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Exam 17: Costing Systems- Job Order Costing

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Question 31

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The following partially completed T accounts summarize the transactions of Carlton Company for last year: At the end of the year,the company closes out the balance in the Overhead account to Cost of Goods Sold. The cost of direct materials used in production is

A) $12,000.
B) $13,000.
C) $16,000.
D) $20,000.

E) A) and D)
F) C) and D)

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Question 32

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To prepare financial statements at the end of the accounting period,the actual overhead cost for the period and the estimated overhead that was applied during the period must be reconciled in a job order costing system.

A) True
B) False

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Question 33

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Regardless of the cost accounting system used,when the products are completed,they are transferred from work in process inventory to finished goods inventory.

Logan Company uses a job order costing system.A predetermined overhead rate of $7 per machine hour in Department A and 220 percent per direct labor dollar in Department B has been established based upon the following information at the beginning of the year: $\begin{array}{lrrr}&\text { Department A } & \text { Department B} \\\text { Estimated overhead } & \$ 40,600 & \$ 88,000 \\\text { Estimated machine hours } & 5,800 & 12,500 \\\text { Estimated direct labor dollars } & \$ 40,000 & \$ 40,000 \\\text { Estimated direct labor hours } & 5,000 & 3,125\end{array}$ Job 19 for 100 units is started in Department A and completed in Department B.Determine the total cost of Job 19 and complete the job cost card based on the following information: $\begin{array}{lrr}&\text { Department A } & \text { Department B} \\\text { Direct materials } & \$ 800 & \$ 950 \\\text { Direct labor dollars } & \$ 490 & \$ 180 \\\text { Direct labor hours } & 30 & 12 \\\text { Machine hours } & 15 & 30\end{array}$

In a job order costing system,the transfer of overhead costs to the Work in Process Inventory account must take place before product unit costs can be computed.

Accounting for the incurrence of __________ does not change significantly between job order costing and process costing.

The flow of costs into a Work in Process Inventory account is very similar for job order and process costing systems.

Morgan & Morgan is a small firm that assists clients in the preparation of their tax returns.The firm has five accountants and five researchers,and it uses job order costing to determine the cost of each client's return.The firm is divided into two departments: (1)Preparation and (2)Research & Planning.Each department has its own overhead application rate.The Preparation Department's rate is based on accountant labor costs and Research & Planning is based on the number of research hours.The following is the company's estimates for the current year's operations. $\begin{array}{lrr}&\text { Preparation } & \text { Research \& } \\&&\text { Planning }\\\text { Accountant hours } & 8,000 & 3,000 \\\text { Research hours } & 0 & 3,000 \\\text { Accountant labor costs } & \$ 480,000 & \$ 135,000 \\\text { Materials and supplies } & 10,000 & 5,000 \\\text { Overhead costs } & 230,400 & 204,000\end{array}$ Client No.2006-713 was completed during April of the current year and incurred the following costs and hours: $\begin{array}{lrr}&\text { Preparation }&\text { Research \& }\\&&\text { Planning }\\\text { Accountant hours } & 30 & 4 \\\text { Research hours } & 0 & 8 \\\text { Materials and supplies } & \$ 25 & \$ 15 \\\text { Accountant labor costs } & 1,800 & 180\end{array}$ a. Compute the overhead rates to be used by both departments. b. Determine the cost of Client No. 2006-713, by department and in total.

Applied overhead exceeds actual overhead when the

The following partially completed T accounts summarize the transactions of Carlton Company for last year: At the end of the year,the company closes out the balance in the Overhead account to Cost of Goods Sold. The cost of goods sold (after adjusting for under- or overapplied overhead) is

A zero balance in Finished Goods Inventory at the start of the period means all previously completed products have been shipped.

Under a job order costing system,the dollar amount of the entry involved in the transfer of goods from work in process to finished goods is the total of the costs charged to all jobs

The type of product costing system used by a company is dictated by the

In a service organization using a job order costing system,actual overhead will be the same as applied overhead.

Product costs appear on the income statement in the form of

In a job order costing system,the Factory Payroll account is a clearing account.

A job order cost card is a type of subsidiary ledger.

In a job order costing system,indirect labor costs are transferred to the Overhead account by increasing the Factory Payroll account and decreasing the Overhead account.

When direct materials are issued from inventory to production under a job order costing system,an increase is recorded in

The ending balance in the Work in Process Inventory account is supported by individual Overhead account balances.