Cost Accounting Foundations And Evolutions 9th Edition by Michael R. Kinney - Test Bank

Cost Accounting Foundations And Evolutions 9th Edition by Michael R. Kinney – Test Bank

 

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Sample Questions Are Posted Below

 

Chapter 5–Job Order Costing

Student: ___________________________________________________________________________

1. A company that produces sugar will use a job-order costing system to track production costs.
   True    False

 

2. A company that produces sugar will use a process costing system to track production costs.
   True    False

 

3. A company that manufactures custom bridal gowns will use a job-order costing system to track production costs.
   True    False

 

4. A company that manufactures custom bridal gowns will use a process costing system to track costs.
   True    False

 

5. A company that manufactures small quantities of identifiable products will use a job-order costing system.
   True    False

 

6. A company that manufactures small quantities of identifiable products will use a process costing system.
   True    False

 

7. A company that manufactures large quantities of homogenous goods will use a process costing system.
   True    False

 

8. In an actual job-order costing system, factory overhead is assigned to a job on a periodic basis.
   True    False

 

9. A company that manufactures large quantities of homogenous goods will use a job-order costing system.
   True    False

 

10. Cost flows and physical flows of units are identical.
    True    False

 

11. In an actual job-order costing system, factory overhead is assigned to a job continuously during the production process.
    True    False

 

12. In a normal job-order costing system, actual factory overhead is applied at the end of the period.
    True    False

 

13. In a normal job-order costing system, factory overhead is applied using actual rates times actual input.
    True    False

 

14. In a normal job-order costing system, factory overhead is applied using predetermined rates times actual input.
    True    False

 

15. In a normal job-order costing system, factory overhead is applied using predetermined rates times standard input.
    True    False

 

16. In a standard job-order costing system, factory overhead is applied using predetermined rates times standard input.
    True    False

 

17. In a standard job-order costing system, factory overhead is applied using actual rates times standard input.
    True    False

 

18. In a standard job-order costing system, factory overhead is applied using predetermined rates times actual input.
    True    False

 

19. In a job-order costing system, costs are accumulated for each individual job.
    True    False

 

20. When raw materials are placed into production, the materials inventory account is debited.
    True    False

 

21. When manufacturing overhead is charged to a job, the work in process account is debited.
    True    False

 

22. When manufacturing overhead is charged to a job, the manufacturing overhead account is debited.
    True    False

 

23. When manufacturing overhead is charged to a job, the work in process account is credited.
    True    False

 

24. When indirect labor is applied to a job in process, the manufacturing overhead account is debited.
    True    False

 

25. When indirect labor is recorded for a job in process, the work in process account is debited.
    True    False

 

26. Overapplied factory overhead that is material in amount is closed to cost of goods sold at year end.
    True    False

 

27. Overapplied factory overhead that is immaterial in amount is closed to cost of goods sold at year end.
    True    False

 

28. Overapplied overhead that is material in amount is allocated between Finished Goods Inventory, Work in Process, and Cost of Goods Sold at year end.
    True    False

 

29. Standards can be used in a job-order costing system if the products manufactured are similar in nature.
    True    False

 

30. Standards can be computed for materials, labor, and overhead.
    True    False

 

31. Standards can be used in a job-order costing system if the products manufactured are varied in nature.
    True    False

 

32. If a normal loss is anticipated on a specific job, the overhead application rate should include an amount for the cost of defective units less disposal value.
    True    False

 

33. If a normal loss is anticipated on all jobs, the overhead application rate should include an amount for the cost of defective units less disposal value.
    True    False

 

34. Normal spoilage is considered a period cost.
    True    False

 

35. Abnormal spoilage is considered a period cost.
    True    False

 

36. The journal entry to record normal spoilage specifically identified with a particular job includes a debit to Work in Process.
    True    False

 

37. The journal entry to record normal spoilage specifically identified with a particular job includes a credit to Work in Process.
    True    False

 

38. Spoilage occurring on specific jobs should be considered in computing predetermined factory overhead rates.
    True    False

 

39. A company that manufactures sugar will use a ____________________ costing system to track production costs
    ________________________________________

 

40. A company that manufactures custom bridal gowns will use a ____________________ costing system to track production costs
    ________________________________________

 

41. A company that manufactures large quantities of homogeneous goods will normally use a ____________________ costing system.
    ________________________________________

 

42. A company that manufactures small quantities of identifiable products will normally use a ____________________ costing system.
    ________________________________________

 

43. Three methods of job-cost valuation are normal, standard, and ____________________.
    ________________________________________

 

44. In a normal job-order costing system, factory overhead is applied using ____________________ rates times ____________________ input.
    ________________________________________

 

45. In a standard job-order costing system, factory overhead is applied using ____________________ rates times ____________________ input.
    ________________________________________

 

46. When a job is begun, the first document in the job-order process is the ___________________________________.
    ________________________________________

 

47. When raw materials are placed into production, the ______________________________ account is debited
    ________________________________________

 

48. When indirect materials are added to a job, the ______________________________ account is debited.
    ________________________________________

 

49. When manufacturing overhead is applied to a job in process, the ______________________________ account is debited
    ________________________________________

 

50. When manufacturing overhead is applied to a job in process, the ______________________________ account is credited.
    ________________________________________

 

51. When indirect labor is recorded for a job in process, ______________________________ is debited.
    ________________________________________

 

52. When production is completed on a job, finished goods are transferred to the _____________________________________________ account.
    ________________________________________

 

53. The document that contains all information about the costs of a specific job is a ________________________________________.
    ________________________________________

 

54. The difference between a standard and an actual quantity, price, or rate is a(n) ____________________.
    ________________________________________

 

55. Underapplied factory overhead that is immaterial in amount is closed to ___________________________________ at year end.
    ________________________________________

 

56. Underapplied factory overhead that is material in amount is closed to ______________________________, ______________________________, and ______________________________ at year end.
    ________________________________________

 

57. If a substandard product can be reworked, it is known as a ____________________.
    ________________________________________

 

58. If a substandard product cannot be reworked, it is known as ____________________.
    ________________________________________

 

59. Which of the following organizations would be most likely to use a job-order costing system?
    A. the loan department of a bank
    B. the check clearing department of a bank
    C. a manufacturer of processed cheese food
    D. a manufacturer of video cassette tapes

 

60. When job-order costing is used, the primary focal point of cost accumulation is the
    A. department.
    B. supervisor.
    C. item.
    D. job.

 

61. In a job-order costing system,
    A. standards cannot be used.
    B. an average cost per unit within a job cannot be computed.
    C. costs are accumulated by departments and averaged among all jobs.
    D. overhead is typically assigned to jobs on the basis of some cost driver.

 

62. What is the best cost accumulation procedure to use when many batches, each differing as to product specifications, are produced?
    A. job-order
    B. process
    C. actual
    D. standard

 

63. Which of the following could not be used in job-order costing?
    A. standards
    B. an average cost per unit for all jobs
    C. normal costing
    D. overhead allocation based on the job’s direct labor hours

 

64. Which of the following costing systems allows management to quickly recognize materials, labor, and overhead variances and take measures to correct them?

Actual Cost System	Normal Cost System

1. yes                  yes
   B.    yes                  no
   C.    no                   yes
   D.    no                   no

 

65. Which of the following costing methods of valuation are acceptable in a job-order costing system?

Actual Material Cost	Standard Material Cost	Actual Labor Cost	Predetermined Overhead Cost

1. yes         yes         no            yes
   B. yes         no          yes           no
   C. no          yes         yes           yes
   D. yes         yes         yes           yes

 

66. In a normal cost system, a debit to Work in Process Inventory would not be made for
    A. actual overhead.
    B. applied overhead.
    C. actual direct material.
    D. actual direct labor.

 

67. After the completion of production, standard and actual costs are compared to determine the ____ of the production process.
    A. effectiveness
    B. complexity
    C. homogeneity
    D. efficiency

 

68. A company producing which of the following would be most likely to use a price standard for material?
    A. furniture
    B. NFL-logo jackets
    C. custom-made picture frames
    D. none of the above

 

69. Knowing specific job costs enables managers to effectively perform which of the following tasks?
    A. estimate costs of future jobs.
    B. establish realistic job selling prices.
    C. evaluate job performance.
    D. all answers are correct.

 

70. A job-order costing system is likely to provide better

(1)	inventory valuations for financial statements.
(2)	control over inventory.
(3)	information about ability to accept additional production work.

 

(1)	(2)	(3)

1. yes      no        no
   B. no       yes       yes
   C. no       no        no
   D. yes      yes       yes

 

71. The trend in job-order costing is to
    A. eliminate the data entry function for the accounting system.
    B. automate the data collection and data entry functions.
    C. use accounting software to change the focal point of the job-order system.
    D. create an Intranet to share information between competitors.

 

72. job-order costing and process costing have which of the following characteristics?

Job-order Costing	Process Costing

1. homogeneous products      heterogeneous products
   and large quantities      and small quantities
   B. homogeneous products      heterogeneous products
   and small quantities      and large quantities
   C. heterogeneous products    homogeneous products
   and large quantities      and large quantities
   D. heterogeneous products    homogeneous products
   and small quantities      and large quantities

 

73. The source document that records the amount of raw material that has been requested by production is the
    A. job-order cost sheet.
    B. bill of lading.
    C. interoffice memo.
    D. material requisition.

 

74. A material requisition form should show all of the following information except
    A. job number.
    B. quantity required.
    C. unit cost.
    D. purchase order number.

 

75. Which of the following statements about job-order cost sheets is true?
    A. All job-order cost sheets serve as the general ledger control account for Work in Process Inventory.
    B. Job-order cost sheets can serve as subsidiary ledger information for both Work in Process Inventory and Finished Goods Inventory.
    C. If material requisition forms are used, job-order cost sheets do not need to be maintained.
    D. Job-order cost sheets show costs for direct material and direct labor, but not for manufacturing overhead since it is an applied amount.

 

76. The primary accounting document in a job-order costing system is a(n)
    A. bill of materials.
    B. job-order cost sheet.
    C. employee time sheet.
    D. materials requisition.

 

77. The cost sheets for incomplete jobs at the end of the period comprise the subsidiary ledger for
    A. Finished Goods Inventory.
    B. Raw Material Inventory.
    C. Work in Process Inventory.
    D. Supplies Inventory.

 

78. The ____ provides management with a historical summation of total costs for a given product.
    A. job-order cost sheet
    B. employee time sheet
    C. material requisition form
    D. bill of lading

 

79. The source document that records the amount of time an employee worked on a job and his/her pay rate is the
    A. job-order cost sheet.
    B. employee time sheet.
    C. interoffice memo.
    D. labor requisition form.

 

80. A credit to Work in Process Inventory represents
    A. work still in process.
    B. raw material put into production.
    C. the application of overhead to production.
    D. the transfer of completed items to Finished Goods Inventory.

 

81. In a job-order costing system, the dollar amount of the entry that debits Finished Goods Inventory and credits Work in Process Inventory is the sum of the costs charged to all jobs
    A. started in process during the period.
    B. in process during the period.
    C. completed and sold during the period.
    D. completed during the period.

 

82. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals
    A. cost of goods manufactured in the year.
    B. ending Work in Process Inventory.
    C. total manufacturing costs to account for.
    D. cost of goods available for sale.

 

83. Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a company that employs a job-order costing system?
    A. Work in Process Inventory
    B. Raw Material Inventory
    C. Accounts Payable
    D. Supplies Inventory

 

84. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material Inventory. The explanation for this would be that
    A. indirect material was placed into production.
    B. raw material was purchased on account.
    C. direct material was placed into production.
    D. direct labor was used for production.

 

85. Which of the following journal entries records the accrual of the cost of indirect labor used in production?
    A. debit Work in Process Inventory, credit Wages Payable
    B. debit Work in Process Inventory, credit Manufacturing Overhead
    C. debit Manufacturing Overhead, credit Work in Process Inventory
    D. debit Manufacturing Overhead, credit Wages Payable

 

86. The logical explanation for an entry that includes a debit to Manufacturing Overhead control and a credit to Prepaid Insurance is
    A. the insurance company sent the company a refund of its policy premium.
    B. overhead for insurance was applied to production.
    C. insurance for production equipment expired.
    D. insurance was paid on production equipment.

 

87. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead control and a debit to
    A. Finished Goods Inventory.
    B. Work in Process Inventory.
    C. Cost of Goods Sold.
    D. Raw Material Inventory.

 

88. In a job-order costing system, the use of indirect material would usually be reflected in the general ledger as an increase in
    A. stores control.
    B. work in process control.
    C. manufacturing overhead applied.
    D. manufacturing overhead control.

 

89. A credit to the Manufacturing Overhead control account represents the
    A. actual cost of overhead incurred.
    B. actual cost of overhead paid this period.
    C. amount of overhead applied to production.
    D. amount of indirect material and labor used during the period.

 

90. The journal entry to record the incurrence and payment of overhead costs for factory insurance requires a debit to
    A. Cash and a credit to Manufacturing Overhead.
    B. Manufacturing Overhead and a credit to Accounts Payable.
    C. Manufacturing Overhead and a credit to Cash.
    D. Work in Process Inventory and a credit to Cash.

 

91. Overhead is applied to jobs in a job-order costing system
    A. at the end of a period.
    B. as jobs are completed.
    C. at the end of a period or as jobs are completed, whichever is earlier.
    D. at the end of a period or as jobs are completed, whichever is later.

 

92. In a job-order costing system, the subsidiary ledger for Finished Goods Inventory is comprised of
    A. all job-order cost sheets.
    B. job-order cost sheets for all uncompleted jobs.
    C. job-order cost sheets for all completed jobs not yet sold.
    D. job-order cost sheets for all ordered, uncompleted, and completed jobs.

 

93. Underapplied overhead resulting from unanticipated and immaterial price increases for overhead items should be written off by
    A. decreasing Cost of Goods Sold.
    B. increasing Cost of Goods Sold.
    C. decreasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.
    D. increasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.

 

94. Overapplied overhead would result if
    A. the plant were operated at less than normal capacity.
    B. overhead costs incurred were less than costs charged to production.
    C. overhead costs incurred were unreasonably large in relation to units produced.
    D. overhead costs incurred were greater than costs charged to production.

 

95. Debits to Cost of Goods Sold typically represent the
    A. transfer of completed items to Finished Goods Inventory.
    B. costs of items sold.
    C. selling price of items sold.
    D. the cost of goods manufactured.

 

96. In a perpetual inventory system, a transaction that requires two journal entries (or one compound entry) is needed when
    A. raw materials are purchased on account.
    B. goods are sold for either cash or on account.
    C. goods are finished and transferred out of Work in Process Inventory.
    D. overhead is applied to Work in Process Inventory.

 

97. Which of the following are drawbacks to applying actual overhead to production?
    A. A delay occurs in assigning costs to jobs or products.
    B. Fluctuations in quantities produced during a period could cause varying per-unit charges for fixed overhead.
    C. Seasonality of overhead costs may cause distortions in job or product costs.
    D. all answers are correct.

 

98. In job-order costing, payroll taxes paid by the employer for factory employees are commonly accounted for as
    A. direct labor cost.
    B. manufacturing overhead cost.
    C. indirect labor cost.
    D. administrative cost.

 

99. Production overhead does not include the costs of
    A. factory depreciation and supplies.
    B. factory employees’ cafeteria departments.
    C. production line labor.
    D. the maintenance department for the factory.

 

100. A company producing which of the following would be most likely to use a time standard for labor?
     A. mattresses
     B. custom-made picture frames
     C. floral arrangements
     D. stained-glass windows

 

101. As data input functions are automated, Intranet data becomes more
     A. complicated to access.
     B. manufacturing, but not accounting, oriented.
     C. real-time accessible.
     D. expensive to install, but easier to use.

 

102. The use of standard material or labor costs in job-order costing
     A. is similar to the use of predetermined overhead rates in a normal costing system.
     B. will keep actual costs of jobs from fluctuating due to changes in component costs.
     C. is appropriate for any company making units to customer specification.
     D. all answers are correct.

 

103. Which of the following statements is false?
     A. While the use of standard costing is acceptable for job-order costing systems, actual cost records should still be maintained.
     B. It is normally more time-consuming for a company to use standard costs in a job-order costing system.
     C. Standards can be used in a job-order costing system, if the company usually produces items that are similar in nature.
     D. Standard costs may be used for material, labor, or both material and labor in a job-order costing environment.

 

104. A service organization would be most likely to use a predetermined overhead rate based on
     A. machine hours.
     B. standard material cost.
     C. direct labor.
     D. number of complaints.

 

105. In a production environment that manufactures goods to customer specifications, a job-order costing system
     A. can be used only if standard costs are used for materials and labor.
     B. will provide reasonable product cost information only when all jobs utilize approximately the same quantities of material and labor.
     C. may be maintained using either actual or predetermined overhead rates.
     D. emphasizes that large customers create the most costs even though they also provide the most revenues.

 

106. A unit that is rejected at a quality control inspection point, but that can be reworked and sold, is referred to as a
     A. spoiled unit.
     B. scrap unit.
     C. abnormal unit.
     D. defective unit.

 

107. The cost of abnormal losses (net of disposal costs) should be written off as

Product cost	Period cost

1. yes         no
   B. yes         yes
   C. no          yes
   D. no          no

 

108. In a job-order costing system, the net cost of normal spoilage is equal to
     A. estimated disposal value plus the cost of spoiled work.
     B. the cost of spoiled work minus estimated spoilage cost.
     C. the units of spoiled work times the predetermined overhead rate.
     D. the cost of spoiled work minus the estimated disposal value.

 

109. If abnormal spoilage occurs in a job-order costing system, has a material dollar value, and is related to a specific job, the recovery value of the spoiled goods should be

debited to	credited to

1. a scrap inventory account      the specific job in process
   B. the specific job in process    overhead
   C. a loss account                 the specific job in process
   D. factory overhead               sales

 

110. In a job-order costing system, the net cost of normal spoilage is equal to
     A. estimated disposal value plus the cost of spoiled work.
     B. the cost of spoiled work minus estimated spoilage cost.
     C. the units of spoiled work times the predetermined overhead rate.
     D. the cost of spoiled work minus the estimated disposal value.

 

111. Shrinkage should be treated as
     A. defective units.
     B. spoiled units.
     C. miscellaneous expense.
     D. a reduction of overhead.

 

112. Spoiled units are
     A. units that cannot be economically reworked to bring them up to standard.
     B. units that can be economically reworked to bring them up to standard.
     C. the same as defective units.
     D. considered abnormal losses.

 

113. Abnormal spoilage is
     A. spoilage that is forecasted or planned.
     B. spoilage that is in excess of planned.
     C. accounted for as a product cost.
     D. debited to Cost of Goods Sold.

 

114. Normal spoilage is defined as unacceptable production that
     A. arises because of a special job or process.
     B. occurs in on-going operations.
     C. is caused specifically by human error.
     D. is in excess of that which is expected.

 

115. Which of the following would fall within the range of tolerance for a production cycle?

Abnormal loss	Normal loss

1. yes           yes
   B. yes           no
   C. no            no
   D. no            yes

 

116. The net cost of normal spoilage in a job-order costing system in which spoilage is common to all jobs should be
     A. assigned directly to the jobs that caused the spoilage.
     B. charged to manufacturing overhead during the period of the spoilage.
     C. charged to a loss account during the period of the spoilage.
     D. allocated only to jobs that are completed during the period.

 

117. Charleston Company uses a job-order costing system. During April, the following costs appeared in the Work in Process Inventory account:

Beginning balance	$ 24,000
Direct material used	70,000
Direct labor incurred	60,000
Applied overhead	48,000
Cost of goods manufactured	185,000

Charleston Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of April which contained $5,600 of overhead. What amount of direct material was included in this job?
A. $4,400
B. $4,480
C. $6,920
D. $8,000

 

118. Jacksonville Company uses a job-order costing system. During May, the following costs appeared in the Work in Process Inventory account:

Beginning balance	$ 30,000
Direct material used	90,000
Direct labor incurred	75,000
Applied overhead	52,500
Cost of goods manufactured	225,000

Jacksonville Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of May which contained $6,300 of overhead. What amount of direct material was included in this job?
A. $ 7,200
B. $ 9,000
C. $11,160
D. $11,790

 

119. Wyman Company is a graphic design shop that produces jobs to customer specifications. During January, Job #3051 was worked on and the following information is available:

Direct material used	$2,500
Direct labor hours worked	15
Machine time used	6
Direct labor rate per hour	$7
Overhead application rate per hour of machine time	$18

What was the total cost of Job #3051 for January?
A. $2,713
B. $2,770
C. $2,812
D. $3,052

 

120. Chapman Company
     
     Chapman Company uses a job-order costing system. At the beginning of March, the company had two jobs in process with the following costs:

	Direct Material	Direct Labor	Overhead
Job #456	$3,400	$510	$255
Job #461	1,100	289	?

Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

Refer to Chapman Company. What is the overhead application rate per direct labor hour?
A. $  0.50
B. $  2.00
C. $  4.25
D. $30.00

 

121. Chapman Company
     
     Chapman Company uses a job-order costing system. At the beginning of March, the company had two jobs in process with the following costs:

	Direct Material	Direct Labor	Overhead
Job #456	$3,400	$510	$255
Job #461	1,100	289	?

Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

Refer to Chapman Company. How much overhead was included in the cost of Job #461 at the beginning of March?
A. $   144.50
B. $   153.00
C. $2,200.00
D. $2,456.50

 

122. Chapman Company
     
     Chapman Company uses a job-order costing system. At the beginning of March, the company had two jobs in process with the following costs:

	Direct Material	Direct Labor	Overhead
Job #456	$3,400	$510	$255
Job #461	1,100	289	?

Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

Refer to Chapman Company. During March, Chapman’ employees worked on Job #649. At the end of the month, $714 of overhead had been applied to this job. Total Work in Process at the end of the month was $6,800 and all other jobs had a total cost of $3,981. What amount of direct material is included in Job #649?
A. $   677.00
B. $1,391.00
C. $2,142.00
D. $4,658.00

 

123. Mayflower Corporation manufactures products on a job-order basis. The job cost sheet for Job #656 shows the following for September:

Direct material	$5,000
Direct labor (100 hours @ $7.25)	$725
Machine hours incurred	40
Predetermined overhead rate per machine hour	$26

At the end of September, what total cost appears on the job cost sheet for Job #656?
A. $5,725
B. $5,765
C. $6,765
D. $8,325

 

124. Trinity Corporation manufactures products on a job-order basis. The job cost sheet for Job #902 shows the following for June:

Direct material	$6,000
Direct labor (110 hours @ $8.50)	$935
Machine hours incurred	50
Predetermined overhead rate per machine hour	$28

At the end of June, what total cost appears on the job cost sheet for Job #902?
A. $ 6,935
B. $ 6,985
C. $ 8,335
D. $10,015

 

125. Products at Conroy Manufacturing are sent through two production departments: Fabricating and Finishing. Overhead is applied to products in the Fabricating Department based on 150 percent of direct labor cost and $18 per machine hour in Finishing. The following information is available about Job #297:

	Fabricating	Finishing
Direct material	$1,590	$580
Direct labor cost	?	48
Direct labor hours	22	6
Machine hours	5	15
Overhead applied	429	?

What is the total cost of Job #297?
A. $2,647
B. $3,005
C. $3,093
D. $3,203

 

126. Tuscaloosa Company applies overhead to jobs at the rate of 40 percent of direct labor cost. Direct material of $1,250 and direct labor of $1,400 were expended on Job #145 during September. On August 31, the balance of Job #145 was $2,800. The balance on September 30 is:
     A. $3,210.
     B. $4,760.
     C. $5,450.
     D. $6,010.

 

127. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. What is the prime cost of Job #6?
A. $42,250
B. $57,250
C. $73,250
D. $82,750

 

128. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. What is the total amount of overhead applied to Job #9?
A. $18,250
B. $26,350
C. $30,000
D. $31,620

 

129. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. What is the total amount of actual overhead?
A. $36,000
B. $69,000
C. $93,000
D. $99,960

 

130. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. How much overhead is applied to Work in Process?
A. $  69,000
B. $  99,960
C. $132,960
D. $144,000

 

131. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. If Job #13 is completed and transferred, what is the balance in Work in Process Inventory at the end of the period if overhead is applied at the end of the period?
A. $  96,700
B. $  99,020
C. $139,540
D. $170,720

 

132. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. Assume the balance in Work in Process Inventory was $18,500 on November 1 and $25,297 on November 30. The balance on November 30 represents one job that contains direct material of $11,250. How many direct labor hours have been worked on this job (rounded to the nearest hour)?
A.   751
B. 1,324
C. 1,653
D. 2,976

 

133. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. What is the prime cost of Job #8?
A. $59,100
B. $82,850
C. $86,475
D. $93,680

 

134. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. What is the total amount of overhead applied to Job #12?
A. $23,750
B. $29,450
C. $39,000
D. $39,188

 

135. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. What is the total amount of actual overhead?
A. $ 45,000
B. $ 95,000
C. $114,500
D. $119,938

 

136. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. How much overhead is applied to Work in Process?
A. $   95,000
B. $ 119,938
C. $ 162,900
D. $ 164,938

 

137. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. If Job #15 is completed and transferred, what is the balance in Work in Process Inventory at the end of the period if overhead is applied at the end of the period?
A. $191,925
B. $201,888
C. $205,284
D. $208,908

 

138. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. Assume the balance in Work in Process Inventory was $21,500 on April 1 and $29,520 on April 30. The balance on April 30 represents one job that contains direct material of $12,375. How many direct labor hours have been worked on this job (rounded to the nearest hour)?
A.   802
B. 1,381
C. 1,805
D. 3,107

 

139. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company. What amount of overhead is applied to Job #323?
A. $4,800
B. $5,550
C. $6,300
D. $7,500

 

140. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company. What amount of overhead is applied to Job #325?
A. $8,325
B. $7,500
C. $7,000
D. $5,000

 

141. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company. What is the amount of direct materials for Job #325?
A. $1,950
B. $1,500
C. $3,700
D. $7,500

 

142. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company Assume that Jobs #323 and #401 are incomplete at the end of September. What is the balance in Work in Process Inventory at that time?
A. $18,920
B. $22,620
C. $28,920
D. $30,120

 

143. Charleston Company
     
     Charleston Company has two departments (Processing and Packaging) and uses a job-order costing system. Charleston applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for July:

	Processing	Packaging
Machine hours	2,500	1,000
Direct labor cost	$44,500	$23,000
Applied overhead	$55,000	$51,750

Refer to Charleston Company. What is the overhead application rate per machine hour for Processing?
A. $  0.81
B. $  1.24
C. $17.80
D. $22.00

 

144. Charleston Company
     
     Charleston Company has two departments (Processing and Packaging) and uses a job-order costing system. Charleston applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for July:

	Processing	Packaging
Machine hours	2,500	1,000
Direct labor cost	$44,500	$23,000
Applied overhead	$55,000	$51,750

Refer to Charleston Company What is the overhead application rate for Packaging?
A. $ 0.44
B. $ 2.25
C. $23.00
D. $51.75

 

145. Peoria Company
     
     Peoria Company has two departments (Processing and Packaging) and uses a job-order costing system. Peoria applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for August:

	Processing	Packaging
Machine hours	3,600	1,500
Direct labor cost	$47,600	$24,000
Applied overhead	$60,500	$54,750

Refer to Peoria Company. What is the overhead application rate per machine hour for Processing?
A. $  0.79
B. $  1.27
C. $13.22
D. $16.81

 

146. Peoria Company
     
     Peoria Company has two departments (Processing and Packaging) and uses a job-order costing system. Peoria applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for August:

	Processing	Packaging
Machine hours	3,600	1,500
Direct labor cost	$47,600	$24,000
Applied overhead	$60,500	$54,750

Refer to Peoria Company What is the overhead application rate for Packaging?
A. $  0.44
B. $  2.28
C. $16.00
D. $36.50

 

147. Williams Company
     
     Williams Company has a job-order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of $12,000 and overhead of $7,200. Job #64 has direct material of $2,000 and direct labor of $9,000.

     Refer to Williams Company. What amount of direct labor cost has been charged to Job #63?
     A. $  6,000
     B. $  7,200
     C. $  8,640
     D. $14,400

 

148. Williams Company
     
     Williams Company has a job-order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of $12,000 and overhead of $7,200. Job #64 has direct material of $2,000 and direct labor of $9,000.

     Refer to Williams Company. What is the total cost of Job #64?
     A. $10,800
     B. $11,000
     C. $21,800
     D. $30,200

 

149. Levine Company
     
     Levine Company has a job-order costing system and an overhead application rate of 125 percent of direct labor cost. Job #123 is charged with direct material of $18,000 and overhead of $9,000. Job #124 has direct material of $4,500 and direct labor of $12,000.

     Refer to Levine Company. What amount of direct labor cost has been charged to Job #123?
     A. $  7,200
     B. $  9,000
     C. $11,250
     D. $18,000

 

150. Levine Company
     
     Levine Company has a job-order costing system and an overhead application rate of 125 percent of direct labor cost. Job #123 is charged with direct material of $18,000 and overhead of $9,000. Job #124 has direct material of $4,500 and direct labor of $12,000.

     Refer to Levine Company. What is the total cost of Job #124?
     A. $15,000
     B. $16,500
     C. $31,500
     D. $43,500

 

151. Davis Company
     
     Davis Company  uses a job-order costing system. Assume that Job #504 is the only one in process. The following information is available:

Budgeted direct labor hours	65,000	Budgeted machine hours	9,000
Budgeted overhead	$350,000	Direct material	$110,500
Direct labor cost	$70,000

Refer to Davis Company. What is the overhead application rate if Davis uses a predetermined overhead application rate based on direct labor hours (rounded to the nearest whole dollar)?
A. $  0.20
B. $  5.00
C. $  5.38
D. $38.89

 

152. Davis Company
     
     Davis Company  uses a job-order costing system. Assume that Job #504 is the only one in process. The following information is available:

Budgeted direct labor hours	65,000	Budgeted machine hours	9,000
Budgeted overhead	$350,000	Direct material	$110,500
Direct labor cost	$70,000

Refer to Davis Company. What is the total cost of Job #504 assuming that overhead is applied at the rate of 135% of direct labor cost (rounded to the nearest whole dollar)?
A. $192,650
B. $268,250
C. $275,000
D. $329,675

 

153. Franklin Company
     
     Franklin Company  uses a job-order costing system. Assume that Job #309 is the only one in process. The following information is available:

Budgeted direct labor hours	72,000	Budgeted machine hours	11,000
Budgeted overhead	$400,000	Direct material	$122,750
Direct labor cost	$80,000

Refer to Franklin Company. What is the overhead application rate if Franklin uses a predetermined overhead application rate based on direct labor hours (rounded to the nearest whole dollar)?
A. $  0.20
B. $  5.00
C. $  5.56
D. $36.36

 

154. Franklin Company
     
     Franklin Company  uses a job-order costing system. Assume that Job #309 is the only one in process. The following information is available:

Budgeted direct labor hours	72,000	Budgeted machine hours	11,000
Budgeted overhead	$400,000	Direct material	$122,750
Direct labor cost	$80,000

Refer to Franklin Company. What is the total cost of Job #309 assuming that overhead is applied at the rate of 130% of direct labor cost (rounded to the nearest whole dollar)?
A. $194,800
B. $274,100
C. $306,750
D. $340,075

 

155. At the end of the last fiscal year, Sheraton Company had the following account balances:

Overapplied overhead	$  6,000
Cost of Goods Sold	$980,000
Work in Process Inventory	$ 38,000
Finished Goods Inventory	$ 82,000

If the most common treatment of assigning overapplied overhead were used, the final balance in Cost of Goods Sold is:
A. $974,000.
B. $974,660.
C. $985,340.
D. $986,000.

 

156. At the end of the last fiscal year, Drury Company had the following account balances:

Overapplied overhead	$  9,000
Cost of Goods Sold	$860,000
Work in Process Inventory	$ 36,000
Finished Goods Inventory	$ 74,000

If the most common treatment of assigning overapplied overhead were used, the final balance in Cost of Goods Sold is:
A. $851,000.
B. $852,021.
C. $867,979.
D. $869,000.

 

157. Sanchez Products has no Work in Process or Finished Goods inventories at the close of business on December 31 of the current year. The balances of Sanchez Products’ accounts as of December 31 are as follows:

Cost of goods sold–unadjusted	$2,040,000
Selling & administrative expenses	900,000
Sales	3,600,000
Manufacturing overhead control	700,000
Manufacturing overhead applied	648,000

Pretax income for the current year is:
A. $608,000.
B. $660,000.
C. $712,000.
D. undeterminable from the information given.

 

158. Sloane Products has no Work in Process or Finished Goods inventories at the close of business on December 31 of the current year. The balances of Sloane Products’ accounts as of December 31 are as follows:

Cost of goods sold–unadjusted	$2,520,000
Selling & administrative expenses	950,000
Sales	4,000,000
Manufacturing overhead control	800,000
Manufacturing overhead applied	754,000

Pretax income for the current year is:
A. $484,000
B. $530,000
C. $576,000
D. $680,000

 

159. Spears Manufacturing Company

     Spears Manufacturing Company produces beach chairs. Chair frames are all the same size, but can be made from plastic, wood, or aluminum. Regardless of frame choice, the same sailcloth is used for the seat on all chairs. Spears has set a standard for sailcloth of $9.90 per square yard and each chair requires 1 square yard of material. Spears produced 500 plastic chairs, 100 wooden chairs, and 250 aluminum chairs during June. The total cost for 1,000 square yards of sailcloth during the month was $10,000. At the end of the month, 50 square yards of sailcloth remained in inventory.

     Refer to Spears Manufacturing Company. The unfavorable material price variance for sailcloth purchases for the month was
     A. $  100.
     B. $  495.
     C. $1,090.
     D. $1,585.

 

160. Spears Manufacturing Company

     Spears Manufacturing Company produces beach chairs. Chair frames are all the same size, but can be made from plastic, wood, or aluminum. Regardless of frame choice, the same sailcloth is used for the seat on all chairs. Spears has set a standard for sailcloth of $9.90 per square yard and each chair requires 1 square yard of material. Spears produced 500 plastic chairs, 100 wooden chairs, and 250 aluminum chairs during June. The total cost for 1,000 square yards of sailcloth during the month was $10,000. At the end of the month, 50 square yards of sailcloth remained in inventory.

     Refer to Spears Manufacturing Company. Assuming that there was no sailcloth in inventory at the beginning of June, the unfavorable material quantity variance for the month was
     A. $  495.
     B. $  500.
     C. $  990.
     D. $1,000.

 

161. Spears Manufacturing Company

     Spears Manufacturing Company produces beach chairs. Chair frames are all the same size, but can be made from plastic, wood, or aluminum. Regardless of frame choice, the same sailcloth is used for the seat on all chairs. Spears has set a standard for sailcloth of $9.90 per square yard and each chair requires 1 square yard of material. Spears produced 500 plastic chairs, 100 wooden chairs, and 250 aluminum chairs during June. The total cost for 1,000 square yards of sailcloth during the month was $10,000. At the end of the month, 50 square yards of sailcloth remained in inventory.

     Refer to Spears Manufacturing Company.  Spears could set a standard cost for which of the following?

Frame cost	Predetermined OH rate	Labor rate

1. yes          yes         yes
   B. no           no          no
   C. yes          no          no
   D. no           yes         yes

 

162. Compare and contrast job-order and process costing systems.

 

 

 

 

 

163. Discuss actual costing, normal costing, and standard costing.

 

 

 

 

 

164. What is a “job” as defined in a job-order costing system?

 

 

 

 

 

165. What information should be contained in a subsidiary ledger for Work in Process Inventory in a job-order costing system?

 

 

 

 

 

166. Discuss the basic forms used in a job-order costing system.

 

 

 

 

 

167. Can standard costing be used in job-order costing? If so, what conditions must exist? If not, explain why.

 

 

 

 

 

168. Discuss the accounting treatment of spoilage in a job-order costing system.

 

 

 

 

 

169. Prepare the necessary journal entries from the following information for Alltizer Company, which uses a perpetual inventory system.

a.	Purchased raw material on account, $56,700.
b.	Requisitioned raw material for production as follows: direct material-80 percent of purchases; indirect material-15 percent of purchases.
c.	Direct labor wages of $33,100 are accrued as are indirect labor wages of $12,500.
d.	Overhead incurred and paid for is $66,900.
e.	Overhead is applied to production based on 110 percent of direct labor cost.
f.	Goods costing $97,600 were completed during the period.
g.	Goods costing $51,320 were sold on account for $77,600.

 

 

 

 

 

 

170. Prepare the necessary journal entries from the following information for Parrish Company, which uses a perpetual inventory system.

a.	Purchased raw material on account, $61,200.
b.	Requisitioned raw material for production as follows: direct material-75 percent of purchases; indirect material-20 percent of purchases.
c.	Direct labor wages of $35,500 are accrued as are indirect labor wages of $14,100.
d.	Overhead incurred and paid for is $68,100.
e.	Overhead is applied to production based on 125 percent of direct labor cost.
f.	Goods costing $99,500 were completed during the period.
g.	Goods costing $53,400 were sold on account for $81,200.

 

 

 

 

 

 

171. Perry Company employs a job-order costing system. Only three jobs-Job #205, Job #206, and Job #207-were worked on during January and February. Job #205 was completed February 10; the other two jobs were still in production on February 28, the end of the company’s operating year. Job cost sheets on the three jobs follow:

	Job Cost Sheet
	Job #205	Job #206	Job #207
January costs incurred:
Direct material	$16,500	$ 9,300	$    —
Direct labor	13,000	7,000	—
Manufacturing overhead	20,800	11,200	—
February costs incurred:
Direct materials	—	8,200	21,300
Direct labor	4,000	6,000	10,000
Manufacturing overhead	?	?	?

The following additional information is available:

a.	Manufacturing overhead is assigned to jobs on the basis of direct labor cost.

 

b.	Balances in the inventory accounts at January 31 were as follows:

 

Raw Material	$40,000
Work in Process	?
Finished Goods	85,000

Required:

a.	Prepare T-accounts for Raw Material, Work in Process Inventory, Finished Goods Inventory, and Manufacturing Overhead Control. Enter the January 31 inventory balances given previously; in the case of Work in Process Inventory, compute the January 31 balance and enter it into the Work in Process Inventory T-account.

 

b.	Prepare journal entries for February as follows:

 

1.	Prepare an entry to record the issue of materials into production and post the entry to appropriate T-accounts. (In the case of direct material, it is not necessary to make a separate entry for each job.)  Indirect materials used during February totaled $4,000.
2.	Prepare an entry to record the incurrence of labor cost and post the entry to appropriate T-accounts. (In the case of direct labor, it is not necessary to make a separate entry for each job.)  Indirect labor cost totaled $8,000 for February.
3.	Prepare an entry to record the incurrence of $19,000 in various actual manufacturing overhead costs for February (credit Accounts Payable).

 

c.	What apparent predetermined overhead rate does the company use to assign overhead cost to jobs? Using this rate, prepare a journal entry to record the application of overhead cost to jobs for February (it is not necessary to make a separate entry for each job). Post this entry to appropriate T-accounts.

 

d.	As stated earlier, Job #205 was completed during February. Prepare a journal entry to show the transfer of this job off of the production line and into the finished good warehouse. Post the entry to appropriate T-accounts.

 

e.	Determine the balance at February 28 in the Work in Process inventory account. How much of this balance consists of the cost of Job #206? Job #207?

 

 

 

 

 

 

172. The Robbins Company manufactures special purpose machines to order. On January 1, there were two jobs in process, #705 and #706. The following costs were applied to these jobs in the prior year:

	Job No.
	705	706
Direct material	$ 5,000	$ 8,000
Direct labor	4,000	3,000
Overhead	4,400	3,300
Total	$13,400	$14,300

During January, the following transactions took place:

*	Raw material costing $40,000 was purchased on account.
*	Jobs #707, #708, and #709 were started and the following costs were applied to them:

 

	JOB
	707	708	709
Direct materials	$3,000	$10,000	$7,000
Direct labor	5,000	6,000	4,000

 

*	Job #705 and Job #706 were completed after incurring additional direct labor costs of $2,000 and $4,000, respectively
*	Wages paid to production employees during January totaled $25,000.
*	Depreciation for the month of January totaled $10,000.
*	Utilities bills in the amount of $10,000 were paid for operations during December.
*	Utilities bills totaling $12,000 were received for January operations.
*	Supplies costing $2,000 were used.
*	Miscellaneous overhead expenses totaled $24,000 for January.

Actual overhead is applied to individual jobs at the end of each month using a rate based on actual direct labor costs.

Required:

a.	Determine the January overhead rate.

 

b.	Determine the cost of each job.

 

c.	Prepare a statement of cost of goods manufactured.

 

 

 

 

 

 

173. Kelley Corporation, began operations on October 1. It employs a job-order costing system. Overhead is charged at a normal rate of $2.50 per direct labor hour. The actual operations for the month of October are summarized as follows:

a.	Purchases of raw material, 25,000 pieces @ $1.20/piece.

 

b.	Material and labor costs charged to production:

 

Job No.	Units	Material	Direct labor cost	Direct labor hours
101	10,000	$4,000	$6,000	3,000
102	8,800	3,600	5,400	2,700
103	16,000	7,000	9,000	4,500
104	8,000	3,200	4,800	2,400
105	20,000	8,000	3,600	1,800

 

c.	Actual overhead costs incurred:

 

Variable	$18,500
Fixed	15,000

 

d.	Completed jobs: 101,  102,  103, and 104

 

e.	Sales-$105,000. All units produced on Jobs 101, 102, and 103 were sold.

Required: Compute the following balances on October 31:

a.	Material inventory

 

b.	Work in process inventory

 

c.	Finished goods inventory

 

d.	Cost of goods sold

 

e.	Under- or overapplied overhead

 

 

 

 

 

 

174. Grant Company.
     
     Grant Company uses a job-order costing system and develops its predetermined overhead rate based on machine hours. The company has two jobs in process at the end of the cycle, Jobs #177 and #179.

Budgeted overhead	$100,300
Budgeted machine hours	85,000
Raw material	$ 63,000
Labor cost	$ 50,000

Refer to Grant Company. What amount of overhead is charged to Jobs #177 and #179? Machine hours are split between Jobs #177 and #179-65 percent and 35 percent, respectively. Actual machine hours equal budgeted machine hours.

 

 

 

 

 

175. Grant Company.
     
     Grant Company uses a job-order costing system and develops its predetermined overhead rate based on machine hours. The company has two jobs in process at the end of the cycle, Jobs #177 and #179.

Budgeted overhead	$100,300
Budgeted machine hours	85,000
Raw material	$ 63,000
Labor cost	$ 50,000

Refer to Grant Company.  Fifty-four percent of raw material belongs to Job 17 and 38 percent belongs to Job 179, and the balance is considered indirect material. What amount of raw material used was allocated to overhead as indirect material?

 

 

 

 

 

176. Grant Company.
     
     Grant Company uses a job-order costing system and develops its predetermined overhead rate based on machine hours. The company has two jobs in process at the end of the cycle, Jobs #177 and #179.

Budgeted overhead	$100,300
Budgeted machine hours	85,000
Raw material	$ 63,000
Labor cost	$ 50,000

Refer to Grant Company. Labor cost was split 25 percent and 70 percent, respectively, between Jobs #177 and #179 for direct labor. The remainder was indirect labor cost. What are the total costs of Jobs #177 and #179?

 

 

 

 

 

177. Dillman Company manufactures custom-built conveyor systems for factory and commercial operations. The cost accountant for Dillman Company is in the process of educating a new employee, Jerry Cole about the job-order costing system that Dillman Company uses. (The system is based on normal costs; overhead is applied based on direct labor cost and rounded to the next whole dollar.)  The following job-order cost records are available for July:

	Direct	Direct		Total
Job No.	Materials	Labor	Applied OH	Cost
667	$ 5,901	$1,730	$ 1,990	$ 9,621
669	18,312	1,810	2,082	22,204
670	406	500	575	1,481
671	51,405	9,500	10,925	71,830
672	9,615	550	633	10,798

To explain the missing job number, the cost accountant informed Jerry that Job #668 had been completed in June. The accountant also told Jerry that Job #667 was the only job in process at the beginning of July. At that time, the job had been assigned $4,300 for direct material and $900 for direct labor. At the end of July, Job #671 had not been completed; all other jobs were complete. The cost accountant asked Jerry several questions to determine whether he understood the job-order costing system.

Required: Help Jerry answer the following questions:

a.	What is the predetermined overhead rate used by Dillman Company?

 

b.	What was the total cost of beginning Work in Process inventory?

 

c.	What was total prime cost incurred for the month of July?

 

d.	What was cost of goods manufactured for July?

 

 

 

 

 

 

178. Hodges Company uses a job-order costing system and has the following information for the first week of June:

1.	Direct labor and direct materials used:

 

Job No.	Direct Material	Direct Labor Hours
498	$1,500	116
506	960	16
507	415	18
508	345	42
509	652	24
511	308	10
512	835	30
Total	$5,015	256

 

2.	The direct labor wage rate is $4 per hour.

 

3.	The overhead rate is $5 per direct labor hour.

 

4.	Actual overhead costs for the week, $1,480.

 

5.	Jobs completed: Nos. 498, 506, and 509.

 

6.	The factory had no work in process at the beginning of the week.

Required:

a.	Prepare a summary that will show the total cost assigned to each job.

 

b.	Compute the amount of overhead over- or underapplied during the week.

 

c.	Calculate the cost of the work in process at the end of the week.

 

 

 

 

 

 

179. You are asked to bring the following incomplete accounts of Parrish Printing Corporation up to date through January 31 of the current year. Consider the data that appear in the T-accounts as well as additional information given in items (a) through (i).

     Parrish’s job-order costing system has two direct cost categories (direct material and direct manufacturing labor) and one indirect cost pool (manufacturing overhead, which is allocated using direct manufacturing labor costs).

Materials Inventory Control		Wages Payable Control
12/31		1/31
Balance   15,000		Balance   3,000

 

		Manufacturing Department
Work in Process Inventory Control		Overhead Control
	January
	Charges  57,000

 

			Manufacturing Overhead Control

 

Finished Goods Inventory Control		Cost of Goods Sold
12/31
Balance    20,000

Additional Information:

a.	Manufacturing department overhead is allocated using a budgeted rate set every December. Management forecasts next year’s overhead and next year’s direct manufacturing labor costs. The budget for the current year is $400,000 of direct manufacturing labor and $600,000 of manufacturing overhead.
b.	The only job unfinished on January 31 is No. 419, on which direct manufacturing labor costs are $2,000 (125 direct manufacturing labor hours) and direct material costs are $8,000.
c.	Total material placed into production during January is $90,000.
d.	Cost of goods completed during January is $180,000.
e.	Material inventory as of January 31 is $20,000.
f.	Finished goods inventory as of January 31 is $15,000.
g.	All plant workers earn the same wage rate. Direct manufacturing labor hours for January total 2,500. Other labor and supervision totals $10,000.
h.	The gross plant payroll for January pay periods totals $52,000. Ignore withholdings. All personnel are paid on a weekly basis.
i.	All “actual” manufacturing department overhead incurred during January has already been posted.

Required:

a.	Material purchased during January
b.	Cost of Goods Sold during January
c.	Direct Manufacturing Labor Costs incurred during January
d.	Manufacturing Overhead Allocated during January
e.	Balance, Wages Payable Control, December 31, prior year
f.	Balance, Work in Process Inventory Control, January 31, current year
g.	Balance, Work in Process Inventory Control, December 31, prior year
h.	Balance, Finished Goods Inventory Control, January 31, current year
i.	Manufacturing Overhead underapplied or overapplied for January

 

 

 

 

 

 

180. Treasures Company manufactures picture frames of all sizes and shapes and uses a job-order costing system. There is always some spoilage in each production run. The following costs relate to the current run:

Estimated overhead (exclusive of spoilage)	$160,000
Spoilage (estimated)	$ 25,000
Sales value of spoiled frames	$ 11,500
Labor hours	100,000

The actual cost of a spoiled picture frame is $7.00. During the year 170 frames are considered spoiled. Each spoiled frame can be sold for $4. The spoilage is considered a part of all jobs.

Required:

a.	Labor hours are used to determine the predetermined overhead rate. What is the predetermined overhead rate per direct labor hour?
b.	Prepare the journal entry needed to record the spoilage.
c.	Prepare the journal entry if the spoilage relates only to Job #12 rather than being a part of all production runs.

 

 

 

 

 

 

 

 

Chapter 5–Job Order Costing Key

1. A company that produces sugar will use a job-order costing system to track production costs.
   FALSE

 

2. A company that produces sugar will use a process costing system to track production costs.
   TRUE

 

3. A company that manufactures custom bridal gowns will use a job-order costing system to track production costs.
   TRUE

 

4. A company that manufactures custom bridal gowns will use a process costing system to track costs.
   FALSE

 

5. A company that manufactures small quantities of identifiable products will use a job-order costing system.
   TRUE

 

6. A company that manufactures small quantities of identifiable products will use a process costing system.
   FALSE

 

7. A company that manufactures large quantities of homogenous goods will use a process costing system.
   TRUE

 

8. In an actual job-order costing system, factory overhead is assigned to a job on a periodic basis.
   TRUE

 

9. A company that manufactures large quantities of homogenous goods will use a job-order costing system.
   FALSE

 

10. Cost flows and physical flows of units are identical.
    TRUE

 

11. In an actual job-order costing system, factory overhead is assigned to a job continuously during the production process.
    FALSE

 

12. In a normal job-order costing system, actual factory overhead is applied at the end of the period.
    FALSE

 

13. In a normal job-order costing system, factory overhead is applied using actual rates times actual input.
    FALSE

 

14. In a normal job-order costing system, factory overhead is applied using predetermined rates times actual input.
    TRUE

 

15. In a normal job-order costing system, factory overhead is applied using predetermined rates times standard input.
    FALSE

 

16. In a standard job-order costing system, factory overhead is applied using predetermined rates times standard input.
    TRUE

 

17. In a standard job-order costing system, factory overhead is applied using actual rates times standard input.
    FALSE

 

18. In a standard job-order costing system, factory overhead is applied using predetermined rates times actual input.
    FALSE

 

19. In a job-order costing system, costs are accumulated for each individual job.
    TRUE

 

20. When raw materials are placed into production, the materials inventory account is debited.
    FALSE

 

21. When manufacturing overhead is charged to a job, the work in process account is debited.
    TRUE

 

22. When manufacturing overhead is charged to a job, the manufacturing overhead account is debited.
    FALSE

 

23. When manufacturing overhead is charged to a job, the work in process account is credited.
    FALSE

 

24. When indirect labor is applied to a job in process, the manufacturing overhead account is debited.
    FALSE

 

25. When indirect labor is recorded for a job in process, the work in process account is debited.
    FALSE

 

26. Overapplied factory overhead that is material in amount is closed to cost of goods sold at year end.
    FALSE

 

27. Overapplied factory overhead that is immaterial in amount is closed to cost of goods sold at year end.
    TRUE

 

28. Overapplied overhead that is material in amount is allocated between Finished Goods Inventory, Work in Process, and Cost of Goods Sold at year end.
    TRUE

 

29. Standards can be used in a job-order costing system if the products manufactured are similar in nature.
    TRUE

 

30. Standards can be computed for materials, labor, and overhead.
    TRUE

 

31. Standards can be used in a job-order costing system if the products manufactured are varied in nature.
    FALSE

 

32. If a normal loss is anticipated on a specific job, the overhead application rate should include an amount for the cost of defective units less disposal value.
    TRUE

 

33. If a normal loss is anticipated on all jobs, the overhead application rate should include an amount for the cost of defective units less disposal value.
    FALSE

 

34. Normal spoilage is considered a period cost.
    FALSE

 

35. Abnormal spoilage is considered a period cost.
    TRUE

 

36. The journal entry to record normal spoilage specifically identified with a particular job includes a debit to Work in Process.
    FALSE

 

37. The journal entry to record normal spoilage specifically identified with a particular job includes a credit to Work in Process.
    TRUE

 

38. Spoilage occurring on specific jobs should be considered in computing predetermined factory overhead rates.
    FALSE

 

39. A company that manufactures sugar will use a ____________________ costing system to track production costs
    process

 

40. A company that manufactures custom bridal gowns will use a ____________________ costing system to track production costs
    job-order

 

41. A company that manufactures large quantities of homogeneous goods will normally use a ____________________ costing system.
    process

 

42. A company that manufactures small quantities of identifiable products will normally use a ____________________ costing system.
    job-order

 

43. Three methods of job-cost valuation are normal, standard, and ____________________.
    actual

 

44. In a normal job-order costing system, factory overhead is applied using ____________________ rates times ____________________ input.
    predetermined; actual

 

45. In a standard job-order costing system, factory overhead is applied using ____________________ rates times ____________________ input.
    predetermined; standard

 

46. When a job is begun, the first document in the job-order process is the ___________________________________.
    materials requisition

 

47. When raw materials are placed into production, the ______________________________ account is debited
    Work in process

 

48. When indirect materials are added to a job, the ______________________________ account is debited.
    manufacturing overhead

 

49. When manufacturing overhead is applied to a job in process, the ______________________________ account is debited
    work in process

 

50. When manufacturing overhead is applied to a job in process, the ______________________________ account is credited.
    manufacturing overhead

 

51. When indirect labor is recorded for a job in process, ______________________________ is debited.
    manufacturing overhead

 

52. When production is completed on a job, finished goods are transferred to the _____________________________________________ account.
    Finished Goods Inventory

 

53. The document that contains all information about the costs of a specific job is a ________________________________________.
    job-order cost sheet

 

54. The difference between a standard and an actual quantity, price, or rate is a(n) ____________________.
    variance

 

55. Underapplied factory overhead that is immaterial in amount is closed to ___________________________________ at year end.
    Cost of Goods Sold

 

56. Underapplied factory overhead that is material in amount is closed to ______________________________, ______________________________, and ______________________________ at year end.
    Work in Process, Finished Goods Inventory, Cost of Goods Sold

 

57. If a substandard product can be reworked, it is known as a ____________________.
    defect

 

58. If a substandard product cannot be reworked, it is known as ____________________.
    spoilage

 

59. Which of the following organizations would be most likely to use a job-order costing system?
    A.the loan department of a bank
    B. the check clearing department of a bank
    C. a manufacturer of processed cheese food
    D. a manufacturer of video cassette tapes

 

60. When job-order costing is used, the primary focal point of cost accumulation is the
    A.department.
    B. supervisor.
    C. item.
    D. job.

 

61. In a job-order costing system,
    A.standards cannot be used.
    B. an average cost per unit within a job cannot be computed.
    C. costs are accumulated by departments and averaged among all jobs.
    D. overhead is typically assigned to jobs on the basis of some cost driver.

 

62. What is the best cost accumulation procedure to use when many batches, each differing as to product specifications, are produced?
    A.job-order
    B. process
    C. actual
    D. standard

 

63. Which of the following could not be used in job-order costing?
    A.standards
    B. an average cost per unit for all jobs
    C. normal costing
    D. overhead allocation based on the job’s direct labor hours

 

64. Which of the following costing systems allows management to quickly recognize materials, labor, and overhead variances and take measures to correct them?

Actual Cost System	Normal Cost System

1. yes                  yes
   B.    yes                  no
   C.    no                   yes
   D.    no                   no

 

65. Which of the following costing methods of valuation are acceptable in a job-order costing system?

Actual Material Cost	Standard Material Cost	Actual Labor Cost	Predetermined Overhead Cost

1. yes         yes         no            yes
   B. yes         no          yes           no
   C. no          yes         yes           yes
   D. yes         yes         yes           yes

 

66. In a normal cost system, a debit to Work in Process Inventory would not be made for
    A.actual overhead.
    B. applied overhead.
    C. actual direct material.
    D. actual direct labor.

 

67. After the completion of production, standard and actual costs are compared to determine the ____ of the production process.
    A.effectiveness
    B. complexity
    C. homogeneity
    D. efficiency

 

68. A company producing which of the following would be most likely to use a price standard for material?
    A.furniture
    B. NFL-logo jackets
    C. custom-made picture frames
    D. none of the above

 

69. Knowing specific job costs enables managers to effectively perform which of the following tasks?
    A.estimate costs of future jobs.
    B. establish realistic job selling prices.
    C. evaluate job performance.
    D. all answers are correct.

 

70. A job-order costing system is likely to provide better

(1)	inventory valuations for financial statements.
(2)	control over inventory.
(3)	information about ability to accept additional production work.

 

(1)	(2)	(3)

1. yes      no        no
   B. no       yes       yes
   C. no       no        no
   D. yes      yes       yes

 

71. The trend in job-order costing is to
    A.eliminate the data entry function for the accounting system.
    B. automate the data collection and data entry functions.
    C. use accounting software to change the focal point of the job-order system.
    D. create an Intranet to share information between competitors.

 

72. job-order costing and process costing have which of the following characteristics?

Job-order Costing	Process Costing

1. homogeneous products      heterogeneous products
   and large quantities      and small quantities
   B. homogeneous products      heterogeneous products
   and small quantities      and large quantities
   C. heterogeneous products    homogeneous products
   and large quantities      and large quantities
   D. heterogeneous products    homogeneous products
   and small quantities      and large quantities

 

73. The source document that records the amount of raw material that has been requested by production is the
    A.job-order cost sheet.
    B. bill of lading.
    C. interoffice memo.
    D. material requisition.

 

74. A material requisition form should show all of the following information except
    A. job number.
    B. quantity required.
    C. unit cost.
    D. purchase order number.

 

75. Which of the following statements about job-order cost sheets is true?
    A.All job-order cost sheets serve as the general ledger control account for Work in Process Inventory.
    B. Job-order cost sheets can serve as subsidiary ledger information for both Work in Process Inventory and Finished Goods Inventory.
    C. If material requisition forms are used, job-order cost sheets do not need to be maintained.
    D. Job-order cost sheets show costs for direct material and direct labor, but not for manufacturing overhead since it is an applied amount.

 

76. The primary accounting document in a job-order costing system is a(n)
    A.bill of materials.
    B. job-order cost sheet.
    C. employee time sheet.
    D. materials requisition.

 

77. The cost sheets for incomplete jobs at the end of the period comprise the subsidiary ledger for
    A.Finished Goods Inventory.
    B. Raw Material Inventory.
    C. Work in Process Inventory.
    D. Supplies Inventory.

 

78. The ____ provides management with a historical summation of total costs for a given product.
    A.job-order cost sheet
    B. employee time sheet
    C. material requisition form
    D. bill of lading

 

79. The source document that records the amount of time an employee worked on a job and his/her pay rate is the
    A.job-order cost sheet.
    B. employee time sheet.
    C. interoffice memo.
    D. labor requisition form.

 

80. A credit to Work in Process Inventory represents
    A.work still in process.
    B. raw material put into production.
    C. the application of overhead to production.
    D. the transfer of completed items to Finished Goods Inventory.

 

81. In a job-order costing system, the dollar amount of the entry that debits Finished Goods Inventory and credits Work in Process Inventory is the sum of the costs charged to all jobs
    A.started in process during the period.
    B. in process during the period.
    C. completed and sold during the period.
    D. completed during the period.

 

82. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals
    A.cost of goods manufactured in the year.
    B. ending Work in Process Inventory.
    C. total manufacturing costs to account for.
    D. cost of goods available for sale.

 

83. Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a company that employs a job-order costing system?
    A.Work in Process Inventory
    B. Raw Material Inventory
    C. Accounts Payable
    D. Supplies Inventory

 

84. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material Inventory. The explanation for this would be that
    A.indirect material was placed into production.
    B. raw material was purchased on account.
    C. direct material was placed into production.
    D. direct labor was used for production.

 

85. Which of the following journal entries records the accrual of the cost of indirect labor used in production?
    A.debit Work in Process Inventory, credit Wages Payable
    B. debit Work in Process Inventory, credit Manufacturing Overhead
    C. debit Manufacturing Overhead, credit Work in Process Inventory
    D. debit Manufacturing Overhead, credit Wages Payable

 

86. The logical explanation for an entry that includes a debit to Manufacturing Overhead control and a credit to Prepaid Insurance is
    A.the insurance company sent the company a refund of its policy premium.
    B. overhead for insurance was applied to production.
    C. insurance for production equipment expired.
    D. insurance was paid on production equipment.

 

87. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead control and a debit to
    A.Finished Goods Inventory.
    B. Work in Process Inventory.
    C. Cost of Goods Sold.
    D. Raw Material Inventory.

 

88. In a job-order costing system, the use of indirect material would usually be reflected in the general ledger as an increase in
    A.stores control.
    B. work in process control.
    C. manufacturing overhead applied.
    D. manufacturing overhead control.

 

89. A credit to the Manufacturing Overhead control account represents the
    A.actual cost of overhead incurred.
    B. actual cost of overhead paid this period.
    C. amount of overhead applied to production.
    D. amount of indirect material and labor used during the period.

 

90. The journal entry to record the incurrence and payment of overhead costs for factory insurance requires a debit to
    A.Cash and a credit to Manufacturing Overhead.
    B. Manufacturing Overhead and a credit to Accounts Payable.
    C. Manufacturing Overhead and a credit to Cash.
    D. Work in Process Inventory and a credit to Cash.

 

91. Overhead is applied to jobs in a job-order costing system
    A.at the end of a period.
    B. as jobs are completed.
    C. at the end of a period or as jobs are completed, whichever is earlier.
    D. at the end of a period or as jobs are completed, whichever is later.

 

92. In a job-order costing system, the subsidiary ledger for Finished Goods Inventory is comprised of
    A.all job-order cost sheets.
    B. job-order cost sheets for all uncompleted jobs.
    C. job-order cost sheets for all completed jobs not yet sold.
    D. job-order cost sheets for all ordered, uncompleted, and completed jobs.

 

93. Underapplied overhead resulting from unanticipated and immaterial price increases for overhead items should be written off by
    A.decreasing Cost of Goods Sold.
    B. increasing Cost of Goods Sold.
    C. decreasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.
    D. increasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.

 

94. Overapplied overhead would result if
    A.the plant were operated at less than normal capacity.
    B. overhead costs incurred were less than costs charged to production.
    C. overhead costs incurred were unreasonably large in relation to units produced.
    D. overhead costs incurred were greater than costs charged to production.

 

95. Debits to Cost of Goods Sold typically represent the
    A.transfer of completed items to Finished Goods Inventory.
    B. costs of items sold.
    C. selling price of items sold.
    D. the cost of goods manufactured.

 

96. In a perpetual inventory system, a transaction that requires two journal entries (or one compound entry) is needed when
    A.raw materials are purchased on account.
    B. goods are sold for either cash or on account.
    C. goods are finished and transferred out of Work in Process Inventory.
    D. overhead is applied to Work in Process Inventory.

 

97. Which of the following are drawbacks to applying actual overhead to production?
    A.A delay occurs in assigning costs to jobs or products.
    B. Fluctuations in quantities produced during a period could cause varying per-unit charges for fixed overhead.
    C. Seasonality of overhead costs may cause distortions in job or product costs.
    D. all answers are correct.

 

98. In job-order costing, payroll taxes paid by the employer for factory employees are commonly accounted for as
    A.direct labor cost.
    B. manufacturing overhead cost.
    C. indirect labor cost.
    D. administrative cost.

 

99. Production overhead does not include the costs of
    A.factory depreciation and supplies.
    B. factory employees’ cafeteria departments.
    C. production line labor.
    D. the maintenance department for the factory.

 

100. A company producing which of the following would be most likely to use a time standard for labor?
     A.mattresses
     B. custom-made picture frames
     C. floral arrangements
     D. stained-glass windows

 

101. As data input functions are automated, Intranet data becomes more
     A.complicated to access.
     B. manufacturing, but not accounting, oriented.
     C. real-time accessible.
     D. expensive to install, but easier to use.

 

102. The use of standard material or labor costs in job-order costing
     A.is similar to the use of predetermined overhead rates in a normal costing system.
     B. will keep actual costs of jobs from fluctuating due to changes in component costs.
     C. is appropriate for any company making units to customer specification.
     D. all answers are correct.

 

103. Which of the following statements is false?
     A.While the use of standard costing is acceptable for job-order costing systems, actual cost records should still be maintained.
     B. It is normally more time-consuming for a company to use standard costs in a job-order costing system.
     C. Standards can be used in a job-order costing system, if the company usually produces items that are similar in nature.
     D. Standard costs may be used for material, labor, or both material and labor in a job-order costing environment.

 

104. A service organization would be most likely to use a predetermined overhead rate based on
     A.machine hours.
     B. standard material cost.
     C. direct labor.
     D. number of complaints.

 

105. In a production environment that manufactures goods to customer specifications, a job-order costing system
     A.can be used only if standard costs are used for materials and labor.
     B. will provide reasonable product cost information only when all jobs utilize approximately the same quantities of material and labor.
     C. may be maintained using either actual or predetermined overhead rates.
     D. emphasizes that large customers create the most costs even though they also provide the most revenues.

 

106. A unit that is rejected at a quality control inspection point, but that can be reworked and sold, is referred to as a
     A.spoiled unit.
     B. scrap unit.
     C. abnormal unit.
     D. defective unit.

 

107. The cost of abnormal losses (net of disposal costs) should be written off as

Product cost	Period cost

1. yes         no
   B. yes         yes
   C. no          yes
   D. no          no

 

108. In a job-order costing system, the net cost of normal spoilage is equal to
     A.estimated disposal value plus the cost of spoiled work.
     B. the cost of spoiled work minus estimated spoilage cost.
     C. the units of spoiled work times the predetermined overhead rate.
     D. the cost of spoiled work minus the estimated disposal value.

 

109. If abnormal spoilage occurs in a job-order costing system, has a material dollar value, and is related to a specific job, the recovery value of the spoiled goods should be

debited to	credited to

1. a scrap inventory account      the specific job in process
   B. the specific job in process    overhead
   C. a loss account                 the specific job in process
   D. factory overhead               sales

 

110. In a job-order costing system, the net cost of normal spoilage is equal to
     A.estimated disposal value plus the cost of spoiled work.
     B. the cost of spoiled work minus estimated spoilage cost.
     C. the units of spoiled work times the predetermined overhead rate.
     D. the cost of spoiled work minus the estimated disposal value.

 

111. Shrinkage should be treated as
     A.defective units.
     B. spoiled units.
     C. miscellaneous expense.
     D. a reduction of overhead.

 

112. Spoiled units are
     A.units that cannot be economically reworked to bring them up to standard.
     B. units that can be economically reworked to bring them up to standard.
     C. the same as defective units.
     D. considered abnormal losses.

 

113. Abnormal spoilage is
     A.spoilage that is forecasted or planned.
     B. spoilage that is in excess of planned.
     C. accounted for as a product cost.
     D. debited to Cost of Goods Sold.

 

114. Normal spoilage is defined as unacceptable production that
     A.arises because of a special job or process.
     B. occurs in on-going operations.
     C. is caused specifically by human error.
     D. is in excess of that which is expected.

 

115. Which of the following would fall within the range of tolerance for a production cycle?

Abnormal loss	Normal loss

1. yes           yes
   B. yes           no
   C. no            no
   D. no            yes

 

116. The net cost of normal spoilage in a job-order costing system in which spoilage is common to all jobs should be
     A.assigned directly to the jobs that caused the spoilage.
     B. charged to manufacturing overhead during the period of the spoilage.
     C. charged to a loss account during the period of the spoilage.
     D. allocated only to jobs that are completed during the period.

 

117. Charleston Company uses a job-order costing system. During April, the following costs appeared in the Work in Process Inventory account:

Beginning balance	$ 24,000
Direct material used	70,000
Direct labor incurred	60,000
Applied overhead	48,000
Cost of goods manufactured	185,000

Charleston Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of April which contained $5,600 of overhead. What amount of direct material was included in this job?
A. $4,400
B. $4,480
C. $6,920
D. $8,000

 

118. Jacksonville Company uses a job-order costing system. During May, the following costs appeared in the Work in Process Inventory account:

Beginning balance	$ 30,000
Direct material used	90,000
Direct labor incurred	75,000
Applied overhead	52,500
Cost of goods manufactured	225,000

Jacksonville Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of May which contained $6,300 of overhead. What amount of direct material was included in this job?
A. $ 7,200
B. $ 9,000
C. $11,160
D. $11,790

 

119. Wyman Company is a graphic design shop that produces jobs to customer specifications. During January, Job #3051 was worked on and the following information is available:

Direct material used	$2,500
Direct labor hours worked	15
Machine time used	6
Direct labor rate per hour	$7
Overhead application rate per hour of machine time	$18

What was the total cost of Job #3051 for January?
A. $2,713
B. $2,770
C. $2,812
D. $3,052

 

120. Chapman Company
     
     Chapman Company uses a job-order costing system. At the beginning of March, the company had two jobs in process with the following costs:

	Direct Material	Direct Labor	Overhead
Job #456	$3,400	$510	$255
Job #461	1,100	289	?

Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

Refer to Chapman Company. What is the overhead application rate per direct labor hour?
A. $  0.50
B. $  2.00
C. $  4.25
D. $30.00

 

121. Chapman Company
     
     Chapman Company uses a job-order costing system. At the beginning of March, the company had two jobs in process with the following costs:

	Direct Material	Direct Labor	Overhead
Job #456	$3,400	$510	$255
Job #461	1,100	289	?

Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

Refer to Chapman Company. How much overhead was included in the cost of Job #461 at the beginning of March?
A. $   144.50
B. $   153.00
C. $2,200.00
D. $2,456.50

 

122. Chapman Company
     
     Chapman Company uses a job-order costing system. At the beginning of March, the company had two jobs in process with the following costs:

	Direct Material	Direct Labor	Overhead
Job #456	$3,400	$510	$255
Job #461	1,100	289	?

Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

Refer to Chapman Company. During March, Chapman’ employees worked on Job #649. At the end of the month, $714 of overhead had been applied to this job. Total Work in Process at the end of the month was $6,800 and all other jobs had a total cost of $3,981. What amount of direct material is included in Job #649?
A. $   677.00
B. $1,391.00
C. $2,142.00
D. $4,658.00

 

123. Mayflower Corporation manufactures products on a job-order basis. The job cost sheet for Job #656 shows the following for September:

Direct material	$5,000
Direct labor (100 hours @ $7.25)	$725
Machine hours incurred	40
Predetermined overhead rate per machine hour	$26

At the end of September, what total cost appears on the job cost sheet for Job #656?
A. $5,725
B. $5,765
C. $6,765
D. $8,325

 

124. Trinity Corporation manufactures products on a job-order basis. The job cost sheet for Job #902 shows the following for June:

Direct material	$6,000
Direct labor (110 hours @ $8.50)	$935
Machine hours incurred	50
Predetermined overhead rate per machine hour	$28

At the end of June, what total cost appears on the job cost sheet for Job #902?
A. $ 6,935
B. $ 6,985
C. $ 8,335
D. $10,015

 

125. Products at Conroy Manufacturing are sent through two production departments: Fabricating and Finishing. Overhead is applied to products in the Fabricating Department based on 150 percent of direct labor cost and $18 per machine hour in Finishing. The following information is available about Job #297:

	Fabricating	Finishing
Direct material	$1,590	$580
Direct labor cost	?	48
Direct labor hours	22	6
Machine hours	5	15
Overhead applied	429	?

What is the total cost of Job #297?
A. $2,647
B. $3,005
C. $3,093
D. $3,203

 

126. Tuscaloosa Company applies overhead to jobs at the rate of 40 percent of direct labor cost. Direct material of $1,250 and direct labor of $1,400 were expended on Job #145 during September. On August 31, the balance of Job #145 was $2,800. The balance on September 30 is:
     A.$3,210.
     B. $4,760.
     C. $5,450.
     D. $6,010.

 

127. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. What is the prime cost of Job #6?
A. $42,250
B. $57,250
C. $73,250
D. $82,750

 

128. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. What is the total amount of overhead applied to Job #9?
A. $18,250
B. $26,350
C. $30,000
D. $31,620

 

129. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. What is the total amount of actual overhead?
A. $36,000
B. $69,000
C. $93,000
D. $99,960

 

130. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. How much overhead is applied to Work in Process?
A. $  69,000
B. $  99,960
C. $132,960
D. $144,000

 

131. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. If Job #13 is completed and transferred, what is the balance in Work in Process Inventory at the end of the period if overhead is applied at the end of the period?
A. $  96,700
B. $  99,020
C. $139,540
D. $170,720

 

132. Moore Company.
     
     Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used	$120,000
Direct labor per hour	$8.50
Overhead applied based on direct labor cost	120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

Refer to Moore Company. Assume the balance in Work in Process Inventory was $18,500 on November 1 and $25,297 on November 30. The balance on November 30 represents one job that contains direct material of $11,250. How many direct labor hours have been worked on this job (rounded to the nearest hour)?
A.   751
B. 1,324
C. 1,653
D. 2,976

 

133. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. What is the prime cost of Job #8?
A. $59,100
B. $82,850
C. $86,475
D. $93,680

 

134. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. What is the total amount of overhead applied to Job #12?
A. $23,750
B. $29,450
C. $39,000
D. $39,188

 

135. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. What is the total amount of actual overhead?
A. $ 45,000
B. $ 95,000
C. $114,500
D. $119,938

 

136. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. How much overhead is applied to Work in Process?
A. $   95,000
B. $ 119,938
C. $ 162,900
D. $ 164,938

 

137. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. If Job #15 is completed and transferred, what is the balance in Work in Process Inventory at the end of the period if overhead is applied at the end of the period?
A. $191,925
B. $201,888
C. $205,284
D. $208,908

 

138. Robertson Company.
     
     Robertson Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #8, #12, and #15.

Raw material used	$130,000
Direct labor per hour	$9.50
Overhead applied based on direct labor cost	125%

Direct material was requisitioned as follows for each job respectively: 25 percent, 30 percent, and 30 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000. Other actual overhead costs totaled $50,000.

Refer to Robertson Company. Assume the balance in Work in Process Inventory was $21,500 on April 1 and $29,520 on April 30. The balance on April 30 represents one job that contains direct material of $12,375. How many direct labor hours have been worked on this job (rounded to the nearest hour)?
A.   802
B. 1,381
C. 1,805
D. 3,107

 

139. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company. What amount of overhead is applied to Job #323?
A. $4,800
B. $5,550
C. $6,300
D. $7,500

 

140. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company. What amount of overhead is applied to Job #325?
A. $8,325
B. $7,500
C. $7,000
D. $5,000

 

141. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company. What is the amount of direct materials for Job #325?
A. $1,950
B. $1,500
C. $3,700
D. $7,500

 

142. Romano Company
     
     The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

Refer to Romano Company Assume that Jobs #323 and #401 are incomplete at the end of September. What is the balance in Work in Process Inventory at that time?
A. $18,920
B. $22,620
C. $28,920
D. $30,120

 

143. Charleston Company
     
     Charleston Company has two departments (Processing and Packaging) and uses a job-order costing system. Charleston applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for July:

	Processing	Packaging
Machine hours	2,500	1,000
Direct labor cost	$44,500	$23,000
Applied overhead	$55,000	$51,750

Refer to Charleston Company. What is the overhead application rate per machine hour for Processing?
A. $  0.81
B. $  1.24
C. $17.80
D. $22.00

 

144. Charleston Company
     
     Charleston Company has two departments (Processing and Packaging) and uses a job-order costing system. Charleston applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for July:

	Processing	Packaging
Machine hours	2,500	1,000
Direct labor cost	$44,500	$23,000
Applied overhead	$55,000	$51,750

Refer to Charleston Company What is the overhead application rate for Packaging?
A. $ 0.44
B. $ 2.25
C. $23.00
D. $51.75

 

145. Peoria Company
     
     Peoria Company has two departments (Processing and Packaging) and uses a job-order costing system. Peoria applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for August:

	Processing	Packaging
Machine hours	3,600	1,500
Direct labor cost	$47,600	$24,000
Applied overhead	$60,500	$54,750

Refer to Peoria Company. What is the overhead application rate per machine hour for Processing?
A. $  0.79
B. $  1.27
C. $13.22
D. $16.81

 

146. Peoria Company
     
     Peoria Company has two departments (Processing and Packaging) and uses a job-order costing system. Peoria applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for August:

	Processing	Packaging
Machine hours	3,600	1,500
Direct labor cost	$47,600	$24,000
Applied overhead	$60,500	$54,750

Refer to Peoria Company What is the overhead application rate for Packaging?
A. $  0.44
B. $  2.28
C. $16.00
D. $36.50

 

147. Williams Company
     
     Williams Company has a job-order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of $12,000 and overhead of $7,200. Job #64 has direct material of $2,000 and direct labor of $9,000.

     Refer to Williams Company. What amount of direct labor cost has been charged to Job #63?
     A. $  6,000
     B. $  7,200
     C. $  8,640
     D. $14,400

 

148. Williams Company
     
     Williams Company has a job-order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of $12,000 and overhead of $7,200. Job #64 has direct material of $2,000 and direct labor of $9,000.

     Refer to Williams Company. What is the total cost of Job #64?
     A. $10,800
     B. $11,000
     C. $21,800
     D. $30,200

 

149. Levine Company
     
     Levine Company has a job-order costing system and an overhead application rate of 125 percent of direct labor cost. Job #123 is charged with direct material of $18,000 and overhead of $9,000. Job #124 has direct material of $4,500 and direct labor of $12,000.

     Refer to Levine Company. What amount of direct labor cost has been charged to Job #123?
     A. $  7,200
     B. $  9,000
     C. $11,250
     D. $18,000

 

150. Levine Company
     
     Levine Company has a job-order costing system and an overhead application rate of 125 percent of direct labor cost. Job #123 is charged with direct material of $18,000 and overhead of $9,000. Job #124 has direct material of $4,500 and direct labor of $12,000.

     Refer to Levine Company. What is the total cost of Job #124?
     A. $15,000
     B. $16,500
     C. $31,500
     D. $43,500

 

151. Davis Company
     
     Davis Company  uses a job-order costing system. Assume that Job #504 is the only one in process. The following information is available:

Budgeted direct labor hours	65,000	Budgeted machine hours	9,000
Budgeted overhead	$350,000	Direct material	$110,500
Direct labor cost	$70,000

Refer to Davis Company. What is the overhead application rate if Davis uses a predetermined overhead application rate based on direct labor hours (rounded to the nearest whole dollar)?
A. $  0.20
B. $  5.00
C. $  5.38
D. $38.89

 

152. Davis Company
     
     Davis Company  uses a job-order costing system. Assume that Job #504 is the only one in process. The following information is available:

Budgeted direct labor hours	65,000	Budgeted machine hours	9,000
Budgeted overhead	$350,000	Direct material	$110,500
Direct labor cost	$70,000

Refer to Davis Company. What is the total cost of Job #504 assuming that overhead is applied at the rate of 135% of direct labor cost (rounded to the nearest whole dollar)?
A. $192,650
B. $268,250
C. $275,000
D. $329,675

 

153. Franklin Company
     
     Franklin Company  uses a job-order costing system. Assume that Job #309 is the only one in process. The following information is available:

Budgeted direct labor hours	72,000	Budgeted machine hours	11,000
Budgeted overhead	$400,000	Direct material	$122,750
Direct labor cost	$80,000

Refer to Franklin Company. What is the overhead application rate if Franklin uses a predetermined overhead application rate based on direct labor hours (rounded to the nearest whole dollar)?
A. $  0.20
B. $  5.00
C. $  5.56
D. $36.36

 

154. Franklin Company
     
     Franklin Company  uses a job-order costing system. Assume that Job #309 is the only one in process. The following information is available:

Budgeted direct labor hours	72,000	Budgeted machine hours	11,000
Budgeted overhead	$400,000	Direct material	$122,750
Direct labor cost	$80,000

Refer to Franklin Company. What is the total cost of Job #309 assuming that overhead is applied at the rate of 130% of direct labor cost (rounded to the nearest whole dollar)?
A. $194,800
B. $274,100
C. $306,750
D. $340,075

 

155. At the end of the last fiscal year, Sheraton Company had the following account balances:

Overapplied overhead	$  6,000
Cost of Goods Sold	$980,000
Work in Process Inventory	$ 38,000
Finished Goods Inventory	$ 82,000

If the most common treatment of assigning overapplied overhead were used, the final balance in Cost of Goods Sold is:
A. $974,000.
B. $974,660.
C. $985,340.
D. $986,000.

 

156. At the end of the last fiscal year, Drury Company had the following account balances:

Overapplied overhead	$  9,000
Cost of Goods Sold	$860,000
Work in Process Inventory	$ 36,000
Finished Goods Inventory	$ 74,000

If the most common treatment of assigning overapplied overhead were used, the final balance in Cost of Goods Sold is:
A. $851,000.
B. $852,021.
C. $867,979.
D. $869,000.

 

157. Sanchez Products has no Work in Process or Finished Goods inventories at the close of business on December 31 of the current year. The balances of Sanchez Products’ accounts as of December 31 are as follows:

Cost of goods sold–unadjusted	$2,040,000
Selling & administrative expenses	900,000
Sales	3,600,000
Manufacturing overhead control	700,000
Manufacturing overhead applied	648,000

Pretax income for the current year is:
A. $608,000.
B. $660,000.
C. $712,000.
D. undeterminable from the information given.

 

158. Sloane Products has no Work in Process or Finished Goods inventories at the close of business on December 31 of the current year. The balances of Sloane Products’ accounts as of December 31 are as follows:

Cost of goods sold–unadjusted	$2,520,000
Selling & administrative expenses	950,000
Sales	4,000,000
Manufacturing overhead control	800,000
Manufacturing overhead applied	754,000

Pretax income for the current year is:
A. $484,000
B. $530,000
C. $576,000
D. $680,000

 

159. Spears Manufacturing Company

     Spears Manufacturing Company produces beach chairs. Chair frames are all the same size, but can be made from plastic, wood, or aluminum. Regardless of frame choice, the same sailcloth is used for the seat on all chairs. Spears has set a standard for sailcloth of $9.90 per square yard and each chair requires 1 square yard of material. Spears produced 500 plastic chairs, 100 wooden chairs, and 250 aluminum chairs during June. The total cost for 1,000 square yards of sailcloth during the month was $10,000. At the end of the month, 50 square yards of sailcloth remained in inventory.

     Refer to Spears Manufacturing Company. The unfavorable material price variance for sailcloth purchases for the month was
     A. $  100.
     B. $  495.
     C. $1,090.
     D. $1,585.

 

160. Spears Manufacturing Company

     Spears Manufacturing Company produces beach chairs. Chair frames are all the same size, but can be made from plastic, wood, or aluminum. Regardless of frame choice, the same sailcloth is used for the seat on all chairs. Spears has set a standard for sailcloth of $9.90 per square yard and each chair requires 1 square yard of material. Spears produced 500 plastic chairs, 100 wooden chairs, and 250 aluminum chairs during June. The total cost for 1,000 square yards of sailcloth during the month was $10,000. At the end of the month, 50 square yards of sailcloth remained in inventory.

     Refer to Spears Manufacturing Company. Assuming that there was no sailcloth in inventory at the beginning of June, the unfavorable material quantity variance for the month was
     A. $  495.
     B. $  500.
     C. $  990.
     D. $1,000.

 

161. Spears Manufacturing Company

     Spears Manufacturing Company produces beach chairs. Chair frames are all the same size, but can be made from plastic, wood, or aluminum. Regardless of frame choice, the same sailcloth is used for the seat on all chairs. Spears has set a standard for sailcloth of $9.90 per square yard and each chair requires 1 square yard of material. Spears produced 500 plastic chairs, 100 wooden chairs, and 250 aluminum chairs during June. The total cost for 1,000 square yards of sailcloth during the month was $10,000. At the end of the month, 50 square yards of sailcloth remained in inventory.

     Refer to Spears Manufacturing Company.  Spears could set a standard cost for which of the following?

Frame cost	Predetermined OH rate	Labor rate

1. yes          yes         yes
   B. no           no          no
   C. yes          no          no
   D. no           yes         yes

 

162. Compare and contrast job-order and process costing systems.

Job-order costing is characterized by the production of small quantities of heterogeneous (distinct or unique) items. Items are produced according to customer specifications and, at a minimum, direct material and direct labor costs can be traced to specific jobs. Process costing is characterized by the production of large quantities of homogeneous (alike or similar in nature) items. Specific items cannot be identified with specific costs during the production process.

 

163. Discuss actual costing, normal costing, and standard costing.

Actual costing, normal costing, or standard costing may be used in either a job-order costing or process costing system. Actual costing assigns the actual cost of all direct material, direct labor, and overhead to the units produced. Normal costing uses actual direct material and direct labor cost and a predetermined overhead application rate to cost products. Standard costing establishes “norms” for direct material and direct labor quantities and/or costs and uses a predetermined (standard) overhead rate for the application of overhead to determine product cost.

 

164. What is a “job” as defined in a job-order costing system?

A job is a single unit or a group of like items that is produced to customer specifications. A job is separately identifiable from other jobs. Each job is treated as a cost object, and costs (typically actual direct material, actual direct labor, and overhead applied using a predetermined rate) are attached to each job as it flows through the production process.

 

165. What information should be contained in a subsidiary ledger for Work in Process Inventory in a job-order costing system?

The Work in Process Inventory subsidiary ledger should contain information on all incomplete jobs. This information will include the amount of direct material and direct labor costs in production, as well as the amount of overhead applied to each job. The subsidiary ledger for Work in Process Inventory is composed of all job cost sheets for uncompleted jobs and substantiates the balance in the general ledger Work in Process Inventory control account.

 

166. Discuss the basic forms used in a job-order costing system.

The forms used in a job-order costing system include (1) a job-order cost sheet which records all the financial and significant production data (actual or standard, and possibly budgeted) relating to a particular job; (2) a material requisition form which records the costs and quantities of material that has been requisitioned for a particular job; and (3) an employee time sheet which records the jobs worked on by an employee and the amount of time spent on each job.

 

167. Can standard costing be used in job-order costing? If so, what conditions must exist? If not, explain why.

Yes. Firms that use job-order costing can also base their costs on standards. Each job must be fairly similar to each other job. Standards may be used for the prices of material and labor if the jobs use basically the same kind of material and labor. If jobs are homogeneous enough, standards can also be used for materials and labor quantities. Some companies may choose to only use price standards, others only quantity standards, and others may use both price and quantity standards.

 

168. Discuss the accounting treatment of spoilage in a job-order costing system.

If the spoilage is common to all jobs, is normal, and can be estimated, the net cost is applied to production using a predetermined overhead rate that was set by including the spoilage estimate in estimated overhead. If spoilage pertains to a particular job and is normal, the disposal value of the spoiled goods should be removed from that particular job. If the spoilage is abnormal, the net cost should be charged to a loss account and credited to the particular Work in Process job that created the spoilage.

 

169. Prepare the necessary journal entries from the following information for Alltizer Company, which uses a perpetual inventory system.

a.	Purchased raw material on account, $56,700.
b.	Requisitioned raw material for production as follows: direct material-80 percent of purchases; indirect material-15 percent of purchases.
c.	Direct labor wages of $33,100 are accrued as are indirect labor wages of $12,500.
d.	Overhead incurred and paid for is $66,900.
e.	Overhead is applied to production based on 110 percent of direct labor cost.
f.	Goods costing $97,600 were completed during the period.
g.	Goods costing $51,320 were sold on account for $77,600.

 

 

a.	Raw Material Inventory	56,700
	Accounts Payable		56,700
b.	Work in Process Inventory	45,360
	Manufacturing Overhead	8,505
	Raw Material Inventory		53,865
c.	Work in Process Inventory	33,100
	Manufacturing Overhead	12,500
	Wages Payable		45,600
d.	Manufacturing Overhead	66,900
	Cash		66,900
e.	Work in Process Inventory	36,410
	Manufacturing Overhead		36,410
f.	Finished Goods Inventory	97,600
	Work in Process Inventory		97,600
g.	Cost of Goods Sold	51,320
	Finished Goods Inventory		51,320
	Accounts Receivable	77,600
	Sales		77,600

 

170. Prepare the necessary journal entries from the following information for Parrish Company, which uses a perpetual inventory system.

a.	Purchased raw material on account, $61,200.
b.	Requisitioned raw material for production as follows: direct material-75 percent of purchases; indirect material-20 percent of purchases.
c.	Direct labor wages of $35,500 are accrued as are indirect labor wages of $14,100.
d.	Overhead incurred and paid for is $68,100.
e.	Overhead is applied to production based on 125 percent of direct labor cost.
f.	Goods costing $99,500 were completed during the period.
g.	Goods costing $53,400 were sold on account for $81,200.

 

 

a.	Raw Material Inventory	61,200
	Accounts Payable		61,200
b.	Work in Process Inventory	45,900
	Manufacturing Overhead	12,240
	Raw Material Inventory		58,140
c.	Work in Process Inventory	35,500
	Manufacturing Overhead	14,100
	Wages Payable		49,600
d.	Manufacturing Overhead	68,100
	Cash		68,100
e.	Work in Process Inventory	44,375
	Manufacturing Overhead		44,375
f.	Finished Goods Inventory	99,500
	Work in Process Inventory		99,500
g.	Cost of Goods Sold	53,400
	Finished Goods Inventory		53,400
	Accounts Receivable	81,200
	Sales		81,200

 

171. Perry Company employs a job-order costing system. Only three jobs-Job #205, Job #206, and Job #207-were worked on during January and February. Job #205 was completed February 10; the other two jobs were still in production on February 28, the end of the company’s operating year. Job cost sheets on the three jobs follow:

	Job Cost Sheet
	Job #205	Job #206	Job #207
January costs incurred:
Direct material	$16,500	$ 9,300	$    —
Direct labor	13,000	7,000	—
Manufacturing overhead	20,800	11,200	—
February costs incurred:
Direct materials	—	8,200	21,300
Direct labor	4,000	6,000	10,000
Manufacturing overhead	?	?	?

The following additional information is available:

a.	Manufacturing overhead is assigned to jobs on the basis of direct labor cost.

 

b.	Balances in the inventory accounts at January 31 were as follows:

 

Raw Material	$40,000
Work in Process	?
Finished Goods	85,000

Required:

a.	Prepare T-accounts for Raw Material, Work in Process Inventory, Finished Goods Inventory, and Manufacturing Overhead Control. Enter the January 31 inventory balances given previously; in the case of Work in Process Inventory, compute the January 31 balance and enter it into the Work in Process Inventory T-account.

 

b.	Prepare journal entries for February as follows:

 

1.	Prepare an entry to record the issue of materials into production and post the entry to appropriate T-accounts. (In the case of direct material, it is not necessary to make a separate entry for each job.)  Indirect materials used during February totaled $4,000.
2.	Prepare an entry to record the incurrence of labor cost and post the entry to appropriate T-accounts. (In the case of direct labor, it is not necessary to make a separate entry for each job.)  Indirect labor cost totaled $8,000 for February.
3.	Prepare an entry to record the incurrence of $19,000 in various actual manufacturing overhead costs for February (credit Accounts Payable).

 

c.	What apparent predetermined overhead rate does the company use to assign overhead cost to jobs? Using this rate, prepare a journal entry to record the application of overhead cost to jobs for February (it is not necessary to make a separate entry for each job). Post this entry to appropriate T-accounts.

 

d.	As stated earlier, Job #205 was completed during February. Prepare a journal entry to show the transfer of this job off of the production line and into the finished good warehouse. Post the entry to appropriate T-accounts.

 

e.	Determine the balance at February 28 in the Work in Process inventory account. How much of this balance consists of the cost of Job #206? Job #207?

 

a.

Raw Materials Inventory		Work in Process Inventory
BB 40,000			BB 77,800
			29,500	60,700
	33,500		20,000
			32,000
			98,600

 

Finished Goods Inventory		Manufacturing Overhead Control
BB 85,000			4,000
60,700			8,000	32,000
			19,000

 

b.	1.	Work in Process Inventory	29,500
		Manufacturing Overhead Control	4,000
		Raw Materials Inventory		33,500
	2.	Work in Process Inventory	20,000
		Manufacturing Overhead Control	8,000
		Payroll		28,000
	3.	Manufacturing Overhead Control		19,000
		Accounts Payable		19,000

 

c.	160%/DL COST ´ $20,000 = $32,000
	Work in Process Inventory	32,000
	Manufacturing Overhead Control		32,000

 

d.	Finished Goods Inventory	60,700
	Work in Process Inventory		60,700

 

e.	WIP INV	98,600
	Job 206 = $51,300	Job 207 = $47,300

 

	JOB #205	JOB #206	JOB #207
Beg WIP	$50,300	$27,500	–
Direct Mat	0	8,200	$21,300
Direct Labor	4,000	6,000	10,000
Factory Overhead	6,400	9,600	16,000
	$60,700	$51,300	$47,300

 

172. The Robbins Company manufactures special purpose machines to order. On January 1, there were two jobs in process, #705 and #706. The following costs were applied to these jobs in the prior year:

	Job No.
	705	706
Direct material	$ 5,000	$ 8,000
Direct labor	4,000	3,000
Overhead	4,400	3,300
Total	$13,400	$14,300

During January, the following transactions took place:

*	Raw material costing $40,000 was purchased on account.
*	Jobs #707, #708, and #709 were started and the following costs were applied to them:

 

	JOB
	707	708	709
Direct materials	$3,000	$10,000	$7,000
Direct labor	5,000	6,000	4,000

 

*	Job #705 and Job #706 were completed after incurring additional direct labor costs of $2,000 and $4,000, respectively
*	Wages paid to production employees during January totaled $25,000.
*	Depreciation for the month of January totaled $10,000.
*	Utilities bills in the amount of $10,000 were paid for operations during December.
*	Utilities bills totaling $12,000 were received for January operations.
*	Supplies costing $2,000 were used.
*	Miscellaneous overhead expenses totaled $24,000 for January.

Actual overhead is applied to individual jobs at the end of each month using a rate based on actual direct labor costs.

Required:

a.	Determine the January overhead rate.

 

b.	Determine the cost of each job.

 

c.	Prepare a statement of cost of goods manufactured.

 

 

a.	MOH  $10,000 + $12,000 + $2,000 + $24,000 =	$48,000 = $2.2857/dl cost
		$21,000 dl cost
b.		JOB #705	JOB #706	JOB #707	JOB #708	JOB #709
	DM	–	–	$ 3,000	$10,000	$ 7,000	=	$  20,000
	DL	$ 2,000	$ 4,000	5,000	6,000	4,000	=	21,000
	MOH	4,571	9,143	11,429	13,714	9,143	=	48,000
	Beg WIP	13,400	14,300	–	–	–	=	27,700
		$19,971	$27,443	$19,429	$29,714	$20,143		$116,700
c.	Beg WIP	$27,700
	+ DM	20,000
	+ DL	21,000
	+ MOH	48,000
	– End WIP	(69,286)
	Cost of Goods Manufactured	$47,414

 

173. Kelley Corporation, began operations on October 1. It employs a job-order costing system. Overhead is charged at a normal rate of $2.50 per direct labor hour. The actual operations for the month of October are summarized as follows:

a.	Purchases of raw material, 25,000 pieces @ $1.20/piece.

 

b.	Material and labor costs charged to production:

 

Job No.	Units	Material	Direct labor cost	Direct labor hours
101	10,000	$4,000	$6,000	3,000
102	8,800	3,600	5,400	2,700
103	16,000	7,000	9,000	4,500
104	8,000	3,200	4,800	2,400
105	20,000	8,000	3,600	1,800

 

c.	Actual overhead costs incurred:

 

Variable	$18,500
Fixed	15,000

 

d.	Completed jobs: 101,  102,  103, and 104

 

e.	Sales-$105,000. All units produced on Jobs 101, 102, and 103 were sold.

Required: Compute the following balances on October 31:

a.	Material inventory

 

b.	Work in process inventory

 

c.	Finished goods inventory

 

d.	Cost of goods sold

 

e.	Under- or overapplied overhead

 

 

a.	$30,000 – ($4,000 + $3,600 + $7,000 + $3,200 + $8,000) = $4,200
b.	Job #105	$8,000 + $3,600 + (1,800 hr ´ $2.50)= $16,100
c.	Job #104	$3,200 + $4,800 + (2,400 hr ´ $2.50) =  14,000
d.	Job #	101	$4,000 + $6,000 + (3,000 hr ´ $2.50) =	$17,500
		102	$3,600 + $5,400 + (2,700 hr ´ $2.50) =	15,750
		103	$7,000 + $9,000 + (4,500 hr ´ $2.50) =	27,250
				$60,500
e.	Applied 14,400 ´ $2.50 =	$36,000
	Actual		33,500
	Overapplied		$ 2,500

 

174. Grant Company.
     
     Grant Company uses a job-order costing system and develops its predetermined overhead rate based on machine hours. The company has two jobs in process at the end of the cycle, Jobs #177 and #179.

Budgeted overhead	$100,300
Budgeted machine hours	85,000
Raw material	$ 63,000
Labor cost	$ 50,000

Refer to Grant Company. What amount of overhead is charged to Jobs #177 and #179? Machine hours are split between Jobs #177 and #179-65 percent and 35 percent, respectively. Actual machine hours equal budgeted machine hours.

OH Applied = MH Cost ´ POHR
Job #177:   85,000 MH ´ 65%= 55,250 ´ $1.18 = $65,195
Job #179:   85,000 MH ´ 35%= 29,750 ´ $1.18 = $35,105

 

175. Grant Company.
     
     Grant Company uses a job-order costing system and develops its predetermined overhead rate based on machine hours. The company has two jobs in process at the end of the cycle, Jobs #177 and #179.

Budgeted overhead	$100,300
Budgeted machine hours	85,000
Raw material	$ 63,000
Labor cost	$ 50,000

Refer to Grant Company.  Fifty-four percent of raw material belongs to Job 17 and 38 percent belongs to Job 179, and the balance is considered indirect material. What amount of raw material used was allocated to overhead as indirect material?

54% + 38% = 92%; this means that 8% is indirect or $5,040
(.08 ´ $63,000).

 

176. Grant Company.
     
     Grant Company uses a job-order costing system and develops its predetermined overhead rate based on machine hours. The company has two jobs in process at the end of the cycle, Jobs #177 and #179.

Budgeted overhead	$100,300
Budgeted machine hours	85,000
Raw material	$ 63,000
Labor cost	$ 50,000

Refer to Grant Company. Labor cost was split 25 percent and 70 percent, respectively, between Jobs #177 and #179 for direct labor. The remainder was indirect labor cost. What are the total costs of Jobs #177 and #179?

 

	Job #177	Job #179
DM	$ 34,020	$23,940
DL	12,500	35,000
MOH	65,195	35,105
	$111,715	$94,045

 

177. Dillman Company manufactures custom-built conveyor systems for factory and commercial operations. The cost accountant for Dillman Company is in the process of educating a new employee, Jerry Cole about the job-order costing system that Dillman Company uses. (The system is based on normal costs; overhead is applied based on direct labor cost and rounded to the next whole dollar.)  The following job-order cost records are available for July:

	Direct	Direct		Total
Job No.	Materials	Labor	Applied OH	Cost
667	$ 5,901	$1,730	$ 1,990	$ 9,621
669	18,312	1,810	2,082	22,204
670	406	500	575	1,481
671	51,405	9,500	10,925	71,830
672	9,615	550	633	10,798

To explain the missing job number, the cost accountant informed Jerry that Job #668 had been completed in June. The accountant also told Jerry that Job #667 was the only job in process at the beginning of July. At that time, the job had been assigned $4,300 for direct material and $900 for direct labor. At the end of July, Job #671 had not been completed; all other jobs were complete. The cost accountant asked Jerry several questions to determine whether he understood the job-order costing system.

Required: Help Jerry answer the following questions:

a.	What is the predetermined overhead rate used by Dillman Company?

 

b.	What was the total cost of beginning Work in Process inventory?

 

c.	What was total prime cost incurred for the month of July?

 

d.	What was cost of goods manufactured for July?

 

 

a.	Use any job started in July:
	Rate =   MOH	JOB $670	$575	= 115%/DL Cost
	DL COST		$500
b.	DM	$4,300
	DL	900
	FOH	1,035	($900 ´ 115%)
		$6,235
c.	Prime Cost =DM + DL
	DM = $85,639 – 4,300 = $81,339
	DL =  14,090 –   900 =  13,190
	$94,529
d.	COGM  =  $9,621 + 22,204 + 1,481 + 10,798 =  $44,104

 

178. Hodges Company uses a job-order costing system and has the following information for the first week of June:

1.	Direct labor and direct materials used:

 

Job No.	Direct Material	Direct Labor Hours
498	$1,500	116
506	960	16
507	415	18
508	345	42
509	652	24
511	308	10
512	835	30
Total	$5,015	256

 

2.	The direct labor wage rate is $4 per hour.

 

3.	The overhead rate is $5 per direct labor hour.

 

4.	Actual overhead costs for the week, $1,480.

 

5.	Jobs completed: Nos. 498, 506, and 509.

 

6.	The factory had no work in process at the beginning of the week.

Required:

a.	Prepare a summary that will show the total cost assigned to each job.

 

b.	Compute the amount of overhead over- or underapplied during the week.

 

c.	Calculate the cost of the work in process at the end of the week.

 

 

a.	Job No.	DM	DL	OH	Total
	498	$1,500	$  464	$  580	$2,544
	506	960	64	80	1,104
	507	415	72	90	577
	508	345	168	210	723
	509	652	96	120	868
	511	308	40	50	398
	512	835	120	150	1,105
		$5,015	$1,024	$1,280	$7,319
b.	Actual MOH		$1,480
	Applied MOH		1,280
	Underapplied		$  200
c.	JOB	507	$  577
		508	723
		511	398
		512	1,105
	Ending WIP		$2,803

 

179. You are asked to bring the following incomplete accounts of Parrish Printing Corporation up to date through January 31 of the current year. Consider the data that appear in the T-accounts as well as additional information given in items (a) through (i).

     Parrish’s job-order costing system has two direct cost categories (direct material and direct manufacturing labor) and one indirect cost pool (manufacturing overhead, which is allocated using direct manufacturing labor costs).

Materials Inventory Control		Wages Payable Control
12/31		1/31
Balance   15,000		Balance   3,000

 

		Manufacturing Department
Work in Process Inventory Control		Overhead Control
	January
	Charges  57,000

 

			Manufacturing Overhead Control

 

Finished Goods Inventory Control		Cost of Goods Sold
12/31
Balance    20,000

Additional Information:

a.	Manufacturing department overhead is allocated using a budgeted rate set every December. Management forecasts next year’s overhead and next year’s direct manufacturing labor costs. The budget for the current year is $400,000 of direct manufacturing labor and $600,000 of manufacturing overhead.
b.	The only job unfinished on January 31 is No. 419, on which direct manufacturing labor costs are $2,000 (125 direct manufacturing labor hours) and direct material costs are $8,000.
c.	Total material placed into production during January is $90,000.
d.	Cost of goods completed during January is $180,000.
e.	Material inventory as of January 31 is $20,000.
f.	Finished goods inventory as of January 31 is $15,000.
g.	All plant workers earn the same wage rate. Direct manufacturing labor hours for January total 2,500. Other labor and supervision totals $10,000.
h.	The gross plant payroll for January pay periods totals $52,000. Ignore withholdings. All personnel are paid on a weekly basis.
i.	All “actual” manufacturing department overhead incurred during January has already been posted.

Required:

a.	Material purchased during January
b.	Cost of Goods Sold during January
c.	Direct Manufacturing Labor Costs incurred during January
d.	Manufacturing Overhead Allocated during January
e.	Balance, Wages Payable Control, December 31, prior year
f.	Balance, Work in Process Inventory Control, January 31, current year
g.	Balance, Work in Process Inventory Control, December 31, prior year
h.	Balance, Finished Goods Inventory Control, January 31, current year
i.	Manufacturing Overhead underapplied or overapplied for January

 

 

a.	$15,000 + Purchases – $20,000 =  $90,000. Purchases  = $95,000
b.	$20,000 + $180,000 – $15,000 = $185,000

 

c.	DL = $2,000  = $16/HR ´ 2,500 HRS = $40,000
	125

 

d.	$600,000 = 150% DL cost ´ $40,000 = $60,000
	$400,000

 

e.	BEGIN + $50,000 – $52,000 = $3,000    BEGIN = $5,000

 

f.	$2,000 + ($2,000 ´ 150%) + $8,000 = $13,000

 

g.	BEGIN + $90,000 + $40,000 + $60,000 – $180,000 = $13,000    BEGIN = $3,000

 

h.	$20,000 + $180,000 – $185,000 = END = $15,000

 

i.	APPLIED	$60,000
	ACTUAL	57,000
		$  3,000  overapplied

 

180. Treasures Company manufactures picture frames of all sizes and shapes and uses a job-order costing system. There is always some spoilage in each production run. The following costs relate to the current run:

Estimated overhead (exclusive of spoilage)	$160,000
Spoilage (estimated)	$ 25,000
Sales value of spoiled frames	$ 11,500
Labor hours	100,000

The actual cost of a spoiled picture frame is $7.00. During the year 170 frames are considered spoiled. Each spoiled frame can be sold for $4. The spoilage is considered a part of all jobs.

Required:

a.	Labor hours are used to determine the predetermined overhead rate. What is the predetermined overhead rate per direct labor hour?
b.	Prepare the journal entry needed to record the spoilage.
c.	Prepare the journal entry if the spoilage relates only to Job #12 rather than being a part of all production runs.

 

 

a.	$160,000 + $25,000 – $11,500 = $173,500
	$173,500/100,000 = $1.735 per DLH
b.	Disposal Value of Spoiled Work	680
	Manufacturing Overhead	510
	Work in Process Inventory		1,190
c.	Disposal Value of Spoiled Work	680
	Work in Process Inventory-Job #12		680