Job Order Costing

The T-account showing the manufacturing overhead activity for Aliyah Corp. for 2018 is as follows

                                                Manufacturing overhead

Requirements

1. What is the actual manufacturing overhead?

Question: The T-account showing the manufacturing overhead activity for Aliyah Corp. for 2018is as follows:

                                         Manufacturing overhead

Requirements

2. What is the allocated manufacturing overhead?  

The T-account showing the manufacturing overhead activity for Aliyah Corp. for 2018 is as follows:

                                             Manufacturing overhead

Requirements

3. Is manufacturing overhead underallocated or overallocated? By how much?

Justice Company’s Manufacturing Overhead account is given below. Use this informationto prepare the journal entry to adjust for overallocated or underallocatedoverhead.

                                         Manufacturing overhead

For the following accounts, indicate what causes the account to increase and decrease. The first account is completed as an example.

Question: Using job order costing in a service company

Roth Accounting pays Jack Smith $90,000 per year.

Requirements

2. What direct labor cost would be assigned to Client 507 if Smith works 15 hours to prepare Client 507’s financial statements?

Question: Using job order costing in a service company

Roth Accounting pays Jack Smith $90,000 per year.

Requirements

1. What is the hourly cost to Roth Accounting of employing Smith? Assume a

30-hour week and a 50-week year.

Question: Using job order costing in a service company

Assume that Roth’s accountants are expected to work a total of 8,000 direct labor hours in 2018. Roth’s estimated total indirect costs are $96,000 and the allocation base used is direct labor hours.

Requirements

1. What is Roth’s predetermined overhead allocation rate?

Question: Using job order costing in a service company

Assume that Roth’s accountants are expected to work a total of 8,000 direct labor hours in 2018. Roth’s estimated total indirect costs are $96,000 and the allocation base used is direct labor hours.

Requirements

2. What indirect costs will be allocated to Client 507 if Jack Smith, an accountant at Roth Accounting, works 15 hours to prepare the financial statements?

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

a. Companies that produce small quantities of many different products.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

b. A company that pulverizes wood into pulp to manufacture cardboard.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

c. A company that manufactures thousands of identical files.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

d. Companies that produce large numbers of identical products.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

e. A computer repair service that makes service calls to homes.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

f. A company that assembles electronic parts and software to manufacture millions of portable media players.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

g. A textbook publisher that produces copies of a particular book in batches.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

h. A company that bottles milk into one-gallon containers.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

i. A company that makes large quantities of one type of tankless hot water heaters.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

j. A governmental agency that takes bids for specific items it utilizes where each item requires a separate bid.

Question: Match the following terms to their definitions.

a. A record used to assign direct labor cost to specific jobs.       1. Job

b. A document that requests the transfer of materials to             2. Job cost order

the production floor.

c. A document that shows the direct materials, direct labor,    3. Job order costing 

and manufacturing overhead costs for an individual job.

d. An accounting system that accumulates costs by process.     4. Labor time record

e. The production of a unique product or specialized service      5. Material requisition

f. Used by companies that manufacture unique products or        6. Process costing system

provide specialized services

Root Trailers’ job cost records yielded the following information:

Use the dates in the table to identify the status of each job. Compute the following

balances for Root:

a. Work-in-Process Inventory at July 31

Root Trailers’ job cost records yielded the following information:

Use the dates in the table to identify the status of each job. Compute the following

balances for Root:

b. Finished Goods Inventory at July 31

Root Trailers’ job cost records yielded the following information:

Use the dates in the table to identify the status of each job. Compute the following

balances for Root:

c. Cost of Goods Sold for July

Goldenrod Company makes artificial flowers and reports the following data for the month:

Journalize the entries relating to materials and labor.

Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:

At the end of 2018, the company had actually incurred:

Requirements

4. Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. Does your entry increase or decrease Cost of Goods Sold?

Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:

At the end of 2018, the company had actually incurred:

Requirements

3. Post the manufacturing overhead transactions to the Manufacturing Overhead T-account. Is manufacturing overhead underallocated or overallocated? By how much?

Selected cost data for Classic Print Co. are as follows:

Requirements

1. Compute the predetermined overhead allocation rate per direct labor dollar.

Selected cost data for Classic Print Co. are as follows:

Requirements

2. Prepare the journal entry to allocate overhead costs for the year.

Selected cost data for Classic Print Co. are as follows:

Requirements

3. Use a T-account to determine the amount of underallocated or overallocated

manufacturing overhead.

Selected cost data for Classic Print Co. are as follows:

Requirements

4. Prepare the journal entry to adjust for the under allocated or overallocated manufacturing overhead.

Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:

At the end of 2018, the company had actually incurred:

Requirements

1. Compute Young’s predetermined overhead allocation rate.

June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:

Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of \)37,000 and $48,000, respectively.

Requirements

2. Open a T-account for Work-in-Process Inventory. Post the journal entry made in Requirement 1. Compute the ending balance in the Work-in-Process Inventory account on June 30.

June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:

Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of

\)37,000 and \(48,000, respectively.

Requirements

3. Prepare the journal entry to record the sale on account of Job 143 for \)63,000.

Also, prepare the journal entry to record Cost of Goods Sold for Job 143.

June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:

Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of

\)37,000 and $48,000, respectively.

Requirements

2. Open a T-account for Work-in-Process Inventory. Post the journal entry made in Requirement 1. Compute the ending balance in the Work-in-Process Inventory

account on June 30.

The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Requirements

3. Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead.

 The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Requirements

2. Was manufacturing overhead overallocated or underallocated for the year, and by how much?

June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:

Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of

\)37,000 and $48,000, respectively.

Requirements

4. What is the gross profit on Job 143?

June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:

Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of

\)37,000 and $48,000, respectively.

Requirements

1. Prepare the journal entry for production completed in June.

The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Requirements

1. How many machine hours did Sporty Kayaks use in 2018?

Jordan Company has the following information for the year ended December 31, 2018. Use the information to prepare a schedule of cost of goods manufactured and an income statement. Assume no indirect materials are used and all amounts are shown in millions.

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

a. Incurred and paid Web site expenses, $2,000.

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

b. Incurred manufacturing wages of $15,000, 75% of which was direct labor and

25% of which was indirect labor.

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

c. Purchased raw materials on account, $24,000.

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

d. Used in production: direct materials, \(7,500; indirect materials, \)5,000.

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

e. Recorded manufacturing overhead: depreciation on plant, \(18,000; plant insurance (previously paid), \)1,500; plant property tax, $3,900 (credit Property Tax Payable).

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

f. Allocated manufacturing overhead to jobs, 200% of direct labor costs.

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

g. Completed production on jobs with costs of $40,000

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

h. Sold inventory on account, \(22,000; cost of goods sold, \)18,000.

Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.

i. Adjusted for overallocated or underallocated overhead.

Question: Analyze the following T-accounts, and describe each lettered transaction. Note that some transactions may be compound entries.

Raw material inventory

Work in process inventory

Finished goods inventory

Prepaid insurance

Account payable

Wages payable

Manufacturing overhead

Cost of goods sold