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Exam 17: Job Order Costing

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Question 101

Multiple Choice

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The entries to record cost and sale of a finished good on account is

A) debit Cost of Goods Sold, credit Finished Goods
B) debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales
C) debit Sales Expense, credit Finished Goods, credit Cash, credit Accounts Receivable
D) debit Work in Process, credit Finished Goods, debit Accounts Receivable, credit Sales

E) A) and B)
F) A) and C)

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Question 102

Multiple Choice

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The document authorizing the issuance of materials from the storeroom is a

A) materials requisition
B) purchase requisition
C) receiving report
D) purchase order

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

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Question 103

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Cavy Company estimates that total factory overhead costs will be $660,000 for the year. Direct labor hours are estimated to be 100,000. Determine a) the predetermined factory overhead rate; b) the amount of factory overhead applied to Job 345 if the amount of direct labor hours is 560 and Job 777 if the amount of direct labor hours is 800; and c) prepare the journal entry to apply factory overhead for April according to the predetermined overhead rate.

A law firm would use a job order cost system to accumulate all of the costs associated with a particular client engagement, such as lawyer time, copying charges, filing fees, and overhead.

Match each of the following phrases with the term a-e) that it most closely describes it. Each term will be used only once. -serves as the basis for recording direct labor on a job cost sheet

Depreciation expense on factory equipment is part of factory overhead cost.

Materials are transferred from the storeroom to the factory in response to materials requisitions.

The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has determined that the basis for applying factory overhead will be machine hours, which is estimated to be 40,000 hours. There are 4,780 machine hours for all of the jobs in the month of April. What is the amount that will be applied to all of the jobs for the month of April?

Period costs are classified as either

Cavy Company completed 26,000 units during the year at a cost of $2,139,800. The beginning finished goods inventory was 5,000 units valued at $405,000. Assuming a FIFO cost flow, determine the cost of goods sold for 20,000 units.

Interim financial statements for a manufacturing business would report over applied factory overhead as a deferred item on the balance sheet.

Match each of the following phrases with the term a-g) that it most closely describes. -a system that uses a different overhead rate for each activity

In a job order cost accounting system for a service business, materials costs are normally included as part of overhead.

A service organization will not use the job order costing method because it has no direct materials.

The following budget data are available for Sharp Company: $\begin{array} { l r } \text { Estimated direct labor hours } & 12,000 \\\text { Estimated direct labor doll ars } & \$ 90,000 \\\text { Estimated factory overhead costs } & \$ 179,000 \\\text { Actual direct lab or hours } & 11,500 \\\text { Actual direct labor dollars } & \$ 92,000 \\\text { Actual factory overhead costs } & \$ 180,000\end{array}$ If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is