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Exam 19: Job Order Costing

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Question 31

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Finished goods inventory is $190,000.If overhead applied to these goods is $72,000,and the overhead rate is 120% of direct labor,how much direct materials cost was incurred in producing the inventory?

A) $31,600.
B) $58,000.
C) $56,000.
D) $60,000.
E) $86,400.

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

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Question 32

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Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

A) True
B) False

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Question 33

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What is a cost accounting system? What are the two basic types of cost accounting systems?

Cost accounting systems used by manufacturing companies are based on the:

A job order cost accounting system would be appropriate for a manufacturer of automobile tires.

A __________ is calculated by relating total estimated factory overhead to an allocation factor such as total estimated direct labor cost,and is used to allocate factory overhead to specific jobs.

Under a job order cost accounting system,individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

Hancock Manufacturing allocates overhead to production on the basis of direct labor costs.At the beginning of the year,Hancock estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000.During the year Hancock incurred $418,000 in materials costs,$413,200 in overhead costs and $224,000 in direct labor costs.Compute the overhead application rate.

A type of production that yields customized products or services for each customer is called:

Service firms,unlike manufacturing firms,should only use actual costs when determining a selling price for their services.

If a company applies overhead to production with a predetermined rate,a credit balance in the Factory Overhead account at the end of the period means that:

At the current year-end,Hardly Company found that its overhead was underapplied by $2,500,and this amount was not deemed to be a material amount.Based on this information,Hardly should

Job order costing is applicable to manufacturing firms only and not service firms.

Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

A job order production system would be appropriate for a company that produces which one of the following items?

A system of accounting for production operations that uses a periodic inventory system is called a:

A company that uses a job order cost accounting system would make the following entry to record the flow of direct materials into production:

Estimated overhead and direct labor costs for the year were $112,500 and $125,000,respectively.During the year,actual overhead was $107,400 and actual direct labor cost was $120,000.The entry to close the over- or underapplied overhead at year-end,assuming an immaterial amount,would include:

The production activities for a customized product represent a(n) :