Chapter 003, Systems Design: Job-Order Costing

| October 3, 2018

147. A number of companies in different industries are listed
below: Natural gas production company

Food caterer that supplies food for weddings and other special
events Elevator production and installation company
Coal mining company

Contract printer that produces posters, books, and pamphlets to
order Dairy farm

Required:

For each company, indicate whether the company is most likely to
use job-order costing or process costing.

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Chapter 003, Systems Design: Job-Order Costing

148. Whether a company uses
process costing or job-order costing depends on its industry. A number of
companies in different industries are listed below:

Brick manufacturer

Contract printer that produces posters, books, and pamphlets to
order Natural gas production company
Dairy farm
Coal mining company

Specialty coffee roaster (roasts small batches of specialty coffee
beans)

Required:

For each company, indicate whether the company is most likely to
use job-order costing or process costing.

149. Some companies use process costing and some use job-order
costing. Which method a company uses depends on its industry. A number of
companies in different industries are listed below:

Custom boat builder

Frozen cranberry juice processor
Concrete block manufacturer
Winery that produces a number of varietal wines

Aluminum refiner that makes aluminum ingots from bauxite ore

Required:

For each company, indicate whether the company is most likely to
use job-order costing or process costing.

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Chapter 003, Systems Design: Job-Order Costing

150. Granite Company uses a
job-order costing system. The company applies manufacturing overhead to jobs
using a predetermined overhead rate based on direct labor-hours. Last year,
manufacturing overhead and direct labor-hours were estimated at $80,000 and
16,000 hours respectively, for the year. In June, Job #315 was completed.
Materials costs on the job totaled $1,500 and labor costs totaled $2,400 at $6
per hour. At the end of the year, it was determined that the company worked
15,000 direct labor-hours for the year, and incurred $78,000 in actual
manufacturing overhead costs.

Required:

a. Determine the predetermined overhead rate for the year.

b. Determine the amount of overhead charged to jobs during the year.

c. Determine the amount of underapplied or overapplied overhead for
the year.

d.Assuming that 100 units were completed, determine the unit cost
that would appear on the job cost sheet for Job #315.

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Chapter 003, Systems Design: Job-Order Costing

151. Job 827 was recently
completed. The following data have been recorded on its job cost sheet:

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The company applies manufacturing overhead on the basis of
machine-hours. The predetermined overhead rate is $13 per machine-hour.

Required:

Compute the unit product cost that would appear on the job cost
sheet for this job.

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Chapter 003, Systems Design: Job-Order Costing

152. Job 484 was recently
completed. The following data have been recorded on its job cost sheet:

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The company applies manufacturing overhead on the basis of direct
labor-hours. The predetermined overhead rate is $24 per direct labor-hour.

Required:

Compute the unit product cost that would appear on the job cost
sheet for this job.

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Chapter 003, Systems Design: Job-Order Costing

153. Alake Company is a
manufacturing firm that uses job-order costing. At the beginning of the year,
the company’s inventory balances were as follows:

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The company applies overhead to jobs using a predetermined
overhead rate based on machine-hours. At the beginning of the year, the company
estimated that it would work 36,000 machine-hours and incur $216,000 in manufacturing
overhead cost. The following transactions were recorded for the year:

a. Raw materials were purchased, $443,000.

b. Raw materials were requisitioned for use in production, $450,000
($435,000 direct and $15,000 indirect).
c. The following employee costs were incurred: direct labor,
$229,000; indirect labor,
$54,000; and administrative salaries, $117,000.
d.Selling costs, $119,000.

e. Factory utility costs, $21,000.

f.Depreciation for the year was $121,000 of which $114,000 is
related to factory operations and $7,000 is related to selling, general, and
administrative activities.
g. Manufacturing overhead was applied to jobs. The actual level of
activity for the year was 38,000 machine-hours.
h. The cost of goods manufactured for the year was $910,000.

i. Sales for the year totaled $1,173,000 and the costs on the job
cost sheets of the goods that were sold totaled $895,000.
j. The balance in the Manufacturing Overhead account was closed out
to Cost of Goods Sold.

Required:

Prepare the appropriate
journal entry for each of the items above (a. through j.). You can assume that
all transactions with employees, customers, and suppliers were conducted in
cash.

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Chapter 003, Systems Design: Job-Order Costing

154. Babbel Company is a manufacturing firm that uses job-order
costing. The company’s inventory balances were as follows at the beginning and
end of the year:

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The company applies overhead to jobs using a predetermined
overhead rate based on machine-hours. At the beginning of the year, the company
estimated that it would work 38,000 machine-hours and incur $266,000 in
manufacturing overhead cost. The following transactions were recorded for the
year:

· Raw materials were purchased, $300,000.

· Raw materials were requisitioned for use in production, $297,000
$(281,000 direct and $16,000 indirect).

· The following employee costs were incurred: direct labor,
$389,000; indirect labor,
$62,000; and administrative salaries, $176,000.

· Selling costs, $160,000.

· Factory utility costs, $19,000.
· Depreciation for the year was $143,000 of which $137,000 is
related to factory operations and $6,000 is related to selling, general, and
administrative activities.

· Manufacturing overhead was applied to jobs. The actual level of
activity for the year was 34,000 machine-hours.

· Sales for the year totaled $1,283,000.

Required:

a. Prepare a schedule of cost of goods manufactured in good form.

b. Was the overhead underapplied or overapplied? By how much?

c. Prepare an income statement for the year in good form. The company
closes any underapplied or overapplied overhead to Cost of Goods Sold.

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Chapter 003, Systems Design: Job-Order Costing

155. The Allen Company uses
a job-order costing system. The following activity took place during the month
of March:

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Required:

Prepare journal entries to record the information above. Key your
entries by the letters a through i. Assume all purchases are made on account.

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