LO 4.1For each item listed, state whether a job order costing system or process costing system would be best.
- team uniforms
- beach chairs
- restaurant-specific pizza boxes
- sneakers customized with number and colors
LO 4.4York Company is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of direct labor. The cost to make Job 0325 is $70 in aluminum and two hours of labor at $20 per hour. During the month, York incurs $50 in indirect material cost, $150 in administrative labor, $300 in utilities, and $250 in depreciation expense.
- What is the predetermined overhead rate if direct labor hours are considered the cost driver?
- What is the cost of Job 0325?
- What is the overhead incurred during the month?
LO 4.4Pocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.
LO 4.5Job cost sheets show the following information:
What are the balances in the work in process inventory, finished goods inventory, and cost of goods sold for January, February, and March?
LO 4.5Complete the information in the cost computations shown here:
LO 4.5During the year, a company purchased raw materials of $77,321, and incurred direct labor costs of $125,900. Overhead is applied at the rate of 75% of the direct labor cost. These are the inventory balances:
Compute the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold.
LO 4.5Freeman Furnishings has summarized its data as shown:
Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hours.
LO 4.6Coop’s Stoops estimated its annual overhead to be $85,000 and based its predetermined overhead rate on 24,286 direct labor hours. At the end of the year, actual overhead was $90,000 and the total direct labor hours were 24,100. What is the entry to dispose of the overapplied or underapplied overhead?
LO 4.6Mountain Peaks applies overhead on the basis of machine hours and reports the following information:
- What is the predetermined overhead rate?
- How much overhead was applied during the year?
- Was overhead over- or underapplied, and by what amount?
- What is the journal entry to dispose of the over- or underapplied overhead?
LO 4.6The actual overhead for a company is $74,539. Overhead was based on 6,000 direct labor hours and was $2,539 underapplied for the year.
- What is the overhead application rate per direct labor hour?
- What is the journal entry to dispose of the underapplied overhead?
LO 4.6When setting its predetermined overhead application rate, Tasty Box Meals estimated its overhead would be $100,000 and would require 25,000 machine hours in the next year. At the end of the year, it found that actual overhead was $102,000 and required 26,000 machine hours.
- Determine the predetermined overhead rate.
- What is the overhead applied during the year?
- Prepare the journal entry to eliminate the underapplied or overapplied overhead.
LO 4.7The following data summarize the operations during the year. Prepare a journal entry for each transaction.
- Purchase of raw materials on account: $3,000
- Raw materials used by Job 1: $500
- Raw materials used as indirect materials: $100
- Direct labor for Job 1: $300
- Indirect labor incurred: $50
- Factory utilities incurred on account: $700
- Adjusting entry for factory depreciation: $250
- Manufacturing overhead applied as percent of direct labor: 200%
- Job 1 is transferred to finished goods
- Job 1 is sold: $3,000
- Manufacturing overhead is overapplied: $100
LO 4.7The following events occurred during March for Ajax Company. Prepare a journal entry for each transaction.
- Materials were purchased on account for $35,429.
- Materials were requisitioned to begin work on Job C15 in the amount of $25,259.
- Direct labor expense for Job C15 was $24,129.
- Actual overhead was incurred on account of $32,852.
- Factory overhead was charged to Job C15 at the rate of 200% of direct labor.
- Job C15 was transferred to finished goods at $97,646.
- Job C15 was sold on account for $401,000.
LO 4.8A movie production studio incurred the following costs related to its current movie:
- Purchased office supplies on account: $33,000
- Issued direct supplies: $22,512
- Issued indirect supplies: $7,535
- Time tickets showing direct labor: $32,503,230
- Time tickets showing indirect labor: $574,326
- Utilities expense on account: $957,323
- Overhead applied: 10% of direct labor cost
Create journal entries for the listed transactions.