LO 4.1For each item listed, state whether a job order costing system or process costing system would be best.
- television repair
- cell phone charge cords
- glassware with company logo
- dog food
- golf balls
- hotel signs to welcome guests
- highlighters and pens
LO 4.4Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense.
- What is the predetermined overhead rate if machine hours are considered the cost driver?
- What is the cost of Job 416?
- What is the overhead incurred during the month?
LO 4.4Event Forms expects $120,000 in overhead during the next year. It doesn’t know whether it should apply overhead on the basis of its anticipated direct labor hours of 6,000 or its expected machine hours of 5,000. What would be the product cost under each predetermined allocation rate if the last job incurred $3,500 in direct material cost, 55 direct labor hours, and 55 machine hours? Wages are paid at $17 per hour.
LO 4.5Summary information from a company’s job cost sheets shows the following information:
What are the balances in the work in process inventory, finished goods inventory, and cost of goods sold for April, May, and June?
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. Direct labor hours will be used as the activity base to allocate overhead:
Compute the cost of goods manufactured.
LO 4.6Queen Bee’s Honey, Inc., estimated its annual overhead to be $110,000 and based its predetermined overhead rate on 27,500 direct labor hours. At the end of the year, actual overhead was $106,000 and the total direct labor hours were 29,000. What is the entry to dispose of the overapplied or underapplied overhead?
LO 4.6Mountain Tops applies overhead on the basis of direct labor hours and reports the following information:
- What is the predetermined overhead rate?
- How much overhead was applied during the year?
- Was overhead overapplied or underapplied, and by what amount?
- What is the journal entry to dispose of the overapplied or underapplied overhead?
LO 4.6The actual overhead for a company is $73,175. Overhead was based on 4,500 machine hours and was $3,325 overapplied 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 Turtle estimated its overhead would be $75,000 and manufacturing would require 25,000 machine hours in the next year. At the end of the year, it found that actual overhead was $74,000 and manufacturing required 24,000 machine hours.
- Determine the predetermined overhead rate.
- What is the overhead applied during the year?
- Prepare the journal entry to eliminate the under- 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: $1,500
- Raw materials used by Job 1: $400
- Raw materials used as indirect materials: $50
- Direct labor for Job 1: $200
- Indirect labor incurred for Job 1: $30
- Factory utilities incurred on account: $500
- Adjusting entry for factory depreciation: $200
- Manufacturing overhead applied as percent of direct labor: 100%
- Job 1 is transferred to finished goods
- Job 1 is sold: $1,000
- Manufacturing overhead is underapplied: $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 $5,429.
- Materials were requisitioned to begin work on Job C15 in the amount of $2,500.
- Direct labor expense for Job C15 was $4,250.
- Actual overhead was incurred on account for $5,385.
- Factory overhead was charged to Job C15 at the rate of 200% direct labor.
- Job C15 was transferred to finished goods at $15,250.
- Job C15 was sold on account for $28,000.
LO 4.8A leather repair shop incurred the following expenses while repairing luggage for a major airline.
- Time cards showing direct labor: $750
- Time cards showing indirect labor: $100
- Purchased repair supplies on account: $1,500
- Issued indirect supplies: $350
- Utilities expense on account: $24,000
- Overhead applied: 100% of direct labor costs
Journalize the listed transactions.