Question 1

At the beginning of the year Monroe Company estimates annual overhead costs to be $2400000 and that 300000 machine hours will be operated. Using machine hours as a base the amount of overhead applied during the year if actual machine hours for the year was 315000 hours is

Accepted Answer

The predetermined overhead rate is calculated as follows:

Predetermined overhead rate = Estimated annual overhead costs / Estimated machine hours 
= $2400000 / 300000 
= $8 per machine hour

The amount of overhead applied during the year is calculated as follows:

Amount of overhead applied = Predetermined overhead rate x Actual machine hours 
= $8 x 315000 
= $2520000

Therefore, the answer is D, $2520000.

Question 2

During 2017 Tanner Manufacturing expected Job No. 26 to cost $300000 of overhead $500000 of materials and $200000 in labor. Tanner applied overhead based on direct labor cost. Actual production required an overhead cost of $290000 $550000 in materials used and $220000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?

Accepted Answer

The answer of During 2017 Tanner Manufacturing expected Job No....

Question 3

Greer Company developed the following data for the current year: $\begin{array}{ll}
\text { Beginning work in process inventory } & \$ 136,000 \
\text { Direct materials used } & 208,000 \
\text { Actual overhead } & 176,000 \
\text { Overhead applied } & 184,000 \
\text { Cost of goods manufactured } & 900,000 \
\text { Total manufacturing costs } & 856,000
\end{array}$ How much is Greer Company's ending work in process inventory for the year?

Accepted Answer

The ending work in process inventory is equal to the total manufacturing costs minus the cost of goods manufactured. Therefore, the ending work in process inventory is $856,000 - $900,000 = $92,000.

Question 4

When determining costs of jobs how does a company account for indirect materials?

Accepted Answer

Indirect materials, such as lubricants, cleaning supplies or tools that are not easily traced to a specific end product, are accounted for as part of manufacturing overhead. Thus, when these materials are used, they are transferred out of raw materials inventory and into manufacturing overhead. This overhead cost is then allocated to the end product using a predetermined overhead rate.

Question 5

Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system?

Accepted Answer

Cost of goods sold is recognized when the finished products are sold and is not part of the accumulating manufacturing costs in a job order cost system. Raw materials, factory labor, and manufacturing overhead are all part of accumulating manufacturing costs.

Question 6

On the cost of goods manufactured schedule the cost of goods manufactured agrees with the

Accepted Answer

The cost of goods manufactured (COGM) represents the total cost of all products that were completed during the period and transferred from Work in Process Inventory to Finished Goods Inventory. Therefore, the COGM should equal the amount transferred from Work in Process Inventory to Finished Goods during the period. Choices A, B, and D are incorrect because they do not represent the COGM.

Question 7

Chmelar Manufacturing Company developed the following data: $\begin{array}{lr}
\text { Beginning work in process inventory } & 120,000 \
\text { Direct materials used } & 720,000 \
\text { Actual overhead } & 840,000 \
\text { Overhead applied } & 810,000 \
\text { Cost of goods manufactured } & 1,920,000 \
\text { Ending work in process } & 90,000
\end{array}$ How much are total manufacturing costs for the period?

Accepted Answer

Total manufacturing costs for the period include direct materials used, actual overhead, and the total labor cost. The total labor cost can be calculated by adjusting the cost of goods manufactured with beginning and ending work in process inventories and the overhead applied. The formula to calculate total manufacturing costs is: Direct Materials + Actual Overhead + (Cost of Goods Manufactured - Beginning Work in Process + Ending Work in Process - Overhead Applied). However, without the direct labor cost explicitly given, we adjust the formula to find total manufacturing costs as follows: Direct Materials + Actual Overhead + Direct Labor (implicitly included in the calculation). Given the data, we can calculate it as follows: Total Manufacturing Costs = Direct Materials Used + Actual Overhead = $720,000 + $840,000 = $1,560,000. However, this calculation seems to miss an adjustment or inclusion of labor costs directly, which suggests a need to revisit the approach based on the provided data. The correct approach to find the total manufacturing costs is to add the direct materials, actual overhead, and any additional costs that would complete the total manufacturing costs. Since the question does not provide direct labor, and my initial explanation missed incorporating the correct formula or given data accurately, the correct calculation should involve a different approach considering the given data points more accurately. Given the oversight in the initial explanation, the correct approach to find the total manufacturing costs involves summing the direct materials used, actual overhead, and the costs associated with labor and adjustments for work in process inventory, which are not directly provided but are part of the total cost of goods manufactured. The formula for total manufacturing costs typically includes Direct Materials + Direct Labor + Manufacturing Overhead. Since the question directly provides two of these components (Direct Materials and Actual Overhead), but lacks clear information on Direct Labor, and my explanation did not correctly calculate or infer the missing components based on the provided data, a reevaluation of the answer choice is necessary based on the correct interpretation of the question's data and the standard formula for total manufacturing costs.

Question 8

Which of the following is not used in assigning manufacturing costs to work in process inventory?

Accepted Answer

Actual manufacturing overhead is not directly assigned to work in process inventory; instead, a predetermined overhead rate is often used to allocate overhead costs based on an estimated activity level.

Question 9

In determining total manufacturing costs on the cost of goods manufactured schedule

Accepted Answer

Total manufacturing costs include direct materials, direct labor, and applied manufacturing overhead. Therefore, manufacturing overhead applied is added to direct materials and direct labor. Beginning work in process inventory may have a balance, and ending work in process inventory is not deducted from beginning work in process inventory on the cost of goods manufactured schedule. Actual manufacturing overhead costs may appear separately on the income statement, but they are not deducted from total manufacturing costs on the cost of goods manufactured schedule.

Question 10

For Wilton Company the predetermined overhead rate is 70% of direct labor cost. During the month $720000 of factory labor costs are incurred of which $200000 is indirect labor. Actual overhead incurred was $360000. The amount of overhead debited to Work in Process Inventory should be:

Accepted Answer

The predetermined overhead rate is 70% of direct labor cost. So, the overhead applied to Work in Process Inventory is 70% of $520,000 ($720,000 - $200,000), which is $364,000.

Question 11

In a job order cost system a credit to Manufacturing Overhead will be accompanied by a debit to

Accepted Answer

Manufacturing Overhead is a control account used to accumulate indirect costs. Indirect costs are part of the cost of a product but cannot be traced directly to a specific product. Examples of indirect costs include rent, utilities, and salaries of production supervisors. The debit to be made will be to Work in Process Inventory because it is the account that reflects the cost of the products in various stages of completion.

Question 12

Gannon Company had the following information at December 31: Finished goods inventory January 1 $ 50000
Finished goods inventory December 31 150000
If the cost of goods manufactured during the year amounted to $2200000 and annual sales were $2750000 the amount of gross profit for the year is

Accepted Answer

The cost of goods sold can be calculated as the sum of the beginning finished goods inventory and the cost of goods manufactured during the year minus the ending finished goods inventory:

Cost of goods sold = $50,000 + $2,200,000 - $150,000 = $2,100,000

Gross profit can then be calculated as sales minus cost of goods sold:

Gross profit = $2,750,000 - $2,100,000 = $650,000

Therefore, the answer is choice C, $650,000.

Question 13

Debits to Work in Process Inventory are accompanied by a credit to all but which one of the following accounts?

Accepted Answer

Debits to Work in Process Inventory represent the cost of production and should be offset by credits to Raw Materials Inventory, Factory Labor, and Manufacturing Overhead. Cost of Goods Sold is not affected until the finished product is sold, so it should not be credited at this point. Therefore, the correct answer is D.

Question 14

Hayward Manufacturing Company developed the following data: $\begin{array}{lr}
\text { Beginning work in process inventory } & \$ 900,000 \
\text { Direct materials used } & 700,000 \
\text { Actual overhead } & 1,100,000 \
\text { Overhead applied } & 800,000 \
\text { Cost of goods manufactured } & 1,200,000 \
\text { Ending work in process } & 1500,000
\end{array}$ Hayward Manufacturing Company's total manufacturing costs for the period is

Accepted Answer

Total manufacturing costs for the period include direct materials used, actual overhead, and any additional costs required to convert the materials into finished goods. In this case, total manufacturing costs are calculated as the sum of direct materials used ($700,000) and actual overhead ($1,100,000), which equals $1,800,000. The beginning and ending work in process inventories and the cost of goods manufactured are not directly used in this calculation.

Question 15

Cost of goods sold is obtained from

Accepted Answer

The cost of goods sold is primarily derived from the finished goods inventory records, which track the cost of manufactured goods that are sold to customers.

Question 16

Which of the following is not viewed as part of assigning manufacturing costs in a job order cost system?

Accepted Answer

The answer of Which of the following is not viewed...

Question 17

Greer Company developed the following data for the current year: $\begin{array}{ll}
\text { Beginning work in process inventory } & \$ 136,000 \
\text { Direct materials used } & 208,000 \
\text { Actual overhead } & 176,000 \
\text { Overhead applied } & 184,000 \
\text { Cost of goods manufactured } & 900,000 \
\text { Total manufacturing costs } & 856,000
\end{array}$ How much is Greer Company's direct labor cost for the year?

Accepted Answer

Total manufacturing costs include direct materials, direct labor, and actual overhead. To find direct labor, subtract direct materials and actual overhead from total manufacturing costs: $856,000 - $208,000 - $176,000 = $472,000.

Question 18

Gulick Company developed the following data for the current year: $\begin{array}{lr}
\text { Beginning work in process inventory } & \$ 240,000 \
\text { Direct materials used } & 144,000 \
\text { Actual overhead } & 288,000 \
\text { Overhead applied } & 216,000 \
\text { Cost of goods manufactured } & 264,000 \
\text { Total manufacturing costs } & 720,000
\end{array}$ Gulick Company's ending work in process inventory is

Accepted Answer

The answer of Gulick Company developed the following data for...

Question 19

Haight Company incurred direct materials costs of $2500000 during the year. Manu-facturing overhead applied was $450000 and is applied at the rate of 60% of direct labor costs. Haight Company's total manufacturing costs for the year was

Accepted Answer

To find the total manufacturing costs, we need to calculate the direct labor costs first. Since manufacturing overhead is 60% of direct labor costs, we can set up the equation: 0.60 * Direct Labor Costs = $450,000. Solving for Direct Labor Costs gives us $750,000. Total manufacturing costs = Direct Materials + Direct Labor + Manufacturing Overhead = $2,500,000 + $750,000 + $450,000 = $3,700,000.

Question 20

Gulick Company developed the following data for the current year: $\begin{array}{lr}
\text { Beginning work in process inventory } & \$ 240,000 \
\text { Direct materials used } & 144,000 \
\text { Actual overhead } & 288,000 \
\text { Overhead applied } & 216,000 \
\text { Cost of goods manufactured } & 264,000 \
\text { Total manufacturing costs } & 720,000
\end{array}$ Gulick Company's direct labor cost for the year is

Accepted Answer

Total manufacturing costs are the sum of direct materials, direct labor, and actual overhead. Given that total manufacturing costs are $720,000, direct materials used are $144,000, and actual overhead is $288,000, we can find direct labor cost by subtracting these from the total manufacturing costs: $720,000 - $144,000 - $288,000 = $288,000. However, there was a mistake in my calculation. The correct calculation should be: Direct labor = Total manufacturing costs - Direct materials used - Actual overhead = $720,000 - $144,000 - $288,000 = $288,000. Therefore, the correct answer is D) $288,000.

Quiz 20: Job Order Costing