Question 1

An overallocation of manufacturing overhead is typically corrected by increasing Cost of Goods Sold on the income statement.

Accepted Answer

An overallocation of manufacturing overhead is typically corrected by decreasing Cost of Goods Sold on the income statement, as the initial allocation had resulted in too high of an expense being recorded.

Question 2

Jamboree Storage Solutions Ltd. manufactures custom storage units for the resource industries from recycled plastics. Many of the company's customers are responding to negative publicity regarding the effect their exploration and development activities are having on the environment. Consequently Jamboree Storage Solutions Ltd. products are gaining market share.
Jamboree Storage Solutions Ltd. includes two types of direct material charges in their job cost for each job: 1) Non-recycled; and 2) Recycled. The company also keeps track of the weight of each type of direct material so that the final recycled-content percentage for the job can be reported to the customer. The company also reports on the percentage of recycled content as a total of plastics used each month on its own internal reporting system to help encourage managers to use recycled-content whenever possible.
Jamboree Storage Solutions Ltd. uses a predetermined manufacturing overhead rate of $25 per direct labour hour. Here is a summary of the materials and labour used on a recent job for Daphne Exploration Ltd.:
  Required: 
A) Calculate the total cost of the Daphne Exploration Ltd. job
B) Calculate the percentage of recycled content used in the job based on kilograms

Accepted Answer

The answer of Jamboree Storage Solutions Ltd. manufactures custom storage...

Question 3

Hollinger Ceramics makes custom ceramic tiles. During March, the company started and finished Job #914. The company's records show the following direct materials were requisitioned for Job #914.
Plain white tiles: 1,500 units at $3.00 per unit
Specialty paint: 4 quarts at $5.00 per quart
High gloss glaze: 3 quarts at $10.00 per quart
Labour time records show the following employees worked on Job #914:
Sarah Goodson: 10 hours at $25 per hour
Micah McWhorter: 5 hours at $15 per hour
Hollinger Ceramics allocates manufacturing overhead at a rate of $12 per direct labour hour.
A) Compute the total amount of direct materials, direct labour, and manufacturing overhead that should be shown on Job #914's job cost record.
B) Job #914 consists of 1,500 tiles. If each tile sells for $11.00, what is the gross profit per tile?

Accepted Answer

The answer of Hollinger Ceramics makes custom ceramic tiles. During...

Question 4

Senator Technology's work in process inventory on July 1 has a balance of $49,000 representing Job No. 96. During July, $135,000 of direct materials were requisitioned for Job No. 96 and $8,600 of direct labour cost was incurred on Job No. 96. Manufacturing overhead is allocated at a rate of $15.00 per direct labour hour. Actual manufacturing overhead costs incurred in July amounted to $40,000. There were 1,200 actual direct labour hours worked in July. No new jobs were started during July. Job No. 96 is completed on July 28.
A) Determine the total cost assigned to Job No. 96.
B) Is manufacturing overhead over allocated or under allocated for the month of July? By how much?

Accepted Answer

The answer of Senator Technology's work in process inventory on...

Question 5

The amount of overallocation or underallocation is found by taking the difference between the amount of overhead allocated during the year and the amount of overhead estimated for the year.

Accepted Answer

The amount of overallocation or underallocation is found by taking the difference between the amount of overhead allocated during the year and the actual amount of overhead incurred during the year.

Question 6

Hardrock Company uses job costing. Hardrock Company has two departments, Sanding and Finishing. Manufacturing overhead is allocated based on direct labour cost in the Sanding Department and direct labour hours in the Finishing Department. The following additional information is available:
  
Actual data for completed Job No. 140 is as follows:
 
 a. Compute the predetermined manufacturing overhead rate for the Sanding Department.
b. Compute the predetermined manufacturing overhead rate for the Finishing Department.
c. What is the total manufacturing overhead cost for Job. No. 140?
d. If Job No. 140 consists of 500 units of product, what is the average unit cost of this job?

Accepted Answer

The answer of Hardrock Company uses job costing. Hardrock Company...

Question 7

If manufacturing overhead has been overallocated during the year, it means the jobs have been overcosted.

Accepted Answer

Overallocating manufacturing overhead means allocating more overhead costs than actually incurred. This will result in overcosting the jobs, as the overhead cost assigned to each job will be higher than its actual cost.

Question 8

Job 2928 requires $38,000 of direct materials, $12,000 of direct labour, 700 direct labour hours, and 375 machine hours. Manufacturing overhead is computed at $15 per direct labour hour used and $12 per machine hour used. The total cost of Job 2948 is

Accepted Answer

D) $38,000 + 12,000 + ($15 × 700 ) + ($12 × 375) = $65,000

Question 9

Records for Josten's Custom Networks contained the following data. 
 Compute: 
A) Work in process inventory on June 30
B) Finished goods inventory on June 30
C) Cost of goods sold for June

Accepted Answer

The answer of Records for Josten's Custom Networks contained the...

Question 10

If manufacturing overhead has been underallocated during the year, it means the jobs have been overcosted.

Accepted Answer

If manufacturing overhead has been underallocated, it means that not enough overhead costs have been allocated to the jobs during the year, resulting in the jobs being undercosted.

Question 11

The amount of overallocation or underallocation is typically corrected by adjusting the Work in Process Inventory account.

Accepted Answer

The answer of The amount of overallocation or underallocation is...

Question 12

The underallocation or overallocation of overhead is a direct result of using a predetermined manufacturing overhead rate rather than the actual manufacturing overhead rate.

Accepted Answer

The answer of The underallocation or overallocation of overhead is...

Question 13

The amount of overallocation or underallocation is found by taking the difference between the amount of overhead allocated during the year and the amount of overhead incurred during the year.

Accepted Answer

This statement correctly describes how overallocation or underallocation of overhead is calculated.

Question 14

Willy's Wagons manufactures custom carts for a variety of uses. The following data has been recorded for Job 531, which was recently completed. Direct materials used cost $12,900. There were 210 direct labour hours worked on this job at a direct labour wage rate of $20 per hour. There were 165 machine hours used on this job. The predetermined overhead rate is $32 per machine hour used. What is the total manufacturing cost of Job 531?

Accepted Answer

B) $12,900 + (210 × $20) + (165 × $32) = $22,380

Question 15

Overallocated overhead costs occur when the overhead costs allocated to work in process inventory are less than the amount actually incurred.

Accepted Answer

Overallocated overhead costs occur when the overhead costs allocated to work in process inventory are more than the amount actually incurred.

Question 16

Switech Technology's work in process inventory on June 1 has a balance of $24,500 representing Job No. 95. During June, $67,500 of direct materials were requisitioned for Job No. 95 and $4,300 of direct labour cost was incurred on Job No. 95. Manufacturing overhead is allocated at a rate of $15.00 per direct labour hour. Actual manufacturing overhead costs incurred in June amounted to $20,000. There were 600 actual direct labour hours worked in June. No new jobs were started during June. Job No. 95 is completed on June 28.
A) Determine the total cost assigned to Job No. 95.
B) Is manufacturing overhead overallocated or underallocated for the month of June? By how much?

Accepted Answer

The answer of Switech Technology's work in process inventory on...

Question 17

Kimberly Glass Works makes custom glass tiles. During May, the company started and finished Job #915. The company's records show the following direct materials were requisitioned for Job #915

Clear white tiles: $\quad $3,000 units at $3.00 per unit
Specialty colours: $\quad $8 quarts at $5.00 per quart
Mirror gloss: $\quad $$\quad $$\quad $6 quarts at $10.00 per quart

Labour time records show the following employees worked on Job #915:
Sarah Goodson: $\quad $$\quad $20 hours at $25 per hour
Micah McWhorter: $\quad $10 hours at $15 per hour

Kimberly Glass Works allocates manufacturing overhead at a rate of $14 per direct labour hour.
A) Compute the total amount of direct materials, direct labour, and manufacturing overhead that should be shown on Job #915's job cost record.
B) Job #915 consists of 3,000 tiles. If each tile sells for $11.00, what is the gross profit per tile?

Accepted Answer

The answer of Kimberly Glass Works makes custom glass tiles....

Question 18

Millstone Company uses job costing. Millstone Company has two departments, Sanding and Finishing. Manufacturing overhead is allocated based on direct labour cost in the Sanding Department and direct labour hours in The Finishing Department. The following additional information is available:
  
Actual data for completed Job No. 140 is as follows:
  
A) Compute the predetermined manufacturing overhead rate for the Sanding Department.
B) Compute the predetermined manufacturing overhead rate for the Finishing Department.
C) What is the total manufacturing overhead cost for Job. No. 140?
D) If Job No. 140 consists of 400 units of product, what is the average unit cost of this job?

Accepted Answer

The answer of Millstone Company uses job costing. Millstone Company...

Question 19

A local financial consulting firm employs 30 full-time staff. The budgeted compensation per employee is $50,000, for 2,000 hours. All direct labour costs are charged to clients. Any other costs are included in a single indirect-cost pool, allocated according to labour-hours. Actual indirect costs were $750,000. Budgeted indirect costs for the year are $525,000 and the firm expects to have 60 clients during the coming year.
What is the total cost of a job which took 27 hours, using predetermined overhead rate?

Accepted Answer

The predetermined overhead rate is calculated based on budgeted costs and hours. The budgeted indirect costs are $525,000, and the total budgeted hours are 30 employees * 2,000 hours = 60,000 hours. So, the predetermined overhead rate is $525,000 / 60,000 hours = $8.75 per hour. For a job taking 27 hours, the overhead cost is 27 hours * $8.75 = $236.25. The direct labor cost is 27 hours * ($50,000 / 2,000 hours) = $675. Therefore, the total cost of the job is $675 (direct labor) + $236.25 (overhead) = $911.25.

Question 20

If the actual amount of the manufacturing overhead allocation base is greater than the estimated amount of the allocation base used to calculate the predetermined rate, then manufacturing overhead must have been underallocated.

Accepted Answer

The answer of If the actual amount of the manufacturing...

Quiz 5: Job Costing