Homework Assignment chapter 2 Accounting

Homework Assignment 02A
Job Order Costing
1.Wisteria Company provided the following data:

Budgeted overhead
$80,000
Budgeted direct labor hours
10,000 hrs.
Actual overhead
$86,000
Actual direct labor hours
10,860 hrs.

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A.
What is applied overhead?
B.
What is the overhead variance? Is it overapplied or underapplied?

2. Deluxe Design Company makes custom furniture. On December 1, there were two jobs in process, Job 683, with a cost of $14,200 and Job 684 with a cost of $23,500. Jobs 685, 686, and 687 were started during the month of December. Data on costs added during the month are as follows:

Job 683
Job 684
Job 685
Job 686
Job 687
Direct materials
$11,000
$8,000
$31,400
$16,700
$6,000
Direct labor
21,000
6,000
12,300
8,450
2,500

Overhead is applied to production at the rate of 80% of direct labor cost. Job 685 was completed on December 17. Job 684 was completed on December 21 and the client was billed at cost plus 45%. All other jobs remained in process.

Required:
A.) The actual overhead for December was $41,100, calculate the variance.
B.) Calculate the sales price for Job #684.
C.) Calculate the adjusted cost of goods sold for the month of December.
D.) If selling and administrative expenses for the month totaled $5,600, what is the company’s operating income for December?

3. Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.

At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.

The following information pertains to December of the current year:

Job 10
Job 11
Job 12
Total
Work-in-process, Dec. 1
$16,000
$26,000
$38,000
$80,000
December production activity:
Materials requisitioned
$4,000
$4,800
$7,200
$16,000
Direct labor cost
2,400
3,600
4,000
10,000
Machine hours
400 hrs.
700 hrs.
900 hrs.
2,000 hrs.
Labor hours
120 hrs.
180 hrs.
200 hrs.
500 hrs.

Actual manufacturing overhead cost incurred in December was $61,000.

Required:
A.
Compute the predetermined overhead application rate.
B.
Determine the total cost associated with each job.
C.
If Jobs 10 and 12 were completed, prepare the journal entry to move the cost.
D.
If Job 10 was delivered to customers that paid $50,000 cash, prepare the journal entries.
E.
What is the gross margin for Job 10?
F.
What is the cost assigned to ending work in process?
G.
Assuming no beginning finished goods, what is the cost assigned to ending finished goods?
H.
How much was overhead over/underapplied?

4. If actual overhead for the year is $33,451 and applied overhead is $32,000, is the overhead variance overapplied or underapplied? Prepare the journal entry necessary to reconcile overhead. Assume the variance is immaterial.

5. Consider two costing systems, normal costing and actual costing.
A.
Which costing system do most firms use to assign costs to units of product or service? What does this costing system include?
B.
What is the other costing system? What does this costing system include?

6. During April, Cavy Company incurred factory overhead as follows:

Indirect materials
$11,000
Factory supervision labor
4,000
Utilities
500
Depreciation (factory)
700
Small tools
300
Equipment rental
750
Record the entry for factory overhead incurred during April.

7. At the end of April, Cavy Company had completed Jobs 766 and 765. The individual job cost sheets reveal the following information:
Job
Direct Materials
Direct Labor
Machine Hours
Job No. 765
$5,670
$3,500
27
Job No. 766
$8,900
$4,775
44

Job 765 produced 152 units, and Job 766 consisted of 250 units.
Assuming that the predetermined overhead rate is applied by using machine hours at a rate of $200 per hour, determine the (a) balance on the job cost sheets for each job, and (b) the cost per unit at the end of April.

8. The Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The total machine hours for the year were 54,300 hours. The actual factory overhead for the year was $1,375,000.
(a) Determine the total factory overhead amount applied.
(b) Calculate the over- or underapplied amount for the year.
(c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold.

9. Technics Inc., a manufacturing company, utilizes job order costing. Each division establishes its own estimates regarding overhead, which are as follows:

Division A
Division B
Total estimated overhead
$128,000
$261,000
Total estimated machine hours
16,000
72,500
Total estimated direct labor costs
$155,000
$290,000
If Division A allocates overhead on the basis of machine hours, and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?

10. During August, the receipts and distributions of Material No. B4G9 are as follows:
Month
Day
Received
Aug
2
1,100 units at $15

16
1,700 units at $17

29
900 units at $18

Issued

11
700 units for Job No. 116

18
1,900 units for Job No. 117

30
800 units for Job No. 118

(a) Determine the cost of each of the three issues under a perpetual system, using the first-in, first-out method.
(b) Present the journal entry to record the issuance of the materials for the month, assuming that the cost of issuances is determined by the first-in, first-out method.

11. On May 15, the stamping department accepted Job 051507A to make 1,000 funnels. Materials requisitioned were 1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set. The cost driver used by stamping department is the drop-forge strokes indicated by a machine mounted counter. Overhead is applied at $2.25 for each drop-forge stroke. Additionally, $375.00 of overhead is applied to each job due to setup and tear down. Direct labor is applied at $22.50 per hour for the machine operator and $11.10 for the machine loader. The job required 6.5 hours of labor.
Upon completion, the job was transferred to Finished Goods Inventory.
Journalize all events as of May 15.

12.Discuss how job order cost information is used in decision making. What are some possible reasons that actual cost of materials would exceed expected costs for a job?

13.

1

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