b b c a a d a c
d Questions
The company should use process costing. Since there are many similar items, process costing is a better fit than job order costing.
What is the prime cost?
What is the conversion cost? Answer:The conversion cost is \(\$72,000\): the sum of direct labor, factory depreciation expense, and utility expense.
The expense recognition principle requires that expenses follow the revenue. Product costs are assigned to the product because they are associated with the revenue from the sale of the product. The cost is transferred from inventory to cost of goods sold when the item is sold. This matches the revenue from the sale with the cost of the item being sold. Period costs are expensed when incurred because they are not related to a specific product but are instead related to the time period in which revenue is earned.
b, d, c, a
Management uses the activity considered to be the cost driver and multiplies that rate by the activity for each specific job. The result is the amount of overhead applied to that specific job.
Expenses normally have a debit balance, and the manufacturing overhead account is debited when expenses are incurred to recognize the incurrence. When the expenses are allocated to the asset, the work in process inventory, the expense account manufacturing overhead is credited. This is in accordance with the expense recognition principle. The timing of the expense follows the revenue, and when the costs are allocated to inventory, they become a part of the product’s cost and are recognized when the asset is sold.
direct materials Exercise Set A
The company assigns overhead at \(\$1.25\) for each direct labor dollar spent. What is the total cost for each of the jobs?
Using the information provided,
What is the cost assigned to Job 5 at the end of the week?
Overhead is applied at \(1.25\) times the direct labor cost. Use the data on the cost sheets to perform these tasks:
Exercise Set B
The company assigns overhead at twice the direct labor cost. What is the total cost for each job?
Using the information provided,
Compute the actual and applied overhead using the company’s predetermined overhead rate of \(\$23.92\) per machine hour. Was the overhead overapplied or underapplied, and by how much?
What is the cost assigned to Job 7 at the end of the week?
Overhead is applied at \(1.75\) times the direct labor cost. Use the data on the cost sheets to perform these tasks:
Problem Set A
What are the balances in the work in process inventory, finished goods inventory, and cost of goods sold for January, February, and March?
Compute the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold.
Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hours.
Create journal entries for the listed transactions. Problem Set B
What are the balances in the work in process inventory, finished goods inventory, and cost of goods sold for April, May, and June?
Compute the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold.
Compute the cost of goods manufactured.
Journalize the listed transactions. Thought Provokers
When a job order costing system is used depreciation for the factory equipment is debited to _?In a job-order cost system, depreciation on factory equipment should be charged directly to the Work in Process account. 12. The entire difference between the actual manufacturing overhead cost for a period and the applied manufacturing overhead cost is typically closed to the Work In Process account. 13.
When a job order cost in system is used actual manufacturing overhead costs are debited to?6. Actual overhead costs are debited to the Manufacturing Overhead account. 7. The entry to record the cost of goods sold includes a debit to Finished Goods Inventory.
When should job order costing be used?Job order costing is a costing method which is used to determine the cost of manufacturing each product. This costing method is usually adopted when the manufacturer produces a variety of products which are different from one another and needs to calculate the cost for doing an individual job.
Which account is debited when indirect labor is recorded?Any indirect material or indirect labor costs are debited to the Manufacturing Overhead control account, along with any other actual manufacturing overhead costs incurred during the period. Manufacturing overhead is applied to Work In Process using the predetermined rate.
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