MULTIPLE CHOICE
1. Which of the following organizations would be most likely to use a job-order costing system?
a.
|
the loan department of a bank
|
b.
|
the check clearing department of a bank
|
c.
|
A manufacturer of processed cheese food
|
d.
|
A manufacturer of video cassette tapes
|
ANS: A
2. When job-order costing is used, the primary focal point of cost accumulation is the
a.
|
department.
|
b.
|
supervisor.
|
c.
|
item.
|
d.
|
job.
|
ANS: D
3. In a job-order costing system,
a.
|
standards cannot be used.
|
b.
|
an average cost per unit within a job cannot be computed.
|
c.
|
costs are accumulated by departments and averaged among all jobs.
|
d.
|
overhead is typically assigned to jobs on the basis of some cost driver.
|
ANS: D
4. What is the best cost accumulation procedure to use when many batches, each differing as to product specifications, are produced?
a.
|
job-order
|
b.
|
process
|
c.
|
actual
|
d.
|
standard
|
ANS: A
5. Which of the following could not be used in job-order costing?
a.
|
Standards
|
b.
|
an average cost per unit for all jobs
|
c.
|
normal costing
|
d.
|
overhead allocation based on the job's direct labor hours
|
ANS: B
6. Which of the following costing systems allows management to quickly recognize materials, labor, and overhead variances and take measures to correct them?
Actual Cost System
|
Normal Cost System
| |||
a.
|
yes yes
| |||
b.
|
yes no
| |||
c.
|
no yes
| |||
d.
|
no no
| |||
ANS: D
7. Which of the following costing methods of valuation are acceptable in a job-order costing system?
Actual
Material
Cost
|
Standard
Material
Cost
|
Actual
Labor
Cost
|
Predetermined
Overhead
Cost
| |||
a.
|
yes yes no yes
| |||||
b.
|
yes no yes no
| |||||
c.
|
no yes yes yes
| |||||
d.
|
yes yes yes yes
| |||||
ANS: D
8. In a normal cost system, a debit to Work in Process Inventory would not be made for
a.
|
actual overhead.
|
b.
|
applied overhead.
|
c.
|
actual direct material.
|
d.
|
actual direct labor.
|
ANS: A
9. After the completion of production, standard and actual costs are compared to determine the ______ of the production process.
a.
|
Effectiveness
|
b.
|
Complexity
|
c.
|
Homogeneity
|
d.
|
Efficiency
|
ANS: D
10. A company producing which of the following would be most likely to use a price standard for material?
a.
|
Furniture
|
b.
|
NFL-logo jackets
|
c.
|
custom-made picture frames
|
d.
|
none of the above
|
ANS: B
11. Knowing specific job costs enables managers to effectively perform which of the following tasks?
a.
|
estimate costs of future jobs.
|
b.
|
establish realistic job selling prices.
|
c.
|
evaluate job performance.
|
d.
|
all answers are correct.
|
ANS: D
12. A job-order costing system is likely to provide better
(1)
|
inventory valuations for financial statements.
|
(2)
|
control over inventory.
|
(3)
|
information about ability to accept additional production work.
|
(1)
|
(2)
|
(3)
| |||
a.
|
yes no no
| ||||
b.
|
no yes yes
| ||||
c.
|
no no no
| ||||
d.
|
yes yes yes
| ||||
ANS: D
13. The trend in job-order costing is to
a.
|
eliminate the data entry function for the accounting system.
|
b.
|
automate the data collection and data entry functions.
|
c.
|
use accounting software to change the focal point of the job-order system.
|
d.
|
create an Intranet to share information between competitors.
|
ANS: B
14. job-order costing and process costing have which of the following characteristics?
job-order Costing
|
Process Costing
| |||
a.
|
homogeneous products heterogeneous products
and large quantities and small quantities
| |||
b.
|
homogeneous products heterogeneous products
and small quantities and large quantities
| |||
c.
|
heterogeneous products homogeneous products
and large quantities and small quantities
| |||
d.
|
heterogeneous products homogeneous products
and small quantities and large quantities
| |||
ANS: D
15. The source document that records the amount of raw material that has been requested by production is the
a.
|
job-order cost sheet.
|
b.
|
bill of lading.
|
c.
|
interoffice memo.
|
d.
|
material requisition.
|
ANS: D PTS: 1 DIF: Easy OBJ: 5-2
16. A material requisition form should show all of the following information except
a.
|
job number.
|
b.
|
quantity required.
|
c.
|
unit cost.
|
d.
|
purchase order number.
|
ANS: D
17. Which of the following statements about job-order cost sheets is true?
a.
|
All job-order cost sheets serve as the general ledger control account for Work in Process Inventory.
|
b.
|
Job-order cost sheets can serve as subsidiary ledger information for both Work in Process Inventory and Finished Goods Inventory.
|
c.
|
If material requisition forms are used, job-order cost sheets do not need to be maintained.
|
d.
|
Job-order cost sheets show costs for direct material and direct labor, but not for manufacturing overhead since it is an applied amount.
|
ANS: B
18. The primary accounting document in a job-order costing system is a(n)
a.
|
bill of materials.
|
b.
|
job-order cost sheet.
|
c.
|
employee time sheet.
|
d.
|
materials requisition.
|
ANS: B
19. The cost sheets for incomplete jobs at the end of the period comprise the subsidiary ledger for
a.
|
Finished Goods Inventory.
|
b.
|
Raw Material Inventory.
|
c.
|
Work in Process Inventory.
|
d.
|
Supplies Inventory.
|
ANS: C
20. The __________ provides management with a historical summation of total costs for a given product.
a.
|
job-order cost sheet
|
b.
|
employee time sheet
|
c.
|
material requisition form
|
d.
|
bill of lading
|
ANS: A
21. The source document that records the amount of time an employee worked on a job and his/her pay rate is the
a.
|
job-order cost sheet.
|
b.
|
employee time sheet.
|
c.
|
interoffice memo.
|
d.
|
labor requisition form.
|
ANS: B
22. A credit to Work in Process Inventory represents
a.
|
work still in process.
|
b.
|
raw material put into production.
|
c.
|
the application of overhead to production.
|
d.
|
the transfer of completed items to Finished Goods Inventory.
|
ANS: D
23. In a job-order costing system, the peso amount of the entry that debits Finished Goods Inventory and credits Work in Process Inventory is the sum of the costs charged to all jobs
a.
|
started in process during the period.
|
b.
|
In process during the period.
|
c.
|
completed and sold during the period.
|
d.
|
completed during the period.
|
ANS: D
24. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals
a.
|
cost of goods manufactured in the year.
|
b.
|
ending Work in Process Inventory.
|
c.
|
total manufacturing costs to account for.
|
d.
|
cost of goods available for sale.
|
ANS: C
25. Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a company that employs a job-order costing system?
a.
|
Work in Process Inventory
|
b.
|
Raw Material Inventory
|
c.
|
Accounts Payable
|
d.
|
Supplies Inventory
|
ANS: D
26. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material Inventory. The explanation for this would be that
a.
|
indirect material was placed into production.
|
b.
|
raw material was purchased on account.
|
c.
|
direct material was placed into production.
|
d.
|
direct labor was used for production.
|
ANS: C
27. Which of the following journal entries records the accrual of the cost of indirect labor used in production?
a.
|
debit Work in Process Inventory, credit Wages Payable
|
b.
|
debit Work in Process Inventory, credit Manufacturing Overhead
|
c.
|
debit Manufacturing Overhead, credit Work in Process Inventory
|
d.
|
debit Manufacturing Overhead, credit Wages Payable
|
ANS: D
28. The logical explanation for an entry that includes a debit to Manufacturing Overhead control and a credit to Prepaid Insurance is
a.
|
the insurance company sent the company a refund of its policy premium.
|
b.
|
overhead for insurance was applied to production.
|
c.
|
insurance for production equipment expired.
|
d.
|
insurance was paid on production equipment.
|
ANS: C
29. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead control and a debit to
a.
|
Finished Goods Inventory.
|
b.
|
Work in Process Inventory.
|
c.
|
Cost of Goods Sold.
|
d.
|
Raw Material Inventory.
|
ANS: B
30. In a job-order costing system, the use of indirect material would usually be reflected in the general ledger as an increase in
a.
|
stores control.
|
b.
|
work in process control.
|
c.
|
manufacturing overhead applied.
|
d.
|
manufacturing overhead control.
|
ANS: D
31. A credit to the Manufacturing Overhead control account represents the
a.
|
actual cost of overhead incurred.
|
b.
|
actual cost of overhead paid this period.
|
c.
|
amount of overhead applied to production.
|
d.
|
amount of indirect material and labor used during the period.
|
ANS: C
32. The journal entry to record the incurrence and payment of overhead costs for factory insurance requires a debit to
a.
|
Cash and a credit to Manufacturing Overhead.
|
b.
|
Manufacturing Overhead and a credit to Accounts Payable.
|
c.
|
Manufacturing Overhead and a credit to Cash.
|
d.
|
Work in Process Inventory and a credit to Cash.
|
ANS: C
33. Overhead is applied to jobs in a job-order costing system
a.
|
at the end of a period.
|
b.
|
as jobs are completed.
|
c.
|
at the end of a period or as jobs are completed, whichever is earlier.
|
d.
|
at the end of a period or as jobs are completed, whichever is later.
|
ANS: C
34. In a job-order costing system, the subsidiary ledger for Finished Goods Inventory is comprised of
a.
|
all job-order cost sheets.
|
b.
|
job-order cost sheets for all uncompleted jobs.
|
c.
|
job-order cost sheets for all completed jobs not yet sold.
|
d.
|
job-order cost sheets for all ordered, uncompleted, and completed jobs.
|
ANS: C
35. Underapplied overhead resulting from unanticipated and immaterial price increases for overhead items should be written off by
a.
|
decreasing Cost of Goods Sold.
|
b.
|
increasing Cost of Goods Sold.
|
c.
|
decreasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.
|
d.
|
increasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.
|
ANS: B
36. Overapplied overhead would result if
a.
|
the plant were operated at less than normal capacity.
|
b.
|
overhead costs incurred were less than costs charged to production.
|
c.
|
overhead costs incurred were unreasonably large in relation to units produced.
|
d.
|
overhead costs incurred were greater than costs charged to production.
|
ANS: B
37. Debits to Cost of Goods Sold typically represent the
a.
|
transfer of completed items to Finished Goods Inventory.
|
b.
|
costs of items sold.
|
c.
|
selling price of items sold.
|
d.
|
the cost of goods manufactured.
|
ANS: B
38. In a perpetual inventory system, a transaction that requires two journal entries (or one compound entry) is needed when
a.
|
raw materials are purchased on account.
|
b.
|
goods are sold for either cash or on account.
|
c.
|
goods are finished and transferred out of Work in Process Inventory.
|
d.
|
overhead is applied to Work in Process Inventory.
|
ANS: B
39. Which of the following are drawbacks to applying actual overhead to production?
a.
|
A delay occurs in assigning costs to jobs or products.
|
b.
|
Fluctuations in quantities produced during a period could cause varying per-unit charges for fixed overhead.
|
c.
|
Seasonality of overhead costs may cause distortions in job or product costs.
|
d.
|
all answers are correct.
|
ANS: D PTS: 1 DIF: Easy OBJ: 5-4
40. In job-order costing, payroll taxes paid by the employer for factory employees are commonly accounted for as
a.
|
direct labor cost.
|
b.
|
manufacturing overhead cost.
|
c.
|
indirect labor cost.
|
d.
|
administrative cost.
|
ANS: B PTS: 1 DIF: Easy OBJ: 5-4
41. Production overhead does not include the costs of
a.
|
factory depreciation and supplies.
|
b.
|
factory employees' cafeteria departments.
|
c.
|
production line labor.
|
d.
|
the maintenance department for the factory.
|
ANS: C PTS: 1 DIF: Easy OBJ: 5-4
42. A company producing which of the following would be most likely to use a time standard for labor?
a.
|
mattresses
|
b.
|
custom-made picture frames
|
c.
|
floral arrangements
|
d.
|
stained-glass windows
|
ANS: A
43. As data input functions are automated, Intranet data becomes more
a.
|
complicated to access.
|
b.
|
manufacturing, but not accounting, oriented.
|
c.
|
real-time accessible.
|
d.
|
expensive to install, but easier to use.
|
ANS: C
44. The use of standard material or labor costs in job-order costing
a.
|
is similar to the use of predetermined overhead rates in a normal costing system.
|
b.
|
will keep actual costs of jobs from fluctuating due to changes in component costs.
|
c.
|
is appropriate for any company making a units to customer specification.
|
d.
|
all answers are correct.
|
ANS: A
45. Which of the following statements is false?
a.
|
While the use of standard costing is acceptable for job-order costing systems, actual cost records should still be maintained.
|
b.
|
It is normally more time-consuming for a company to use standard costs in a job-order costing system.
|
c.
|
Standards can be used in a job-order costing system, if the company usually produces items that are similar in nature.
|
d.
|
Standard costs may be used for material, labor, or both material and labor in a job-order costing environment.
|
ANS: B
46. A service organization would be most likely to use a predetermined overhead rate based on
a.
|
machine hours.
|
b.
|
standard material cost.
|
c.
|
direct labor.
|
d.
|
number of complaints.
|
ANS: C
47. In a production environment that manufactures goods to customer specifications, a job-order costing system
a.
|
can be used only if standard costs are used for materials and labor.
|
b.
|
will provide reasonable product cost information only when all jobs utilize approximately the same quantities of material and labor.
|
c.
|
may be maintained using either actual or predetermined overhead rates.
|
d.
|
emphasizes that large customers create the most costs even though they also provide the most revenues.
|
ANS: C
48. A unit that is rejected at a quality control inspection point, but that can be reworked and sold, is referred to as a
a.
|
spoiled unit.
|
b.
|
scrap unit.
|
c.
|
abnormal unit.
|
d.
|
defective unit.
|
ANS: D
49. The cost of abnormal losses (net of disposal costs) should be written off as
Product cost
|
Period cost
|
a.
|
yes no
|
b.
|
yes yes
|
c.
|
no yes
|
d.
|
no no
|
ANS: C
50. In a job-order costing system, the net cost of normal spoilage is equal to
a.
|
estimated disposal value plus the cost of spoiled work.
|
b.
|
the cost of spoiled work minus estimated spoilage cost.
|
c.
|
the units of spoiled work times the predetermined overhead rate.
|
d.
|
the cost of spoiled work minus the estimated disposal value.
|
ANS: D
51. If abnormal spoilage occurs in a job-order costing system, has a material peso value, and is related to a specific job, the recovery value of the spoiled goods should be
debited to
|
credited to
|
a.
|
a scrap inventory account the specific job in process
|
b.
|
the specific job in process overhead
|
c.
|
a loss account the specific job in process
|
d.
|
factory overhead sales
|
ANS: A
52. In a job-order costing system, the net cost of normal spoilage is equal to
a.
|
estimated disposal value plus the cost of spoiled work.
|
b.
|
the cost of spoiled work minus estimated spoilage cost.
|
c.
|
the units of spoiled work times the predetermined overhead rate.
|
d.
|
the cost of spoiled work minus the estimated disposal value.
|
ANS: D
53. Shrinkage should be treated as
a.
|
defective units.
|
b.
|
spoiled units.
|
c.
|
miscellaneous expense.
|
d.
|
a reduction of overhead.
|
ANS: B
54. Spoiled units are
a.
|
units that cannot be economically reworked to bring them up to standard.
|
b.
|
units that can be economically reworked to bring them up to standard.
|
c.
|
the same as defective units.
|
d.
|
considered abnormal losses.
|
ANS: A
55. Abnormal spoilage is
a.
|
spoilage that is forecasted or planned.
|
b.
|
spoilage that is in excess of planned.
|
c.
|
accounted for as a product cost.
|
d.
|
debited to Cost of Goods Sold.
|
ANS: B
56. Normal spoilage is defined as unacceptable production that
a.
|
arises because of a special job or process.
|
b.
|
occurs in on-going operations.
|
c.
|
is caused specifically by human error.
|
d.
|
is in excess of that which is expected.
|
ANS: B
57. Which of the following would fall within the range of tolerance for a production cycle?
Abnormal loss
|
Normal loss
|
a.
|
yes yes
|
b.
|
yes no
|
c.
|
no no
|
d.
|
no yes
|
ANS: D
58. The net cost of normal spoilage in a job-order costing system in which spoilage is common to all jobs should be
a.
|
assigned directly to the jobs that caused the spoilage.
|
b.
|
charged to manufacturing overhead during the period of the spoilage.
|
c.
|
charged to a loss account during the period of the spoilage.
|
d.
|
allocated only to jobs that are completed during the period.
|
ANS: B
59. Bobcat Company. uses a job-order costing system. During April, the following costs appeared in the Work in Process Inventory account:
Beginning balance
|
P 24,000
|
Direct material used
|
70,000
|
Direct labor incurred
|
60,000
|
Applied overhead
|
48,000
|
Cost of goods manufactured
|
185,000
|
Bobcat Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of April which contained P5,600 of overhead. What amount of direct material was included in this job?
a.
|
P4,400
|
b.
|
P4,480
|
c.
|
P6,920
|
d.
|
P8,000
|
ANS: A
Total Costs Incurred
|
202,000
| |
Less: Cost of Goods Manufactured
|
(185,000)
| |
Costs remaining in WIP
|
17,000
| |
Overhead
|
5,600
| |
Direct Labor (5,600/.80)
|
7,000
|
(12,600)
|
Direct Materials
|
4,400
|
PTS: 1
60. West Company is a print shop that produces jobs to customer specifications. During January, Job #3051 was worked on and the following information is available:
Direct material used
|
P2,500
|
Direct labor hours worked
|
15
|
Machine time used
|
6
|
Direct labor rate per hour
|
P7
|
Overhead application rate per hour of machine time
|
P18
|
What was the total cost of Job #3051 for January?
a.
|
P2,713
|
b.
|
P2,770
|
c.
|
P2,812
|
d.
|
P3,052
|
ANS: A
Direct Materials
|
P 2,500
| |
Direct Labor (15 hours * P7/hour)
|
105
| |
Factory Overhead (6 hrs machine time *
| ||
* P18/mach hr)
|
108
| |
P 2,713
|
Gamma Company
Gamma Co. uses a job-order costing system. At the beginning of January, the company had two jobs in process with the following costs:
Direct Material
|
Direct Labor
|
Overhead
| |
Job #456
|
P3,400
|
P510
|
P255
|
Job #461
|
1,100
|
289
|
?
|
Gamma pays its workers P8.50 per hour and applies overhead on a direct labor hour basis.
61. Refer to Gamma Company. What is the overhead application rate per direct labor hour?
a.
|
P 0.50
|
b.
|
P 2.00
|
c.
|
P 4.25
|
d.
|
P30.00
|
ANS: C
Direct Labor Hours: P510/P8.50
|
60 hrs
| |
Overhead Application Rate:
| ||
P255 / 60 hrs
|
P 4.25
|
62. Refer to Gamma Company. How much overhead was included in the cost of Job #461 at the beginning of January?
a.
|
P 144.50
|
b.
|
P 153.00
|
c.
|
P2,200.00
|
d.
|
P2,456.50
|
ANS: A
Direct Labor Hours: P289/P8.50
|
34 hrs
| |
Overhead Application Rate:
| ||
P255 / 60 hrs
|
P 4.25
| |
34 hrs * P4.25/hr
|
P 144.50
|
63. Refer to Gamma Company. During January, Gamma’s employees worked on Job #649. At the end of the month, P714 of overhead had been applied to this job. Total Work in Process at the end of the month was P6,800 and all other jobs had a total cost of P3,981. What amount of direct material is included in Job #649?
a.
|
P 677.00
|
b.
|
P1,391.00
|
c.
|
P2,142.00
|
d.
|
P4,658.00
|
ANS: A
Direct Materials--Job 649
| ||
Total Work in Process
|
P 6,800
| |
Other Work in Process
|
(3,981)
| |
Costs remaining in WIP
|
2,819
| |
Overhead
|
714
| |
Direct Labor (OH x 2) P714 * 2
|
1,428
|
(2,142)
|
Direct Materials
|
P 677
|
64. Green Corporation manufactures products on a job-order basis. The job cost sheet for Job #656 shows the following for March:
Direct material
|
P5,000
|
Direct labor (100 hours @ P7.25)
|
P725
|
Machine hours incurred
|
40
|
Predetermined overhead rate per machine hour
|
P26
|
At the end of March, what total cost appears on the job cost sheet for Job #656?
a.
|
P5,725
|
b.
|
P5,765
|
c.
|
P6,765
|
d.
|
P8,325
|
ANS: C
Direct Materials
|
P 5,000
| |
Direct Labor (15 hours * P7/hour)
|
725
| |
Factory Overhead (26 hrs machine time *
| ||
* P40/mach hr)
|
1,040
| |
P 6,765
|
65. Products at Forrest Manufacturing are sent through two production departments: Fabricating and Finishing. Overhead is applied to products in the Fabricating Department based on 150 percent of direct labor cost and P18 per machine hour in Finishing. The following information is available about Job #297:
Fabricating
|
Finishing
| |
Direct material
|
P1,590
|
P580
|
Direct labor cost
|
?
|
48
|
Direct labor hours
|
22
|
6
|
Machine hours
|
5
|
15
|
Overhead applied
|
429
|
?
|
What is the total cost of Job #297?
a.
|
P2,647
|
b.
|
P3,005
|
c.
|
P3,093
|
d.
|
P3,203
|
ANS: D
Direct Labor Fabricating P429/1.50 = P286
| |||
Applied Overhead Finishing 15 hrs * P18 = P270
| |||
Fabricating
|
Finishing
| ||
Direct material
|
P 1,590
|
P 580
| |
Direct labor cost
|
286
|
48
| |
Overhead applied
|
429
|
270
| |
Total Costs
|
2,305
|
898
|
P 3,203
|
66. Carolina Company applies overhead to jobs at the rate of 40 percent of direct labor cost. Direct material of P1,250 and direct labor of P1,400 were expended on Job #145 during June. On May 31, the balance of Job #145 was P2,800. The balance on June 30 is:
a.
|
P3,210.
|
b.
|
P4,760.
|
c.
|
P5,450.
|
d.
|
P6,010.
|
ANS: D
Beginning WIP
|
P 2,800
| |
Direct Materials
|
1,250
| |
Direct Labor
|
1,400
| |
Factory Overhead (P1,400 * 40%)
|
560
| |
Ending WIP
|
P 6,010
|
Williams Company.
Williams Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.
Raw material used
|
P120,000
|
Direct labor per hour
|
P8.50
|
Overhead applied based on direct labor cost
|
120%
|
Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is P33,000. Other actual overhead costs totaled P36,000.
67. Refer to Williams Company. What is the prime cost of Job #6?
a.
|
P42,250
|
b.
|
P57,250
|
c.
|
P73,250
|
d.
|
P82,750
|
ANS: B
Direct Materials (P120,000 * 30%)
|
P 36,000
| |
Direct Labor (2,500 hrs * P8.50)
|
21,250
| |
Total Prime Costs
|
P 57,250
|
68. Refer to Williams Company. What is the total amount of overhead applied to Job #9?
a.
|
P18,250
|
b.
|
P26,350
|
c.
|
P30,000
|
d.
|
P31,620
|
ANS: D
Direct Labor Hours
|
Direct Labor Rate
|
OH Application Rate
|
Total
|
3,100
|
P8.50
|
120%
|
P31,620
|
69. Refer to Williams Company. What is the total amount of actual overhead?
a.
|
P36,000
|
b.
|
P69,000
|
c.
|
P93,000
|
d.
|
P99,960
|
ANS: C
Indirect Materials (P120,000 * 20%)
|
P 24,000
| |
Indirect Labor
|
33,000
| |
Other Overhead Costs
|
36,000
| |
Total Prime Costs
|
P 93,000
|
70. Refer to Williams Company. How much overhead is applied to Work in Process?
a.
|
P 69,000
|
b.
|
P 99,960
|
c.
|
P132,960
|
d.
|
P144,000
|
ANS: B
Direct Labor Hours
|
6
|
2500
| |
9
|
3100
| ||
13
|
4200
|
9,800
| |
Direct Labor Rate
|
P 8.50
| ||
Overhead Application Rate
|
120%
| ||
Total Overhead Applied
|
P 99,960
|
71. Refer to Williams Company. If Job #13 is completed and transferred, what is the balance in Work in Process Inventory at the end of the period if overhead is applied at the end of the period?
a.
|
P 96,700
|
b.
|
P 99,020
|
c.
|
P139,540
|
d.
|
P170,720
|
ANS: D
Step 1: Compute Total Cost of Job #6
| |||
DM: P120,000 * .30
|
P 36,000
| ||
DL: 2,500 * 8.50
|
21,250
| ||
FOH: 21,250 * 120%
|
25,500
|
82,750
| |
Step 2: Compute Total Cost of Job #9
| |||
DM: P120,000 * .25
|
P 30,000
| ||
DL: 3,100 * 8.50
|
26,350
| ||
FOH: 26,350 * 120%
|
31,620
| ||
87,970
| |||
Total Costs of Jobs 6 and 9
|
170,720
|
72. Refer to Williams Company. Assume the balance in Work in Process Inventory was P18,500 on June 1 and P25,297 on June 30. The balance on June 30 represents one job that contains direct material of P11,250. How many direct labor hours have been worked on this job (rounded to the nearest hour)?
a.
|
751
|
b.
|
1,324
|
c.
|
1,653
|
d.
|
2,976
|
ANS: A
Step 1: Determine DL and FOH
| |||
WIP at June 30:
|
P 25,297
| ||
Less DM in WIP
|
11,250
|
14,047
| |
Step 2: Separate DL and FOH
| |||
Let x = DL; 1.2x = FOH
| |||
x + 1.2x = 14,047
| |||
2.2x = 14,047
| |||
x = P6,385
| |||
Step 3: Compute DL Hours
| |||
P6,385 ÷ 8.50
|
751
|
hours
|
Sigma Company
The following information pertains to Sigma Company for September:
Direct Material
|
Direct Labor
|
Overhead
| |
Job #323
|
P3,200
|
P4,500
|
?
|
Job #325
|
?
|
5,000
|
?
|
Job #401
|
5,670
|
?
|
P5,550
|
Sigma Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.
73. Refer to Sigma Co. What amount of overhead is applied to Job #323?
a.
|
P4,800
|
b.
|
P5,550
|
c.
|
P6,300
|
d.
|
P7,500
|
ANS: C
Direct Labor
|
Application Rate
|
Total Overhead
|
P4,500
|
140%
|
P6,300
|
74. Refer to Sigma Co. What amount of overhead is applied to Job #325?
a.
|
P8,325
|
b.
|
P7,500
|
c.
|
P7,000
|
d.
|
P5,000
|
ANS: B
Direct Labor
|
Application Rate
|
Total Overhead
|
P5,000
|
150%
|
P7,500
|
75. Refer to Sigma Co. What is the amount of direct materials for Job #325?
a.
|
P1,950
|
b.
|
P1,500
|
c.
|
P3,700
|
d.
|
P7,500
|
ANS: B
Step 1: Determine OH for Jobs 323 and 325
| |||
323
|
P 6,300
| ||
325
|
7,500
| ||
Step 2: Compute Total Cost of Job 323
|
DM
|
P 3,200
| |
DL
|
4,500
| ||
FOH
|
6,300
|
14,000
| |
Step 3: Compute Direct Materials for Job 325
| |||
(14,000 - (5,000 + 7,500)
|
P 1,500
| ||
76. Refer to Sigma Co. Assume that Jobs #323 and #401 are incomplete at the end of September. What is the balance in Work in Process Inventory at that time?
a.
|
P18,920
|
b.
|
P22,620
|
c.
|
P28,920
|
d.
|
P30,120
|
ANS: C
Step 1: Determine DL for Job 401
| |||
P5,550 ÷ 150%
|
3,700
| ||
Step 2: Compute Total Cost of Job 401
|
DM
|
P 5,670
| |
DL
|
3,700
| ||
FOH
|
5,550
|
14,920
| |
Step 2: Compute Total Cost of Job 323
|
DM
|
P 3,200
| |
DL
|
4,500
| ||
FOH
|
6,300
|
14,000
| |
Total Costs of Jobs 323 and 401
|
28,920
|
