Job-Order Costing System Essentials

Posted on Feb 19, 2025 in Modern Languages and Management

Key Concepts of Job-Order Costing Systems

Here’s a corrected and improved version of the provided text, focusing on clarity and accuracy:

  1. The use of a predetermined overhead rate in a job-order cost system makes it possible to compute the total cost of a job before. FALSE
  2. The formula for computing the predetermined overhead rate is: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base. TRUE
  3. When the predetermined overhead rate is based on direct labor-hours, the amount of overhead applied to a job is proportional to the. FALSE
  4. The cost of a completed job in a job-order costing system typically consists of the actual direct materials cost of the job, the actual direct. TRUE
  5. Job cost sheets are used to record the costs of preparing routine accounting reports. FALSE
  6. In a job-order cost system, direct labor is assigned to a job using information from the employee time ticket. TRUE
  7. Manufacturing overhead is overapplied if actual manufacturing overhead costs for a period are greater than… to Work in Process. FALSE
  8. If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing. TRUE

Departmental vs. Plant-wide Overhead Rates

Departmental overhead rates are generally preferred to plant-wide overhead rates when:

A. The activities of the various departments in the plant are not homogeneous.

Recording Overhead Application

Which of the following entries would correctly record the application of overhead cost?

D. Work in Process XXX

Manufacturing Overhead XXX

Indirect Materials Usage

In a job-order costing system, the use of indirect materials that have been previously purchased is recorded as a credit to:

C. Raw Materials inventory.

Schedule of Cost of Goods Manufactured

On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents:

D. the amount of cost of goods completed during the current year, whether they were started before or during the current year.

Overapplied Manufacturing Overhead

Overapplied manufacturing overhead means that:

B. The applied manufacturing overhead cost was greater than the actual manufacturing overhead cost.

Calculations

26. Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: 74,000 $7.67 $1,630,960 D. $29.71

27. Hibshman Corporation bases 10,000 machine- overhead was $6.82 per machine overhead was $230,200. rate for the recently completed year was closest to: A. $29.84 per machine-hour

29. Jameson Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year:

  • Direct materials $5,000
  • Direct labor $19,000
  • Rent on factory building $16,000
  • Sales salaries $24,000
  • Depreciation on factory equipment $7,000
  • Indirect labor $11,000
  • Production supervisor’s salary $14,000

Jameson estimates that 24,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be: A. $2.00 overhead rate = $48,000 ÷ 24,000 direct labor-hours = $2.00 per direct labor-hour.