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Chapter 17: 17-1SE-g (page 938)
Distinguishing between job order costing and process costing
Would the following companies most likely use job order costing or process costing?
g. A cell phone manufacturer
A cell phone manufacturer is most likely to use process costing system.
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Distinguishing between job order costing and process costing
Would the following companies most likely use job order costing or process costing?
a. A manufacturer of refrigerators
The T-account showing the manufacturing overhead activity for Aliyah Corp. for 2018 is as follows:
Manufacturing overhead
| 195000 | 203,000 |
Requirements
3. Is manufacturing overhead underallocated or overallocated? By how much?
Job 303 includes direct materials costs of \(550 and direct labor costs of \)400. If the predetermined overhead allocation rate is 40% of direct labor cost, what is the total cost assigned to Job 303?
Question: Using job order costing in a service company
Assume that Roth’s accountants are expected to work a total of 8,000 direct labor hours in 2018. Roth’s estimated total indirect costs are $96,000 and the allocation base used is direct labor hours.
Requirements
2. What indirect costs will be allocated to Client 507 if Jack Smith, an accountant at Roth Accounting, works 15 hours to prepare the financial statements?
Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:
Manufacturing overhead costs | \(840,000 |
Direct labor cost | 1,480,000 |
Machine hours | 70,000 hours |
At the end of 2018, the company had actually incurred:
Direct labor cost | \)1,230,000 |
Depreciation on manufacturing plant and equipment | 620,000 |
Property taxes on plant | 35,500 |
Sales salaries | 26,000 |
Delivery driver’s wages | 22,500 |
Plant janitor’s wages | 17,000 |
Machine hours | 60,000 hours |
Requirements
3. Post the manufacturing overhead transactions to the Manufacturing Overhead T-account. Is manufacturing overhead underallocated or overallocated? By how much?
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