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Chapter 17: Q 15E_c (page 941)
Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.
c. A company that manufactures thousands of identical files.
Answer:
Process costing system is used by the company that manufacture thousands of similar files.
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Refer to the previous question. Give the journal entry to adjust the Manufacturing Overhead account for overallocated or underallocated overhead.
Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.
f. Allocated manufacturing overhead to jobs, 200% of direct labor costs.
Question: The T-account showing the manufacturing overhead activity for Aliyah Corp. for 2018is as follows:
Manufacturing overhead
| 195,000 | 203,000 |
Requirements
2. What is the allocated manufacturing overhead?
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
1. What is Roth’s predetermined overhead allocation rate?
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
4. Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. Does your entry increase or decrease Cost of Goods Sold?
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