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Exam 12: Job-Order, Process, and Hybrid Costing Systems

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Question 21

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O'Hare Company,is a manufacturing firm that uses a job-order cost system to determine the costs of its products.On January 1,2014,O'Hare purchased $3,000 of raw materials with cash.The entry to record the purchase of raw materials would:

A) Increase total assets.
B) Decrease total assets.
C) Have no impact on total assets.
D) Decrease net income.

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Question 22

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Needham Company uses a job order cost system.During the month of September,the company worked on three jobs.The job order cost sheets for the three jobs contained the following information at the end of September: $\begin{array}{|l|r|r|r|}\hline & {\text { Job A }} & {\text { Job B }} &{\text { Job C }} \\\hline \text { Beginning Balances } & \$ 4,000 & \$ 3,000 & \$ 6,000 \\\hline \text { Direct Materials } & 1,000 & 1,600 & 2,000 \\\hline \text { Direct Labor } & 2,400 & 4,600 & 1,800 \\\hline\end{array}$ The company applies overhead at 120% of direct labor cost. The total cost of Job A at the end of September was:

A) $6,280.
B) $10,280.
C) $16,280.
D) $11,720.

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Question 23

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Equivalent units of production would best be defined as: I realize the bold word in text is "equivalent whole units" - However,given the wording of the LO,I have not inserted the word "whole" anywhere.

A hybrid cost system contains:

The use of raw materials in production is:

Which product costing system distributes costs evenly across total production?

Gibbons Company uses a process cost system and the weighted average method.The company had 400 units of product in its work in process inventory at the beginning of the period.During the period 1,500 additional units of product were started.At the end of the period there were 750 units of product in the work in process account.The ending work in process inventory was estimated to be 30% complete.The beginning work in process inventory had a cost of $2,000.There wereProduct costs totaling $42,000 of product costs were added to work in process during the period.The number of equivalent whole units in ending work in process is:

Needham Company uses a job order cost system.During the month of September,the company worked on three jobs.The job order cost sheets for the three jobs contained the following information at the end of September: $\begin{array}{|l|r|r|r|}\hline & {\text { Job A }} & {\text { Job B }} &{\text { Job C }} \\\hline \text { Beginning Balances } & \$ 4,000 & \$ 3,000 & \$ 6,000 \\\hline \text { Direct Materials } & 1,000 & 1,600 & 2,000 \\\hline \text { Direct Labor } & 2,400 & 4,600 & 1,800 \\\hline\end{array}$ The company applies overhead at 120% of direct labor cost. If Job B was sold for $16,000,what was the amount of gross margin for this job? (Ignore any consideration of overunderapplied- or overunderapplied overhead. )

The work in process account for Chambers Company contained the following entries: Debit of $80,000 for direct raw materials Debit of $120,000 for direct labor Debit of $60,000 for manufacturing overhead Ending balance,$84,000,associated with Job #2 The company uses a job-order cost system.Work was only performed on two jobs during the period.The beginning balance in work in process was zero.What was the cost of Job #1,which was started and completed during the period?

Maynard Manufacturing Company uses a job order cost system in its two departments,Machining and Assembly.Overhead is allocated in the Machining Department on the basis of machine hours,while in the Assembly Department overhead is allocated on the basis of direct labor cost.The following budget data are provided: $\begin{array}{|l|r|r|}\hline& \text {Machining Department} & \text { Assembly Department } \\\hline \text {Manufacturing overhead } & \$500,000 & \$ 1,075,000 \\\hline \text {Direct labor cost} &350,000 & 500,000 \\\hline \\\hline \text { Machine hours } & 100,000 & 10,000 \\\hline \text { Direct labor hours } & 50,000 & 150,000 \\\hline\end{array}$ The following information is provided for a job (Job No.510)recently completed by the company: $\begin{array}{|l|r|r|}\hline& \text {Machining Department} & \text { Assembly Department } \\\hline \text {Manufacturing overhead } & \$25,000 & \$ 37,500 \\\hline \text {Direct labor cost} &10,000 & 12,500\\\hline \\\hline \text { Machine hours } & 5,000 & 1,000 \\\hline \text { Direct labor hours } & 2,000 & 3,000 \\\hline\end{array}$ Required: 1)Compute the two departmental overhead rates. 2)Compute the cost of Job No.510. 3)Assume that the company decides to use a single overhead rate for the two departments,calculated by adding their overhead costs and using direct labor hours as the allocation base.What would the overhead rate be,and how much manufacturing overhead cost would be assigned to Job No.510? (Do not round your intermediate calculation. ) Rounding? Added.

O'Hare Company,is a manufacturing firm that uses a job-order cost system to determine the costs of its products.During 2014the current accounting period,O'Hare transferred total product costs for job #132,to finished goods inventory.The recognition of this event would:

Why is the concept of equivalent units important for process costing?

Bates Manufacturing uses a job order cost system,and overhead is applied on the basis of direct labor hours.At the beginning of the period,the company estimated that overhead would be $64,000 and 10,000 direct labor hours would be worked.Two projects were started and completed in the current accounting period.The following transactions were completed during the period: (a) Used $10,000 of direct material on Project I and $6,800 of direct material on Project II. (b) Labor costs for the two jobs amounted to the following: Project I,$24,000 (2,000 hours) ;Project II,$44,000 (6,000 hours) . (c) Project II was sold during the period for $120,000. The company's gross margin for the period was: (Do not round your intermediate calculation. ) :

Select the response from the list provided that best matches each of the following descriptions: $\begin{array}{|l|l|l|} \hline \text {Your Answer } & \text { Description } & \text { Responses } \\\hline & \text { A. System used to determine cost of distinct, one of a kind products } & \text {1. Cost per equivalent whole unit }\\\hline & \text { B. Method used in process cost systems to determine equivalent whole units, where state of completion of beginning units is innored } & \text { 2. Equivalent whole units}\\\hline & \text { C. System used to determine costs of products such as chemicals or paints } & \text { 3. FIFO method }\\\hline & \text { D. Calculated by dividing total production costs by number of equivalent whole units } & \text { 4. Hybrid accounting system }\\\hline & \text {E. The result of expressing partially completed goods in equivalent number of fully completed goods } & \text { 5. Job-order cost sheet }\\\hline & \text {F. Cost system that blends features of job-order and process costing} & \text {6. Job-order cost system}\\\hline & \text {G. Document used in job-order costing system to accumulate material, labor, and overhead costs of a job through the various stages of production. } & \text { 7. Materials requisition }\\\hline & \text {H. Costs that are transferred from one department to the next } & \text { 8. Process cost system }\\\hline & \text {I. Mechanism or document used to request materials needed to begin a job} & \text {9. Transferred-in costs}\\\hline & \text {J. Mechanism or document used to accumulate the time spent on a job by each employee } & \text { 10. Weighted-average method }\\\hline & \text {K . More complicated method of determining equivalent whole units when accuracy is of paramount importance} & \text {11. Work ticket}\\\hline\end{array}$ #2.Since you haven't used "whole" elsewhere,do you want to use it here? Also in B.and K. Also in answer below. Yes.We should use it.I went back through and inserted it as needed.

A materials requisition is sent to the purchasing agent by the materials storeroom clerk to request that additional materials be purchased.

Select the incorrect statement regarding cost flows through a process cost system.

Gaither Company uses a process cost system and the weighted average method.The following data applies to January 2014. $\begin{array}{|l|r|}\hline &{\text { Units }} \\\hline \text { Beginning Work in Process } & 2,500 \\\hline \text { Started during the period } & 25,000 \\\hline \text { Ending Work in Process } & 1,000 \\\hline\end{array}$ The ending work in process inventory is 90% complete.The total number of equivalent whole units for processed during January was:

The weighted average method of calculating equivalent units does not account for the state of completion of units in beginning work in process inventory.

O'Hare Company,is a manufacturing firm that uses a job-order cost system to determine the costs of its products.During 2014the current accounting period,O'Hare recognized cost of goods sold of $4,850 for job #132.The recognition of this event will include a decrease to which of the following accounts?:

Under process costing,a cost of production report is prepared to determine the amount of costs that should be transferred to the next department or to finished goods.