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

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Question 41

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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. During the 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?

A) Cost of Goods Sold.
B) Production Supplies.
C) Work in Process Inventory.
D) Finished Goods Inventory.

E) C) and D)
F) B) and C)

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Question 42

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The Neptune Corporation uses a process cost system and the weighted average method. The company started March with 2,300 units in work in process-Dept.A During the month 4,000 units were started. At the end of the month there were 3,200 units in ending work in process-Dept. A inventory that were 30% complete. The beginning work in process balance was $120,270 and total manufacturing cost for the period was $304,000. Based on this information, the amount of cost transferred from work in process-Dept. A to work in process-Dept. B was:

A) $323,950.
B) $127,281.
C) $271,667.
D) $100,320.

E) None of the above
F) All of the above

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Question 43

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In a job-order cost system a separate job cost sheet is maintained for each job to facilitate costing.

Process costing is used for products produced in mass quantities through a continuous process that provides similar inputs to each unit produced.

Carter Manufacturing Company has two departments, Assembly and Finishing. Consider the following data for the Finishing Department for December: Required: 1) Prepare a cost of production report for the Finishing Department.2) How much cost should be transferred to Finished Goods?

Why is calculating the cost of services provided to customers important for a service business?

In a process cost system, a transferred-in cost is the same thing as raw materials cost.

Factory insurance is an indirect product cost and part of overhead.

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: 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 underapplied or overapplied overhead.) $\begin{array} { | l | r | r | r | } \hline & { \text { Job A } } & { \text { Job B } } & { \text { Job C } } \\\hline \text { Beginning Balances } & \$ 4,000 & \$ 3,000 & \$ 6,000 \\\hline \text { Direct Materials } & 1,000 & 1,600 & 2,000 \\\hline \text { Direct Labor } & 2,400 & 4,600 & 1,800 \\\hline\end{array}$

Indicate whether each of the following statements is true or false.Recognizing depreciation on manufacturing equipment is an asset use transaction.Recognizing depreciation on cars driven by a manufacturing company's executive officers is an asset use transaction.Recognizing revenue from the sale of goods a company has manufactured is an asset source transaction.Recording the cost of goods sold is an asset exchange transaction.If overhead was underapplied during a period, the entry to close the Manufacturing Overhead account would increase cost of goods sold.

For the month of November, Department B completed and transferred to the next department 5,000 units of product. Department B's ending work in process was 3,000 units that were 10 percent complete. The following cost information is available for the period: Required: (A) Determine the cost per equivalent whole unit for the month of November. (Round your answer to three decimal places.)(B) Determine the cost transferred out during the month.(C) Calculate the cost assigned to the ending work in process at the end of the month. (Round your answer to the nearest dollar.) $\begin{array} { | l | r | } \hline \text { Cost transferred in } & \$ 35,000 \\\hline \text { Cost of beginning work in process } & 3,600 \\\hline \text { Direct materials } & 17,000 \\\hline \text { Direct labor } & 9,000 \\\hline \text { Manufacturing overhead } & 12,000 \\\hline\end{array}$

Indicate whether each of the following statements about cost systems is true or false.Job-order cost systems accumulate product costs by department.Job-order cost systems are used by many companies to determine the cost of services provided to customers.Companies use job-order cost systems when they need to determine the cost of individual batches of products.Job-order cost systems allocate costs to homogeneous products.With a process cost system, the cost per unit of product is calculated by dividing total product cost by number of units produced in a batch.

Company N manufactures machines to customer order. Why would the use of a process cost system not be appropriate for N?

Beta Company determined that its manufacturing overhead for the current accounting period was overapplied by $1,400. It closed the amount to cost of goods sold. The recognition of this transaction will:

In a job-order cost system, the subsidiary accounts for the Work in Process Inventory account are the:

Mertz Group is a consulting firm specializing in mergers and acquisitions. In addition to the three partners, the firm employs nine consultants who work directly with clients. The average budgeted compensation for the twelve professionals is $65,000. Each consultant is budgeted at 1,600 billable hours per year. All professional labor costs are included in a single direct cost pool and are traced to jobs on a per-hour basis. All non-professional labor costs are included in a single overhead cost pool and are allocated to jobs using professional labor hours as the allocation base. Budgeted overhead costs total $600,000. During the period the firm worked on the following jobs: (a) The Smith Account: Consultants booked 100 hours (b) The Davis account: Consultants booked 175 hours.Required: 1) Compute the budgeted direct cost rate per hour of professional labor. (Round your answer to three decimal places.)2) Compute the budgeted overhead cost rate per hour of professional labor.3) Compute the cost assigned to each job.4) Compute the fee to be charged to each client assuming the company uses a cost plus pricing approach and marks up cost by 20%.

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: The company applies overhead at 120% of direct labor cost.The total cost of Job A at the end of September was: $\begin{array} { | l | r | r | r | } \hline & { \text { Job A } } & { \text { Job B } } & { \text { Job C } } \\\hline \text { Beginning Balances } & \$ 4,000 & \$ 3,000 & \$ 6,000 \\\hline \text { Direct Materials } & 1,000 & 1,600 & 2,000 \\\hline \text { Direct Labor } & 2,400 & 4,600 & 1,800 \\\hline\end{array}$

Indicate whether each of the following statements about job-order cost systems is true or false.In a job-order cost system, the costs of a job are accumulated on a job cost sheet.Materials requisition forms are prepared by the company's purchasing department to order raw materials from a supplier.A materials requisition form is a source document used in preparing a job cost sheet.A materials requisition form is usually prepared and delivered electronically.A manufacturer's production department is responsible for preparing job cost sheets.

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.

Indicate whether each of the following statements about product cost systems is true or false.The type of product made by a manufacturer affects the type of accounting system that it should use to calculate the costs of its products.Hybrid costing systems are used by service businesses, but not manufacturing companies.A company that manufactures high-volume industrial chemicals such as sulfuric acid would use a job-order cost system.An automobile repair shop would use a job-order cost system to assign costs to individual jobs.Only process cost systems require averaging in assigning costs to products.