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Exam 19: Job Order Cost Accounting

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Question 71

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M.A.E. charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, M.A.E. Company's Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should M.A.E. make at year-end?

A) No entry is needed.
B) Debit Factory Overhead $5,000; credit Cost of Goods Sold $5,000.
C) Debit Cost of Goods Sold $5,000; credit Factory Overhead $5,000.
D) Debit Factory Overhead $5,000; credit Goods in Process Inventory $5,000.
E) Debit Factory Overhead $5,000; credit Finished Goods Inventory $5,000.

F) C) and D)
G) B) and D)

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Question 72

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If actual overhead incurred during a period exceeds applied overhead, the difference will be a credit balance in the Factory Overhead account at the end of the period.

A) True
B) False

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Question 73

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A company that uses a job order cost accounting system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a:

Explain how a service firm, such as an advertising agency, might use job order costing.

A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of product is a:

Erlander Company uses a job order cost accounting system. On November 1, $15,000 of direct materials and $3,500 of indirect materials were requisitioned for production. Prepare the general journal entry to record this requisition.

Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

The Factory Overhead account will have a credit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

When time ticket information is entered into the accounting system, the journal entry is a debit to Factory Payroll and a credit to Goods in Process Inventory.

A source document that an employee uses to report how much time was spent working on a job or on overhead activities and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead is called a:

The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

Cost accounting information is helpful to management in controlling costs but has no effect on pricing decisions.

A manufacturing company uses an overhead allocation rate based on direct labor cost. The company's Goods in Process Inventory account has a $15,000 debit balance after all posting is completed, and the cost sheet of the one job still in process shows direct material costs of $6,600 and direct labor costs of $3,000. What is the company's overhead application rate?

A job order cost accounting system would be appropriate for a manufacturer of automobile tires.

Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

A pricing method where the customer pays the manufacturer for costs incurred on the job plus a negotiated amount or rate of profit is known as a _________________________ basis.

When a job is finished, its job cost sheet is completed and moved from the file of jobs in process to the file of finished jobs that are yet to be delivered to customers.

The two basic types of cost accounting systems are:

Canoe Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. Canoe Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The overhead application rate was: