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When factory payroll costs are assigned to products in a job cost accounting system:
A. Factory Labor is debited and Work in Process is credited.
B. Work in Process Inventory and Factory Overhead are debited and Factory Labor is credited.
C. Cost of Goods Manufactured is debited and Direct Labor is credited.
D. Direct Labor and Indirect Labor are debited and Factory Labor is credited.
E. Work in Process is debited and Factory Labor is credited.
Canoe Company’s manufacturing accounting system uses direct labor costs to apply overhead to work in process and finished goods inventories. Canoe Company’s manufacturing costs for the year were: direct labor, $30,000; direct materials, $50,000; and manufacturing overhead applied, $6,000. The overhead allocation rate was: 5.0%.
The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company’s overhead allocation rate is: 40%.
O.K. Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company’s overhead allocation rate? 6.25%.
If one unit of Product X used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale? $8.00.
The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If the overhead applicable to these goods is $3,000, and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units?
At the current year-end, Hardly Company found that its overhead was underapplied by $2,500, and this amount was not deemed to be a material amount. Based on this information, Hardly should: Close the $2,500 to Cost of Goods Sold.
A. Close the $2,500 to Finished Goods Inventory.
B. Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year.
C. Carry the $2,500 to the income statement as “Other Expense”.
D. Carry the $2,500 to the next period.
The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:
A. Estimated overhead.
B. Predetermined overhead.
C. Underapplied overhead.
D. Overapplied overhead.
If a company applies overhead to production with a predetermined rate, a credit balance in the Manufacturing Overhead account at the end of the period means that:
The bookkeeper has made an error because the debits don’t equal the credits.
A. The balance will be carried forward to the next period as an overhead cost.
B. Actual overhead was less than the overhead amount charged to production.
C. The overhead was underapplied for the period.
D. Actual overhead was greater than the overhead amount charged to production.
Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include: A debit to Cost of Goods Sold for $600.
A. A credit to Manufacturing Overhead for $600.
B. A credit to Finished Goods Inventory for $600.
C. A debit to Work in Process Inventory for $600.
D. A credit to Cost of Goods Sold for $600.