1. Job Costing and Process Costing Track Costs Differently

\Accounting 2

Handouts

Assignment 7.1 Handout

1. Job costing and process costing track costs differently.

Requirement

Would the following companies use job order costing or process costing?

2. For a manufacturer that uses job order costing, there is a correct order that the costsflow through the accounts.

Requirement

Order the following from 1–4. Item 1 has been completed for you.

3. Gear Packs manufactures backpacks. Its plant records include the followingmaterials-related transactions:

Requirements

R1. What journal entries record these transactions?

R2. Post these transactions to the Materials inventory account.

R3. If the company had $35,000 of Materials inventory at the beginning of theperiod, what is the ending balance of Materials inventory?

4. Boston Enterprises produces LCD touch screen products. The company reports thefollowing information at December 31, 2010:

Boston began operations on January 30, 2010.

Requirements

R1. What is the cost of direct materials used? The cost of indirect materials used?

R2. What is the cost of direct labor? The cost of indirect labor?

5. Evergreen Furniture manufactures wood patio furniture. The company reports thefollowing costs for June 2011:

Requirement

What is the balance in the Manufacturing overhead account?

6. Job 303 includes a direct materials cost of $470 and direct labor costs of $350.

Requirement

If the manufacturing overhead allocation rate is 60% of direct labor cost, whatis the total cost assigned to Job 303?

7. Refer to the data in exercise 4.

Requirements

R1. What is the actual manufacturing overhead of Boston Enterprises?

R2. What is the allocated manufacturing overhead?

R3. Is manufacturing overhead underallocated or overallocated? By how much?

8. The T-account showing the manufacturing overhead activity for Edith, Corp., for2011 is as follows:

Requirements

R1. What is the actual manufacturing overhead?

R2. What is the allocated manufacturing overhead?

R3. What is the predetermined manufacturing overhead rate as a percentage of directlabor cost, if actual direct labor costs were $170,000?

R4. Is manufacturing overhead underallocated or overallocated? By how much?

R5. Is Cost of goods sold too high or too low?

9. Refer to the data in exercise 8.

Requirement

R1. Journalize the entry to close out the company’s Manufacturing overheadaccount.

10. Blake Advertising pays Amanda Hilton $108,000 per year. Hilton works2,000 hours per year.

Requirements

R1. What is the hourly cost to Blake Advertising of employing Hilton?

R2. What direct labor cost would be traced to client 507 if Hilton works 18 hours toprepare client 507’s magazine ad?

11. Consider the following incomplete statements.

Requirement

Complete each of the statements with the term job order costing or the termprocess costing.

12. Great Quality Trailers’ job cost records yielded the following information:

Requirement

Using the dates above to identify the status of each job, compute Great Quality ’scost of (a) Work in process inventory at May 31, (b) Finished goods inventory atMay 31, and (c) Cost of goods sold for May.

13. Consider the following transactions for Sleek’s Furniture:

Requirement

Journalize the transactions in Sleek’s general journal.

14. Simms Realtors, a real estate consulting firm, specializes in advising companies onpotential new plant sites. The company uses a job order costing system with a predeterminedindirect cost allocation rate, computed as a percentage of direct labor costs.At the beginning of 2011, managing partner Debra Simms prepared the followingbudget for the year:

Maynard Manufacturing, Inc., is inviting several consultants to bid for work. DebraSimms estimates that this job will require about 260 direct labor hours.

Requirements

R1. Compute Simms Realtors’ (a) hourly direct labor cost rate and (b) indirect costallocation rate.

R2. Compute the predicted cost of the Maynard Manufacturing job.

R3. If Simms wants to earn a profit that equals 55% of the job’s cost, how muchshould she bid for the Maynard Manufacturing job?

Accounting 2 Assignment HandoutPage 1 of 64/22/2019