Quiz 2: Job Order Costing

Multiple Choice:

1. Under the job-order system, purchases of direct materials are debited to:
a. Materials
b. Work In Process
c. Factory Overhead Control
d. Finished Goods

2. What is the best cost accumulation procedure to use when many batches, each differing as to product
specification, are produced?
a. Job order
b. Process
c. Actual
d. Standard

3. Which of the following production operations would be most likely to employ a job order system of cost
accounting?
a. Toy manufacturing
b. Shipbuilding
c. Crud oil refining
d. Candy manufacturing

4.When a manufacturing company has a highly automated plant producing many

different products, probably the most appropriate basis of applying factory overhead
costs to Work in Process is:
a. units processed
b. machine hours
c. direct labor hours
d. direct labor dollars
e. none of the above

5.Job costing information is used ________.

a. to determine target customers
b. to calculate the percentage of completion
c.for internal financial reporting
d. to enhance public relations

6.Job costing is ________.

a.used by businesses to price identical products
b. used by businesses to price unique products for different jobs
c.used to calculate equivalent units
d. used to calculate the percentage of work completed

7.Job costing ________.

a. cannot be used by the service industry
b. records the flow of costs for each product or service
c.allocates an equal amount of cost to each unit made during a time period
d. is used when each unit of output is identical

8. In a normal costing system, the Manufacturing Overhead Control account ________.

a.is increased by allocated manufacturing overhead

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 b. is credited with amounts transferred to Work-in-Process
c.is decreased by allocated manufacturing overhead
d. is debited with actual overhead costs

9. Which of the following is true of the Work-in-Process Control account?

a. It tracks all direct material purchases.
b. Its balance is the sum of amounts from all in-process individual job-cost records.
c. It is an expense account.
d. It tracks overhead costs in-process from beginning through completion.

10. Direct costs ________.

a.are anything for which a measurement of costs is desired
b. are costs related to a particular cost object that can be traced to that cost
object in a cost-effective manner
c.focus specifically on the costing needs of the CFO
d. are costs related to a particular cost object that cannot be traced to that cost
object in a cost-effective manner

11.Howell Corporation has a job order cost system. The following debits (credits)
appeared in Work in Process for the month of July:

July 1, balance................................................................................... P 12,000

July 31, direct materials..................................................................... 40,000
July 31, direct labor............................................................................ 30,000
July 31, factory overhead................................................................... 27,000
July 31, to finished goods................................................................... (100,000)

Howell applies overhead to production at a predetermined rate of 90% based on

the direct labor cost. Job 1040, the only job still in process at the end of July, has
been charged with factory overhead of P2,250. What was the amount of direct
materials charged to Job 1040?
A. 6,750
B. 2,250
C. 2,500
D. 4,250

12.Selected cost data (in thousands) concerning the past fiscal year's operations of the
Moscow Manufacturing Company are presented below.

Inventories
Beginning Ending
Materials..................................................................... P75 P 85
Work in process.......................................................... 80 30
Finished goods............................................................ 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct
materials, direct labor, and factory overhead applied at the rate of 60% of
direct labor cost), P686
Cost of goods available for sale, P826

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 Selling and general expenses, P25

The cost of goods sold during the year was:

A. 716
B. 691
C. 801
D. 736

13.J. D. Doonesbury Company manufactures tools to customer specifications. The

following data pertain to Job 1501 for April:

Direct materials used.......................................................................... P 4,200

Direct labor hours worked................................................................... 300
Direct labor rate per hour................................................................... P 8.00
Machine hours used............................................................................ 200
Applied factory overhead rate per machine hour................................ P 15.00

What is the total manufacturing cost recorded on Job 1501 for April?
A. 9,600
B. 10,300
C. 11,100
D. 5,400
E. 8,800

14. Pidro

Voyager Inc. produces customized vans in a job order shop. On November 1, the following balances appear in the
inventory records

Finished goods......................................................................................................................................... P179,000

Work in process....................................................................................................................................... 308,000

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Materials.................................................................................................................................................. 83,000

The amount in Finished Goods represents $101,000 recorded for Van 175 and $78,000 recorded for Van 177. The
work in process account represents the three vans in process, as follows:

Van 179 Van 180 Van 181

Factory overhead................................................................................. P75,000 P50,000 P25,000
Direct labor.......................................................................................... 60,000 40,000 20,000
Direct materials................................................................................... 26,000 7,000 5,000

The following transactions occurred during November:

(a) Purchased materials on account, P80,000.
(b) Requisitioned P60,000 of materials from inventory: P15,000 applied to Van 180, P25,000 to Van 181, and
P16,000 to Van 182, a new order; the balance was for indirect materials.
(c) Paid the payroll and the labor cost distribution in a single entry: total payroll, P208,750. Of the payroll cost,
10% applied to Van 179, 20% to Van 180, 35% to Van 181, 30% to Van 182, and the remainder to indirect
labor.
(d) Applied factory overhead at the rate of 150% of direct labor cost.
(e) Completed Vans 179 and 180.
(f) Sold Vans 175, 177, and 180 at 50% over manufacturing costs.

Required:
15. Prepare general journal entries to record transactions (a) to (f).
a Materials 80,000
Accounts payable 80,000
b Work in process inventory 56,000
FO control 4,000
Materials 60,000
c Work in process inventory 198,312.50
FO control 10,437.50
Payroll 208,750
d Work in process inventory 297,468.75
FO applied 297,468.75
e Finished goods inventory 429,562.500
Work in process inventory 429,562.500
f. Cash or accounts receivable 593,062.50
Sales 593,062.50

Cost of goods sold 395,375

Finished goods inventory 395,375

16. How much is the cost of goods manufactured? (rounded to the nearest cent) 429,529.50

17. What is the balance of the work in process account at the end of the period? (rounded to the nearest cent)
395,375

18. What is the balance of the finished goods account at the end of the period? 430,218.75

19. What is the balance of the finished goods account at the end of the period? (rounded to the nearest

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 cent) 213,187.50,

Parker Company manufactures custom-built conveyor systems for factory and commercial operations. Susan Jones
is the cost accountant for Parker Company and she is in the process of educating a new employee, Terry Smith
about the job-order costing system that Parker Company uses. (The system is based on normal costs; overhead is
applied based on direct labor cost and rounded to the next whole peso.) The following job-order cost records are
available for July:

Direct Direct Total

Job No. Materials Labor Applied OH Cost
667 P 5,901 P1,730 p 1,990 P 9,621
669 18,312 1,810 2,082 22,204
670 406 500 575 1,481
671 51,405 9,500 10,925 71,830
672 9,615 550 633 10,798

To explain the missing job number, Susan informed Terry that Job #668 had been completed in June. She also told
her that Job #667 was the only job in process at the beginning of July. At that time, the job had been assigned
P4,300 for direct material and P900 for direct labor. At the end of July, Job #671 had not been completed; all others
had. Terry asked Susan several questions to determine whether she understood the job-order system.

Required: Help Susan answer the following questions:

20 What is the predetermined overhead rate used by Parker Company? 115%

21 What was the total cost of beginning Work in Process inventory? 6,235

22 What was cost of goods manufactured for July? 50,339

23. Moon Cor. Transferred P72,000 of raw materials to its production department in February and incurred P37,000 of
conversion costs P22,000 of direct labor and p15,000 of overhead). At the beginning of the period, P14,000 of
inventory (material and conversion costs) was in process. At the end of the period, P18,000 of inventory was in
process. What was the cost of goods manufactured? 105,000

24. Star Co. is a manufacturing concern using the perpetual inventory system. The following materials inventory account
data is provided:

Beginning balance P 275,000

Other debits to the account 825,000
Excess of ending inventory over beginning inventory 55,000

How much is the cost of materials issued to production? 770,000

Sun Co. uses job order costing. Factory overhead is applied to production at a determined rate based on direct-labor
cost. Any over-or-underapplied factory overhead is closed to the cost of goods sold account at the end of each
month. Additional information is available as follows:

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 a. Job 101 was the only job in process at January 31, 2020, with accumulated costs as follows:
Direct materials P4,000
Direct labor 2,000
Applied factory overhead 3,000

b. Jobs 102,103, and 104 were started during February.

c. Direct materials requisitions for February totaled, P26,000.
d. Direct-labor cost of P20,000 was incurred for February.
e. Actual factory overhead was P32,000 for February.
f. The only job still in process at February 28, 2020 was Job 104, with cost of P2,800 for direct materials and
P1,800 for direct labor.

25. how much is the cost of goods manufactured for February 2020? 77,700

26. if all jobs finished are sold, what is the amount of cost of goods sold, actual? 79700

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