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ACCT 204 Lecture Notes - Lecture 18: Direct Labor Cost, Indian Railways, Association To Advance Collegiate Schools Of Business

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limebeaver717
19 Nov 2017
School
VCU
Department
Accounting
Course
ACCT 204
Professor
All

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How much overhead would be allocated to a job if it required total labor costing ,000: ,000, ,000, ,000, ,000, ,000, hancock manufacturing allocates overhead to production on the basis of direct labor costs. Compute the amount of under- or overapplied overhead for the year: ,000 overapplied, ,200 overapplied, ,000 underapplied, ,200 underapplied, ,800 underapplied, the predetermined overhead allocation rate for forsythe, inc. , is based on estimated direct labor costs of. What would be the cost per equivalent unit for conversion costs for the month? (round off to three decimal places. : . 112, . 300, . 533, . 108, loll company uses the weighted-average method in its process costing system. Wild - chapter 19 #59: a company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing ,000: ,000, ,000, ,000, ,000, ,000.

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Related Questions

Pedriani Company uses a job order cost system and applies overhead to production on the basis of direct labor hours. On January 1, 2017, Job No. 25 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $10,000; direct labor $6,000; and manufacturing overhead $9,000. Job No. 23 had been completed at a cost of $42,000 and was part of finished goods inventory. There was a $5,000 balance in the Raw Materials Inventory account.

During the month of January, the company began production on Jobs 26 and 27, and completed Jobs 25 and 26. Jobs 23 and 25 were sold on account during the month for $63,000 and $74,000, respectively. The following additional events occurred during the month.

1. Purchased additional raw materials of $45,000 on account.

2. Incurred factory labor costs of $33,500. Of this amount, $7,500 related to employer

payroll taxes.

3. Incurred manufacturing overhead costs as follows: indirect materials $10,000;

indirect labor $9,500; depreciation expense on equipment $12,000; and various

other manufacturing overhead costs on account $11,000.

4. Assigned direct materials and direct labor to jobs as follows.

Job No.

Direct Materials

Direct Labor

25

$ 5,000

$ 3,000

26

17,000

12,000

27

13,000

9,000

5. The company uses direct labor hours as the activity base to assign overhead. Direct labor hours incurred on each job were as follows: Job No. 25, 200; Job No. 26, 800; and Job No. 27, 600.

Instructions

(a) Calculate the predetermined overhead rate for the year 2017, assuming Pedriani Company estimates total manufacturing overhead costs of $440,000, direct labor costs of $300,000, and direct labor hours of 20,000 for the year.

(b) Open job cost sheets for Jobs 25, 26, and 27. Enter the January 1 balances on the job cost sheet for Job No. 25.

(c) Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.

(d) Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.

(e) Job 25, $37,400

Job 26, $46,600

(e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.

(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month.

(g) What is the balance in the Work in Process Inventory account at the end of the month? What does this balance consist of?

(h) What is the amount of over- or underapplied overhead?

Nixon Company uses a job order cost system and applies overheadto production on the basis of direct laborcost. On January 1, 2014, Job No. 50 was the only jobin process. The costs incurred prior to January 1 on this job wereas follows: direct materials $25,000; direct labor $15,000; andmanufacturing overhead $20,000. Job No. 49 had been completed at acost of $85,000 and was part of finished goods inventory. There wasa $22,000 balance in the Raw Materials inventory account.

During themonth of January, the company began production on Jobs 51 and 52,and completed Jobs 50 and 51. Jobs 49 and 50 were sold on accountduring the month for $118,000 and $125,000, respectively. Thefollowing additional events occurred during the month.

1. Purchased additional raw materials of $200,000 onaccount.

2. Incurred factory labor costs of $41,000. Of this amount$11,000 is related to employer payroll taxes.

3. Incurred manufacturing overheadcosts as follows: indirect materials $3,000; indirect labor $12000;depreciation expense $19,000.

4. Assigned direct materials anddirect labor to jobs as follows.

JobNo. DirectMaterials Direct Labor

50 $8,000 $ 6,000

51 23,000 14,000

52 20,000 11,000

5. The company usesdirect labor cost as the activity base toassign overhead.

Instructions

(a) Calculate thepredetermined overhead rate for the year 2014, assuming Proctor& Gamble Company Manufacturing estimates total manufacturingoverhead costs of $750,000, direct labor costs of $200,000, anddirect labor hours of 25,000 for the year.

(b) Open job cost sheets for Jobs 50,51, and 52. Enter the January 1 balances on the job cost sheet forJob No. 50. (This can be done also when you get to parts d. ande.)

(c) Prepare the journal entries torecord the purchase of raw materials, the factory labor costsincurred, and the manufacturing overhead costs incurred during themonth of January.

(d) Prepare the journal entries torecord the assignment of direct materials, direct labor, andmanufacturing overhead costs to production. In assigningmanufacturing overhead costs, use the overhead rate calculated in(a). Post all costs to the job cost sheets as necessary.

(e) Total the job cost sheets for Job50 and Job 51 that were completed during the month. Prepare thejournal entry to record the completion of these jobs during themonth.

(f) Prepare the journal entries torecord the sale of Job 49 and Job 50 during the month.

(g) What is the balance in theWork in Process Inventory account at the end of the month?What does this balance consist of? (For example which Job and whatspecific costs.)

(h) What is the amount of over- orunderapplied overhead for the month?

I. The basic parts of a joborder costing system are the:

A. Cost______________ and _________________ procedures.

B. ____________________ documents.

C. Accountsthat a company uses when it incurs costs for direct ____________,direct ________________, and ___________________.

II. Accounting for materialsrequires three types of entries.

A. With the ______________ of materials,debit Materials Inventory and credit Accounts Payable.

B. With the _______________ of directmaterials to ________________, debit Work in Process Inventory andcredit Materials Inventory.

C. With the transfer of__________________ materials to production, debit Overhead andcredit Materials Inventory.

III. Accounting for labor requirestwo types of entries.

A. For payroll costs incurred for_____________ labor, debit Work in Process Inventory and creditPayroll Payable.

B. For payroll costs incurred for_______________ labor, debit Overhead and credit PayrollPayable.

IV. Accounting for other overhead requires twotypes of entries.

A. Other overhead includes plant____________, property _____________, insurance, and_______________.

B. To record _____________ overhead costs,debit Overhead and credit Cash or Accumulated Depreciation.

C. To record _____________ overheadcosts, debit Work in Process Inventory and credit Overhead.

D. The actual (debits) and estimated(credits) overhead costs are ________________ at the end of theperiod to determine the accuracy of overhead costrecognition.

V. To recordthe transfer of ________________ units, debit Finished GoodsInventory and credit Work in Process Inventory.

VI. When a companyuses a perpetual inventory system, two accounting entries are madewhen products are sold.

A. To record the sold product’s________________, debit Accounts Receivable (or Cash) and creditSales.

B. To record the sold product’sassociated ____________, debit Cost of Goods Sold and creditFinished Goods Inventory.

VII. Each job in production has a job order_________________.

A. Hasspace for direct materials, direct labor, and overhead costs.

B. Includesthe job order number, product specifications, customer name, dateof order, projected completion date, and a cost summary.

C. Forincomplete jobs, they make up the _______________ ledger for theWork in Process Inventory account.

D. When ajob is completed, the costs are totaled on the_____________________.

1. Unit cost is computed to_____________ items in inventory.

2. Product ___________Cost = Total Costs for Job ÷ Number of Good Units Produced

VIII. Job order costing systems are also used in______________ organizations.

A. Job ordercost cards track ________________ contracts.

IX. Overhead costs are allocated in foursteps.

A. Step 1: _____________ the overheadrate.

1. A ________________ overheadrate is calculated as estimated overhead costs divided by estimatedcost driver activity.

B. Step 2:______________ the overhead rate.

1. Costs are assigned by multiplyingthe actual cost _____________ activity by the predeterminedoverhead rate.

C. Step 3:Record ________________ overhead costs

D. Step 4:_________________ applied and actual overhead amounts

1. Ifover- or underapplied amounts are minimal, credit or debit_________________.

2. Ifover- or underapplied amounts are material, adjustments should bemade to the inventory accounts affected.

X. The__________________ approach to applying overhead costs is to use asingle plantwide rate.

XI. The moreaccurate _____________________ approach to applying overhead costscreates many smaller activity pools and establishes separate ratesfor each pool.