Ch 17 - Job Order Costing

Question 1

Predetermined Manufacturing Overhead Rate

Answer 1

Predetermined Manufacturing Overhead Rate =

Total Estimated Overhead Cost

Estimated Quantity

of the Allocation Base

Question 2

Job order costing …

Process order costing …

Answer 2

Job Order Costing - Accumulates cost for each “batch” or “job”

Process Order Costing - Accumulates costs of each process needed to complete the product

Question 3

As costs are added while making the product

we debit _____.

When products are finished

we move the costs from _____ to _____.

Answer 3

As costs are added while making the product

we debit Work in Process.

When products are finished

we move the costs from Work in Process (credit) to Finished Goods (debit).

Question 4

The costs that make up a product:

1. _____
2. _____
3. _____

Answer 4

The costs that make up a product:

1. Direct Materials
2. Direct Labor
3. Manufacturing Overhead

Question 5

When a manufacturing company uses direct labor it assigns the cost by debiting…

a. Work in process inventory
b. Manufacturing overhead
c. Direct labor
d. Wages Payable

Answer 5

When a manufacturing company uses direct labor it assigns the cost by debiting…

a. Work in process inventory

b.

c.

d.

Question 6

When a manufcaturing company uses indirect materials, it assigns the cost by debiting:

a. Work in Process Inventory
b. Indirect Materials
c. Materials Inventory
d. Manufacturing Overhead

Answer 6

When a manufcaturing company uses indirect materials, it assigns the cost by debiting:

a.

b.

c.

d. Manufacturing Overhead

Question 7

When a manufacturing company uses direct materials it assigns the cost by debiting:

a. Direct Materials
b. Work in Process Inventory
c. Manufacturing Overhead
d. Materials Inventory

Answer 7

When a manufacturing company uses direct materials it assigns the cost by debiting:

a.

b. Work in Process Inventory

c.

d.

Question 8

Which of the following are Manufacturing Overhead:

indirect labor

depreciation on plant

machinery repair/ maintenance

direct labor

plant supplies

plant utilities

advertising

sales commissions

insurance

Answer 8

Manufacturing Overhead:

indirect labor

depreciation on plant

machinery repair/ maintenance

plant supplies

plant utilities

insurance

Question 9

If Manufacturing Overhead is Overallocated:

Journal Entry to Close Manufacturing Overhead?

Answer 9

Manufacturing Overhead xxxx (debit)

Cost of Goods Sold xxxx (credit)

Because overallocated = credit balance

• Allocations to Work in Progress are credits to Manufacturing Overhead
• Actual overhead costs are debits to Manufacturing Overhead

Question 10

If Manufacturing Overhead is Overallocated

it has a _____ blance.

If Manufacturing Overhead is Underallocated

it has a _____ blance.

Answer 10

If Manufacturing Overhead is Overallocated

it has a credit blance.

If Manufacturing Overhead is Underallocated

it has a debit blance.

Question 11

Allocations to Work in Progress are ____ to Manufacturing Overhead

Actual overhead costs are _____ to Manufacturing Overhead

Answer 11

Allocations to Work in Progress are credits to Manufacturing Overhead

Actual overhead costs are debits to Manufacturing Overhead

Question 12

…….

Less: …..

= Indirect Materials Used

Answer 12

Materials Requisitioned

Less: Direct Materials Used

= Indirect Materials Used

Question 13

Direct Labor is [debit/credit]

to the [] account

Indirect Labor is [debit/credit]

to the [] account

Answer 13

Direct Labor is debited to the Work In Process Inventory account

Indirect Labor is debited to the Manufacturing Overhead account

Journal Entry:

Work in Process Inventory xxx

Manufacturing Overhead xxx

Wages Payable xxx

Question 14

Journal Entry to account for Direct Labor and Indirect Labor during the manufacturing process

Answer 14

Journal Entry:

Work in Process Inventory xxx <- direct

Manufacturing Overhead xxx <- indirect

Wages Payable xxx

Question 15

Journal Entry to allocate

Manufacturing Overhead to jobs:

Answer 15

Journal Entry to allocate

Manufacturing Overhead to jobs:

Work in Process Inventory xxx

Manufacturing Overhead xxx

Question 16

Conversion costs are ….

Answer 16

Conversion costs are the combination of direct labor costs plus manufacturing overhead costs.

You can think of conversion costs as the manufacturing or production costs necessary to convert raw materials into products.

Expressed another way, conversion costs are a manufacturer’s product or production costs other than the costs of raw materials.

The term conversion costs often appears in the calculation of the cost of an equivalent unit in a process costing system.