Chap 3

1. Consider the following statements:

I. Predetermined overhead rates are based on estimated cost and estimated activity data.

II. The cost of a completed job in a job-order costing system typically consists of the actual direct

materials cost of the job, the actual direct labor cost of the job, and the manufacturing overhead

cost applied to the job.

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

2. Consider the following statements:

I. Manufacturing overhead is overapplied if actual manufacturing overhead costs for a period are

less than the amount of manufacturing overhead that was charged to Work in Process.

II. If a job is not completed at year end, then no manufacturing overhead cost would be

applied to that job when a predetermined overhead rate is used.

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

3. Consider the following statements:

I. The Cost of Goods Manufactured equals ending work in process inventory, plus the total

manufacturing costs charged to jobs, less beginning work in process inventory.

II. The labor time ticket contains a detailed summary of the direct and indirect labor hours of an

employee.

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

4. In a job-order costing system, the amount of overhead cost that has been applied to a job that

remains incomplete at the end of a period [See chapter emphasis]:

a. is deducted of the Income Statement as overapplied overhead.

b. is closed to Cost of Goods Sold.

c. is transferred to Finished Goods at the end of the period.

d. is part of the ending balance of the Work-in-Process inventory account.

5. In a job-order costing system that is based on machine-hours, which of the following formulas

is correct?

a. Predetermined overhead rate = Estimated manufacturing overhead Estimated machine-hours

b. Predetermined overhead rate = Estimated manufacturing overhead Actual machine-hours

c. Predetermined overhead rate = Actual manufacturing overhead Actual machine-hours

d. Predetermined overhead rate = Actual manufacturing overhead Estimated machine-hours

6. The job cost sheet:

a. summarizes all costs charged to a particular job.

b. contains only direct costs such as direct materials and direct labor.

c. is discarded after production is begun on a particular job.

d. is useful only in accounting for employee withholding taxes.

7. Parker Corporation has a job-order costing system and uses a predetermined overhead rate based

on direct labor Hours to apply manufacturing overhead to jobs. At the beginning of the year,

manufacturing overhead and direct labor Hours were estimated at $50,000 and 20,000 hours,

respectively. In June, Job #461 was completed. Material costs on the job totaled $3,250 and direct

labor costs totaled $2,000 at $5 per hour. If Job #461 contained 100 units, the unit product cost on

the completed job cost sheet would be:

a. $61.75 c. $63.10 e. None of the above. The answer is ______.

b. $62.50 d. $55.00

8. Crombie Inc. uses a job-order costing system. The company has provided the following data:

Cost of goods Manufactured for the month $141,000. Work-in-process inventory: beginning

$13,000, ending $20,000; Finished-goods Inventory: beginning $56,000, ending $29,000.

The {unadjusted} cost of goods sold for the month is [see chapter emphasis]:

a. $114,000 c. $186,000 e. None of the above. The answer is ______

b. $164,000 d. $208,000

9. Reamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for next year:

Direct materials	$	1,000
Direct labor	$	3,000
Sales commissions	$	4,000
Salary of production supervisor	$	2,000
Indirect materials	$	400
Advertising expense	$	800
Rent on factory equipment	$	1,000

Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:

a. $6.80 per machine-hour

b. $6.00 per machine-hour

c. $3.00 per machine-hour

d. $3.40 per machine-hour

e. None of the above. The answer is _____

10. Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data:

Total direct labor-hours		40,000
Total fixed manufacturing overhead cost	$	90,000
Variable manufacturing overhead per direct labor-hour	$	3.00

Recently, Job P951 was completed with the following characteristics:

Number of units in the job		20
Total direct labor-hours		100
Direct materials	$	755
Direct labor cost	$	4,000

The total job cost for Job P951 is closest to: (Round your intermediate calculations to 2 decimal places.)

a. $4,540

b. $4,755

c. $5,280

d. $5,495

e. None of the above. The answer is _____