Discussion Questions 1. Why must a company estimate the amount of factory over- head assigned to individual jobs or job lots? 2. Some companies use labor cost to apply factory over- head to jobs. Identify another factor (or base) a company might reasonably use to apply overhead costs. 3. What information is recorded on a job cost sheet? How do management and employees use job cost sheets? 4. In a job order costing system, what records serve as a sub- sidiary ledger for Work in Process Inventory? For Finished Goods Inventory? 5. What journal entry is recorded when a materials manager receives a materials requisition and then issues materials (both direct and indirect) for use in the factory? 6. How does the materials requisition help safeguard a company's assets? 7. Google uses a "time ticket" for some em- GOOGLE ployees. How are time tickets used in job order costing? 8. What events cause debits to be recorded in the Factory Overhead account? What events cause credits to be re corded in the Factory Overhead account? 9. Google applies overhead to product costs. GOOGLE What account(s) is(are) used to eliminate overapplied or underapplied overhead from the F Overhead account, assuming the amount is not material 10. Assume that Apple produces a batch of APPLE 1,000 iPhones. Does it account for this as 1,000 individual jobs or as a job lot? Explain (consider benefits). in consider costs and Chapter 19 Job Order Costing 709 sta company use predetermined overheal rates 11. Why mus " when using job order costing? 12. How would 14. A . Sorint will install and service a server to link all of a customer's employees' smartphonesto il centralized com- piny server for an up-front flat price. How can Sprint use a joh order casting system Hari I would a hospital apply job order casting? Explain. Davidson manufachines 30 custom made, luxury motorcycles. Does it account for these t orcycles xlividual jobs or as a job lot xnlain 13. aconnect QUICK STUDY ine which of the following are most likely to be considered as a job and which as a jablol. 1. Hats imprinted with company logo 4. A 90-foot motor yacht 2. Little League trophies 5. Weckling dresses for a chain of stores 3. A handcrafted table 6. A custom-designed home OS 19.1 Jobs and job lots C1 c es Cars's job cost sheet for Job A40 shows that the cost to add security features to a car was 10 Son. The car was delivered to the customer, who paid $14.900 in cash for the added features. What mal entries should Clemens record for the completion and delivery of Job A40! OS 19-2 Jon cost sheets C2 Label each item a through e below as a feature of either a job onder d) or process (P) operation. _a. Heterogeneous products and services _d. Low production volume b. Routine, repetitive procedures e. Low product standardization c. Low product flexibility OS 19-3 Comparing process and job order operations Dering the current month, a company that uses job order costing purchases $50.000 in raw materials for cash. It then uses $12.000 of raw materials indirectly as factory supplies and uses $32,00%) of raw materi ak as direct materials. Prepare journal entries to record these three transactions OS 19-4 raw materials journal entries P1 QS 19.5 Labor journal entries P2 During the current month, a company that uses job order costing incurred a monthly factory payroll of S160.000. Of this amount. $40,000 is classified as indirect labor and the remainder as direct. Prepare mal entries to record these transactions company estimates the following manufacturing costs for the next period: direct labor, S168.000, direct Materials, S390,000: and factory overhead. S117.000. Compute ils predetermined overhead rate as a per cent of (l) direct labor and direct materials. Express your answers as percents, winded to the nearest QS 19-6 Factory overhead rates P3 whole number QS 19.7 Aaplying overhead P3 the beginning of the year, a company predicts total overhead costs of $50,0X). The company applies werhead using machine hours and estimates it will use 1,40) machine hours during the year. What amount Oriead should be applied to Job 65A if that job uses 13 machine hours during January? OS 19-8 Predetermined overhead rato P3 What is the predeterminedo e beginning of the year, a company predicts total direct materials costs of $900,000 and total over costs of S1,1700XX). If the company uses direct materials costs as its activity base to apply overhead, le predetermined overhead rate it should use during the year! De March 1 a dressmak QS 19.9 Applying Overhead Pa de costing and conth, the jobs use tach of the three jobs. ich la dressmaker starts work on three custom-designed wedding dresses. The company uses job ng and applies Overhead to cach job dress) at the rate of 4 of direct manas costs. During the jobs used direct materials as shown below. Compute the amount of overhead applied to Job S5.000 Job 2 $5,000 Job 3 $1.500 Discussion Questions 1. Why must a company estimate the amount of factory over- head assigned to individual jobs or job lots? 2. Some companies use labor cost to apply factory over- head to jobs. Identify another factor (or base) a company might reasonably use to apply overhead costs. 3. What information is recorded on a job cost sheet? How do management and employees use job cost sheets? 4. In a job order costing system, what records serve as a sub- sidiary ledger for Work in Process Inventory? For Finished Goods Inventory? 5. What journal entry is recorded when a materials manager receives a materials requisition and then issues materials (both direct and indirect) for use in the factory? 6. How does the materials requisition help safeguard a company's assets? 7. Google uses a "time ticket" for some em- GOOGLE ployees. How are time tickets used in job order costing? 8. What events cause debits to be recorded in the Factory Overhead account? What events cause credits to be re corded in the Factory Overhead account? 9. Google applies overhead to product costs. GOOGLE What account(s) is(are) used to eliminate overapplied or underapplied overhead from the F Overhead account, assuming the amount is not material 10. Assume that Apple produces a batch of APPLE 1,000 iPhones. Does it account for this as 1,000 individual jobs or as a job lot? Explain (consider benefits). in consider costs and Chapter 19 Job Order Costing 709 sta company use predetermined overheal rates 11. Why mus " when using job order costing? 12. How would 14. A . Sorint will install and service a server to link all of a customer's employees' smartphonesto il centralized com- piny server for an up-front flat price. How can Sprint use a joh order casting system Hari I would a hospital apply job order casting? Explain. Davidson manufachines 30 custom made, luxury motorcycles. Does it account for these t orcycles xlividual jobs or as a job lot xnlain 13. aconnect QUICK STUDY ine which of the following are most likely to be considered as a job and which as a jablol. 1. Hats imprinted with company logo 4. A 90-foot motor yacht 2. Little League trophies 5. Weckling dresses for a chain of stores 3. A handcrafted table 6. A custom-designed home OS 19.1 Jobs and job lots C1 c es Cars's job cost sheet for Job A40 shows that the cost to add security features to a car was 10 Son. The car was delivered to the customer, who paid $14.900 in cash for the added features. What mal entries should Clemens record for the completion and delivery of Job A40! OS 19-2 Jon cost sheets C2 Label each item a through e below as a feature of either a job onder d) or process (P) operation. _a. Heterogeneous products and services _d. Low production volume b. Routine, repetitive procedures e. Low product standardization c. Low product flexibility OS 19-3 Comparing process and job order operations Dering the current month, a company that uses job order costing purchases $50.000 in raw materials for cash. It then uses $12.000 of raw materials indirectly as factory supplies and uses $32,00%) of raw materi ak as direct materials. Prepare journal entries to record these three transactions OS 19-4 raw materials journal entries P1 QS 19.5 Labor journal entries P2 During the current month, a company that uses job order costing incurred a monthly factory payroll of S160.000. Of this amount. $40,000 is classified as indirect labor and the remainder as direct. Prepare mal entries to record these transactions company estimates the following manufacturing costs for the next period: direct labor, S168.000, direct Materials, S390,000: and factory overhead. S117.000. Compute ils predetermined overhead rate as a per cent of (l) direct labor and direct materials. Express your answers as percents, winded to the nearest QS 19-6 Factory overhead rates P3 whole number QS 19.7 Aaplying overhead P3 the beginning of the year, a company predicts total overhead costs of $50,0X). The company applies werhead using machine hours and estimates it will use 1,40) machine hours during the year. What amount Oriead should be applied to Job 65A if that job uses 13 machine hours during January? OS 19-8 Predetermined overhead rato P3 What is the predeterminedo e beginning of the year, a company predicts total direct materials costs of $900,000 and total over costs of S1,1700XX). If the company uses direct materials costs as its activity base to apply overhead, le predetermined overhead rate it should use during the year! De March 1 a dressmak QS 19.9 Applying Overhead Pa de costing and conth, the jobs use tach of the three jobs. ich la dressmaker starts work on three custom-designed wedding dresses. The company uses job ng and applies Overhead to cach job dress) at the rate of 4 of direct manas costs. During the jobs used direct materials as shown below. Compute the amount of overhead applied to Job S5.000 Job 2 $5,000 Job 3 $1.500