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“17. Compute the amount of direct materials used during August if $25,000 of raw materials was purchased during the month and the inventories were as follows: Balance Balance Inventories August 1 August 31 Raw Materials $ 5,000 $ 3,000 Work in process 13,000 16,000 Finished goods 25,000 27,000 a. $16,000 b. $19,000 c. $23,000 d. $27,000”,”4Direct materials used during August = Beginning balance of raw materials + Purchases – Ending balance of raw materials 5,000 + 25,000 – 3,000 = $27
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Read more“18. Jameson Company has the following estimated costs for the next year: Direct materials $ 5,000 Direct labor 19,000 Rent on factory building 16,000 Sales salaries 24,000 Depreciation on factory equipment 7,000 Indirect labor 11,000 Production supervisor’s salary 14,000 Jameson estimates that 24,000 direct labor hours will be worked during the year. If overhead is applied on the basis of direct labor hours, the overhead rate per hour will be: a. $2.00 b. $2.79 c. $3.00 d. $4.00”,”1The overhead rate per hour:Predetermined OH rate = Estimated MOH costs / Estimated activity base:= (16,000+7,000+11,000+14,000)/24
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Read more“19. Precision Company used a predetermined overhead rate during 19×2 of $3 per direct labor hour, based on an estimate of 24,000 direct labor hours to be worked during the year. Actual costs and activity during 19×2 were: Actual manufacturing overhead cost incurred $84,000 Actual direct labor hours worked 27,000 The under- or overapplied overhead for 19×2 would be a. $3,000 underapplied b. $3,000 overapplied c. $12,000 underapplied d. $9,000 overapplied”,”1The under or overapplied overhead for 19×2 would be:Applied MOH = Predetermined Rate x Actual Hours3 x 27,000 = $81,000Actual MOH – Applied MOH = Over or (Under)84,000 – 81
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Read more“20. Malcolm Company uses direct labor hours as a base for applying predetermined factory overhead to production jobs. On September 1, the estimates for the month were: Factory overhead $17,000 Direct labor hours 13,600 During September, the actual production figures were: Factory overhead $18,500 Direct labor hours 12,000 The cost records for September will show a. Overapplied overhead of $3,500 b. Underapplied overhead of $2,000 c. Overapplied overhead of $1,500 d. Underapplied overhead of $3,500”,”4Predetermined rate = Estimated MOH/ Estimated DLHPredetermined rate = 17,000 = $1.25/DLH 13,600Applied MOH = DLH x predetermined rateApplied MOH = 12,000 x 1.25 = $15,000Compare to $18,500: Underapplied by 3
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Read more“21. The work in process account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $500 and $300 for materials used, and charges of $400 and $600 for direct labor used. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of a. 83% b. 120% c. 40% d. 250%”,”2Total Cost for uncompleted Jobs = $3,000 – Cost of Raw Materials (800) – DL Cost (1000) = App. MOH 1,200Compare 1,200 to $1
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Read more“22. For 19×4, Parsons Company incurred $250,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount of $12,000 for the year. If the predetermined overhead rate was $8.00 per direct labor hour, how many hours were worked during the year? a. 31,250 hours b. 30,250 hours c. 32,750 hours d. 29,750 hours”,”3Number of hours worked during the year:Applied MOH = Actual MOH + Overapplied overhead = 250,000 + 12,000 = $262,000Actual Hrs = Applied MOH/ = 262,000 /= 32,750 Hrs. PredeterminedRate 8.0023.The overhead rate per hour:= Estimated MOH / Estimated activity base= (40,000+8,000+20,000)/16
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Read more“23. Steele Company has the following estimated costs for next year: Direct materials $20,000 Direct labor 60,000 Sales commissions 80,000 Salary of production supervisor 40,000 Indirect materials 8,000 Advertising expense 16,000 Rent on factory equipment 20,000 Steele estimates that 10,000 direct labor hours and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, the overhead rate per hour will be: a. $4.25 b. $8.00 c. $9.00 d. $10.25”
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Read more“24. Kelson Company applies overhead to completed jobs on the basis of 60% of direct labor cost. If Job 201 shows $27,000 of manufacturing overhead applied, the direct labor cost on the job was: a. $16,200 b. $27,000 c. $37,800 d. $45,000”,”4$27,000 = 60% of DLCDLC = 27,000 = $45
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Read more“25. The Donaldson Company uses a job-order cost system. The following data were recorded for July: July 1 Added During July Work in Process Direct Direct Job Number Inventory Materials Labor 475 $1,500 $ 500 $ 300 476 $1,000 $ 700 $ 900 477 $ 900 $1,000 $1,500 478 $ 700 $1,200 $2,000 Overhead is charged to production at 80 percent of direct materials cost. Jobs 475, 477, and 478 were completed during July and transferred to finished goods. Jobs 475 and 478 have been delivered to the customer. Donaldson’s Work in Process inventory balance on July 31 was: a. $7,280 b. $2,600 c. $3,160 d. $3,320”,”3Total costs in Work in Process for July =Beginning balance = $4,100Direct material = $2,500Direct labor = $4,700Applied MOH (.8×2500) = $2,000Total cost for the month = $13,300Transferred to Finished Gods during he month:Job 475: 1500+500+300+(.8×500) = $2,700Job 477: 900+100+1500+(.8×100) = $2,580J0b 478: 700+1200+2000+(.8×1200) = $4,860Total finished and transferred = $10,140Total costs in Work in Process = Total cost for the period – Total finished and transferred = $13,300 – $10,140 = $3
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