CH4 Test Bank (Problems)
CH4 Test Bank (Problems)
CH4 Test Bank (Problems)
For each item below indicate the source documents that would most likely authorize the journal entry in
a job-costing system.
Required:
a. direct materials purchased
b. direct materials used
c. direct manufacturing labor
d. indirect manufacturing labor
e. finished goods control
f. cost of goods sold
Answer:
a. purchase invoice
b. materials requisition record
c. labor time card/record
d. labor time card
e. job-cost record
f. sales invoice
A manufacturer estimates that it will incur variable indirect costs for the month of October of $70,000 and
$30,000 of fixed costs. The company uses direct labor hours to calculate the predetermined overhead rate
and predicted that 3,000 direct labor hours would be used in October. Actual direct labor hours
amounted to 3,200.
Required:
A) What is the variable predetermined indirect rate for October?
B) What is the fixed predetermined indirect cost rate for October?
C) What is the total allocation rate per direct labor hour for October?
Answer: A) $70,000/3,000 = $23.33 per direct labor hour
B) $30,000/3000 - $10.00 per direct labor hour
C) $23.33 + $10.00 = $33.33 per direct labor hour
Rally Company manufactures garage storage systems for homeowners. It uses a normal costing system
with two direct cost categories - direct materials and direct labor - an one indirect-cost pool,
manufacturing overhead costs.
For 2018:
Budgeted manufacturing overhead costs $1,000,000
Budgeted manufacturing labor-hours 20,000 hours
Actual manufacturing overhead costs $1,100,000
Actual direct manufacturing labor-hours 22,000
Actual direct material costs $10,000
Actual direct manufacturing labor hours 200
Actual direct manufacturing labor rate $20 per hour
Required:
Calculate the total manufacturing costs using normal costing.
Answer: $24,000 = $10,000 + (200 x $20) + (200 x $50)
Chief Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate
to allocate manufacturing overhead costs to the various jobs contracted during the year. The following
estimates are provided for the coming year for the company and for the Somerset High School Science
Olympiad Jacket job.
Company Somerset High School
Job
Direct materials $25,000 $600
Direct manufacturing labor $5,000 $200
Manufacturing overhead costs $20,000