Question 1
tb.job.oc.038_1809
Ed was working on a custom-made workbench for a customer. The job, TB0414, was
started in November. At the end of November, the job cost sheet for TB0414 showed
direct materials of $215, direct labor of 14 hours at $18 per hour, and overhead of 50%
of direct labor cost. During December, $85 of direct materials were added to Job TB0414
and Ed's time ticket showed 15 hours on Job TB0414, 25 hours on Job TB0614, 10
hours of maintenance on the lathe, and 40 hours on a new job, DR1014. Job TB0414
was completed on December 28. What is the total cost of Job TB0414 as of December
28?
$1,083
$593
$490
$783
You Answered Correctly!
Correct. The total cost of Job TB0414 equals direct materials plus direct labor plus
overhead applied in November and December.
Direct materials = ($215 + $85) = $300
Direct labor = (14 + 15) × $18 = $522
Overhead applied = $522 × 50% = $261
Total cost of Job TB0414 = $300 + $522 + $261 = $1,083
Question 2
tb.job.oc.016_1809
Which of the following statements about process cost accounting is true?
A process cost accounting system is generally not used in companies that mass produce
similar products in a continuous fashion.
Service companies that perform individual jobs that are repetitive and routine can benefit from
the use of a process cost system.
For products that are individually produced to the specifications of customers, process cost
accounting can be very effective.
The process cost accounting system tracks costs on a job cost sheet.
This Answer is Correct
Correct. Because a process cost accounting system applies the same amount of
materials, labor, and overhead to each unit produced, it can benefit service companies
that perform individual jobs that are repetitive and routine; therefore, the above
statement is true.
Question 3
tb.job.oc.043_1809
Gable Industries provided the following information for Job 387 from its accounting
records for the most recent year:
Direct materials used $45,600
Direct labor hours worked 1,200
Direct labor rate per hour $16.00
Machine hours used 800
Applied factory overhead rate per machine hour $30.00
What is the total manufacturing cost for Job 387?
$100,800
$88,800
, $64,800
$105,600
This Answer is Correct
Correct. The total manufacturing cost equals direct materials plus direct labor plus
applied overhead. The total manufacturing cost for Job 387 equals $88,800 ($45,600 +
(1,200 × $16.00) + (800 × $30.00)).
Question 4
1C1-CQ02
From the following budgeted data, calculate the budgeted indirect cost rate that would be
used in a normal costing system.
$28.
$40.
$48.
$20.
This Answer is Correct
The budgeted indirect cost rate per direct labor hour is calculated as follows:
Budgeted indirect labor cost rate per direct labor hour = (budgeted indirect costs) /
(budgeted direct labor hours)
Budgeted indirect labor cost rate per direct labor hour = ($5,000,000 + $7,000,000) /
250,000
Budgeted indirect labor cost rate per direct labor hour = $12,000,,000
Budgeted indirect labor cost rate per direct labor hour = $48 per direct labor hour.
Question 5
1C2-LS12
A promotional department for a retailer uses job order costing. At the beginning of the
period Job #154 had a work-in-process (WIP) inventory balance of $5,000. During the
current period, Job #154 required $4,000 in direct materials and $6,000 in direct labor.
The department has an overhead cost pool of $80,000 for all jobs. (The pool uses labor-
hours as a cost-allocation base.) All jobs in the department consumed 10,000 labor-
hours. If Job #154 used 1,000 labor-hours and sold for $34,000, what is its gross profit
margin?
$18,000.
$11,000.
$6,000.
$12,000.
This Answer is Correct
To calculate the gross profit margin, first calculate the indirect cost rate by dividing the
overhead cost by the total cost allocation base ($80,000/10,000 = $8/labor-hour).
,Then multiply the indirect cost rate by the actual units of the allocation base for the job
($8/labor-hour × 1,000 labor-hours = $8,000).
This amount plus the beginning work in process and current period direct materials and
direct labor costs equals the total costs ($8,000 + $5,000 + $4,000 + $6,000 = $23,000).
The gross profit margin is the profit less the total costs ($34,000 − $23,000 = $11,000).
Question 6
1A4-CQ17
Manoli Gift Shop maintains a 35% gross profit percentage on sales, and carries an
ending inventory balance each month sufficient to support 30% of the next month's
expected sales. Anticipated sales for the fourth quarter are as follows.
What is the cost of the goods that Manoli Gift Shop should plan to purchase for the
month of November?
$62,800.
$40,820.
$52,130.
$51,220.
This Answer is Correct
Purchases in dollars is calculated as follows:
Purchases in dollars = (cost of sales) + (expected ending inventory) − (expected
beginning inventory)
Cost of sales = (100% − the gross profit percentage)(sales)
Cost of sales, November = (100% − 35%)($58,000) = (0.65)($58,000) = $37,700
The ending inventory for each month = 30% of the next month's expected cost of sales.
Ending inventory, November = (30%)(Cost of sales, December) = (0.3)(0.65)($74,000) =
$14,430
Beginning inventory, November = (30%)(Cost of sales, November) = (0.3)($37,700) =
$11,310
Therefore, the purchases in dollars for November can be calculated as follows:
Purchases for November = $37,700 + $14,430 − $11,310 = $40,820
Question 7
tb.job.oc.009_1809
Mink Manufacturing used $2,200 of indirect raw materials and $21,000 of direct raw
materials during the period. The company incurred $14,000 of direct factory labor and
$2,400 of indirect factory labor during the period. What amount will Mink assign to
manufacturing overhead?
$18,600
$4,600
$23,200
$35,000
, This Answer is Correct
Correct. The amounts assigned to manufacturing overhead are indirect raw materials
and indirect factory labor; therefore, manufacturing overhead equals $4,600 ($2,200 +
$2,400).
Question 8
tb.job.oc.002_1809
Which of the following is included in the Work-in-Process Inventory?
All goods sold during the period.
All materials purchased during the last period.
All goods which are completed and ready to sell.
Goods which are only partially completed.
This Answer is Correct
Correct. Work-in-Process Inventory is used to track costs of items that are only partially
complete as of that date.
Question 9
1A4-LS09
Using the information from Exhibit C, how many pounds of direct materials must be
purchased in February?
15,660
pounds.
15,695
pounds.
15,630
pounds.
15,687
tb.job.oc.038_1809
Ed was working on a custom-made workbench for a customer. The job, TB0414, was
started in November. At the end of November, the job cost sheet for TB0414 showed
direct materials of $215, direct labor of 14 hours at $18 per hour, and overhead of 50%
of direct labor cost. During December, $85 of direct materials were added to Job TB0414
and Ed's time ticket showed 15 hours on Job TB0414, 25 hours on Job TB0614, 10
hours of maintenance on the lathe, and 40 hours on a new job, DR1014. Job TB0414
was completed on December 28. What is the total cost of Job TB0414 as of December
28?
$1,083
$593
$490
$783
You Answered Correctly!
Correct. The total cost of Job TB0414 equals direct materials plus direct labor plus
overhead applied in November and December.
Direct materials = ($215 + $85) = $300
Direct labor = (14 + 15) × $18 = $522
Overhead applied = $522 × 50% = $261
Total cost of Job TB0414 = $300 + $522 + $261 = $1,083
Question 2
tb.job.oc.016_1809
Which of the following statements about process cost accounting is true?
A process cost accounting system is generally not used in companies that mass produce
similar products in a continuous fashion.
Service companies that perform individual jobs that are repetitive and routine can benefit from
the use of a process cost system.
For products that are individually produced to the specifications of customers, process cost
accounting can be very effective.
The process cost accounting system tracks costs on a job cost sheet.
This Answer is Correct
Correct. Because a process cost accounting system applies the same amount of
materials, labor, and overhead to each unit produced, it can benefit service companies
that perform individual jobs that are repetitive and routine; therefore, the above
statement is true.
Question 3
tb.job.oc.043_1809
Gable Industries provided the following information for Job 387 from its accounting
records for the most recent year:
Direct materials used $45,600
Direct labor hours worked 1,200
Direct labor rate per hour $16.00
Machine hours used 800
Applied factory overhead rate per machine hour $30.00
What is the total manufacturing cost for Job 387?
$100,800
$88,800
, $64,800
$105,600
This Answer is Correct
Correct. The total manufacturing cost equals direct materials plus direct labor plus
applied overhead. The total manufacturing cost for Job 387 equals $88,800 ($45,600 +
(1,200 × $16.00) + (800 × $30.00)).
Question 4
1C1-CQ02
From the following budgeted data, calculate the budgeted indirect cost rate that would be
used in a normal costing system.
$28.
$40.
$48.
$20.
This Answer is Correct
The budgeted indirect cost rate per direct labor hour is calculated as follows:
Budgeted indirect labor cost rate per direct labor hour = (budgeted indirect costs) /
(budgeted direct labor hours)
Budgeted indirect labor cost rate per direct labor hour = ($5,000,000 + $7,000,000) /
250,000
Budgeted indirect labor cost rate per direct labor hour = $12,000,,000
Budgeted indirect labor cost rate per direct labor hour = $48 per direct labor hour.
Question 5
1C2-LS12
A promotional department for a retailer uses job order costing. At the beginning of the
period Job #154 had a work-in-process (WIP) inventory balance of $5,000. During the
current period, Job #154 required $4,000 in direct materials and $6,000 in direct labor.
The department has an overhead cost pool of $80,000 for all jobs. (The pool uses labor-
hours as a cost-allocation base.) All jobs in the department consumed 10,000 labor-
hours. If Job #154 used 1,000 labor-hours and sold for $34,000, what is its gross profit
margin?
$18,000.
$11,000.
$6,000.
$12,000.
This Answer is Correct
To calculate the gross profit margin, first calculate the indirect cost rate by dividing the
overhead cost by the total cost allocation base ($80,000/10,000 = $8/labor-hour).
,Then multiply the indirect cost rate by the actual units of the allocation base for the job
($8/labor-hour × 1,000 labor-hours = $8,000).
This amount plus the beginning work in process and current period direct materials and
direct labor costs equals the total costs ($8,000 + $5,000 + $4,000 + $6,000 = $23,000).
The gross profit margin is the profit less the total costs ($34,000 − $23,000 = $11,000).
Question 6
1A4-CQ17
Manoli Gift Shop maintains a 35% gross profit percentage on sales, and carries an
ending inventory balance each month sufficient to support 30% of the next month's
expected sales. Anticipated sales for the fourth quarter are as follows.
What is the cost of the goods that Manoli Gift Shop should plan to purchase for the
month of November?
$62,800.
$40,820.
$52,130.
$51,220.
This Answer is Correct
Purchases in dollars is calculated as follows:
Purchases in dollars = (cost of sales) + (expected ending inventory) − (expected
beginning inventory)
Cost of sales = (100% − the gross profit percentage)(sales)
Cost of sales, November = (100% − 35%)($58,000) = (0.65)($58,000) = $37,700
The ending inventory for each month = 30% of the next month's expected cost of sales.
Ending inventory, November = (30%)(Cost of sales, December) = (0.3)(0.65)($74,000) =
$14,430
Beginning inventory, November = (30%)(Cost of sales, November) = (0.3)($37,700) =
$11,310
Therefore, the purchases in dollars for November can be calculated as follows:
Purchases for November = $37,700 + $14,430 − $11,310 = $40,820
Question 7
tb.job.oc.009_1809
Mink Manufacturing used $2,200 of indirect raw materials and $21,000 of direct raw
materials during the period. The company incurred $14,000 of direct factory labor and
$2,400 of indirect factory labor during the period. What amount will Mink assign to
manufacturing overhead?
$18,600
$4,600
$23,200
$35,000
, This Answer is Correct
Correct. The amounts assigned to manufacturing overhead are indirect raw materials
and indirect factory labor; therefore, manufacturing overhead equals $4,600 ($2,200 +
$2,400).
Question 8
tb.job.oc.002_1809
Which of the following is included in the Work-in-Process Inventory?
All goods sold during the period.
All materials purchased during the last period.
All goods which are completed and ready to sell.
Goods which are only partially completed.
This Answer is Correct
Correct. Work-in-Process Inventory is used to track costs of items that are only partially
complete as of that date.
Question 9
1A4-LS09
Using the information from Exhibit C, how many pounds of direct materials must be
purchased in February?
15,660
pounds.
15,695
pounds.
15,630
pounds.
15,687
