Chapter 17: 17-1SE-a (page 938)
Distinguishing between job order costing and process costing
Would the following companies most likely use job order costing or process costing?
a. A manufacturer of refrigerators
A manufacturer of the refrigerator is most likely to use process costing.
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Back Country manufactures backpacks. Its plant records include the following materials-related data
Journalize the entries to record the transactions, post to the Raw Materials Inventory account, and determine the ending balance in Raw Materials Inventory.
Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:
Manufacturing overhead costs | \(840,000 |
Direct labor cost | 1,480,000 |
Machine hours | 70,000 hours |
At the end of 2018, the company had actually incurred:
Direct labor cost | \)1,230,000 |
Depreciation on manufacturing plant and equipment | 620,000 |
Property taxes on plant | 35,500 |
Sales salaries | 26,000 |
Delivery driver’s wages | 22,500 |
Plant janitor’s wages | 17,000 |
Machine hours | 60,000 hours |
Requirements
1. Compute Young’s predetermined overhead allocation rate.
Give five examples of manufacturing overhead costs. Why are they consideredindirect costs?
Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.
a. Companies that produce small quantities of many different products.
June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:
June 1 balance | \(36,000 |
Direct materials used | 32,000 |
Direct labor assigned to jobs | 40,000 |
Manufacturing overhead allocated to jobs | 28,000 |
Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of
\)37,000 and $48,000, respectively.
Requirements
1. Prepare the journal entry for production completed in June.
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