Apply Job Order And Process Costing
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CPA Business Analysis and Reporting (BAR) › Apply Job Order And Process Costing
Pinecrest Manufacturing uses job-order costing with a predetermined overhead rate of $15 per direct labor hour. Job #312 incurred direct materials of $4,200, direct labor of 180 hours at $20 per hour, and used 180 direct labor hours for overhead application. What is the total cost of Job #312?
$11,700
$7,800
$10,500
$9,300
Explanation
Direct labor cost = 180 hours x $20 = $3,600. Applied overhead = 180 hours x $15 = $2,700. Total job cost = $4,200 + $3,600 + $2,700 = $10,500. Option A omits applied overhead entirely. Option C applies only part of the overhead. Option D applies an overhead rate higher than the predetermined rate.
Pinecrest Manufacturing has budgeted manufacturing overhead of $360,000 and budgeted direct labor hours of 24,000 for the year. What is the predetermined overhead rate?
$12.00 per DLH
$18.00 per DLH
$24.00 per DLH
$15.00 per DLH
Explanation
Predetermined overhead rate = Budgeted overhead / Budgeted activity = $360,000 / 24,000 = $15.00 per DLH. Option A divides by 15,000 hours. Option B divides by 20,000 hours. Option D divides by 30,000 hours.
Pinecrest Manufacturing applies overhead at $15 per direct labor hour. During the year, actual direct labor hours were 22,000 and actual overhead incurred was $345,000. What is the amount and direction of under- or overapplied overhead?
$30,000 underapplied
$30,000 overapplied
$15,000 overapplied
$15,000 underapplied
Explanation
Applied overhead = 22,000 DLH x $15 = $330,000. Under/overapplied = Actual - Applied = $345,000 - $330,000 = $15,000 underapplied. Actual overhead exceeded applied overhead, so overhead was underapplied. Option A has the correct amount but incorrect direction. Option B uses incorrect applied overhead in the calculation. Option C has both an incorrect amount and incorrect direction.
Pinecrest Manufacturing reports: beginning WIP $45,000, direct materials added $280,000, direct labor $195,000, overhead applied $165,000, ending WIP $62,000. What is the cost of goods manufactured for the period?
$578,000
$623,000
$685,000
$640,000
Explanation
Cost of goods manufactured = Beginning WIP + Direct materials + Direct labor + Overhead applied - Ending WIP = $45,000 + $280,000 + $195,000 + $165,000 - $62,000 = $623,000. Option B omits the deduction for ending WIP. Option C omits beginning WIP from the calculation. Option D applies an incorrect ending WIP balance.
Riverdale Co. has total conversion costs to account for of $280,000 and equivalent units of production for conversion of 20,000. What is the cost per equivalent unit for conversion costs?
$12.00
$14.00
$15.50
$16.00
Explanation
Cost per equivalent unit = Total conversion costs / EUP = $280,000 / 20,000 = $14.00. Option A divides by an incorrect equivalent unit count of approximately 23,333. Option B and Option C result from arithmetic errors using incorrect denominators.
Riverdale Co. has total direct materials costs of $396,000. Materials are added at the start of the process, so ending WIP is 100% complete for materials. Units completed and transferred: 18,000; ending WIP: 4,000 units. What is the cost per equivalent unit for direct materials?
$16.00
$18.00
$20.00
$22.00
Explanation
EUP for materials = 18,000 + (4,000 x 100%) = 22,000. Cost per EU for materials = $396,000 / 22,000 = $18.00. Option B divides by 24,750, overstating equivalent units. Option C divides by 19,800. Option D divides by 18,000, treating ending WIP as having zero material content.
Riverdale Co. has a cost per equivalent unit of $18.00 for materials and $14.00 for conversion. What is the total cost assigned to the 18,000 units completed and transferred out?
$252,000
$630,000
$576,000
$504,000
Explanation
Cost per completed unit = $18.00 + $14.00 = $32.00. Total cost transferred = 18,000 x $32.00 = $576,000. Option A applies only the conversion cost rate to all 18,000 units. Option C applies only the materials rate to all units. Option D applies an incorrectly higher combined rate.
Riverdale Co. has cost per EU: materials $18.00, conversion $14.00. Ending WIP is 4,000 units (100% complete for materials, 50% complete for conversion). What is the total cost assigned to ending WIP?
$100,000
$128,000
$72,000
$56,000
Explanation
Materials cost in ending WIP = 4,000 x 100% x $18.00 = $72,000. Conversion cost in ending WIP = 4,000 x 50% x $14.00 = $28,000. Total ending WIP cost = $72,000 + $28,000 = $100,000. Option A treats ending WIP as 100% complete for conversion as well. Option B includes only the materials component. Option D includes only the conversion component.
A company uses job-order costing. Job #445 had a beginning balance of $8,500. During the month, direct materials of $6,200 were requisitioned, 80 direct labor hours were worked at $25 per hour, and overhead is applied at $18 per direct labor hour. What is the ending balance on Job #445's cost sheet?
$16,700
$18,140
$19,580
$17,560
Explanation
Direct labor = 80 hours x $25 = $2,000. Applied overhead = 80 hours x $18 = $1,440. Ending balance = $8,500 + $6,200 + $2,000 + $1,440 = $18,140. Option A omits applied overhead. Option B applies an incorrect overhead rate. Option C applies overhead to the beginning balance as well as current hours.
Using the FIFO process costing data: current period conversion costs $189,000 and FIFO equivalent units for conversion of 21,000. What is the cost per equivalent unit for conversion under FIFO?
$8.00 per equivalent unit
$7.50 per equivalent unit
$9.00 per equivalent unit
$10.00 per equivalent unit
Explanation
Under FIFO, cost per EU = Current period costs only / FIFO equivalent units = $189,000 / 21,000 = $9.00. FIFO excludes beginning WIP costs from the rate calculation, preserving the prior-period cost in the beginning WIP layer. Option A divides by 23,625. Option C divides by 18,900. Option D divides by 25,200.