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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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Selected cost data for Classic Print Co. are as follows:
Estimated manufacturing overhead cost for the year | $125,000 |
Estimated direct labor cost for the year | 78,125 |
Actual manufacturing overhead cost for the year | 116,000 |
Actual direct labor cost for the year | 67,000 |
Requirements
2. Prepare the journal entry to allocate overhead costs for the year.
Distinguishing between job order costing and process costing
Would the following companies most likely use job order costing or process costing?
e. A landscape contractor
Question: Wesson Company is a consulting firm. The firm expects to have \(45,000 in indirect costs during the year and bill customers for 6,000 hours. The cost of direct labor is \)75 per hour.
16. Calculate the predetermined overhead allocation rate for Wesson using estimated billable hours for the allocation base.
17. Wesson completed a consulting job for George Peterson and billed the customer for 15 hours. What was the total cost of the consulting job?
18. If Wesson wants to earn a profit equal to 60% of the cost of a job, how much should the company charge Mr. Peterson?
Question: Match the following terms to their definitions.
a. A record used to assign direct labor cost to specific jobs. 1. Job
b. A document that requests the transfer of materials to 2. Job cost order
the production floor.
c. A document that shows the direct materials, direct labor, 3. Job order costing
and manufacturing overhead costs for an individual job.
d. An accounting system that accumulates costs by process. 4. Labor time record
e. The production of a unique product or specialized service 5. Material requisition
f. Used by companies that manufacture unique products or 6. Process costing system
provide specialized services
Question: Explain the difference between cost of goods manufactured and cost of goods sold.
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