Chapters 3 Job-Order Costing
1. In a job order cost system, the amount of overhead cost that has been applied to a job that
remains incomplete at the end of a period is?
A. deducted on the Income Statement as over-applied overhead.
B. closed to Cost of Goods Sold.
C. transferred to Finished Goods at the end of the period.
D. part of the ending balance of the Work in Process inventory account.
2. Harrell Company uses a predetermined overhead rate based on direct labour hours to apply
manufacturing overhead to jobs. At the beginning of the year the company estimated its total
manufacturing overhead cost at $400,000 and its direct labour-hours at 100,000 hours. The actual
overhead cost incurred during the year was $350,000 and the actual direct labour hours incurred
on jobs during the year was 90,000 hours. The manufacturing overhead for the year would be?
A. $10,000 underapplied.
B. $10,000 overapplied.
C. $50,000 underapplied.
D. $50,000 overapplied.
3. For the current year, Paxman Company incurred $150,000 in actual manufacturing overhead
cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount
of $6,000 for the year. If the predetermined overhead rate was $8.00 per direct labour hour, how
many hours were worked during the year?
A. 17,750 hours
B. 18,000 hours
C. 18,750 hours
D. 19,500 hours
4. Kelsh Company uses a predetermined overhead rate based on machine hours to apply
manufacturing overhead to jobs. The company has provided the following estimated costs for
next year:
Kelsh estimates that 5,000 direct labour hours and 10,000 machine hours will be worked during
the year. The predetermined overhead rate per hour will be?
A. $3.40.
B. $6.40.
C. $6.80.
D. $8.20.
5. Lucy Sportswear manufactures a specialty line of T-shirts. The company uses a job-order
costing system. During March, the following costs were incurred on Job ICU2: direct materials
$13,700 and direct labour $4,800. In addition, selling and shipping costs of $7,000 were incurred
on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour and Job
ICU2 required 800 machine-hours. If Job ICU2 consisted of 7,000 shirts, the Cost of Goods Sold
per shirt was?
A. $5.50.
B. $5.70.
C. $6.00.
D. $6.50.
6. The job cost sheet is used to accumulate the costs charged to a particular job.
True False
7. The predetermined overhead rate is calculated using the following formula:
A. estimated total manufacturing overhead cost divided by estimated total units
B. actual overhead divided by estimated total units
C. estimated total manufacturing overhead cost divided by actual total units
D. actual overhead divided by actual total units
8. The amount of applied overhead will always be equal to the actual overhead incurred.
True False
9. If more manufacturing overhead is applied than is actually incurred, then overhead cost will be
over-applied and we have to credit (reduce) Cost of Goods Sold Account.
True False
10. If manufacturing overhead is under-applied, we have to debit (increase) Cost of Goods Sold
Account so that Net Income is reduced.
True False
