Question : 37) Describe job-costing and process-costing systems. Explain when it would : 1186274

37) Describe job-costing and process-costing systems. Explain when it would be appropriate to use each.

38) In a job-costing system, explain why it is necessary to apply indirect costs to production through the use of a manufacturing overhead cost allocation rate.

4.2 Apply the decision framework in a seven-step method to assign total actual costs to a distinct service.

1) Based on the following data, calculate the actual indirect cost rate, using direct labour hours as the allocation base.

Actual total indirect costs

$1,152,000

Budgeted total indirect costs

1,216,000

Actual direct labour costs

3,200,000

Actual direct labour rate

$50 per hour

Actual machine hours

3,000 hours

A) $384.00

B) $7.68

C) $18.00

D) $19.00

E) $138.89

2) A law office employs full-time attorneys and five paraprofessionals. For 2012 indirect costs were budgeted at $225,000, but actually amounted to $350,000.

Direct and indirect costs are applied on a professional labour-hour basis which includes both attorney and paraprofessional hours. Total budgeted labour-hours were 25,000; however, actual labour-hours were 30,000.

What is the actual indirect-cost rate, if a client used 5,000 professional labour-hours?

A) $5.00

B) $9.00

C) $7.50

D) $14.00

E) $11.67

3) Professional labour costs in a CGA firm are traced directly to the cost object of a given job. Generally, other indirect operating costs are

A) first traced to a cost pool and then allocated to the final cost object, the given job.

B) allocated directly to the final cost object, the given job.

C) allocated to an intermediate cost object, assigned to a given auditor, and then traced to a cost pool which is then allocated to the final cost object, the given job.

D) costs which are assigned to a given job using indirect cost tracing.

E) treated the same as direct costs in a service firm.

4) Fixed costs remain constant at $200,000 per month. During high-output months variable costs are $160,000, and during low-output months variable costs are $40,000. What are the respective high and low indirect cost allocation rates if professional labour-hours are 8,000 for high-output months and 2,000 for low-output months?

A) $45.00 per hour; $120.00 per hour

B) $45.00 per hour; $45.00 per hour

C) $25.00 per hour; $20.00 per hour

D) $56.20 per hour; $120.00 per hour

E) $25.00 per hour; $100.00 per hour

5) Normandeau Company’s actual indirect cost pool amounted to $1,400,000 and the direct labour pool was $5,400,000. Overhead is allocated on the basis of direct labour hours. Actual and budgeted direct labour hours were 25,000 and 30,000 for the period. What is the manufacturing overhead cost allocation rate using actual direct labour hours as the cost allocation base?

A) $46.67

B) $272.00

C) $75.00

D) $226.67

E) $56.00

6) A company currently has 30 full-time employees. Actual time for each employee was as follows:

billable time for clients

2,000 hours

vacation time

200 hours

professional development

175 hours

nonbillable time

0 hours

sick leave

125 hours

Consumer demand for the company’s services is at 100 percent of time available. Each employee receives a salary of $75,000 per year.

What is the total actual indirect cost allocation rate if management believes that clients should be charged for the employees’ benefits?

A) $10.00

B) $6.67

C) $30.00

D) $6.00

E) $37.50

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July 1, 2023

11) Net income appears on the worksheet:

A) only in the balance sheet credit column.

B) only in the income statement credit column

C) in the income statement debit column and balance sheet debit column

D) in the income statement debit column and balance sheet credit column

12) Net loss appears on the worksheet:

A) in the income statement credit column and balance sheet debit column.

B) only in the income statement credit column.

C) in the income statement debit column and balance sheet credit column.

D) only in the balance sheet debit column.

13) The prepaid rent account has a balance that is $400 less in the worksheet's balance sheet debit column than in the worksheet's trial balance debit column. This would be the result of a:

A) $400 entry to prepaid rent in the worksheet's adjustments debit column.

B) $400 entry to prepaid rent in the worksheet's adjustments credit column.

C) $400 entry to rent expense in the worksheet's adjustments credit column.

D) mistake in cross-adding the worksheet.

14) Salary expense has a balance of $65,400 in the trial balance debit column of a worksheet. The adjustments credit column contains a $500 credit to salary payable. The adjusted trial balance column will show:

A) salary expense with a debit balance of $64,900.

B) salary expense with a debit balance of $6,500.

C) salary expense with a debit balance of $65,900.

D) salary payable with a credit balance of $65,900.

15) Interest expense on a worksheet's trial balance debit column has a $3,400 balance and a $4,000 balance on the worksheet's income statement debit column. The difference is due to:

A) an entry in the adjustments credit column for $600 to interest expense.

B) an entry in the adjustments debit column for $4,000 to interest expense.

C) an entry in the adjustments credit column for $4,000 to interest expense.

D) an entry in the adjustments credit column for $600 to interest payable.

16) On a worksheet, the income statement debit column equals $190,800 and the income statement credit column equals $195,600. From this data, it can be determined that:

A) the company had a net loss of $4,800 added to the income statement credit column.

B) the company had a net income of $4,800 added to the income statement debit column.

C) the company had a net loss of $4,800 added to the income statement debit column.

D) the company had a net income of $4,800 added to the income statement credit column.

17) Which of the following appears in the balance sheet debit column of a worksheet?

A) service revenue

B) income summary

C) owner withdrawals

D) accounts payable

18) Which of the following appears in the income statement credit column of a worksheet?

A) service revenue

B) income summary

C) owner withdrawals

D) accounts receivable

19) If the unearned service revenue account had an unadjusted normal balance of $4,800, and an adjustment was made debiting the account for $1,500, the account would appear on the adjusted trial balance of the worksheet as a:

A) $4,800 debit.

B) $6,300 credit.

C) $3,300 credit.

D) $3,300 debit.

20) After all the account balances have been extended to the balance sheet columns of the worksheet, the totals of the debit and credit columns are $35,350 and $38,750, respectively. It can be concluded the company has a:

A) net income of $3,400.

B) net loss of $3,400.

C) $74,100 net loss.

D) $74,100 net income.