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Unformatted text preview: 9/9/09 7:02 PM McGraw-Hill's Connect - Ebook Page 1 of 12 http://connect.mcgraw-hill.com/connect/hmEBook.do?setTab=sectionTabs Managerial Accounting EBook 13/e Content Chapter3: Systems Design: Job-Order Costing Exercises EXERCISE 3 1 Process Costing and Job-Order Costing [ LO1 ] Which method of determining product costs, job-order costing or process costing, would be more appropriate in each of the following situations? a. An Elmer's glue factory. b. A textbook publisher such as McGraw-Hill. c. An Exxon oil refinery. d. A facility that makes Minute Maid frozen orange juice. e. A Scott paper mill. f. A custom home builder. g. A shop that customizes vans. h. A manufacturer of specialty chemicals. i. An auto repair shop. j. A Firestone tire manufacturing plant. k. An advertising agency. l. A law office. EXERCISE 3 2 Job-Order Costing Documents [ LO2 ] Cycle Gear Corporation has incurred the following costs on job number W456, an order for 20 special sprockets to be delivered at the end of next month. 9/9/09 7:02 PM McGraw-Hill's Connect - Ebook Page 2 of 12 http://connect.mcgraw-hill.com/connect/hmEBook.do?setTab=sectionTabs Required: 1. On what documents would these costs be recorded? 2. How much cost should have been recorded on each of the documents for Job W456? EXERCISE 3 3 Compute the Predetermined Overhead Rate [ LO3 ] Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year it estimated that its total manufacturing overhead would be $134,000 and the total direct labor would be 20,000 hours. Its actual total manufacturing overhead for the year was $123,900 and its actual total direct labor was 21,000 hours. Required: Compute the company's predetermined overhead rate for the year. EXERCISE 3 4 Prepare Journal Entries [ LO4 ] Larned Corporation recorded the following transactions for the just completed month. a. $80,000 in raw materials were purchased on account. b. $71,000 in raw materials were requisitioned for use in production. Of this amount, $62,000 was for direct materials and the remainder was for indirect materials. c. Total labor wages of $112,000 were incurred. Of this amount, $101,000 was for direct labor and the remainder was for indirect labor. d. Additional manufacturing overhead costs of $175,000 were incurred. Required: Record the above transactions in journal entries. EXERCISE 3 5 Apply Overhead [ LO5 ] 9/9/09 7:02 PM McGraw-Hill's Connect - Ebook Page 2 of 12 http://connect.mcgraw-hill.com/connect/hmEBook.do?setTab=sectionTabs Required: 1. On what documents would these costs be recorded? 2. How much cost should have been recorded on each of the documents for Job W456?...
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