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Practice Quiz
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1
The Linkage Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine hours in Dept. B. At the beginning of the year, the company made the following estimates:
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What predetermined overhead rates would be used in Dept A and Dept B, respectively?
A)$15 and 110%
B)50% and $5.00
C)50% and $8.00
D)200% and $5.00
2
Which of the following statements is (are) true?
A)Companies that produce many different products or services are more likely to use job-order costing systems than process costing systems.
B)Job-order costing systems are used by service firms and process costing systems are used by manufacturers.
C)Costs are traced to departments and then allocated to units of product when job-order costing is used.
D)All of the above.
3
Simmons Company has the following estimated costs for next year:

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Simmons estimates that 40,000 direct labor and 64,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, the overhead rate per hour will be:
A)$3.50.
B)$6.94.
C)$7.63.
D)$8.56.
4
In a job-order cost system, indirect labor costs would be recorded as a debit to:
A)Raw Materials.
B)Work in Process.
C)Manufacturing Overhead.
D)Finished Goods.
5
In a job order cost system, the use of direct materials would be recorded as a debit to:
A)Work in Process inventory.
B)Finished Goods inventory.
C)Manufacturing Overhead.
D)Raw Materials inventory.
6
Glenn Company's predetermined overhead rate is based on direct labor costs. The company's Work in Process inventory account has a balance of $1,200, which relates to the one job that was not complete at the end of an accounting period. The related job cost sheet includes total charges of $200 for direct materials and $500 for direct labor. The company's predetermined overhead rate, as a percentage of direct labor costs, must be:
A)17%.
B)40%.
C)50%.
D)100%.
7
Houghton Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $200,000 and direct labor hours would be 20,000. The actual figures for the year were $220,000 for manufacturing overhead and 21,000 direct labor hours. The cost records for the year will show:
A)overapplied overhead of $5,000.
B)underapplied overhead of $5,000.
C)underapplied overhead of $10,000.
D)overapplied overhead of $10,000.
8
Kasper Company's predetermined overhead rate is based on direct labor hours. At the beginning of the current year, the company estimated that its manufacturing overhead would total $440,000 during the year. During the year, the company incurred $400,000 in actual manufacturing overhead costs. The Manufacturing Overhead account showed that overhead was underapplied by $16,000 during the year. If the predetermined overhead rate was $20.00 per direct labor hour, how many hours were worked during the year?
A)19,200 hours
B)20,000 hours
C)20,800 hours
D)22,000 hours
9
Artsy Sportswear manufactures a specialty line of silk-screened T-shirts. The company uses a job-order costing system. During May, the following costs were incurred on Job PS4: direct materials $27,400 and direct labor $9,600. In addition, selling and shipping costs of $14,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour and Job PS4 required 160 machine-hours. If Job PS4 consisted of 5,000 shirts, the cost of goods sold per shirt was:
A)$7.40
B)$8.20
C)$11.00
D)$25.00
10
Under Horton Company's job-order costing system, manufacturing overhead is applied to Work in Process inventory using a predetermined overhead rate. During July, Horton's transactions included the following:
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Horton Company had no beginning or ending inventories in July. What was the cost of goods manufactured for July?
A)$1,208,000
B)$1,240,000
C)$1,288,000
D)$1,320,000





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