Revision 2

Job-order costing most likely be used by a:

• Crude oil refinery

• Greeting card manufacturer

• Paper company

• Custom furniture workshop

Which of the following costs are classified as direct costs in a job-order costing system? (There may be more than one correct answer)

• A machine operator's wages working on a single custom job

• The cost of nails and glue used to assemble a custom cabinet

• The salary of a production manager responsible for multiple jobs

• The cost of high-quality leather used to upholster a custom-made chair

Which one of the following best describes a job cost sheet?

• It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job

• It is used to track manufacturing overhead costs to specific jobs

• It is used by management to understand how direct costs affect profitability

• It is a daily form that management uses for tracking worker productivity on which employee raises are based

Which of the following statements about predetermined overhead rates (POHR) is true?

• POHR is calculated using actual overhead costs and actual allocation base usage.

• POHR is determined before the period begins based on estimates.

• POHR applies only to direct labor costs.

• POHR is unnecessary if actual overhead costs are used directly.

During 2013, Cotte Manufacturing expected Job No. 59 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Cotte applied overhead based on direct labor cost. Actual production required an overhead cost of $290,000, $550,000 in materials used, and $220,000 in labor. All of the goods were completed. How much is the amount of over- or underapplied overhead?

• $10,000 underapplied​

• $10,000 overapplied​

• $40,000 underapplied​

• $40,000 overapplied​