Which of the following industries would be most likely to use a job costing system

For which of the following industries would job-order costing most likely not be appropriate?

a.Small business printing.b.Cereal production.

c.Home construction.d.Aircraft assembly.

SOLUTION

Choice "b" is correct. The cereal products business involves the production of a number of

homogeneous items. As a result, it is more conducive to the use of process costing than job-order

costing.

Choice "a" is incorrect. Job-order costing is conducive to small business printing as a new job

order is created (with costs tracked) every time a new job is started.

Choice "c" is incorrect. The construction of new homes would use job-order costing as every

home has some unique or specialized feature to it.

Choice "d" is incorrect. The creation and/or assembly of aircraft is conducive to the use of job-

order costing given the unique and specialized nature of each aircraft.

4-19ABC Company uses job-order costing and has assembled the following cost data for the

production and assembly of item X:

Based on the above cost data, the manufacturing overhead for item X is:

a.$500 overallocated.

b.$600 underallocated.

c.$500 underallocated

d.$600 overallocated.

Superior Construction, Inc. is a home builder in Arizona. Superior uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction Overhead. The company applies overhead based on estimated direct labor costs. For the year, it estimated construction overhead of $1,150,000 and total direct labor costs of $5,750,000. The following events occurred during August:

a. Purchased materials on account, $400,000.

b. Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned.

c. The company incurred total wages of $300,000. Use the data from Item b to assign the wages. Wages are not yet paid.

d. Depreciation of construction equipment, $6,700.

e. Other overhead costs incurred: Equipment rentals paid in cash, $30,000; Worker liability insurance expired, $7,000.

f. Allocated overhead to jobs.

g. Houses completed: 402, 404.

h. House sold on account: 404 for $250,000.

Requirements

1. Calculate Superior’s predetermined overhead allocation rate for the year.

2. Prepare journal entries to record the events in the general journal.

3. Open T-accounts for Work-in-Process Inventory and Finished Goods Inventory.

Post the appropriate entries to these accounts, identifying each entry by letter.

Determine the ending account balances, assuming that the beginning balances

were zero.

4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work-in-Process Inventory account.

5. Add the costs of the completed house that has not yet been sold, and show that this equals the ending balance in Finished Goods Inventory.

6. Compute gross profit on the house that was sold. What costs must gross profit

cover for Superior Construction?

Which of the following companies would most likely use a job costing system?

In which of the following industries job costing is used?

Which of the following industries would be most likely to use a process costing system?

What types of businesses can use a job costing system quizlet?