Jose Company uses a |ob order cost system At the end of an accounting period, Jo
ID: 2483173 • Letter: J
Question
Jose Company uses a |ob order cost system At the end of an accounting period, Jose has a debit balance in the Factory Overhead account This would indicate: a loss for the period. underapplied overhead. overapplied overhead. a malfunction in the job order cost system. None of these. If beginning work in process was 600 units, 1,400 additional units were put into production, and ending work in process was 500 units, how many units were completed? 500 900 1.400 2,000 None of these. Which of these alternatives would decrease contribution per unit margin the most? A 10 percent decrease in selling price. A 10 percent increase in variable expenses. A 10 percent increase in selling price. A 10 percent decrease in variable expenses. None of these.Explanation / Answer
A debit balance in manufacturing overhead account means:
B. Underapplied overhead
Underapplied overhead means overhead applied to the job, based on the predetermined rate, is less than the actual overhead incurred for the job.
Second question:
Answer: E. none of this
Units completed
= units to be accounted for - ending WIP
= (beginning WIP + Units added during the production) - ending WIP
= (600+1400) - 500
= 1500 units
Third Question:
Answer: A) 10% decrease in selling price
note: 10% increase in variable expense and 10% decrease in selling price, both will decrease the contribution margin. But, as the selling price is always greater than the variable expense (in normal business condition), a decrease in selling price will always be greater then a decrease in variable expense when both are decreased by the same percentage.
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