Accounting

Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $224,580. At the end of the year, actual direct labor-hours for the year were 18,200 hours, manufacturing overhead for the year was underapplied by $12,100, and the actual manufacturing overhead was $219,580. The predetermined overhead rate for the year must have been closest to: A. $11.40 per machine-hour B. $12.34 per machine-hour C. $12.06 per machine-hour D. $10.53 per machine-hour

A

The following costs were incurred in September: Direct materials $38,000 Direct labor $29,000 Manufacturing overhead $21,000 Selling expenses $17,000 Administrative expenses $32,000 Conversion costs during the month totaled: A. $50,000 B. $59,000 C. $137,000 D. $67,000

A

Wert Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. Last year, the company's estimated manufacturing overhead was $1,200,000 and its estimated level of activity was 50,000 direct labor-hours. The company's direct labor wage rate is $12 per hour. Actual manufacturing overhead amounted to $1,240,000, with actual direct labor cost of $650,000. For the year, manufacturing overhead was: A. overapplied by $60,000 B. underapplied by $60,000 C. overapplied by $40,000 D. underapplied by $44,000

A

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture? A. Sheet steel in a file cabinet made by the company. B. Manufacturing equipment depreciation. C. Idle time for direct labor. D. Taxes on a factory building.

A

During December at Ingrim Corporation, $74,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $6,000. The journal entry to record the requisition from the storeroom would include a: A. debit to Raw Materials of $74,000 B. debit to Work in Process of $68,000 C. credit to Manufacturing Overhead of $6,000 D. debit to Work in Process of $74,000

B

In computing its predetermined overhead rate, Marple Company inadvertently left its indirect labor costs out of the computation. This oversight will cause: A. Manufacturing Overhead to be overapplied. B. The Cost of Goods Manufactured to be understated. C. The debits to the Manufacturing Overhead account to be understated. D. The ending balance in Work in Process to be overstated.

B

Martinez Aerospace Company uses a job-order costing system. The direct materials for Job #045391 were purchased in July and put into production in August. The job was not completed by the end of August. At the end of August, in what account would the direct material cost assigned to Job #045391 be located? A. Raw materials inventory B. Work in process inventory C. Finished goods inventory D. Cost of goods manufactured

B

The salary of the president of a manufacturing company would be classified as which of the following? A. Product cost B. Period cost C. Manufacturing overhead D. Direct labor

B

Vandagriff Corporation has provided data concerning the company's Manufacturing Overhead account for the month of June. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $77,000 and the total of the credits to the account was $64,000. Which of the following statements is true? A. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $77,000. B. Manufacturing overhead applied to Work in Process for the month was $64,000. C. Manufacturing overhead for the month was overapplied by $13,000. D. Actual manufacturing overhead incurred during the month was $64,000.

B

Compton Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in Department A and on a machine-hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates: Dept. A Dept. B Direct labor cost $56,000 $33,000 Manufacturing overhead $67,200 $45,000 Direct labor hours 8,000 9,000 Machine hours 4,000 15,000 What predetermined overhead rate would be used in Department A and Department B, respectively? A. 83% and $5 B. 83% and $3 C. 120% and $3 D. 83% and $120

C

Manufacturing overhead consists of: A. all manufacturing costs. B. indirect materials but not indirect labor. C. all manufacturing costs, except direct materials and direct labor. D. indirect labor but not indirect materials.

C

Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves? A. Machine-hours B. Power consumption C. Direct labor-hours D. Machine setups

C

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?Product Period A. $2700 $0 B. $2160 $540 C. $1440 $360 D. $720 $180

D

The term "relevant range" means the range of activity over which: A. relevant costs are incurred. B. costs may fluctuate. C. production may vary. D. the assumptions about fixed and variable cost behavior are reasonably valid.

D

A debit balance in the Manufacturing Overhead account at the end of the year means that manufacturing overhead is overapplied. T/F

False

A variable cost is a cost whose cost per unit varies as the activity level rises and falls. T/F

False

Although the contribution format income statement is useful for external reporting purposes, it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs. T/F

False

Managerial accounting reports are mandatory, and they must be prepared using a prescribed format and frequency. T/F

False

The concept of the relevant range does not apply to fixed costs. T/F

False

The cost of a completed job in a job-order costing system typically consists of the actual direct materials cost of the job, the actual direct labor cost of the job, and the actual manufacturing overhead cost of the job. T/F

False

The following journal entry would be made to apply overhead cost to jobs in a job-order costing system: Manufacturing overhead XXX Work in process XXX T/F

False

The following would typically be considered indirect costs of manufacturing a particular Boeing 787 to be delivered to Singapore Airlines: electricity to run production equipment, the factory manager's salary, and the cost of the General Electric jet engines installed on the aircraft. T/F

False

A decrease in production will ordinarily result in an increase in fixed production costs per unit. T/F

True

In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement. T/F

True

In any decision making situation, sunk costs are irrelevant and should be ignored. T/F

True

Period costs are expensed as incurred, rather than going into the Work in Process account. T/F

True

Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead. T/F

True

The following costs should be considered by a law firm to be indirect costs of defending a particular client in court: rent on the law firm's offices, the law firm's receptionist's wages, the costs of heating the law firm's offices, and the depreciation on the personal computer in the office of the attorney who has been assigned the client. T/F

True

When a job has been completed, the goods are transferred from the production department to the finished goods warehouse and the journal entry would include a credit to Work in Process. T/F

True