Acct 2 Test 2
Which two terms below describe the wages paid to security guards that monitor a factory 24 hours a day? A. Variable cost and direct cost B. Fixed cost and direct cost C. Variable cost D. Fixed cost and indirect method
D. Fixed cost and indirect method
An example of a period cost is A. Fire insurance on a factory building B. Salary of a factory supervisor C. Direct materials D. Rent on a headquarters building
D. Rent on a headquarters building
Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record the completion of Job KN668 at a total cost of $7,600?
Debit Finished Goods $7,600 Credit Work in Process $7,600
Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record $9,500 of depreciation on its printing presses?
Debit Manufacturing Overhead $9,500 Credit Accumulated Depreciation $9,500
What is the journal entry recorded when recognizing factory overhead?
Debit factory overhead, credit the appropriate accounts. For every factory cost except direct materials and direct labor, you debit factory overhead and credit the factory cost
What is the journal entry used to recognize finished jobs/goods?
Debit finished goods, Credit work in process
What is the journal entry recorded once we buy raw materials?
Debit materials, Credit accounts payable
What is the journal entry recorded when we use the predetermined factory overhead rate?
Debit work in process, Credit factory overhead
What is the journal entry recorded once we begin production and start using the direct materials?
Debit work in process, Credit materials
What is the journal entry recorded when recognizing direct labor?
Debit work in process, Credit wages payable
Direct labor is a _________ cost, ________________ cost, and a _____________ cost, but not a ____________ cost
Direct Labor is a Prime cost, conversion cost, and a product cost, but not a period cost
The wages of factory workers who directly hands on work with the inventory
Direct labor
What are wages of those who work on the machines classified as?
Direct labor
The materials that directly become part of the product.
Direct materials
What is paper used to make magazines classified as?
Direct materials
What is included in factory costs?
Direct materials, Direct labor, and Factory overhead
The cost of inventory is the sum of ____________.
Direct materials, direct labor, and factory overhead
__________ costs make up the cost of inventory.
Factory
All factory costs other than direct materials and direct labor
Factory overhead
What is the maintenance on printing machines classified as?
Factory overhead
True or False: Wages paid to production supervisors would be considered direct labor
False
True or False: When completed goods are sold, the transaction is recorded as a debit to Cost of Goods Sold and a credit to Work in Process
False
Is the factory supervisor's salary variable, fixed, or mixed?
Fixed
Costs that are constant as production varies
Fixed cost
What kind of cost is depreciation?
Fixed cost
What kind of cost is factory rent?
Fixed cost
What kind of cost is indirect labor?
Fixed cost
What kind of cost is property taxes?
Fixed cost
What is the formula for Investment Turnover?
Investment Turnover = Sales / Invested Assets
Why is inventory important?
It goes on the balance sheet as ending inventory and the income statement as cost of goods sold.
The costs of selling the product
Marketing expenses
What are the three inventory accounts for each job that manufacturers have?
Materials, work in process, and finished goods
Costs that are partially fixed and partially variable
Mixed cost
What kind of cost is utilties?
Mixed cost
When is the work in process inventory account used?
Once we begin production We charge factory costs here Contains jobs that are not yet complete
Costs that are expensed immediately
Period cost
What is the formula for predetermined factory overhead rate?
Predetermined Factory Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Activity Base
During December, Fleeger Corporation incurred $51,000 of direct labor costs and $5,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a: A. Debit to Work in Process of $56,000 B. Credit to Work in Process of $51,000 C. Debit to Work in Process of $51,000 D. Credit to Work in Process of $56,000
C. Debit to Work in Process of $51,000
The cost of materials are classified as: A. Conversion cost, manufacturing cost, and prime cost B. Conversion cost and manufacturing cost C. Manufacturing cost and prime cost
C. Manufacturing cost and prime cost
Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following? A. Product cost B. Manufacturing overhead C. Period cost D. Administrative cost
C. Period cost
Freeman 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 $150,000 and direct labor-hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor-hours. The cost records for the year will show: A. Overapplied overhead of $30,000 B. Underapplied overhead of $30,000 C. Underapplied overhead of $6,000 D. Overapplied overhead of $6,000
C. Underapplied overhead of $6,000
What kind of cost would salaries for the supervisor be?
Conversion cost
What is the formula for conversion costs?
Conversion cost = direct labor + factory overhead
The following costs were incurred in August: Direct materials: $20,000 Direct labor: $18,000 Manufacturing overhead: $21,000 Selling expenses: $16,000 Administrative expenses: $21,000 Prime costs during the month totaled:
$38,000
The following costs were incurred in August: Direct Materials: $37,000 Direct Labor: $14,000 Manufacturing Overhead: $38,000 Selling Expenses: $10,000 Administrative Expenses: $28,000 Conversion costs during the month totaled:
$52,000
In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include: A. A credit to the Manufacturing Overhead account B. A credit to the Work in Process inventory account C. A debit to Cost of Goods Sold D. A debit to the Manufacturing Overhead account
A. A credit to the Manufacturing Overhead account
Which of following situations always results in underapplied overhead? A. Actual overhead is greater than applied overhead B. Actual overhead is less than applied overhead C. Estimated overhead is greater than actual overhead D. Estimated overhead is less than actual overhead
A. Actual overhead is greater than applied overhead
Which of the following terms could be used to correctly describe the wages paid to the workers that cut up the cloth into the jean pattern shape? A. Conversion cost and variable cost B. Conversion cost C. Variable cost
A. Conversion cost and variable cost
During October, Kreitner Inc. transferred $73,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $76,000. The journal entries to record these transactions would include a: A. Credit to Work in Process of $73,000 B. Credit to Cost of Goods Sold of $76,000 C. Debit to Finished Goods of $76,000 D. Credit to Finished Goods of $73,000
A. Credit to Work in Process of $73,000
Prime cost consists of direct materials combines with A. Direct Labor B. Manufacturing Overhead C. Indirect Materials D. Cost of Goods Manufactured
A. Direct labor
The cost of fire insurance for a manufacturing plant is generally considered to be A. Product Cost B. Period Cost C. Variable Cost D. All of these
A. Product cost
The corporate controller's salary would be considered a(n)
Administrative cost
The costs of operating the company
Administrative expenses
What is included in non-factory costs?
Administrative expenses and Marketing expenses
Which of the following companies would be most likely to use a job-order costing system rather than a process costing system? A. Fast food restaurant B. Shipbuilding C. Crude oil refining D. Candy making
B. Shipbuilding
Is direct labor a prime cost, conversion cost, or both?
Both
For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system? A. A steel factory that processes iron ore into steel bars B. A factory that processes sugar and other ingredients into black licorice C. A costume maker that makes specialty costumes for figure skaters D. All of these
C. A costume maker that makes speciality costumes for figure skaters
What is the formula for prime costs?
Prime cost = direct materials + direct labor
All factory costs are ____________ costs.
Product
Costs that are capitalized and charged to an asset
Product cost
What is the formula for Profit Margin?
Profit Margin = Operating Income / Sales
What is the formula for Return on Investments (ROI)?
Return on Investments = Operating Income / Invested Assets
What are conversion costs?
The cost of converting raw materials into a finished product
What are prime costs?
The prime/direct cost in making a product
True or False: Direct labor is a part of both prime cost and conversion cost
True
True or False: The cost of goods manufactured for a period is the amount transferred from work in process inventory to finished goods inventory during the period
True
True or False: The sum of all amounts transferred from the Work in Process account and into the Finished Goods account represents the Cost of Goods Manufactured for the period
True
A cost that varies with changes in the level of production
Variable cost
What kind of cost is direct labor?
Variable cost
What kind of cost is direct materials?
Variable cost
What kind of costs are factory costs?
Variable cost and product cost
When is the finished goods inventory account used?
We charge factory costs here once they are complete
When do we use job order costing?
When we have seperate distinct different jobs
When is the materials inventory account used?
When we purchase raw materials We debit the materials account
When do we use predetermined factory overhead rate?
When you assign the overhead jobs based on labor worked and pay rate
