acctg 202 chapter 3

At the Nassau Advertising Agency, partner and staff compensation cost is a key driver of agency overhead. In light of this fact, which of the following is the correct expression to determine the amount of overhead applied to a particular client job?

(Budgeted overhead ÷ budgeted compensation) x actual compensation cost on the job

Oregon Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor. The proper journal entry to record these events would include a debit to Work in Process for

106000. direct labor is what is working in process of production of whatever you are producing

The following information relates to October: Production supervisor's salary: $2,500 Factory maintenance wages: 250 hours at $8 per hour The journal entry to record the preceding information is: A. Manufacturing Overhead 4,500 Wages Payable 4,500 B. Wages Payable 4,500 Manufacturing Overhead 4,500 C. Work-in-Process Inventory 4,500 Wages Payable 4,500 D. Wages Payable 4,500 Work-in-Process Inventory 4,500 E. Work-in-Process Inventory 2,500 Manufacturing Overhead 2,000 Wages Payable 4,500

A. manufacturing overhead because direct labor

The assignment of direct labor cost to individual jobs is based on

ACTUAL amount of time spent on jobx wage

predetermined overhead rate calculation

Budgeted overhead cost ÷ budgeted amount of cost driver

15. Which of the following statements about manufacturing cost flows is false? A. Direct materials, direct labor, and manufacturing overhead are entered in the Work-in-Process Inventory account. B. The Finished-Goods Inventory account will contain entries that reflect the cost of goods sold during the period. C. The cost of units sold during the period will typically appear on the income statement. D. When a company sells goods that cost $54,000 for $60,000, the firm will enter $6,000 in an account entitled Profit on Sale. E. Units are normally transferred from Work-in-Process Inventory to Finished-Goods Inventory.

D

Which of the following statements about material requisitions is false? A. Material requisitions are often computerized. B. Material requisitions are a common example of source documents. C. Material requisitions contain information that is useful to the cost accounting department. D. Material requisitions authorize the transfer of materials from the production floor to the raw materials warehouse. E. Material requisitions are routinely linked to a bill of materials that lists all of the materials needed to complete a job.

D. doesn't authorize anything. just provides info

Selto Manufacturing recently sold goods that cost $35,000 for $45,000 cash. The journal entries to record this transaction would include: A. a credit to Work-in-Process Inventory for $35,000. B. a debit to Sales Revenue for $45,000. C. a credit to Profit on Sale for $10,000. D. a debit to Finished-Goods Inventory for $35,000. E. a credit to Sales Revenue for $45,000

E

statements about overhead application

I.Actual overhead rates result in more accurate but less timely information. II.Predetermined overhead rates result in less accurate but more timely information. III.Predetermined overhead rates tend to smooth product costs over time.

true statements about materials:

The use of direct materials gives rise to a debit to Work-in-Process Inventory. C. The use of indirect materials gives rise to a debit to Manufacturing Overhead. D. The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory. E. Direct materials are accounted for in a different manner than indirect materials.

As production takes place, all manufacturing costs are added to the

WIP inventory account. during production its a work in process. not finished yet

WIP:

Work in process is partially completed inventory. B. Work in process consists of direct labor, direct material, and manufacturing overhead. C. Work-in-Process Inventory is debited to record direct material used and direct labor incurred. D. Work-in-Process Inventory appears on the year-end balance sheet

left side of manufacturing OH account used to accumulate for

actual manufacturing overhead costs incurred throughout the accounting period

A typical job-cost record would provide information about all of the following items related to an order except: A. the cost of direct materials used. B. administrative costs. C. direct labor costs incurred. D. applied manufacturing overhead. E. direct labor hours worked

administrative costs. everything else is directly related to the cost of the specific job

Product costing in a manufacturing firm is the process of:

assigning costs to the firms inventory (product=inventory)

Longview Corporation recently used $72,000 of direct materials and $3,000 of indirect materials in production activities. The journal entries reflecting these transactions would include: A. a debit to Raw-Material Inventory for $72,000. B. a debit to Manufacturing Overhead for $3,000. C. a credit to Manufacturing Overhead for $3,000. D. a debit to Work-in-Process Inventory for $75,000. E. a debit to Manufacturing Overhead for $75,000

b

Which of the following manufacturers would most likely use job-order costing? A. Chemical manufacturers. B. Microchip processors. C. Custom-furniture manufacturers. D. Gasoline refiners. E. Fertilizer manufacturers

custom-furniture manufacturers. think anything specific and customizable and not mass produced

The final step in recognizing the completion of production requires a company to

debit finished goods credit wip

total production cost of job=

direct labor+direct material+APPLIED manufacturing OH

manufacturing overhead

is a pool of indirect production costs that must somehow be attached to each unit manufactured.

A manufacturing firm produces goods in accordance with customer specifications, commencing production upon receipt of a purchase order. To accumulate the cost of each order, the company would use a

job cost record. traces cost of each job/ order

A custom-home builder would likely utilize

job order costing

electricity costs

manufacturing OH`

In comparison with firms that use plantwide overhead rates and departmental overhead rates, companies that have adopted activity-based costing will typically use:

more cost pools and more cost drivers

The process of assigning overhead costs to the jobs that are worked on is commonly called

overhead application

32. Throughout the accounting period, the credit side of the Manufacturing Overhead account is used to accumulate

overhead applied to WIP inventory

normal costing refers to

predetermined overhead rates

In the two-stage cost allocation process, costs are assigned

service departments to production departments to jobs

supply chain management

system that coordinates flow of all goods services and info in and out of organization

Which of the following types of companies would most likely use process costing? A. Aircraft manufacturers. B. Textile manufacturers. C. Textbook publishers. D. Custom-machining firms. E. Shipbuilders

textile manufacturers because mass produced process = MASS