Chapter 14, 15, 16 Accounting 2

The predetermined overhead rate is based on total _____ overhead costs and activity base.

estimated or predetermined

True or false: Journal entries are not required when direct materials are requisitioned.

false

True or false: Materials requisitioned for use on a specific job are always considered to be direct materials.

false

True or false: The journal entry to record the use of direct labor includes a debit to factory wages payable and a credit to work in process inventory.

false

A cost accounting system:

is used to control costs of manufacturing activities. helps managers' determine selling prices.

Producing products that are individually designed to meet the needs of a specific customer where each customized product is manufactured separately is the definition of:

job order production

The cost of units transferred from Work in Process Inventory to Finished Goods Inventory is called the cost of goods

manufactured

Companies use job cost sheets to track the costs of:

materials, labor, and overhead costs of a job

Understanding the cost of partially completed goods allows the manufacturer to:

measure production activity for the period

All of the following are manufacturing costs except:

office salaries

Each department in a process costing system, will use (one, two, none) Work in Process account.

one

The journal entry to record indirect materials costs used in production includes a debit to factory

overhead

In process operations, where there is a series of repetitive processes, each ____ is a separate production department.

process

The mass production of products in a continuous flow of steps is the definition of:

process operations

A company has a predetermined overhead rate of 50% of direct labor costs. Job 62 incurs $560 in labor costs. Overhead allocated to Job 62 will be

$280

A manufacturing company reports the following items: Finished goods inventory, beginning balance: $1,000 Finish goods inventory, ending balance: $1,200 Cost of goods manufactured, $5,000 The cost of goods sold is

$4,800

A company works on three jobs and incurs the following: Direct materials - $50,000 and Direct labor - $100,000. The company uses a predetermined overhead rate of 60% of direct labor costs. How much overhead will be allocated to the three jobs?

$60,000

List the following documents in the order in which they are used when recording indirect materials costs in job order cost accounting,

1. Receiving reports 2. Materials ledger cards 3. Materials requisitions 4. Factory overhead ledger

List the following documents in the order in which they are used when recording direct materials costs in job order cost accounting

1. Receiving reports 2. Materials ledger cards 3. Materials requisitions 4. Job cost sheets

List the following documents in the order in which they are used when recording indirect labor costs in job order costing,

1. Time tickets 2. Factory overhead ledger 3. Allocated to specific jobs through factory overhead

List the following documents in the order in which they are used when recording direct labor costs in job order costing

1. Time tickets 2. Job cost sheets 3. Factory wages payable

List the four steps involving analysis when accounting for a department's activity, with the first step listed on top.

1. physical flow 2. equivalent units 3. cost per equivalent unit 4. assignment and reconciliation

A department completed and transferred to finished goods 75,000 units. The cost per EUP for direct materials is $8.00 and the cost per EUP for conversion cost is $6.00. The costs transferred to Finished Goods Inventory is $

1050000

A company uses direct labor costs as it allocation base. Management estimates the company will incur $150,000 of direct labor cost during the year and total overhead costs of $200,000. What is their predetermined overhead rate?

133%

A company completes 21,000 units this month and has ending goods in process inventory of 3,000 units which are estimated to be 40% complete. Direct materials cost per EUP is $5.00 and Conversion cost per EUP is $1.50. The cost transferred to Finished Goods Inventory is $

136500

Department C had direct materials EUP cost of $4.00 and conversion EUP cost of $2.50. If the department had 38,000 units completed and transferred to the next department, their cost of units completed for direct materials is $

152000

Department A completed and transferred out 2,100 units and had ending work in process inventory of 120 units. The ending inventory is 10% complete for materials and 70% complete for labor and overhead. The equivalent units of production for labor and overhead is

2184

Department D had materials costs of $10,000 in beginning work in process inventory and added an additional $50,000 in materials costs this period. If the department had 20,000 EUP for materials, the cost per equivalent unit of production is $

3

A manufacturing department completed and transferred to finished goods a total of 50,000 units. They also had 2,500 units in ending work in process inventory. Of this ending inventory, direct materials were 60% complete and conversion costs were 20% complete. Their cost per EUP for direct materials is $5.75 and $1.25 for conversion cost. The cost of units completed this period is $

350000

Department 1 completed and transferred out 450 units and had ending work in process inventory of 60 units. The ending inventory is 20% complete for materials and 60% complete for labor and overhead. The equivalent units of production for materials is

462

Department 1 completed and transferred out 450 units and had ending work in process inventory of 60 units. The ending inventory is 20% complete for materials and 60% complete for labor and overhead. The equivalent units of production for labor and overhead is

486

Department Y started 675 units during the accounting period. They had a beginning balance in goods in process inventory of 225 units and an ending balance of 150 units. ____ units were completed and transferred out.

750

Match the following activities to their effect on the general ledger accounts.

Allocate indirect labor --> Credit Factory Wages Payable Pay factory property tax --> Debit Factory Overhead Purchase materials --> Debit Raw Materials Inventory Use direct materials --> Credit Raw Materials Inventory Complete job --> Debit Finished Goods Inventory Deliver job --> Credit Finished Goods Inventory Allocate overhead costs to jobs --> Credit Factory Overhead Direct labor used --> Debit Work in Process Inventory

Job order production is most likely used by companies that produce:

Customized wedding cakes

Match the following overhead activities to the correct time period.

Calculate the predetermined overhead rate --> At the start of the accounting period Allocate overhead to jobs --> During the accounting period Adjust overhead account for over- or underapplied overhead --> At the end of the accounting period

Which of the following are the variable costs relative to number of units produced and sold?

Commissions based on sales Materials used in production

Job cost sheets can be used to:

provide a subsidiary ledger for the Finished Goods Inventory account. monitor costs incurred to date and to predict and control costs for each job. provide a permanent record for the Cost of Goods Sold account.

The cost object in a job order system is the ______ and the cost object in a process costing system is the ______.

specific job; process

Equivalent units of production refers to the number of units that could have been:

started and completed

In a process costing system, which of the following is correct regarding the Work in Process Inventory account:

there will be a separate Work In Process account for each department

A process cost summary summarizes the following process costing steps:

total costs charged to the department equivalent units of production physical flow of units cost assignment and reconciliation.

True or false: Using the weighted-average method, the computation of EUP separates units into direct materials and conversion.

true

The correct cost flow in a job order costing system is:

work in process; finished goods, cost of goods sold

Which of the following are product costs for a manufacturer?

Direct Materials Depreciation on the factory equipment

Those who work directly on the product to convert raw materials into a finished product are known as

Direct labor

The three types of manufacturing costs in a job order costing system include:

Direct labor Direct materials Overhead

Prime costs consists of:

Direct labor and direct materials

Costs which are tangible components of the finished product are called

Direct materials

Financial accounting provides information for _____ decision makers, while managerial accounting provides information for _____ decision makers

External, Interal

True or false: The main purpose of managerial accounting is to provide general-purpose financial statements

False

Consider a company that manufactures picture frames. Which of the following costs would be considered direct costs?

Glass used in the frame Oak wood used for the frame Wages of assembly line worker

Consider the production department of a manufacturer of laptop computers. Classify the cost of the factory maintenance manager's salary.

Indirect Fixed Product

Each of the following are examples of factory overhead:

Indirect labor Indirect Materials

What types of information does managerial accounting provide?

Information for external decision makers Financial Non-Financial

A cost accounting system includes which of the following?

It generates timely information about inventory.

Heterogeneous products

Job order operations

Managerial accounting is different from financial accounting in that:

Managerial accounting is used in planning and control decisions and financial accounting is used in making investment and credit decisions

Which of the following characteristics describe managerial accounting?

Many projections and estimates Used to make planning and control decisions Monetary and nonmonetary information Internal users Emphasis on projects, processes, and divisions

The characteristics of the fraud triangle include

Opportunity Financial Pressure Rationalization

Which of the following are indirect costs for the finishing department of a furniture manufacturing plant?

Plant manager's salary Electricity cost for the plant Rent on the manufacturing facility

Manufacturing of products in a repetitive manner is referred to as (process/job order) _____ operations while manufacturing of custom products is referred to as (process/job order) _____ operations.

Process Job order

Homogeneous products

Process operations

The main purpose of managerial accounting is

Providing useful information to internal managers

Direct and indirect materials are known as

Raw materials

Financial Accounting

Used by creditors

Managerial Accounting

Uses many projections and estimates with some historical information

Consider the production department of a manufacturer of laptop computers. Classify the cost of the processor chips

Variable Direct Product

Which of the following are period costs for a manufacturer?

Wages for administrative staff Rent on the office building Sales commissions

A company incurs factory overhead costs of $1,200 and applied $1,500. If the difference is considered immaterial, then the:

adjusting entry will require a credit to Cost of Goods Sold. Factory Overhead account has a credit balance of $300 before adjusting.

Manufacturing costs include direct materials, direct labor, and

applied overhead costs

The predetermined overhead rate is calculated:

at the start of the accounting period

Process and job order operations are similar in that both

combine materials, labor, and overhead in producing products. are used to determine the cost per unit of product or service.

After determining the physical flow of units, the next step in process costing is:

compute equivalent units of production

A Schedule of Cost of Goods Manufactured includes all of the following costs except:

cost of goods sold

The Factory Overhead account is (debited/credited) _____ for applied overhead costs.

credited

The journal entry to record depreciation on factory equipment is to:

debit Factory Overhead and credit Accumulated Depreciation - Equipment

The journal entry to record indirect labor used in production is to:

debit Factory Overhead and credit Factory Wages Payable

The journal entry to record the accrual of factory utilities is to:

debit Factory Overhead and credit Utilities Payable

The journal entry to record the transfer of completed work in process to finished goods in process costing is to:

debit Finished Goods Inventory and credit Work in Process Inventory

The journal entry to record the purchase of materials on account is to:

debit Raw Materials Inventory and credit Accounts Payable

The journal entry to record the allocation of factory overhead to work in process is:

debit Work in Process Inventory and credit Factory Overhead

The journal entry to record the use of direct labor in process costing is to:

debit Work in Process Inventory and credit Factory Wages Payable.

The journal entry to record the insurance on the factory equipment is to:

debit factory overhead, credit prepaid insurance

If the factory overhead is overapplied, then the adjusting journal entry to close the factory overhead account includes a

debit to Factory Overhead. credit to Cost of Goods Sold.

The recording of direct labor will result in a:

debit to Work in Process Inventory and credit Factory Wages Payable

The journal entry to record the transfer of completed work in process to finished goods in process costing is a(n):

decrease in one asset and an increase in another asset

A Schedule of Cost of Goods Manufactured includes all of the following costs:

direct labor used direct materials used factory overhead applied work in process inventory

In a process operation, each process has a separate department which will accumulate costs for each of the following:

direct materials direct labor overhead

List the items below in the correct order in which they would appear in the calculation of cost of goods sold for a manufacturing company.

Beginning finished goods inventory PLUS Cost of goods manufactured MINUS Ending finished goods inventory

Managers use a predetermined overhead rate for which of the following reasons?

To assist in setting prices for jobs To estimate total job costs before the job is completed

Process operations is defined as a manufacturing process that includes:

high level of standardization. series of sequential processes.

Characteristics of process operations include:

identical units low product flexibility. high volume production.

The journal entry to record the purchase of materials on account is a(n):

increase in assets increase in liabilities

The journal entry to record direct labor will result in a(n):

increase in assets and a increase in liabilities

All of the following are inventory accounts for a manufacturer except:

indirect materials inventory