Chapter 15 (For final)

C

A company expected its annual overhead costs to be $1,440,000 and direct labor costs to be $800,000. Actual overhead was $1,392,000, and actual labor costs totaled $880,000. How much is the company's predetermined overhead rate to the nearest cent? A. $1.74 B. $1.57 C. $1.80 D. $1.64

B

A company expected its annual overhead costs to be $3,600,000 and direct labor costs to be $2,000,000. Actual overhead was $3,480,000, and actual labor costs totaled $2,200,000. How much is the company's predetermined overhead rate to the nearest cent? A. $1.74 B. $1.80 C. $1.64 D. $1.57

2

A company uses -- when it manufactures a large volume of similar products, and production is continuous. 1. Job order cost system 2. Process cost system

A

As of December 31, 2017, Gold Digger Industries had $10,000 of raw materials inventory. At the beginning of 2017, there was $8,000 of materials on hand. During the year, the company purchased $1,300,000 of materials; however, it paid for only $1,250,000. How much inventory was requisitioned for use on jobs during 2017? A. $1,298,000 B. $1,248,000 C. $1,302,000 D. $1,252,000

B

As of December 31, 2017, Lavender Company had $5,000 of raw materials inventory. At the beginning of 2017, there was $4,000 of materials on hand. During the year, the company purchased $650,000 of materials; however, it paid for only $625,000. How much inventory was requisitioned for use on jobs during 2017? A. $651,000 B. $649,000 C. $624,000 D. $626,000

B

At the beginning of the year, Maricopa Mfg. estimates annual overhead costs to be $3,200,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is A. $2,240,000. B. $3,360,000. C. $3,047,618. D. $3,200,000.

A

At the beginning of the year, Sonora Industries estimates annual overhead costs to be $1,280,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is A. $1,344,000. B. $1,280,000. C. $896,000. D. $1,219,047.

2

At the end of an accounting period, a company using a job order cost system calculates the cost of goods manufactured: 1. from the job cost sheet 2. from the work in process inventory account 3. by adding direct materials used, direct labor incurred, and manufacturing overhead incurred 4. from the cost of goods sold account

Yes: For example, General Motors uses process cost accounting for its standard model cars, and job order cost accounting for a custom-made limousine

Can a company use both job order and process cost system? Yes or no

B

Companies assign manufacturing overhead to work in process on an estimated basis through the use of a(n) A. assigned overhead rate. B. predetermined overhead rate. C. actual overhead rate. D. previous year's overhead rate.

1

Cost accounting involves the measuring, recording and reporting of: 1. product and service costs 2. future costs 3. manufacturing process 4. managerial accounting decisions

A

During 2017, Fillmore Company expected Job No. X-B to cost $240,000 of overhead, $400,000 of materials, and $160,000 in labor. Fillmore applied overhead based on direct labor cost. Actual production required an overhead cost of $224,000, $440,000 in materials used, and $168,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods? A. $860,000 B. $800,000 C. $832,000 D. $848,000

A

During 2017, Madison Manufacturing expected Job No. MM-3 to cost $600,000 of overhead, $1,000,000 of materials, and $400,000 in labor. Madison applied overhead based on direct labor cost. Actual production required an overhead cost of $560,000, $1,100,000 in materials used, and $420,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods? A. $2,150,000 B. $2,120,000 C. $2,080,000 D. $2,000,000

D

During 2017, Sheridan Industries expected Job No. 85542 to cost $180,000 of overhead, $300,000 of materials, and $120,000 in labor. Sheridan applied overhead based on direct labor cost. Actual production required an overhead cost of $174,000, $330,000 in materials used, and $132,000 in labor. All of the goods were completed. How much is the amount of over- or under applied overhead? A. $24,000 under applied B. $6,000 over applied C. $6,000 under applied D. $24,000 over applied

D

During 2017, Virginia Company expected Job No. VIR-09 to cost $600,000 of overhead, $1,000,000 of materials, and $400,000 in labor. Virginia applied overhead based on direct labor cost. Actual production required an overhead cost of $580,000, $1,100,000 in materials used, and $440,000 in labor. All of the goods were completed. How much is the amount of over- or under applied overhead? A. $80,000 under applied B. $20,000 over applied C. $20,000 under applied D. $80,000 over applied

B

Factory Labor is a(n) A. subsidiary account. B. temporary account. C. expense account. D. control account.

Cost of completed service contracts

Finished goods inventory for service companies

C

Finished goods inventory is debited and work in process inventory is credited when A. when goods have been sold. B. materials which were ordered have been received. C. a job is completed and all costs have been accumulated on a job cost sheet. D. when manufacturing overhead costs which are considered product costs have been

D

If actual overhead is less than applied manufacturing overhead, then manufacturing overhead is: A. a loss on the income statement under "Other Expenses and Losses." B. considered a miscellaneous expense. C. underapplied. D. overapplied.

True

In job order cost accounting, the flow of cost parallels the physical flow of the materials as they are converted into finished goods and then sold. True or false

2

In recording the issuance of raw materials in a job order cost system, it would be incorrect to: 1. debit work in process inventory 2. debit finished goods inventory 3. debit manufacturing overhead 4. credit raw materials inventory

B

Job cost sheets constitute the subsidiary ledger for the A. Cost of Goods Manufactured account. B. Work In Process Inventory account. C. Finished Goods Inventory account. D. Cost of Goods Sold account.

2

Job order costing requires -- amount of data entry than process costing 1. less 2. more 3. same

False

Labor costs are debited to Work in process inventory when they are incurred. True or False

2

Manufacturing overhead is underapplied if: 1. actual overhead is less than applied 2. actual overhead is greater than applied 3. the predetermined rate equals the actual rate 4. actual overhead equals applied overhead

C

Process costing is used when A. production is aimed at filling a specific customer order. B. dissimilar products are involved. C. the production process is continuous. D. costs are to be assigned to specific jobs.

D

Route Manufacturing. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $820,000. The company used 1,000 hours of processing on Job No. 5 during the period and incurred overhead costs totaling $840,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. 5? A. $42,000 B. $840 C. $820 D. $41,000

3

Second step of job order cost accounting is: 1. Transfer the cost of the completed job out of WIP inventory into finished goods inventory 2. Accumulate costs 3. Assign manufacturing cost to specific jobs 4. transfers cost out of finished goods inventory into COGS

C

Shoe Co. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $2,050,000. The company used 1,000 hours of processing on Job No. LKP during the period and incurred overhead costs totaling $2,100,000. The budgeted machine hours for the year totaled 40,000. How much overhead should be applied to Job No. LKP? A. $1,025 B. $52,500 C. $51,250 D. $1,050

1

The entry when direct factory labor is assigned to jobs is a debit to: 1. Work in process inventory and credit to factory labor 2. Manufacturing overhead and a credit to factory labor 3. Factory labor and a credit to Manufacturing overhead 4. Factory labor and a credit to work in process inventory

B

The following information is available for completed Job No. 206: Direct materials, $240,000; direct labor, $360,000; manufacturing overhead applied, $180,000; units produced, 15,000 units; units sold, 12,000 units. The cost of the finished goods on hand from this job is A. $780,000. B. $156,000. C. $120,000. D. $624,000.

D

The following information is available for completed Job No. 804: Direct materials, $160,000; direct labor, $240,000; manufacturing overhead applied, $120,000; units produced, 10,000 units; units sold, 8,000 units. The cost of the finished goods on hand from this job is A. $80,000. B. $416,000. C. $520,000. D. $104,000.

4

The formula for computing the predetermined manufacturing overhead rate is estimated annual overhead costs divided by estimated annual operating activity, expressed as: 1. direct labor cost 2. direct labor hours 3. machine hours 4. any of the above

B

The predetermined overhead rate is A. not calculated until actual overhead costs are incurred. B. determined at the beginning of the year. C. determined at the end of the current year. D. determined on a moving average basis throughout the year.

4

The source of information for assigning costs to job cost sheets are: 1. invoices, time tickets, and the predetermined overhead rate 2. materials requisition slips, time tickets, and the actual overhead rate 3. materials requisition slips, payroll register, and the predetermined overhead rate 4. materials requisition slips, time tickets, and the predetermined overhead rate

True

The two major steps in the job order cost flow are 1) accumulating the manufacturing costs and 2) assigning the accumulated costs to the work done. True or False

1

Under a --, the company assigns costs to each job or to each batch of goods 1. Job order cost system 2. Process cost system

C

When incurred, factory labor costs are debited to A. Factory Wages Payable. B. Factory Wages Expense. C. Factory Labor. D. Work in Process.

3

When incurred, factory labor costs are debited to: 1. Work in process 2. Factory Wage Expense 3. Factory Labor 4. Factory Wages Payable

C

Which account is credited when a job is completed? A. Cost of Goods Sold. B. Sales Revenue. C. Work in Process Inventory. D. Finished Goods Inventory.

B

Which of the following is one of the components of cost accounting? A. It requires cost minimizing principles. B. It involves measuring product costs. C. It requires GAAP to be applied. D. It involves the determination of company profits.

3

Which of the following statement is true? 1. job order costing requires less data entry than process costing 2. allocation of overhead is easier under job order costing than process costing 3. Job order costing provides more precise costing for custom jobs than process costing 4. The use of job order costing has declined because more companies have adopted automated accounting system

A

Which of the following statements is correct regarding cost accounting? A. All of these answer choices are correct. B. It involves determining both the total cost and the unit cost of each product. C. It is vital for effective evaluation of employee performance. D. it is used to determine what prices to charge and how much quantity of each product to produce.

D

Which one of the following is a source document that impacts the job cost sheet? A. Raw materials receiving slips. B. Materials purchase orders. C. Finished goods shipping documents. D. Labor time tickets.

service contracts in process

Work in process inventory for service companies