Chapter 15 Study

A company uses direct labor costs as its 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% Reason: Rate = estimated overhead costs/estimated activity base

A tax accounting firm pays tax preparers $44 per hour. The firm has a predetermined overhead rate of $24 per labor hour. The Jones tax return required 2.5 hours to complete. The total cost of this job is $

170 44+44+22+24+24+12

A company has a predetermined overhead rate of $14 per machine hour. Job 846 uses 27.5 machine hours. Overhead allocated to Job 846 will be $.

385 14 * 27.5

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? Multiple choice question. $75,000 $50,000 $60,000 $15,000

60,000 100,000 * 0.60 = 60,000

After jobs are completed and delivered to customers, the job cost sheet is used to provide a permanent record for: Multiple choice question. Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Cost of Goods Sold

COGS

Choose the product(s) that are most likely to be manufactured as a job, rather than as a job lot. (Check all that apply.) Multiple select question. Customized home Tailored wedding dress Advertising circulars for a grocery store. T-shirts for a local charity run

Customized home Tailored wedding dress

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

False

Managers use a predetermined overhead rate for which of the following reasons? (Check all that apply.) Multiple select question. Predetermined costs are more accurate than using actual costs Total job costs are not needed until the end of the accounting period, so predetermined rates are not needed. To estimate total job costs before the job is completed To assist in setting prices for jobs

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

True or false: The principle of customization is applicable to both service and manufacturing companies. True false

True

Which of the following are characteristics of materials ledger cards? Select all that apply. Multiple select question. Used to record materials issued for use in production Considered a source document Used to record materials purchases Perpetual records Updated by the production manager

Used to record materials issued for use in production Used to record materials purchases Perpetual records

A cost accounting system includes which of the following? Multiple choice question. It accumulates production costs and assigns them to products and services. It is used with periodic inventory systems. It is used to record costs of selling activities.

It accumulates production costs and assigns them to products and services.

At the end of the accounting period, a company's overhead was overapplied by $400. The Factory Overhead account was properly adjusted. What effect did the adjustment have on net income? Multiple choice question. It decreased net income by $400. It increased net income by $400. Net income will not be affected. The affect cannot be determined from the information given.

It increased net income by $400.

The cost accounting system used when producing customized products is called _________ order production.

Job

At the end of the accounting period, a company's overhead was underapplied by $150. If not adjusted, how does this affect net income? Multiple choice question. Net income will not be affected. Net income will be understated by $150. Net income will be overstated by $150.

Net income will be overstated by $150.

A Schedule of Cost of Goods Manufactured includes all of the following costs except: Multiple choice question. direct labor cost of goods sold work in process factory overhead applied direct materials used

cost of goods sold

The journal entry to record depreciation on factory equipment is to: Multiple choice question. debit Factory Overhead and credit Accumulated Depreciation - Equipment debit Depreciation Expense and credit Accumulated Depreciation - Equipment debit Cash and credit Accumulated Depreciation - Equipment

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: Multiple choice question. debit Cash and credit Factory Overhead debit Factory Overhead and credit Utilities Payable debit Utilities Payable and credit Factory Overhead debit Factory Overhead and credit Cash

debit Factory Overhead and credit Utilities Payable

The journal entry to record the purchase of materials on account is to: Multiple choice question. debit Raw Materials Inventory and credit Accounts Payable debit Accounts Payable and credit Production Materials debit Production Materials and credit Accounts Payable debit Accounts Payable and credit Raw Materials Inventory

debit Raw Materials Inventory and credit Accounts Payable

The journal entry to record the allocation of factory overhead to work in process is: Multiple choice question. debit Factory Overhead and credit Work in Process Inventory debit Work in Process Inventory and credit Cash debit Cash and credit Factory Overhead debit Work in Process Inventory and credit Factory Overhead

debit Work in Process Inventory and credit Factory Overhead

The journal entry to record direct labor in production is to: Multiple choice question. debit Work in Process Inventory and credit Factory Wages Payable. debit Factory Wages Payable and credit Work in Process Inventory. debit Factory Overhead and credit Work in Process Inventory. debit Work in Process Inventory and credit Factory Overhead.

debit Work in Process Inventory and credit Factory Wages Payable.

The journal entry to record the use of direct materials in production is to: Multiple choice question. debit Factory Overhead and credit Raw Materials Inventory. debit Raw Materials Inventory and credit Factory Overhead. debit Work in Process Inventory and credit Raw Materials Inventory. debit Raw Materials Inventory and credit Work in Process Inventory.

debit Work in Process Inventory and credit Raw Materials Inventory.

The recording of direct labor will result in a: Multiple choice question. debit to Factory Overhead and a credit Work in Process Inventory debit to Factory Wages Payable and a credit to Work in Process Inventory debit to Work in Process Inventory and a credit Factory Overhead debit to Work in Process Inventory and credit Factory Wages Payable

debit to Work in Process Inventory and credit Factory Wages Payable

Overhead may be applied based on: Multiple select question. indirect labor direct materials machine hours direct labor

direct labor, machine hours

Both service companies and manufacturing companies have: (Check all that apply). Multiple select question. overhead direct labor direct materials finished goods inventory

direct labor, overhead

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

false

The journal entry to record the purchase of materials on account is a(n): Multiple choice question. increase in assets and a decrease in liabilities increase in one asset and a decrease in another decrease in assets and a decrease in liabilities increase in assets and an increase in liabilities

increase in assets and an increase in liabilities

All of the following are inventory accounts for a manufacturer except: Multiple choice question.

indirect materials inventory

A cost accounting system: (Check all that apply.) Multiple select question. is used to control costs of manufacturing activities. correct helps managers' determine selling prices. correct provides general information used by investors. is used only with a perpetual inventory system.

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

A job which involves producing more than one unit of a custom product is called a Multiple choice question. special order job order customized product job lot

job lot

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: Multiple choice question. job order production process production service production mass production

job order production

Companies use job cost sheets to track the costs of: Multiple choice question. labor, overhead, and marketing costs of a job materials, labor, and selling prices of a job labor, marketing, and operating costs of a job materials, labor, and overhead costs of a job

materials, labor, and overhead costs of a job

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

overhead

Job cost sheets can be used to: (Check all that apply.) Multiple select question. provide a record for the Cost of Goods Sold account. provide a subsidiary ledger for the Finished Goods Inventory account. monitor costs incurred and to predict costs for each job. provide a subsidiary ledger for the Raw Materials Inventory account.

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

Time tickets are used in job order costing to: Multiple choice question. combine hours worked on several different jobs during the payroll period report hours worked on specific jobs during the payroll period

report hours worked on specific jobs during the payroll period

Journal entries for materials used in production are posted to:(Check all that apply.) Multiple select question. contributory records. subsidiary records. general ledger accounts. secondary accounts.

subsidiary records. general ledger accounts.

During production, job cost sheets represent: Multiple choice question. the balance in the work in process inventory account the balance in the cost of goods sold account the balance in the materials inventory account the balance in the finished goods inventory account

the balance in the work in process inventory account

List the following documents in the order in which they are used when recording indirect labor costs in job order costing, with the first document on top. Position 1 of 3 Time tickets correct toggle button unavailable Time tickets

time tickets factory overhead allocated to specific jobs

True or false: A job order costing system requires the company to keep separate records for each job. True false

true

The correct order of cost flows in a job order costing system is: Multiple choice question. cost of goods sold, work in process, finished goods cost of goods sold, finished goods, work in process finished goods, work in process; cost of goods sold work in process; finished goods, cost of goods sold

work in process; finished goods, cost of goods sold

The base to which overhead costs are linked, such as direct labor or machine hours, is known as the overhead ________ base.

activity

If the factory overhead is underapplied, then: (Check all that apply.) Multiple select question. applied overhead costs > actual overhead costs. actual overhead cost > applied overhead costs. the Factory Overhead account has a credit balance. the Factory Overhead account has a debit balance.

actual overhead cost > applied overhead costs. the Factory Overhead account has a debit balance.

The predetermined overhead rate is calculated: Multiple choice question. during the accounting period at the end of the accounting period at the start of the accounting period

at the start of the accounting period

Time tickets are used in job order costing to record the time and cost of: Multiple choice question. both direct and indirect labor in the production department only direct labor in the production department only indirect labor in the production department

both direct and indirect labor in the production department

Requisitions are used in job order costing to record the cost and quantity of: Multiple choice question. both direct and indirect materials requested by the production department only direct materials requested by the production department only indirect materials requested by the production department

both direct and indirect materials requested by the production department