Chapter 2

Given the following, compute the cost of goods manufactured. Direct material cost: $40,000 Direct labor cost: $100,000 Applied overhead: $120,000 Beginning work in process inventory: $30,000 Ending work in process inventory: $12,000 $278,000 $302,000 $242,000 $260,000

$278,000

Nonmanufacturing costs increase ______. various asset and liability accounts the Manufacturing Overhead account the Selling, General & Administrative expense accounts the Cost of Goods sold account

the Selling, General & Administrative expense accounts

In a job-order costing system costs flow first to ______. the income statement and then to the inventory accounts the inventory accounts and then to the Finished Goods account cost of goods manufactured and then to the inventory accounts the inventory accounts and then to cost of goods sold

the inventory accounts and then to cost of goods sold

When actual manufacturing overhead costs are incurred, ______. work in process inventory is credited the manufacturing overhead cost is credited the manufacturing overhead cost is debited work in process inventory is debited

the manufacturing overhead cost is debited

When actual manufacturing overhead costs are incurred, ______. work in process inventory is debited the manufacturing overhead cost is debited work in process inventory is credited the manufacturing overhead cost is credited

the manufacturing overhead cost is debited

Overhead costs are debited to Work in Process when ______. the actual costs are incurred the job is sold they are applied to jobs the job is started

they are applied to jobs

Overhead costs are debited to Work in Process when ______. the job is started the job is sold the actual costs are incurred they are applied to jobs

they are applied to jobs

A direct labor__ __ is a document used to record how long workers spend on each job and task.

time ticket

True or false: Job cost sheets serve as a subsidiary ledger to the overall Work in Process Inventory account.

true

True or false: The Manufacturing Overhead account is a temporary account used to accumulate actual and applied overhead costs.

true

If there is a debit balance in Manufacturing Overhead after overhead has been applied to all jobs it means overhead was

underapplied

What document specifies the type and quantity of direct materials used on a specific job? Direct labor time ticket Materials requisition form Bill of materials form Job cost sheet

Materials requisition form

What document specifies the type and quantity of direct materials used on a specific job? Job cost sheet Direct labor time ticket Materials requisition form Bill of materials form

Materials requisition form

Ideally an allocation base should ______. be a cost associated with producing the firm's goods should not be a cost driver be calculated using a predetermined overhead rate explain or influence the amount of overhead incurred

explain or influence the amount of overhead incurred

Ideally an allocation base should ______. be a cost associated with producing the firm's goods should not be a cost driver explain or influence the amount of overhead incurred be calculated using a predetermined overhead rate

explain or influence the amount of overhead incurred

When a job is completed, its costs are transferred into ______. Cost of Goods Sold Finished Goods Sales Revenue Work in Process

finished goods

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. $102,000 $130,000 $70,000 $74,000

$74,000

What is the formula for applying overhead to a specific job? Estimated manufacturing overhead / estimated total cost driver usage Actual manufacturing overhead rate × actual cost driver usage for the specific job Predetermined overhead rate × the actual cost driver usage for the specific job Estimated manufacturing overhead / cost driver usage for the specific job

Predetermined overhead rate × the actual cost driver usage for the specific job

Which of the following would not be considered a job in a service firm that uses job-order costing?

The tax department in an accounting firm

the cost of goods manufactured report includes ______ manufacturing overhead costs. actual applied

applied

Applied manufacturing overhead costs are credited to the Manufacturing Overhead account ______. as they are incurred when the jobs are sold at the end of the period as the costs are applied to jobs

as the costs are applied to jobs

The costs incurred for each unique product, project, or service are recorded on a document called a(n) __ __ sheet

job cost

The cost of goods __ is the sum of all amounts transferred from Work in process to Finished goods during a period.

manufactured

Actual manufacturing overhead consists of all ______. costs other than direct labor and direct materials manufacturing costs other than direct labor and direct materials indirect costs manufacturing costs

manufacturing costs other than direct labor and direct materials

Actual manufacturing overhead consists of all ______. indirect costs manufacturing costs other than direct labor and direct materials costs other than direct labor and direct materials manufacturing costs

manufacturing costs other than direct labor and direct materials

Gross profit minus selling and administrative expenses equals ______. net operating assets cost of goods sold net operating income cost of goods manufactured

net operating income

Gross profit minus selling and administrative expenses equals ______. net operating income cost of goods sold net operating assets cost of goods manufactured

net operating income

Ending Work in Process Inventory represents the cost of goods ______. not yet completed not yet sold to be started on next period

not yet completed

A blend of process and job order costing is called__ costing

operations

The predetermined overhead rate is multiplied by the actual cost driver usage for a job to calculate the ______ the job. overhead applied to total cost of predetermined overhead rate for actual overhead for

overhead applied to

Nonmanufacturing costs incurred during a period are treated as ______. liabilities assets product costs period expenses

period expenses

All materials that will be used in future production are first recorded in the __ __ Inventory account.

raw materials

When materials are purchased they are first recorded in the ______ account. Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Manufacturing Overhead

raw materials inventory

The job cost sheet serves as a(n) __ __to the overall Work in Process Inventory account.

subsidiary ledger

The balance of work in process inventory may be calculated by ______. subtracting the cost of goods sold from the sum of all manufacturing costs summing the sales value of all jobs in process summing the costs of all jobs in process subtracting the cost of finished goods inventory from the sum of all manufacturing costs

summing the costs of all jobs in process

Given the following, calculate total current manufacturing costs: Direct materials: $40,000; Direct labor: $100,000 Manufacturing overhead applied: $120,000 Beginning Work in process inventory: $30,000 Ending Work in process inventory: $12,000 $302,000 $278,000 $242,000 $260,000

$260,000

Gemini had Sales of $50,000, Unadjusted Cost of goods sold of $23,000, Overapplied Manufacturing Overhead of $3,000, and Selling and administrative expenses of $25,000. Calculate gross profit. $5,000 $24,000 $27,000 $30,000

$30,000

Luver Corporation's Gross profit is $100,000, Cost of goods sold equals $70,000, and Selling and administrative expenses total $45,000. Calculate the net operating income (loss).

$55,000

Jonas Corporation used $20,000 of direct materials, incurred $40,000 of direct labor cost, and applied $30,000 of manufacturing overhead to jobs this period. No jobs were incomplete at the beginning of the period, but at the end of the period, jobs with a total cost of $25,000 were unfinished. What was the cost of goods manufactured for this period? $115,000 $25,000 $65,000 $90,000

$65,000

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

$74,000

The balance of work in process inventory may be calculated by ______. summing the sales value of all jobs in process subtracting the cost of goods sold from the sum of all manufacturing costs summing the costs of all jobs in process subtracting the cost of finished goods inventory from the sum of all manufacturing costs

summing the costs of all jobs in process

In a job-order costing system costs flow first to ______. the income statement and then to the inventory accounts the inventory accounts and then to cost of goods sold cost of goods manufactured and then to the inventory accounts the inventory accounts and then to the Finished Goods account

the inventory accounts and then to cost of goods sold

Which of the following would most likely NOT be classified as a direct material? Nails and screws Laptop keyboard Drywall Automobile engine

Nails and screws

Carlisle, Inc. had Sales revenue of $500,000, Unadjusted cost of goods sold of $395,000, Underapplied manufacturing overhead of $5,000, and Selling and administrative expenses of $50,000. Calculate gross profit. $100,000 $110,000 $50,000 $105,000

$100,000

Raw materials inventory was $5,000 at the beginning of the year and $12,000 at the end of the year. During the year, a total of $27,000 in raw materials were purchased, including $4,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. $30,000 $20,000 $16,000 $24,000

$16,000

Calculate total current manufacturing costs given the following: Direct materials cost: $62,000 Direct labor cost: $78,000 Manufacturing overhead applied: $46,000 Actual manufacturing overhead: $51,000 Beginning Work in process inventory: $32,000 Ending Work in process inventory: $35,000 $183,000 $186,000 $191,000

$186,000

Given: Cost of goods manufactured of $234,000, beginning finished goods inventory of $18,000, and ending finished goods inventory of $24,000, calculate unadjusted cost of goods sold. $258,000 $240,000 $252,000 $228,000

$228,000

Given the following, calculate total current manufacturing costs: Direct materials: $40,000; Direct labor: $100,000 Manufacturing overhead applied: $120,000 Beginning Work in process inventory: $30,000 Ending Work in process inventory: $12,000 $302,000 $260,000 $242,000 $278,000

$260,000

Select all that apply Which methods can be used to dispose of underapplied or overapplied manufacturing overhead? Allocate it to Work in Process, Finished Goods, and Cost of Goods Sold Make a direct adjustment to Cost of Goods Sold Close it out to Work in process Allocate it to Raw Materials, Work in Process, and Finished Goods Make a direct adjustment to Finished Goods

Allocate it to Work in Process, Finished Goods, and Cost of Goods Sold Make a direct adjustment to Cost of Goods Sold

Which of the following companies would be most likely to use operations costing? A custom home builder A dog food manufacturer An automobile manufacturer A law firm

An automobile manufacturer

True or false: A predetermined overhead rate of $50 per direct labor hour means that the total cost of direct labor and indirect cost equals $50 per hour.

False

True or false: At the end of the accounting period, a balance in the Manufacturing Overhead account always means that overhead was underapplied. True False

False

True or false: Job-order costing can only be used in manufacturing firms.

False

True or false: The cost of each individual unit is tracked to products under both job order and process costing.

False

A cost driver is ______. the rate that is used to apply manufacturing overhead to products and services the total estimated manufacturing overhead cost a measure that explains or influences the amount of manufacturing overhead cost incurred another name for predetermined overhead rate

a measure that explains or influences the amount of manufacturing overhead cost incurred

The first step in assigning manufacturing overhead is to determine the __ __ or cost driver

allocation base

Select all that apply When materials are requisitioned into production, ______. direct materials are recorded on the job cost sheet indirect materials are recorded in Work in Process direct materials are recorded in Work in Process indirect materials are recorded as a separate line item on the job cost sheet

direct materials are recorded on the job cost sheet direct materials are recorded in Work in Process

to calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract ______. only beginning raw materials inventory ending raw materials inventory and indirect materials used only ending raw materials inventory beginning raw materials inventory and indirect materials used

ending raw materials inventory and indirect materials used

To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the ______.

estimated total cost driver

A company's calculated predetermined overhead rate is $90 per direct labor hour. If a job requires 4 direct labor hours, ______. the total cost of labor and overhead for the job is $360 $360 is assigned to the job to cover indirect costs the total cost of labor for the job is $360

$360 is assigned to the job to cover indirect costs

Given: Cost of goods manufactured of $410,000, beginning finished goods inventory of $110,000, and ending finished goods inventory of $125,000, calculate unadjusted cost of goods sold. $535,000 $395,000 $520,000 $425,000

$395,000

Murphy Manufacturing estimated $100,000 in manufacturing overhead and 5,000 direct labor hours for 2016. Actual overhead for the year was $120,000 and 7,500 actual direct labor-hours were used. How much overhead was applied to a job completed during 2016 that used 200 direct labor-hours? $4,000 $3,200 $4,800 $100,000

$4,000

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. $130,000 $70,000 $102,000 $74,000

$74,000

Select all that apply Which of the following statements are true? Direct labor costs flow through the Raw materials inventory account. Raw materials inventory represents the cost of materials not yet used in production. When materials are purchased they are recorded in the Raw materials inventory account. Raw materials inventory only includes the cost of direct materials.

Raw materials inventory represents the cost of materials not yet used in production. When materials are purchased they are recorded in the Raw materials inventory account.

Which of the following is not a manufacturing cost category? Selling & administrative costs Direct labor Manufacturing overhead Direct materials

Selling & administrative costs

Which of the following would NOT be part of direct labor cost? Supervisor salaries Attorney salaries Plumber wages Assembly-workers wages

Supervisor salaries

A cost driver is ______. the rate that is used to apply manufacturing overhead to products and services the total estimated manufacturing overhead cost another name for predetermined overhead rate a measure that explains or influences the amount of manufacturing overhead cost incurred

a measure that explains or influences the amount of manufacturing overhead cost incurred

As jobs are worked on the Work in Process account accumulates ______. actual direct materials and applied direct labor and overhead costs actual direct materials, direct labor, and overhead costs actual direct materials and direct labor costs and applied overhead costs estimated direct materials and direct labor and applied overhead costs

actual direct materials and direct labor costs and applied overhead costs

The work in process account accumulates ______. actual direct materials, actual direct labor, and applied overhead costs actual direct material, applied direct labor, and applied overhead costs applied direct material, applied direct labor, and actual overhead costs actual direct materials, actual direct labor, and actual overhead costs

actual direct materials, actual direct labor, and applied overhead costs

Overhead is overapplied if ______. actual overhead is more than applied overhead actual overhead is less than applied overhead cost of goods manufactured is less than cost of goods sold adjusted cost of goods sold is more than unadjusted cost of goods sold

actual overhead is less than applied overhead

Overhead is underapplied if ______. actual overhead is more than applied overhead actual overhead is less than applied overhead cost of goods manufactured is less than cost of goods sold adjusted cost of goods sold is less than unadjusted cost of goods sold

actual overhead is more than applied overhead

Select all that apply At the end of the reporting period, any differences between actual and applied manufacturing overhead may be ______. reported on the income statement as a gain or loss ignored if the amount is insignificant adjusted directly to Cost of Goods Sold (COGS) adjusted to Work in Process, Finished Goods, and COGS

adjusted directly to Cost of Goods Sold (COGS) adjusted to Work in Process, Finished Goods, and COGS

The most common method for disposing of the balance in Manufacturing Overhead is ______. allocating it between Work in Process and Finished Goods inventory adjusting Finished Goods inventory adjusting Cost of Goods Sold allocating it between Cost of Goods Sold and inventory accounts

adjusting Cost of Goods Sold

Select all that apply A direct labor time ticket includes the ______. materials used on each job worked amount of time spent on each job job numbers of jobs worked on

amount of time spent on each job job numbers of jobs worked on

Select all that apply Labor costs ______. are always recorded directly into Work in Process are determined from the job cost sheets are recorded in basically the same way as material costs may be direct or indirect

are recorded in basically the same way as material costs may be direct or indirect

Select all that apply Labor costs ______. are determined from the job cost sheets are always recorded directly into Work in Process are recorded in basically the same way as material costs may be direct or indirect

are recorded in basically the same way as material costs may be direct or indirect

The basic formula for process costing is ______. average unit cost = total manufacturing cost/total units produced total cost = actual direct materials + actual direct labor + applied overhead average unit cost = total units produced/total manufacturing costs

average unit cost = total manufacturing cost/total units produced

Predetermined overhead rates are ______. based on some secondary allocation measure generally calculated for each month of the year calculated using estimated costs and actual cost driver usage used to assign both direct and indirect manufacturing costs to jobs

based on some secondary allocation measure

Predetermined overhead rates are ______. used to assign both direct and indirect manufacturing costs to jobs based on some secondary allocation measure generally calculated for each month of the year calculated using estimated costs and actual cost driver usage

based on some secondary allocation measure

When is the predetermined overhead rate calculated? As soon as actual overhead is known After the period is over Before the period begins Throughout the year

before the period begins

Finished goods ______. consists of goods that require additional processing before being sold is the same as cost of goods manufactured consists of completed, unsold goods consists of goods that have been sold to customers during the period

consists of completed, unsold goods

Job-order costing would most likely be used in a(n) ______. construction company dairy farm that produces raw milk soda bottling factory oil refinery

construction company

Select all that apply Materials requisition forms are used to ______. control the flow of materials from inventory into production specify the cost of materials to be ordered summarize the cost of a job record the cost of raw materials in the accounting system

control the flow of materials from inventory into production record the cost of raw materials in the accounting system

Select all that apply Materials requisition forms are used to ______. specify the cost of materials to be ordered summarize the cost of a job control the flow of materials from inventory into production record the cost of raw materials in the accounting system

control the flow of materials from inventory into production record the cost of raw materials in the accounting system

When calculating a predetermined overhead rate, the ideal allocation base should be a(n) __ __

cost driver

The total cost transferred out of Work in Process inventory into Finished Goods inventory is ______. gross profit net operating income cost of goods sold cost of goods manufactured

cost of goods manufactured

When goods are sold to customers, ______. costs are transferred from Finished Goods to Sales Revenue costs are transferred from Work in Process to Finished Goods the inventory accounts are not affected costs are transferred from Finished Goods to Cost of Goods Sold

costs are transferred from Finished Goods to Cost of Goods Sold

Actual manufacturing overhead costs are accumulated on the ______ side of the Manufacturing Overhead account and applied costs are shown on the ______ side. credit, debit debit, credit

debit, credit

If the Manufacturing Overhead account has a ______ balance at the end of the period that indicates that overhead was underapplied and Cost of Goods Sold must be ______.

debit, increased

The first step in assigning manufacturing overhead costs using a predetermined overhead rate is to ______. calculate the predetermined overhead rate determine the cost driver assign manufacturing overhead

determine the cost driver

Underapplied or overapplied overhead is the ______. sum of overhead applied to jobs and actual overhead same as actual overhead difference between overhead applied to jobs and actual overhead total overhead applied to work in process

difference between overhead applied to jobs and actual overhead

Select all that apply Categories of manufacturing costs include ______. selling expenses direct labor direct materials manufacturing overhead administrative expenses

direct labor direct materials manufacturing overhead

Major inputs such as lumber and fixtures that can be easily traced to a specific job are called __ __

direct materials

Costs are transferred from raw materials inventory to ______. finished goods inventory only manufacturing overhead only work in process inventory only either finished goods or work in process either work in process or manufacturing overhead

either work in process or manufacturing overhead

The formula for a predetermined overhead rate is ______. estimated total manufacturing overhead cost / estimated total cost driver estimated total cost driver / estimated total manufacturing overhead cost actual total manufacturing overhead cost / actual total cost driver actual total cost driver / actual total manufacturing overhead cost

estimated total manufacturing overhead cost / estimated total cost driver

A predetermined overhead rate of $20 per direct labor hours means that ______. for each direct labor hour, $20 is added to cover indirect costs the total cost of direct and indirect labor is $20 per hour employees who directly work on the job are paid $20 per hour

for each direct labor hour, $20 is added to cover indirect costs

Select all that apply Manufacturing overhead costs ______. include some materials and labor must be manufacturing costs are indirect costs must be traceable to specific jobs

include some materials and labor must be manufacturing costs are indirect costs

Select all that apply Process costing ______. is used for mass production uses job cost sheets accumulates costs by customer is used for homogeneous products

is used for mass production is used for homogeneous products

An allocation base is a(n) ______. measure of activity used to assign overhead costs to products and services activity that causes overhead costs to change measure used to assign all manufacturing costs to products and services

measure of activity used to assign overhead costs to products and services

If there is a credit balance in the Manufacturing Overhead account after overhead have been applied to all jobs it means overhead was__

overapplied

The difference between overhead applied to jobs and actual overhead is ______. cost of goods manufactured ending work in process inventory overapplied or underapplied overhead cost of goods sold

overapplied or underapplied overhead

If the Manufacturing Overhead account has a credit balance at the end of the period that indicates that overhead was ______ and Cost of Goods Sold must be ______.

overapplied, decreased

The predetermined overhead rate is multiplied by the actual cost driver usage for a job to calculate the __ job

overhead applied to

Job order costing requires a good record-keeping system that uses __documents that trace direct costs to specific jobs.

source

Cost of goods manufactured is the ______. value of all jobs in Finished Goods at the end of a period average value of the Work in Process account value of all jobs transferred from Work in Process to Finished Goods value of all jobs transferred from Finished Goods to Cost of Goods Sold

value of all jobs transferred from Work in Process to Finished Goods

Cost of goods manufactured is the ______. value of all jobs transferred from Work in Process to Finished Goods value of all jobs in Finished Goods at the end of a period average value of the Work in Process account value of all jobs transferred from Finished Goods to Cost of Goods Sold

value of all jobs transferred from Work in Process to Finished Goods

The major difference between job order and process costing is ______. whether the products produced are hand made or machine made whether the products produced are similar or different job order costing is used for products and process costing is used for services

whether the products produced are similar or different

Costs of partially completed units are accounted for in ______. cost of goods manufactured finished goods work in process raw materials

work in process

When a job is completed, its costs are transferred out of ______. Cost of Goods Sold Finished Goods Work in Process Manufacturing Overhead

work in process