exam 1 review

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?

$10

steps to calculate manufacturing overhead applied?

- actual machine hours x POR= overhead

steps to calculate total manufacturing cost assigned to job?

- direct materials+ direct labor+ manufacturing overhead applied

steps to calculate unit product cost?

- total manufacturing cost/ # of units

Absorption Costing

A costing approach in which all manufacturing costs are charged to the product.

Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?

Debit Work in Process, debit Manufacturing Overhead, and credit Raw Materials.

cost of goods sold formula

beginning inventory + purchases - ending inventory

Which of the following occurs when manufacturing overhead is applied to Work in Process?

credit manufacturing overhead

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?

$4000

steps to find predetermined overhead rate?

-estimated total manufacturing overhead +( estimated variable overhead per MH x estimated machines hours) -total/ total machine hours estimated

In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is paid a monthly salary of $2,500. If the total monthly requirement is 1,300 machine-hours, the total salaried employee expense is ________.

17,500

The following information is available for the current year ending December 31: Manufacturing overhead applied$150,000 Actual amount of manufacturing overhead costs 120,000 Knowledge Check 01 What is the balance of the Manufacturing Overhead account and is overhead underapplied or overapplied at the end of the year?

credit $30,000 overapplied

prime cost formula

direct materials cost+ direct labor costs

indirect labor is?

janitors/ maintainers included in manufacturing overhead

the equation, Y = a + bX, represents ________.

mixed cost= fixed cost + variable cost (activity level)

Companies can improve job cost accuracy by using ________.

multiple predetermined overhead rates

Property taxes associated with a company's administrative facility are considered ________.

non manufacturing costs

When all of a company's job cost sheets are viewed collectively they form what is known as a ________.

subsidiary ledger

direct labor is also called?

touched labor

What is the term used when a company applies less overhead to production than it actually incurs?

underapplied

The following information is available for the current year ending December 31: Manufacturing overhead applied$150,000 Actual amount of manufacturing overhead costs 120,000 Amount of overhead applied during the year that is in: Work in Process$37,500 25% Finished Goods 52,500 35% Cost of Goods Sold 60,000 40% Total overhead applied$150,000 100% Knowledge Check 01 If the Manufacturing Overhead account is closed to Cost of Goods Sold, the related entry will ________.

debit manufacturing overhead credit cost of goods sold

journal entry: Salary of the Production Supervisor is payable.

debit manufacturing overhead credit salaries and wages payable

On April 1, Ruger Corporation had $7,000 in raw materials on hand. During the month, the company purchased on account an additional $60,000 in raw materials. The purchase is recorded in journal entry

debit raw materials 60,000 credit accounts payable 60,000

Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.

manufacturing overhead costs

Zimmer, Inc. started the month of January with beginning finished goods inventory of $20,000. The cost of goods manufactured during the month was $120,000 and the ending finished goods inventory was $50,000. What is the unadjusted cost of goods sold for January?

$90000

Which of the following statements about opportunity costs is not correct? -opportunity cost is the potential benefit that is given up when one alternative is selected over another -An opportunity cost cannot be changed by any decision made now or in the future -Opportunity costs are not usually found in accounting records -Opportunity costs are costs that must be explicitly considered in every decision a manager makes.

-An opportunity cost cannot be changed by any decision made now or in the future

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job's unit product cost (per audio controller)?

124

Davidson Company has sales of $100,000, variable cost of goods sold of $40,000, variable selling expenses of $15,000, variable administrative expenses of $5,000, fixed selling expenses of $7,000, and fixed administrative expenses of $9,000. What is Davidson's contribution margin?

40,000

Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equals ________.

5000

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?

6200

Which of the following best describes the journal entry to record the use of direct and indirect labor in production?

Debit Work in Process, debit Manufacturing Overhead, and credit Salaries and Wages Payable.

The direct materials required to manufacture each unit of product are listed on a ________.

bill of materials

Which of the following occurs when finished jobs are shipped to customers?

debit cost of goods sold credit finished goods

Which of the following occurs when a job has been completed and transferred to the finished goods warehouse?

debit finished goods credit work in process

journal entry: Lubricating oil, waste cotton, and solder are used in the factory.

debit manufacturing overhead credit raw materials

journal entry: The wages of direct laborers who worked on a particular job are payable.

debit work in process credit salaries and wages payble

journal entry: Manufacturing overhead is applied to jobs using a predetermined overhead rate.

debit work in process credit manufacturing overhead

journal entry: Direct materials are issued into production for a specific job.

debit work in process credit raw materials

The adjustment for overapplied overhead ________.

decreases cost of goods sold and increases net operating income.

Which of the following is common to both prime cost and conversion cost?

direct labor

How should the wages of a sheet metal worker in a fabrication plant be classified?

product costs

Differential costs are always ________.

relevant in making business decisions

For the month of October, Janus Corporation used $30,000 worth of direct materials in production and incurred direct labor costs of $60,000. Actual manufacturing overhead costs were $40,000, whereas $45,000 was the manufacturing overhead applied to work in process. What is the amount of total manufacturing costs that would appear in the Schedule of Cost of Goods Manufactured for October?

$135000

Manufacturing overhead applied$150,000 Actual amount of manufacturing overhead costs 120,000 Amount of overhead applied during the year that is in: Work in Process$37,500 25% Finished Goods 52,500 35% Cost of Goods Sold 60,000 40% Total overhead applied$150,000 100% If the Manufacturing Overhead account is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold, the related entry will include a ________.

debit to Manufacturing Overhead for $30,000 credit work in process 7500 credit finished goods 10500 credit cost of goods sold 12000