Managerial Acct Ch 2

Manufacturing Overhead Costs

Are indirect costs, include some materials and labor, and must be manufacturing costs

labor costs

Are recorded and basically the same way as material cost, and may be direct or indirect

labor costs

Are recorded in basically the same way as material cost, and may be direct or indirect

In a service firm, salaries of administrative personnel, rent and utilities, and non-billable employee time are

Assigned to client or account to using an allocation base

The most common driver used to assign costs in a service firm is

Billable hours

A journal entry that debits finished goods inventory and credits work in progress records the

Completion of a job

Finished goods

Consist of completed, unsold goods

Materials requisition forms are used to

Control the flow of materials from inventory into production, and record the cost of raw materials in the accounting system

What two accounts are involved when underapplied or overapplied overhead is disposed of?

Cost of good sold and manufacturing overhead

The total cost transferred out of work in process inventory into finished goods inventory is

Cost of goods manufactured

When overhead is underapplied, a _______ must be made to the manufacturing overhead account to eliminate the balance.

Credit

When overhead is over applied, a_______entry is required to dispose of the balance in the manufacturing overhead account

Debit

The journal entry to record depreciation on office equipment debits

Depreciation expense and credits accumulated depreciation

underapplied or overapplied overhead is the

Difference between overhead applied to jobs an actual overhead

A journal entry that debits work in process inventory and manufacturing overhead and credits we just payable records

Direct and indirect labor cost

Hands-on work that can be easily traced to a specific product is called_______ _______.

Direct labor

When materials are requisitioned into production,

Direct materials are recorded in work in process, and direct materials are recorded on the job cost sheet

A journal entry that involves manufacturing overhead and cost of good sold is recorded to

Dispose of underapplied or overapplied overhead

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

FALSE Because units in process costing are all the same, there is no need to track the cost of each individual unit.

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

FALSE Job-order costing can be used in any company or firm where the products or services are not homogeneous.

True or false: materials purchases are initially recorded in raw materials and then all materials used are transferred to work in process.

False Direct materials are transferred to work in process and indirect materials are transferred to manufacturing overhead

The cost of jobs that have been completed but not yet sold are contained in______ _______Inventory.

Finished goods

What is the most common method for disposing of the balance in manufacturing overhead?

Making a direct adjustment to Cost of Goods Sold

Cost of goods_____is the total cost of jobs completed during the period

Manufactured

The cost of goods_____is the sum of all amounts transferred from work in process to finished goods during a period.

Manufactured or completed

Factory labor charges that cannot be easily traced to a job are treated as

Manufacturing Overhead (MOH)

Factory labor charges that cannot be easily traced to a job or treated as

Manufacturing overhead

Manufacturing Overhead Costs

Must be manufacturing cost, or indirect cost, and include some materials and labor

The difference between overhead applied to jobs and actual overhead is

Over applied or under applied overhead

The difference between overhead applied to jobs an actual overhead is

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

Non-manufacturing cost incurred during a period are treated as

Period Expenses

A journal entry that debits work in process and manufacturing overhead and credits raw materials inventory records

Putting materials into production

When materials are purchased they are first recorded in the_____account

Raw materials inventory

When actual manufacturing overhead costs are incurred, ______.

the manufacturing overhead cost is debited

Costs are transferred out of finished goods inventory

when goods are sold

Costs of partially completed units are accounted for in

work in process

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 beginning work in process inventory: $12,000

$278,000

As jobs are worked on, the work in process account accumulates

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

The most common method for disposing of the balance in manufacturing overhead is

Adjusting cost of goods sold

Which methods can be used to dispose of under ply or over applied manufacturing overhead?

Allocate it to work in process, finished goods, and cost of goods sold, Or make a direct adjustment to cost of goods sold

A direct labor time ticket includes the

Amount of time spent on each job and job numbers of jobs worked on

On the job cost sheet and work in process accounts, the_____manufacturing overhead is recorded.

Applied

The cost of goods manufactured report includes____manufacturing overhead cost.

Applied

If the manufacturing overhead account has a____balance at the end of the period that indicates that overhead was under played in cost of goods sold must be____

Debit, increased

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

False

All materials that will be used in future production are first recorded in the______ ________Inventory count

Raw materials

The journal entry to record placing materials into production credits

Raw materials

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

direct materials

When a job is completed, its costs are transferred into ______.

finished goods

When a job is completed, which account is debited?

finished goods inventory

Companies that use job-order costing

make unique products

Actual manufacturing overhead consists of all

manufacturing costs other than direct labor and direct materials

What document specifies the type and quantity of direct materials used on a specific job?

materials requisition form

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 journal entry to record the purchase of materials debits

raw materials inventory

The balance of work in process inventory may be calculated by

summing the costs of all jobs in process

Non-manufacturing costs increase

the Selling and General & Administrative expense account.

Overhead Costs are debited to work in process when

they are applied to jobs

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

underapplied

Materials requisition forms are used to

Record the cost of raw materials in the accounting system, and control the flow of materials from inventory into production

In a job-order costing system costs flow first to_________.

The inventory accounts and then to cost of goods sold

A direct labor________ __________Is a document used to record how long worker spend on each job and task.

Time ticket

In a service firm, salaries of administrative personnel, rent and utilities, and non-billable employee time are

Treated like manufacturing overhead

Cost of goods manufactured is the

Value of all jobs transferred from working process to finished goods

The major difference between job order and process costing is

Whether the products produced are similar or different

When a job is completed its cost or transferred out of

Work in process

When a job is completed, its costs are transferred out of

Work in process

A company requisition and $40,000 in direct materials and $30,000 in indirect materials from the store room to be used in production. The journal entry to record this transaction is debit

Work in process $40,000, debit manufacturing overhead $30,000. And credit raw materials inventory $70,000

Which accounts are debited in the Journal entry to record manufacturing labor costs?

Work in process and Manufacturing overhead

What accounts are debited in a journal entry that records putting both direct and indirect materials into production?

Work in process and manufacturing overhead

The Work-in-Process account accumulates

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

A journal entry debiting salaries expense and crediting salaries and wages payable could record

administrative salaries

When goods are sold to customers,

costs are transferred from Finished Goods to Cost of Goods Sold.

What of the following may be credited in the journal entry to record the purchase of materials?

credit accounts payable (debit raw materials inventory)

underapplied or overapplied overhead is the

difference between overhead applied to work in process and actual overhead

Hands-on work that can be easily traced to a specific product is called

direct labor

Categories of manufacturing costs include:

direct materials, direct labor, manufacturing overhead

Costs are transferred from raw materials inventory to ______.

either Work in Process or Manufacturing overhead (MOH)

Costs are transferred from raw materials inventory to ______.

either work in process or manufacturing overhead

To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract

ending raw materials inventory and indirect materials used