Principles of managerial accounting chapter 3 exercises

Job #4260 consisted of 1,000 units at a total cost of $200,000. The cost transferred to Cost of Goods Sold for the sale of 600 of the units is ______.

$120,000

Raw materials inventory was $5000 at the beginning of the year and $12000 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.

16000

What side of the Manufacturing overhead account is actual manufacturing overhead entered on?

Always the debit side

The journal entry to record issuing both direct and indirect materials into production debits

Work in process and Manufacturing overhead

Overhead is underapplied if ______.

actual overhead is more than applied overhead

underapplied or overapplied overhead is the ____

difference between overhead applied to work in process and actual overhead

A journal entry that debits Manufacturing overhead and credits Accounts payable would not be used to record ______.

direct labor costs

Unadjusted cost of goods sold is calculated by subtracting

ending finished goods inventory from goods available for sale

Manufacturing overhead costs include

factory utilities factory rent factory maintenance wages

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.

$228,000= (18,000+234,000)-24,000

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

$395,000= (110,000+410,000)-(125,000)

Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is ______.

$480,000 (unadjusted cost of goods sold + underapplied overhead: 450,000 +30,000)

Luver Corporation's Gross margin is $100,000, Cost of goods sold equals $70,000, and Selling and administrative expenses total $45,000. Net operating income is ______.

$55,000= (100,000-45,000)

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100000 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 (beginning inventory (27000 + purchases 100000) - indirect materials (28000)- ending inventory (25000)

Manufacturing overhead costs include

- The factory supervisor's salary - Factory insurance

What methods can be used to dispose of Underapplied or overapplied manufacturing overhead?

Close it to cost of goods sold Closed proportionately to work in process, finished goods, and cost of goods sold

Which of the statements regarding closing out over or Underapplied overhead is correct

Closing to Cost of goods sold is simpler, and allocating is more accurate.

finished goods

Consist of completed, unsold goods

Underapplied or overapplied manufacturing overhead can be disposed of by closing it to ______.

Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold

When overhead is Underapplied, a_____ must be made to the manufacturing overhead to close it out

Credit

Manufacturing overhead applied to production is always recorded on the blank side of the manufacturing overhead account and the blank side is always used to record the actual manufacturing costs incurred

Credit Debit

If overapplied is closed out to cost of goods sold, the cost of goods sold

Decreased

Selling and administering costs first appear on the _____

Income statement

When a company chooses to close Underapplied or overapplied overhead to cost of goods sold instead of allocating it:

Inventory values will likely be affected

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

Manufactured

The journal entry to record accrued property taxes for a factory building debits

Manufacturing overhead and credits Property taxes payable

Gross margin minus selling and administrative expenses equals ______.

Net operating income

Actual overhead costs may not be proportional to the actual amount of the allocation base used because____

Overhead spending may not be under control Many actual overhead costs are fixed

The schedule of cost of goods _____ summarizes the portions of those costs that remain in ending finished goods inventory and that are transferred out of finished into cost of goods sold

Sold

The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next

True

Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels.

True

Which of the following statements are true?

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

The journal entry to record the manufacturing overhead applied to job #40 debits

Work in process and credits Manufacturing overhead

The journal entry to record the purchase of materials credits

accounts payable

The manufacturing overhead account is debited when

actual overhead costs are incurred

The manufacturing overhead account is debited when _____

actual overhead costs are incurred

Overhead is overapplied if ______.

actual overhead is less than applied overhead

To calculate the adjusted cost of goods sold ______.

add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold

A journal entry debiting Salaries expense and crediting Salaries and wages payable could be recording ______.

administrative salaries

The more accurate method of closing out the balance in Manufacturing overhead is ______.

allocating it among Work in process, Finished goods, and Cost of goods sold

A journal entry to record selling and administrative salaries debits

an expense account and credits Cash or a liability

Work in Process consists of ______.

applied manufacturing overhead actual direct materials cost actual direct labor cost

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______.

as they are incurred

The amount transferred from work in process to finished goods is

cost of goods manufactured

Actual manufacturing overhead is _____ to the manufacturing overhead account

debited

Completed units that have not yet been sold are found in ____________ __________ inventory.

finished goods

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

finished goods

Cost of Goods Manufactured

includes manufacturing costs of goods finished during the period

Labor costs charged to Manufacturing Overhead represent _____ labor costs

indirect

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

issuance of materials

The schedule of cost of goods ___ summarizes costs that remain in work in process inventory and that have been transferred from work in process to finished goods inventory

manufactured or produced

Which of the following would not be charged to the manufacturing overhead account?

nonmanufacturing costs

When labor costs are incurred, _________ labor costs are added directly to the Work in Process account.

only direct

a credit balance in the manufacturing overhead account of Y dollars means that the overhead is _____ by of Y dollars

overapplied

The difference between overhead applied to work in process and actual overhead is ____

overapplied or underapplied overhead

A journal entry that debits Raw Materials and credits Accounts Payable is recording the ______.

purchase of materials

Any purchased materials that will go into the finished product are first recorded in _______ ________ inventory account.

raw materials

A journal entry that debits Manufacturing overhead and credits property taxes payable records the _____

recognition of accrued property taxes

A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______.

rent expense on factory equipment factory utilities expense

The cost of goods manufactured for a period is the ____

sum of all amounts transferred between the Work in process account and the Finished goods account during that period

A debit balance in Manufacturing overhead means overhead was

underapplied

When only a portion of the units involved in a job are sold, the ____

unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold

Costs of partially completed units are accounted for in

work in process

Manufacturing overhead is applied with a debit to

work in process

units of product that are only partially complete and will require further work before they are ready for sale to the customer are contained in the

work in process