ACC 202 Chapter 17

At the end of the year, overhead applied was $53,000,000. Actual overhead was $52,200,000. Closing over/under applied overhead into cost of goods sold would cause net income to increase/decrease by? a. Decrease by $800,000 b. Increase by $800,000 c. Not affect net income. d. Decrease net income by $200,000

b. Increase by $800,000 (The journal entry includes a credit of $800,000 to Cost of Goods Sold, reducing Cost of Goods Sold and thus increasing Net Income)

If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a: a. credit balance and be underapplied b. debit balance and be underapplied c. credit balance and be overapplied d. debit balance and be overapplied

b. debit balance and be underapplied

The Sneathen Company forecasts that total overhead for the current year will be $15,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $15,500,000 and the actual machine hours are 220,000 hours. If the company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date) the overhead is over/under applied by? a. $1,000,000 over b. $1,000,000 under c. $500,000 over d. $500,000 under

a. $1,000,000 over (Overhead rate = $15,000,000/200,000 = $75 per machine hour; Applied overhead = $75 × 220,000)

Foundry Manufacturers Inc. has estimated total factory overhead costs of $190,000 and 20,000 direct labor hours for the current fiscal year. If job number 108 incurred 1,600 direct labor hours, the work in process account will be debited and factory overhead will be credited for: a. $15,200 b. $1,600 c. $95,000 d. cannot be determined

a. $15,200

Which of the following would most likely use a job order costing system? a. A swimming pool installer b. A paper mill c. A company that manufactures chlorine for swimming pools d. An oil refinery

a. A swimming pool installer

During the month, labor costs incurred were $450,000 including $400,000 for production orders and $50,000 for general factory use. In addition, factory overhead charged to production was $273,000. From the following, select the entry to record the direct labor costs. a. Work in Process 400,000 Wages Payable 400,000 b. Work in Process 450,000 Wages Payable 450,000 c. Wages Payable 450,000 Work in Process 450,000 d. Wages Payable 400,000 Work in Process 400,000

a. Work in Process 400,000 Wages Payable 400,000

When a job is completed in a service organization, the job costs are transferred to the a. cost of services account. b. work in process account. c. finished goods account. d. cost of goods sold account.

a. cost of services account.

The journal entry to record direct labor costs into production in a job order cost accounting system is: a. debit Work in Process, credit Wages Payable b. debit Finished Goods, credit Wages Payable c. debit Factory Overhead, credit Work in Process d. debit Factory Overhead, credit Wages Payable

a. debit Work in Process, credit Wages Payable

Which of the following costs are NOT included in finished goods inventory? a. Direct labor b. Company CEO's salary c. Factory overhead d. Direct materials

b. Company CEO's salary

In a job order cost accounting system used by a service business, which of the following items would normally not be included as part of overhead? a. Materials b. Direct labor c. Rent d. Supplies

b. Direct labor

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 45,000. Actual factory overhead costs incurred were $379,200, and actual direct labor hours were 47,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year? a. $16,000 overapplied. b. $16,000 underapplied. c. $3,200 underapplied. d. $3,200 overapplied.

c. $3,200 underapplied.

Selected accounts with some debits and credits omitted are presented as follows: Work in Process Jan. 1 Balance 275,000 Jan. 31 Goods finished 1,030,000 31 Direct materials ? 31 Direct labor 450,000 31 Factory overhead ? Factory Overhead Jan. 1-31 Costs incurred 145,000 Jan. 1 Balance 15,000 31 Applied ? If the balance of Work in Process at Jan. 31 is $220,000, what was the amount debited to Work in Process for direct materials in January, assuming a factory overhead rate of 30% of direct labor costs? a. $525,000 b. $170,000 c. $390,000 d. $580,000

c. $390,000 Hint: Applied overhead = 30% × $450,000 = $135,000 Journal entry of applied overhead is: Dr. Work in Process $135,000 Cr. Factory Overhead $135,000 275 + DM + 450 + 135 - 1,030 = 220 → DM = 390

The Johnson Company forecasts that total overhead for the current year will be $30,000,000 and that total machine hours will be 400,000 hours. Year to date, the actual overhead is $30,500,000 and the actual machine hours are 420,000 hours. If the company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate? a. $71 per machine hour b. $78 per machine hour c. $75 per machine hour d. $68 per machine hour

c. $75 per machine hour

The journal entry to record the application of factory overhead costs to jobs would include a credit to: a. Work in Process b. Wages Payable c. Factory Overhead d. Cost of Goods Sold

c. Factory Overhead

In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a: a. purchase order b. sales invoice c. receiving report d. purchase requisition

c. receiving report

When job 527 was completed, direct materials totaled $2,000; direct labor, $2,300; and factory overhead, $1,200, respectively. Units produced totaled 500. Unit costs are: a. $11,000 b. $1,100 c. $110 d. $11

d. $11

The following budget data are available for Glencoe Company: Estimated direct labor hours 24,000 Estimated direct materials $90,000 Estimated factory overhead costs $358,000 If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is a. $2.57 b. $.51 c. $.067 d. $14.92

d. $14.92

Which of the following are the two main types of cost accounting systems for manufacturing operations? a. Process cost and general accounting systems b. Process cost and replacement cost systems c. Job order and general accounting systems d. Job order cost and process cost systems

d. Job order cost and process cost systems

Which of the following would record the labor costs to an individual job? a. Clock card b. In-and-out cards c. Payroll register d. Time tickets

d. Time tickets

The source of the data for debiting Work-in-Process for direct materials usage is the: a. purchase order b. purchase requisition c. receiving report d. materials requisition

d. materials requisition