Acc 202 Chapter 3 reading

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 Explanation: $200,000 ÷ 1,000 × 600 = $120,000.

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

$16,000 Explanation: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($5,000 + $27,000 - $12,000 - $4,000 = $16,000)

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 Explanation: $110,000 + $410,000 - $125,000 = $395,000

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 Explanation: $100,000 - $45,000 = $55,000

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 Explanation: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($27,000 + $100,000 - $28,000 - $25,000 = $74,000)

Manufacturing overhead costs include

- The factory supervisor's salary - Factory insurance

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 a job is completed, its costs are transferred into

Finished Goods

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account

as they are incurred

finished goods

consist of completed, unsold goods

Applied manufacturing overhead is ______ to the Manufacturing overhead account.

credited

Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited

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

direct labor costs

Selling and administrative costs first appear on the

income statement

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

The sum of all amounts transferred from work in process to the finished goods accounts represents the cost of good

manufactured

Cost of goods manufactured is the

sum of all jobs transferred from Work in process to Finished goods

A debit balance in Manufacturing overhead means overhead is

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

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 Explanation: $18,000 + $234,000 - $24,000 = $228,000

Which of the following statements are true?

-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.

Methods to dispose of underapplied or overapplied manufacturing overhead are

-allocate it to Work in process, Finished goods, and Cost of goods sold -close it to Cost of goods sold

Which of the following costs are charged directly to the income statement?

-selling costs -administrative costs

The accounts involved in closing underapplied or overapplied overhead using the simpler method are

Cost of goods sold and Manufacturing overhead

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

Indirect

If a company incurs $2,000 of factory rent, $1,000 of factory utilities, and $5,000 of miscellaneous factory costs, the journal entry to record these transactions would be to debit

Manufacturing overhead $8,000 and credit Accounts payable $8,000

The journal entry to record issuing materials to be used in production credits

Raw materials

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

True

Manufacturing overhead is applied with a debit to

Work in process

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

Work in process and Manufacturing overhead

The journal entry to record manufacturing overhead applied to Job #40 debits

Work in process and credits Manufacturing overhead

Overhead is overapplied if

actual overhead is less than applied overhead

Overhead is underapplied if

actual overhead is more than applied overhead

A journal entry that includes Manufacturing overhead and Cost of goods sold is recorded to ______.

dispose of underapplied or overapplied overhead

Completed units that have not yet been sold are found in

finished goods

Gross margin minus selling and administrative expenses equals

net operating income

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

only direct

A credit balance in Manufacturing overhead means overhead is

overapplied

Selling and administrative costs incurred are treated as

period expenses

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 the ________ ______ inventory account

raw materials

The journal entry to record the purchase of materials debits

raw materials

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 Goods into Cost of Goods Sold.

sold

Units of product that are only partially complete are contained in ____________ _________process inventory.

work in

Costs of partially completed units are accounted for in

work in process