Accounting exam 1
Which one of the following should be equal to the balance of the Work In Process Inventory account at the end of the period? a. The total of the amounts transferred from raw materials for the current period b. The sum of the costs shown on the job cost sheets of unfinished jobs c. The total of manufacturing overhead applied to work in process for the period d. The total manufacturing costs for the period
B
A manager that is establishing objectives is performing which management function?
C. Planning
Because of automation, which component of product cost is declining?
Direct labor
Coordinating a company's diverse activities and human resources to produce a smooth-running operation is a function of
Directing
Which of the following is not a control account? Factory labor Raw materials Manufacturing overhead
Factory labor
T/F Direct materials cost and indirect materials are manufacturing overhead
False
T/F In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from the sales.
False
T/F Managerial accounting information generally pertains to an entity as a whole and is highly aggregated
False
T/F Managerial accounting is primarily concerned with managers and external users
False
T/F Manufacturing costs are generally incurred in one period and recorded in a subsequent period.
False
T/F Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred
False
T/F Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.
False
T/F Planning involves coordinating the diverse activities and human resources of a company to produce a smooth running operation
False
T/F Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used.
False
T/F Raw materials inventory shows the cost of completed goods available for sale to customers
False
T/F Raw materials that can be conveniently and directly associated with a finished product are called materials overhead.
False
T/F The Purchases account is credited for all raw materials purchase returns and allowances.
False
T/F The Sarbanes-Oxley act replaces generally accepted accounting principles in a manufacturing company.
False
T/F When raw materials are purchased, the Work in Process Inventory account is debited.
False
The labor costs that have been identified as indirect labor should be charged to
Manufacturing Overhead
Which of the following is not another name for the term manufacturing overhead?
Pervasive costs
Records of individual items of raw materials would not be maintained in what account
Raw materials
Which of the following are period costs? Raw materials Direct materials and direct labor Direct labor and manufacturing overhead Selling expenses
Selling expenses
Planning is a function that involves
Setting goals and objectives for an entity
T/F A job order cost system and a process cost system are two alternative methods for valuing inventories.
True
T/F A job order cost system identifies costs with a particular job rather than with a set time period.
True
T/F A process cost accounting system is appropriate for similar products that are continuously mass produced.
True
T/F Accumulating and assigning manufacturing costs are two important activities in a job order cost system.
True
T/F At the end of the year, the accountant credits the amount of the overapplied overhead to Cost of Goods Sold.
True
T/F Both direct labor cost and indirect labor costs are product costs.
True
T/F Controlling is the process of determining whether planned goals are being met.
True
T/F Cost accounting is primarily concerned with accumulating information about product costs.
True
T/F Decision making is an integral part of the planning, directing, and controlling functions
True
T/F Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.
True
T/F Ending finished goods inventory appears on both the balance sheet and the income statement of a manufacturing company
True
T/F Finished Goods Inventory is charged for the cost of jobs completed during a period.
True
T/F In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.
True
T/F Indirect labor and indirect materials are both inventoriable costs
True
T/F Period costs include selling and administrative expenses.
True
T/F Product costs are also called inventoriable costs
True
T/F Recording the acquisition of raw materials is a part of accumulating manufacturing costs.
True
T/F Requisitions for direct materials are posted daily to the individual job cost sheets.
True
Internal reports must be communicated
as needed
The predetermined overhead rate is determined at the
beginning of theyear
In a job order cost accounting system, the Raw Materials Inventory account is a
control account
The function of keeping activities in accordance with plans
controlling
Usually, under- or overapplied overhead is considered to be an adjustment to
cost of goods sold
Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system? Cost of goods sold is recognized Raw materials are purchased Factory labor is incurred Manufacturing overhead is incurred
cost of goods sold is recognized
The principle difference between a merchandising and a manufacturing income statement is the
cost of goods sold section
Which of the following is not an internal user? (department user, creditor, controller, treasurer)
creditor
The entry to record the acquisition of raw materials on account is
debit raw materials inventory, credit accounts payable
Internal reports are generally
detailed
Financial and managerial accounting are similar in that both deal with ______ events in an enterprise
economic
Differences between a job order cost system and a process cost system include all of the following except the
flow of costs
Cost of goods sold appears on both manufacturing and merchandising companies'
income statements
If the total manufacturing costs are greater than the cost of goods manufactured, work in process inventory has
increased
Under an effective system of internal control, the authorization for issuing materials is made on a prenumbered
materials requisitions sheet
A major purpose of cost accounting is to _____, ______, and _______ product costs
measure, record, report
Postings to control accounts in a costing system are made
monthly
A copy of the materials requisition slip would not include the: (quantity, stock number, cost per unit, name of the supplier)
name of the supplier
If Manufacturing Overhead has a credit balance at the end of the period, then overhead has been
overapplied
If actual overhead is less than applied manufacturing overhead, then manufacturing overhead is:
overapplied
Sales commissions are classified as
period costs
Property taxes on a manufacturing plant are an element of a
product cost
The major reporting standard for presenting managerial accounting information is
relevance
All of the following would be entries in assigning accumulated costs to the Work In Process Inventory except: the purchase of raw materials. raw materials are used. overhead is applied. factory labor is used.
the purchase of raw materials
Factory labor costs include _______ pay
vacation
For a manufacturing company, which of the following is an example of a period cost rather than a product cost?
wages of salespersons
If equivalent units are 15,000 for conversion costs and units transferred out equals 10,000, what stage of completion should the ending work in process be for the 20,000 units remaining?
25% Solution: (15,000 - 10,000) = 5,000; 5,000 / 20,000 = 25%
The following information is available for completed Job No. 402: Direct materials, $80,000; direct labor, $120,000; manufacturing overhead applied, $60,000; units produced, 5,000 units; units sold, 4,000 units. The cost of the finished goods on hand from this job is
52,000
Which of the following is one of the components of cost accounting? a. It involves measuring product costs. b. It involves the determination of company profits. c. It requires GAAP to be applied. d. It requires cost minimizing principles.
A
Sportly, Inc. completed Job No. B14 during 2011. The job cost sheet listed the following: Direct materials $44,000 Direct labor $24,000 Manufacturing overhead applied $16,000 Units produced 3,000 units Units sold 1,800 units How much is the cost of the finished goods on hand from this job?
33,600
Which of the following is not a management function?
Constraining
The wages of a timekeeper in the factory would be classified as
Indirect labor
A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a
Indirect material
Manufacturing costs that cannot be classified as either direct materials or direct labor are known as
Manufacturing overhead
T/F Managerial accounting applies to all forms of business organizations
True
Younger, Inc. manufactures recliners for the hotel industry. It has two products, the Heater and the Massager, and total overhead is $3,160,000. The company plans to manufacture 400 Heaters and 100 Massagers this year. In manufacturing the recliners, the company must perform 600 material moves for the Heater and 400 for the Massager; it processes 900 purchase orders for the Heater and 700 for the Massager; and the company's employees work 1,400 direct labor hours on the Heater product and 3,400 on the Massager. Younger's total material handling costs are $2,000,000 and its total processing costs are $1,160,000. Using ABC, how much overhead would be assigned to the Heater product?
$1,852,500 Solution: $2,000,000 / (600 + 400) = $2,000; $1,160,000 / (900 + 700) = $725; ($2,000 x 600) + ($725 x 900) = $1,852,500
Thomsen Computer Company produces three products: Earth, Wind, and Fire. Earth requires 80 machine setups, Wind requires 60 setups, and Fire requires 180 setups. Thomsen has identified an activity cost pool with allocated overhead of $960,000 for which the cost driver is machine setups. How much overhead is assigned to each product? Earth Wind Fire a. $320,000 $320,000 $320,000 b. $200,000 $150,000 $450,000 c. $240,000 $180,000 $540,000 d. $180,000 $320,000 $460,000
a. $240,000 b. $180,000 c. $540,000 Solution: $2,400,000 / (600 + 400) = $2,400; $5,400,000 / (24,000 + 26,000) = $108; $1,800,000 / (800 + 700) = $1,200; ($2,400 x 400) + ($108 x 26,000) + ($1,200 x 700) = $960,000 + $2,808,000 + 840,000 = $4,608,000
If the entry to assign factory labor showed only a debit to Work In Process Inventory, then all labor costs were
direct labor
Manufacturing overhead is applied to each job by means of a
predetermined overhead rate
Cost of raw materials is debited to Raw Materials Inventory when the materials are
received
Time tickets should be approved by the
supervisor
If actual overhead is greater than applied manufacturing overhead, then manufacturing overhead is:
underapplied
What term describes all activities associated with providing a product or service?
value chain
Foxx Company incurs $480,000 overhead costs each year in its three main departments, setup ($30,000), machining ($330,000), and packing ($120,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Foxx's two products is as follows: Product A1 Product B1 Number of setups 20 20 Machining hours 1,000 4,000 Orders packed 150 350 Number of products manufactured 600 400 Using ABC, how much overhead is assigned to Product A1 each year?
$117,000 Solution: Setup : $30,000 / (20 + 20) = $750; Machining: $330,000 / ( 1,000 + 4,000) = $66; Packing: $120,000 / (150 + 350) = $240; ($750 x 20) + ($66 x 1,000) + ($240 x 150) = $117,000
Ben Gordon, Inc. manufactures 2 products, wheels and seats. The company has estimated its overhead in the assembling department to be $660,000. The company produces 300,000 wheels and 600,000 seats each year. Each wheel uses 2 parts, and each seat uses 3 parts. How much of the assembly overhead should be allocated to wheels?
$165,000 Solution: $660,000 / ((300,000 * 2) + (600,000 * 3) = .275 x 600,000 = 165,000
Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: Regular Supreme Direct labor hours 10,000 15,000 Machine hours 10,000 30,000 Number of parts 90,000 160,000 Overhead applied to Supreme using traditional costing using direct labor hours is
$2,700,000 Solution: ($3,000,000 + $1,500,000) / (10,000 + 15,000) = $180 x 15,000 = $2,700,000
In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 90,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for materials for June were
110,000 equivalent units Solution: 20,000 + 90,000 = 110,000
Jinnah Company applies overhead on the basis of 200% of direct labor cost. Job No. 501 is charged with $90,000 of direct materials costs and $120,000 of manufacturing overhead. The total manufacturing costs for Job No. 501 is
270,000
As of December 31, 2011, Stand Still Industries had $2,500 of raw materials inventory. At the beginning of 2011, there was $2,000 of materials on hand. During the year, the company purchased $305,000 of materials; however, it paid for only $292,500. How much inventory was requisitioned for use on jobs during 2011?
304,500
Kline Manufacturing has the following labor costs: Factory—Gross wages $390,000 Factory—Net wages 320,000 Employer Payroll Taxes Payable 50,000 The entry to record the cost of factory labor and the associated payroll tax expense will include a debit to Factory Labor for
440,000
Kushman Combines, Inc. has $20,000 of ending finished goods inventory as of December 31, 2011. If beginning finished goods inventory was $10,000 and cost of goods sold was $40,000, how much would Kushman report for cost of goods manufactured?
50,000
In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete. These units had $60,000 of materials costs and $45,000 of conversion costs. Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process. During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30. During April, manufacturing costs charged to the department were: Materials $1,380,000; Conversion costs $1,530,000. The cost assigned to the units in the ending work in process inventory on April 30 was
$315,000 Solution: ($60,000 + $1,380,000) / 12,000 = $120; ($45,000 + $1,530,000) / 10,500 = $150; (2,000 x $120) + (2,000 x .25 x $150) = $315,000
As of December 31, 2017, Stand Still Industries had $2,500 of raw materials inventory. At the beginning of 2017, there was $2,000 of materials on hand. During the year, the company purchased $375,000 of materials; however, it paid for only $312,500. How much inventory was requisitioned for use on jobs during 2017?
$374,500
Simmons Inc. applies overhead to production at a predetermined rate of 90% based on direct labor cost. Job No. 250, the only job still in process at the end of August, has been charged with manufacturing overhead of $3,600. What was the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is $15,000?
7,400
The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 730,000 units, completed and transferred out 690,000 units, and ending work in process 80,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are:
722,000 Solution: 690,000 + (80,000 x .40) = 722,000
If annual overhead costs are expected to be $800,000 and direct labor costs are expected to be $1,000,000, then if the activity base is direct labor costs, for every dollar of direct labor, _____ of manufacturing overhead will be assigned
80 cents
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 90,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?
90,000 equivalent units Solution: (90,000 - 20,000) + 20,000 = 90,000
Which one of the following represents a period cost? a. The VP of Sales' salary and benefits b. Overhead allocated to the manufacturing operations c. Labor costs associated with quality control d. Fringe benefits associated with factory workers
A
Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion?
Activity based costing
A manufacturing company calculates cost of goods sold as follows:
Beginning FG inventory + cost of goods manufactured - ending FG inventory.
Cost of goods manufactured is calculated as follows:
Beginning WIP + direct materials used + direct labor + manufacturing overhead - ending WIP.
A process cost system would be used for all of the following except the a. manufacture of cereal. b. refining of petroleum. c. printing of wedding invitations. d. production of automobiles.
C
In a manufacturing company, the cost of factory labor consists of all of the following except a. employer payroll taxes. b. fringe benefits incurred by the employer. c. net earnings of factory workers. d. gross earnings of factory workers.
C
Which of the following is correct regarding cost systems? Job Order Process a. Work in process account several one for each process b. Work in process account one one c. Work in process account one one for each process d. Work in process account several one
C
Which of the following shows entries only to control accounts? a. Factory Labor Wages Payable b. Work in Process Factory Labor Raw Materials Inventory Wages Payable c. Work in Process Manufacturing Overhead Raw Materials Inventory d. Factory Labor Raw Materials Inventory Accounts Payable Wages Payable
C
Which one of the following characteristics would likely be associated with a just-in-time inventory method? a. Ending inventory of work in process that would allow several production runs b. A backlog of inventory orders not yet shipped c. Minimal finished goods inventory on hand d. An understanding with customers that they may come to the showroom and select from inventory on hand
C
A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available: Department Expected Use of Driver Cost Processing 800 $1,500,000 Packaging 200,000 1,500,000 Testing 2,000 600,000 Production information for the two products is as follows: Oil Sludge Department Expected Use of Driver Expected Use of Driver Processing 300 500 Packaging 120,000 80,000 Testing 1,600 400 The amount of overhead assigned to Oil using ABC is
$1,942,500 Solution: Processing: $1,500,000 / 800 = $1,875; Packaging: $1,500,000 / 200,000 = $7.50; Testing: $600,000 / 2,000 = $300; ($1,875 x 300) + ($7.50 x 120,000) + ($300 x 1,600) = $562,500 + $900,000 + $480,000 = $1,942,500
Redman Company manufactures customized desks. The following pertains to Job No. 978: Direct materials used $15,450 Direct labor hours worked 360 Direct labor rate per hour $15.00 Machine hours used 300 Applied factory overhead rate per machine hour $22.00 What is the total manufacturing cost for Job No. 978?
$27,450
Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: Board 12 Case 165 Direct labor hours 15,000 25,000 Machine setups 600 400 Machine hours 24,000 26,000 Inspections 800 700 Overhead applied to Board 12 using traditional costing using direct labor hours is
$3,600,000 Solution: ($2,400,000 + $5,400,000 + $1,800,000) / (15,000 + 25,000) = $240 x 15,000 = $3,600,000
Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Titanium Aluminum Total Cost Assembly 500 mach. hours 500 mach. hours $60,000 Inspections 350 150 $100,000 2,100 labor hours 1,900 labor hours Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much assembly cost is assigned to titanium racquets?
$30,000 Solution: $60,000 / (500 + 500) = $60 x 500 = $30,000
Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Titanium Aluminum Total Cost Assembly 500 mach. hours 500 mach. hours $45,000 Inspections 350 150 $75,000 2,100 labor hours 1,900 labor hours Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much inspections cost is assigned to titanium racquets?
$52,500 Solution: $75,000 / (350 + 150) = $150 x 350 = $52,500
Cost of goods manufactured equals $85,000 for 2017. Finished goods inventory is $2,000 at the beginning of the year and $5,500 at the end of the year. Beginning and ending work in process for 2017 are $4,000 and $5,000, respectively. How much is cost of goods sold for the year?
$81,500
During 2011, Tanner Manufacturing expected Job No. 26 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Tanner applied overhead based on direct labor cost. Actual production required an overhead cost of $560,000, $550,000 in materials used, and $220,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?
1,100,000
In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 90,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for conversion costs for June were
104,000 equivalent units Solution: 90,000 + 20,000 = 110,000 - 10,000 = 100,000; 100,000 + (10,000 x .40) = 104,000
Managerial accounting information is generally prepared for:
C. Managers
In determining whether planned goals are being met, a manager is performing the function of
Controlling
The function that pertains to keeping the activities of the enterprise on track is
Controlling
Overhead application is recorded with a
Credit to Manufacturing Overhead
Which of the following would be accounted for using a job order cost system? a. The production of personal computers. b. The production of automobiles. c. The refining of petroleum. d. The construction of a new campus building.
D
Which one of the following is an example of a period cost? a. A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer b. Workers' compensation insurance on factory workers' wages allocated to the factory c. A box cost associated with computers d. A manager's salary for work that is done in the corporate head office
D
When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is
Debit Finished goods inventory, credit work in process inventory
Which one of the following would not be classified as manufacturing overhead? (Indirect labor, direct materials, indirect materials, insurance on factory building)
Direct Materials
The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is
Direct labor
Which of the following is not a control account? Manufacturing Overhead Factory Labor Accounts Receivable Raw Materials Inventory
Factory labor
T/F A company may use either a job order cost system or a process cost system, but not both.
False
T/F A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete.
False
T/F A job order cost system is most appropriate when a large volume of uniform products are produced.
False
T/F Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.
False
T/F Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred.
False
T/F At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold.
False
T/F Determining the unit cost of manufacturing a product is an output of financial accounting.
False
T/F Direct labor and direct materials are the only product costs.
False
T/F Direct materials become a cost of the finished goods manufactured when they are acquired, not when they are used
False
T/F Factory labor should be assigned to selling and administrative expenses on a proportionate basis.
False
T/F In a manufacturing company balance sheet, manufacturing inventories are reported in the current assets section in the order of their expected use in production
False
T/F Raw materials are equal to direct materials minus indirect materials.
False
T/F The balanced scorecard approach attempts to maintain as little inventory on hand as possible
False
T/F The beginning work in process inventory appears on both the balance sheet and the cost of goods manufactured schedule of a manufacturing company
False
T/F The cost of raw materials purchased is credited to Raw Materials Inventory when materials are received.
False
T/F The management function of organizing and directing is mainly concerned with setting goals and objectives for the entity.
False
T/F The perpetual inventory method cannot be used in a job order cost system.
False
T/F The sum of the direct materials cost, direct labor costs, and beg work in process is the total manufacturing costs for the year
False
T/F The supply chain is all the activities associated with providing a product or service.
False
T/F Total period costs are deducted from total cost of work in process to calculate cost of goods manufactured.
False
T/F When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited.
False
When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is:
Finished Goods Inventory Work In Process Inventory
The inventory accounts that show the cost of completed goods on hand and the costs applicable to production that is only partially completed are, respectively
Finished Goods Inventory and Work in Process Inventory
A manufacturing company usually has three inventory accounts which are
Finished goods inventory, work in process inventory, raw materials inventory
Records of individual items of raw materials would not be maintained
In the Raw Materials Inventory account
Direct Material/Indirect Material Lubricant for a ball-bearing joint for a large crane
Indirect
Cotter pins and lubricants used irregularly in a production process are classified as
Indirect materials
Which one of the following is a source document that impacts the job cost sheet?
Labor time tickets
Which of the following is not viewed as part of assigning manufacturing costs in a job order cost system? Manufacturing overhead is applied Raw materials are used Manufacturing overhead is incurred Completed goods are recognized
Manufacturing overhead is incurred
Which of the following is not included in factory labor costs? Gross earnings. Net earnings. Fringe benefits. Employer payroll taxes.
Net earnings
Which one of the following costs would not be inventoriable?
Period costs
Which one of the following costs would not be inventoriable? Period costs Factory insurance costs Indirect materials Indirect labor costs
Period costs
Which of the following is not another name for the term manufacturing overhead? Factory overhead Pervasive costs Burden Indirect manufacturing costs
Pervasive costs
A manager that is establishing objectives is performing which management function?
Planning
The management function that requires managers to look ahead and establish objectives is
Planning
Some companies implement systems to reduce defects in finished products with the goal of achieving zero defects. What are these systems called?
Total quality management systems
T/F A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company.
True
T/F Finished goods inventory does not appear on a cost of goods manufactured schedule.
True
T/F Finished goods inventory for a manufacturing company is equivalent to merchandise inventory for a merchandising company
True
T/F Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.
True
T/F If the ending work in process inventory is greater than the beginning work in process inventory, then the cost of goods manufactured will be less than total manufacturing costs for the period.
True
T/F Job order cost sheets constitute the subsidiary ledger of the control account Work In Process Inventory.
True
T/F Managerial accounting applies to all types of firms.
True
T/F Managerial accounting reports are prepared more frequently than are classified financial statements.
True
T/F Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead
True
T/F Many companies have significantly lowered inventory levels and costs by using just-in-time inventory methods
True
T/F Period costs are not inventoriable costs
True
T/F The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.
True
T/F The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.
True
T/F The total cost of a finished product does not generally contain equal amounts of materials, labor, and overhead costs.
True
T/F There should be a separate job cost sheet for each job.
True
T/F Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.
True
T/F When raw materials are received, there no effort at this point to associate the cost of materials with specific jobs.
True
T/F When the physical association of raw materials with the finished product is too small to trace in terms of cost, they are usually labeled indirect materials.
True
Which of the following is not classified as direct labor? Bottlers of beer in a brewery Copy machine operators at a copy shop Wages of supervisors Bakers in a bakery
Wages of supervisors
Which of the following shows entries only to control accounts?
Work in Process Manufacturing Overhead Raw Materials Inventory
A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to:
Work in Process—Packaging Department.
What is work in process inventory generally described as?
a. Costs applicable to units that have been started in production but are only partially completed
Which one of the following is not considered as material costs?
a. Partially completed motor engines for a motorcycle plant
What activities and responsibilities are not associated with management's functions?
accountability
The two major steps in the flow of costs are
accumulating and assigning
Which of the following is not used in assigning manufacturing costs to work in process inventory? Actual manufacturing overhead Time tickets Materials requisitions Predetermined overhead rate
actual manufacturing overhead
The predetermined overhead rate is based on the relationship between
b. estimated annual costs and expected annual activity.
A process cost system would most likely be used by a company that makes motion pictures. repairs to automobiles. breakfast cereal. college graduation announcements.
breakfast cereal
Which one of the following is not a cost element in manufacturing a product?
c. Office salaries
Managerial accounting does not encompass
calculating earnings per share
Process costing is used when the production process is
continuous
For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to
cost of goods manufactured
Cost of goods manufactured in a manufacturing company is analogous to ______________ in a merchandising company
cost of goods purchased
As inventoriable costs expire, they become
cost of goods sold
At the end of the year, any balance in the Manufacturing Overhead account is generally eliminated by adjusting
cost of goods sold
Debits to Work in Process Inventory are accompanied by a credit to all but which one of the following accounts?
cost of goods sold
If manufacturing overhead has been underapplied during the year, the adjusting entry at the end of the year will show a debit to
cost of goods sold
The existence of under- or overapplied overhead at the end of the year requires an adjustment to
cost of goods sold
The job cost sheet does not show
cost of goods sold
Direct materials and direct labor of a company total $8,000,000. If manufacturing overhead is $4,000,000, what is direct labor cost?
d. Cannot be determined from the information provided
Overhead application is recorded with a ______ to manufacturing overhead
debit
A materials requisition slip showed that direct materials requested were $58,000 and indirect materials requested were $9,000. The entry to record the transfer of materials from the storeroom is
debit work in process inventory 58,000, debit manufacturing overhead 9,000, credit raw materials inventory 67,000
The Raw Materials Inventory account is ______ for invoice costs and freight costs chargeable to the purchaser
debited
If the cost of goods manufactured is less than the cost of goods sold, finished goods inventory has
decreased
A distinguishing feature of managerial accounting is
detailed reports
For the work of factory employees to be considered as _________, the work must be conveniently and periodically associated with raw materials conversion
direct labor
Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?
direct materials used
Process costing is not used when jobs have ________ characteristics
distinguishing
An important feature of a job order cost system is that each job has its own
distinguishing characteristics
Conceptually, any under- or overapplied overhead at the end of the year should be allocated among all of the following except cost of goods sold. ending work in process inventory. ending raw materials inventory. ending finished goods inventory.
ending raw materials inventory
The predetermined overhead rate is based on the relationship between _______ annual costs and _______ annual activity
estimated, expected
A time ticket does not indicate the number of personal ______ claimed by the employee
exemptions
Management accountants would not prepare reports primarily for _________ users
external
Cost of goods sold is obtained from the _________ inventory records
finished goods
Financial statements for external users can be described as
general purpose
Reports prepared in financial accounting are ___________ reports
general purpose
The reporting standard for external financial reports is
generally accepted accounting principles
A company assigned overhead to work in process. At year end, the overhead assigned to work in process is ______ than the overhead incurred.
greater
If the Manufacturing Overhead account has a debit balance at the end of a period, it means that actual overhead costs were ________ than overhead costs applied to jobs.
greater
The subtotal, "Cost of goods manufactured" appears on
income statement
Materials requisition slips are costed using any of the
inventory costing methods
The principal accounting record used in assigning costs to jobs is a
job cost sheet
a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job.
job cost sheet
The flow of costs in a ___________ cost system involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done.
job order
The two basic types of cost accounting systems are
job order and process cost systems
How have many companies significantly lowered inventory levels and costs?
just-in-time method
Which one of the following is a source document that impacts the job cost sheet? Raw materials receiving slips. Materials purchase orders. Labor time tickets. Finished goods shipping documents.
labor time tickets
As current technology changes manufacturing processes, it is likely that direct
labor will decrease
If the amount of "Cost of goods manufactured" during a period exceeds the amount of "Total manufacturing costs" for the period, then ending work in process is ______ than the amount of the beginning work in process inventory.
less
If, at the end of the year, Manufacturing Overhead has been overapplied, it means that actual overhead costs were ____ than the overhead assigned to jobs
less
A primary driver of overhead costs in continuous manufacturing operations is:
machine hours
In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to
machine hours
Managerial accounting information is generally prepared for
managers
Factory Labor is what type of account
manufacturing cost clearing account
If manufacturing overhead has been overapplied during the year, the adjusting entry at the end of the year will show a debit to
manufacturing overhead
In determining total manufacturing costs on the cost of goods manufactured schedule, ________________ applied is added to direct materials and direct labor
manufacturing overhead
On the costs of goods manufactured schedule, depreciation on factory equipment appears in what section
manufacturing overhead
The labor costs that have been identified as indirect labor should be charged to
manufacturing overhead
The product cost that is most difficult to associate with a product is
manufacturing overhead
When determining costs of jobs, how does a company account for indirect materials? It is transferred out of raw materials and into ____________ when used
manufacturing overhead
Overapplied manufacturing overhead exists when overhead assigned to work in process is _____ than overhead incurred and there is a _____ balance in Manufacturing Overhead at the end of a period.
more, credit
Managerial accounting is applicable to what entities
non-profit, service, manufacturing
An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:
number of purchase orders
If the manufacturing overhead costs applied to jobs worked on were greater than the actual manufacturing costs incurred during a period, overhead is said to be
overapplied
The Manufacturing Overhead account shows debits of $30,000, $24,000, and $28,000 and one credit for $86,000. Based on this information, manufacturing overhead has been
overapplied
The managerial function of controlling includes
performance evaluation by management
Companies assign manufacturing overhead to work in process on an estimated basis through the use of a(n)
predetermined overhead rate
Both direct materials and indirect materials are
raw materials
In a job order cost system, it would be correct in recording the purchase of raw materials to debit
raw materials inventory
Manufacturing Overhead would not have a subsidiary account for
raw materials inventory
In an analogous sense, external user is to internal user as generally accepted accounting principles are to
relevance to decision
Planning is a function that involves
setting goals and objectives for an entity
Factory labor costs include _______ earned by factory workers
sick pay
A manufacturing company reports cost of goods manufactured as a component in the calculation of cost of goods _____ on the income statement
sold
For inventoriable costs to become expenses under the matching principle,the product to which they attached must be
sold
Managerial accounting reports can be described as
special purpose
Reports prepared in managerial accounting are ________ reports
special purpose
On the costs of goods manufactured schedule, the item raw materials inventory (ending) appears as a
subtraction from raw materials available for use.
Managerial accounting information pertains to _______ of the entity and may be very detailed
subunits
The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the
total manufacturing costs
If Manufacturing Overhead has a debit balance at the end of the period, then overhead has been
underapplied
In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit to
work in process inventory
When the company assigns factory labor costs to jobs, the direct labor cost is debited to
work in process inventory
Job cost sheets constitute the subsidiary ledger for the
work in process inventory account
On the cost of goods manufactured schedule, the cost of goods manufactured agrees with the amount transferred from __________ Inventory to _________ during the period.
work in process, finished goods
After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted, Manufacturing Overhead will have a ______ balance.
zero