ACCT 2020 Ch. 3

What are the three reasons why assigning manufacturing overhead to a specific job involves some difficulties

1. MO is an indirect cost 2. MO consists of many different types of costs ranging from grease to salaries, some can be variable and change in levels of production 3.the cost per unit will vary from one period to the next even with fixed costs

predetermined overhead rate equation

=(estimated total MO cost)/(estimated total amount of the allocation base)

cost driver

a factor, such as machine hours, beds occupied, computer time, or flight hours that causes overhead costs to occur

allocation base

a measure such as direct labor-hours (DHL) or machine hours (MH) that is used to assign overhead costs to products and services.

What is credited in the journal entry to record the purchase of materials?

accounts payable

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

predetermined overhead rate

computed before the period begins and is used to find the overhead applied to the job

schedule of cost of goods manufactured

contains three elements of product costs- direct materials, direct labor, MO- and it summarizes the portions of hos costs that remain in ending work in process inventory that are transferred out of Work in Process into finished Goods

The journal entry to record shipping goods to customers includes a debit to

cost of goods sold

gross margin is calculated by subtracting

cost of goods sold from sales

Himber just completed a job tat cost $14000 in direct materials, $1200 in direct labor, and $8000 in applied manufacturing overhead. The journal entry to record completion of the job would:

debit Finished goods $34000 and credit Work in process $34000

the journal entry that debits work in process and manufacturing overhead and credits salaries and wages payable is recording

direct and indirect labor costs

what is the equation for total manufacturing cost?

direct materials+direct labor=MO applied to work in process`

unadjusted cost of goods sold is calculated by subtracting

ending finished goods inventory from goods available for sale

A journal entry that debits manufacturing overhead and credits accounts payable could record?

factory utilities expense and rent expense on factory equipment

As finished goods are shipped to customers, their accumulated costs are transferred from ______ to _____

finished goods, cost of goods sold.

What is an example of an indirect labor cost?

maintenance (not accounting, assembly, or sales)

the schedule of cost of goods _________ summarizes costs that remain in work in process inventory and that have been transferred from works in process to finished goods inventory

manufactured

the manufacturing overhead account contains

many different kinds of indirect costs

what is the formula for determining the amount of overhead cost to apply to a perticular job

overhead applied to a particular job=predetermined overhead rate x amount of the allocation base incurred by the job (or actual direct labor hours charged to the job)

What is the formula for applying overhead to a specific job?

predetermined overhead rate x amount of allocation base incurred by job

job cost sheet

records the materials, labor, and manufacturing overhead costs charged to that job

the schedule of cost of goods ______ summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold

sold

when calculating the cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials must be

subtracted from raw materials used in production

overhead application

the process of assigning overhead cost to jobs

what is the equation for cost of goods manufactured?

total manufacturing costs+ beginning work in process inventory - ending work in process inventory

to calculate the adjusted cost of goods sold

add under-applied overhead to or subtract over-applied overhead from unadjusted cost of goods sold

absorption costing

all manufacturing costs, both fixed and variable, are assigned to units of product-units are said to fully absorb manufacturing costs

schedule of cost of goods sold

also contains direct materials, direct labor and MO- it summarizes the portions of those costs that remain in ending finished goods inventory hat are transferred out of finished goods and cost of goods sold