Acct 245

A cost driver is ______.

A factor that causes overhead costs to occur

Journal entry that debits WIP and credits MOH is recording the...

Application of MOH costs

A journal entry that debits Work in process and credits Manufacturing overhead is recording the ______

Application of manufacturing overhead costs

When preparing financial statements in a job-order costing system, finished goods flow first to the

BALANCE SHEET

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.

BEG finished good + COGS - ENDING

Unadjusted COGS equation

Beginning finished goods inventory + cost of goods sold manufacturing - ending finished goods inventory = unadjusted cost of goods sold

The type and quantity of each type of direct material needed to complete a unit of product is listed on the

Bill of materials

The amount transferred from WIP (Work in process) to finished goods is....

COGS (Cost of goods sold) Manufactured

Selling and admin costs are...

Charged directly to the income statement

Costs that are shared by multiple cost objects in a company are known as ______ costs.

Common

Costs that are shared by multiple cost objects in a company are known as...

Common costs

Sales revenue - variable expenses/cost equals

Contribution Margin

The amount transferred from Work in Process to Finished Goods is ______.

Cost of goods manufactured

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

Cost of goods sold and Manufacturing overhead

When overhead is underapplied, a _____ must be made to the Manufacturing overhead account to close it out.

Credit

Actual manufacturing overhead was $50,000, while overhead applied to jobs was $45,000. The entry to dispose of underapplied or overapplied overhead

Credit Manufacturing overhead $5000- because it is under, you must DR COGS and CR MOH

When MOH is applied, MOH is ______ because we are adding it to WIP

Credited

Cost objectives:

Customers Organizational subunits & departments Anything for cost data desired

Costs that can be easily and conveniently traced to a specific product are called ______ costs.

DIRECT

Manufacturing cost catagory:

DL (Direct Labor) DM (Direct Materials) MOH (Manufacturing Overhead)

Differential costs, opportunity costs and incremental costs are all cost classifications used in

Decison making

Under-applies/ over-applies is the.....

Difference between overhead applied to work in process and actual overhead

Which of the following costs are found on the balance sheet of a manufacturer?

Direct Labor Raw Materials Manufacturing Overhead

Which of the following statements are true?

Direct labor costs flow through the Raw materials inventory account. Reason: Direct labor costs are added directly to Work in process. Raw materials inventory only includes the cost of direct materials. Reason: Raw materials include any materials that are used in production—both direct and indirect. When materials are purchased they are recorded in the Raw materials inventory account. correct Raw materials inventory represents the cost of materials not yet used in production.

Period costs flow from Finished Goods to Cost of Goods Sold.

FALSE- period cost are recorded as expenses as incurred and do not flow through inventory accounts

MOH (Manufacturing Overhead)

FC (Fixed costs) IC (Indirect costs) Different types of costs

True or False: Period costs flow from Finished Goods to Cost of Goods Sold

False Period costs are recorded as expenses as incurred and do not flow through the inventory accounts

Completed units that have not yet been sold are found in

Finished Goods

When jobs are sold their costs are transferred out of

Finished Goods

Which of the following is not a COST CLASSIFICATION associated with decision making?

INDIRECT COSTS

COGS manufactured includes:

Manufacturing cost of goods finished during the period

Which of the following is not a manufacturing cost category?

Manufacturing overhead Selling & administrative costs correct Direct labor Direct materials

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

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

Only direct

Cost classifications associated with decision making:

Opportunity cost Differential costs Sunk cost

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find

Overhead applied to the job

The total cost of a job includes:

Predetermined manufacturing overhead. Direct labor cost. Direct materials cost.

Overhead applied to the job equation

Predetermined overhead rate x actual allocation base incurred by a job

Any purchased materials that will go into the finished product are first recorded in the

Raw Materials

Which of the following costs are found on the balance sheet of a manufacturer?

Raw Materials Direct Labor Manufacturing Overhead

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

Raw materials

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.

Finding contribution margin equation

Sales revenue - variable expense = contribution margin

Which of the following is not a manufacturing cost category?

Selling & administrative costs

THEN

TO INCOME STATEMENT

Cost plus occurs when...

There is a mark-up in price

Why are indirect costs not associated with decision making?

They do not factor into individual decision making about specific actions.

Total cost of a job equation

Total direct labor + direct material cost + predetermined manufacturing overhead costs = Total cost of a job

An income statement focusing on product and period costs has been prepared using a(n)

Traditional

Income statements focusing on product and period costs are prepared using __________, while a _________ income makes distinctions between fixed cost and variable cost.

Traditional format Contribution Format

Which of the following are differences between the traditional and contribution format to income statements?

Traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior. Contribution format statements make it easier to predict how decisions affect the future. (WRONG )The traditional income statement is for internal use, while the contribution format income statement is for external use. (the opposite is true)

Actual MOH is ALWAYS debited T/F

True

One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

True

Predetermined MOH is ALWAYS credited T/F

True

True or False: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors

True If actual rates were used, costs may be higher in summer and winter than in spring or fall due to heating and cooling costs

Bill of materials contains the...

Type of each direct material needed to complete a unit of product Quantity of each direct material needed to complete a unit of product

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

When a job is completed, the job costs are transferred out of....

WIP

Units of product that are only partially complete are contained in

Work in Process Inventory

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

Work in process and credits Manufacturing overhead

Work in Process consists of ______.

actual direct labor cost actual direct materials cost applied manufacturing overhead

Companies use a predetermined overhead rate rather than an actual overhead rate because

an actual rate is not known until the end of the period

A journal entry that debits Work in process and credits Manufacturing overhead is recording the

application of manufacturing overhead costs

Work in Process consists of

applied manufacturing overhead actual direct labor cost actual direct materials cost

Manufacturing overhead costs

are indirect costs consist of many different items

Finished goods

consist of completed, unsold goods

A factor that causes overhead costs is called a

cost driver

The amount transferred from Work in Process to Finished Goods is

cost of goods manufactured

Underapplied or overapplied overhead is the _____

difference between overhead applied to work in process and actual overhead

The total cost of a job includes

direct materials cost. direct labor cost. predetermined manufacturing overhead.

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

dispose of underapplied or overapplied overhead

Unadjusted cost of goods sold is calculated by subtracting

ending finished goods inventory from the sum of beginning finished goods inventory and cost of goods manufactured.

Cost of goods manufactured

includes manufacturing costs of goods finished during the period

Manufacturing overhead:

is an indirect cost. contains fixed costs. consists of many different types of costs.

Typical cost drivers include

machine-hours computer time flight-hours

contributon margin format income state

makes a distinction between fixed and variable cost

Labor charges that cannot be easily traced to a job are considered:

manufacturing overhead indirect labor

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

overapplied or underapplied overhead

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find

overhead applied to the job

Period costs flow from Finished Goods to Cost of Goods Sold

period cost are recorded as expenses as incurred and do not flow through the inventory accounts

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost, and:

predetermined manufacturing overhead cost.

The formula for applying overhead to a specific job is: ______ amount of allocation base incurred by job.

predetermined overhead rate x

A bill of materials contains the

quantity of each direct material needed to complete a unit of product type of each direct material needed to complete a unit of product

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