Acct exam 1

what are fixed cost

cost that remains constant. if per unit basis, average cost per unit varies inversely with changes in activity

what are variable costs

cost that varies in direct proportion to changes in level of activity. variable cost per unit is constant

selling expenses

cost to secure order and get to customer

MOH applied table

wip-d and moh-c

Managerial accounting applies to all types of business--service, merchandising, and manufacturing and to all forms of business organizations

A

Manufacturing overhead is underapplied if: a. Actual overhead is greater than applied. b. The predetermined rate equals the actual rate. c. Actual overhead equals applied overhead. d. Actual overhead is less than applied.

A

Most companies debit underapplied overhead to: a. cost of goods sold. b. work in process inventory. c. finished goods inventory. d. manufacturing overhead.

A

Product costs include each of the following except: a. selling and administrative expenses. b. manufacturing overhead. c. direct labor. d. direct materials.

A

Which of the following costs should be expensed as incurred, never being recorded as an asset, for financial reporting purposes a. Advertising Costs b. Work in Process c. Indirect Labor Costs d. Direct Labor Costs

A

Which of the following is NOT a period cost. a. Depreciation on factory equipment b. Salary of a clerk who handles customer billing c. Insurance for the company's office building d. Advertising

A

Which one of the following causes the work in process account to increase in a job order cost accounting system? a. Requisitioned direct materials from the storeroom. b. Incurred and paid indirect labor. c. Completed products during the period. d. Purchased direct materials.

A

For the year, Redder Company has cost of goods manufactured of $600,000, beginning finished goods inventory of $200,000, and ending finished goods inventory of $250,000. The cost of goods available for sale and cost of goods sold is: a. $800,000 $500,000. b. $800,000 $550,000. c. $850,000 $600,000. d. $600,000 $450,000.

B

Karon Audio, Inc. manufactures speakers. During March, Karon's transactions and accounts included the following: Raw materials acquired for cash $82,500 Cost of direct materials issued to production 81,900 Costs to ship products to customers 1,000 Direct labor cost incurred 41,000 Total manufacturing overhead incurred 25,000 Raw materials inventory, beginning 3,500 Raw materials inventory, ending 3,600 Work in process inventory, beginning 12,000 Work in process inventory, ending 14,200 Total manufacturing overhead applied 22,000 What is the cost of indirect materials transferred to manufacturing overhead? a. $600 b. $500 c. $700

B

The cost of the beginning work in process plus the total manufacturing costs for the current period is the cost of goods manufactured. a. True b. False

B

The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the: a. cost of goods manufactured. b. total manufacturing costs. c. total manufacturing overhead. d. total cost of work in process.

B

Which account is credited when a job is completed? a. Finished Goods Inventory. b. Work in Process Inventory. c. Sales Revenue. d. Cost of Goods Sold.

B

For a manufacturing company, which of the following is an example of a period cost rather than a product cost? a. Insurance on factory equipment b. Depreciation on factory equipment c. Wages of salespersons d. Wages of machine operators

C

Which of the following is not an element of manufacturing overhead? a. Factory repairman's wages. b. Product inspector's salary. c. Sales manager's salary. d. Plant manager's salary.

C

Which one of the following is not a manufacturing cost? a. Wheels that are being installed on new automobiles being manufactured. b. Factory maintenance. c. Advertising cost. d. Wages of assembly workers.

C

In the first column, indicate whether the cost item is a variable or fixed cost.In the second column, indicate whether the item is a product cost or a period cost for financial statements: -Hamburger buns in a Wendy's restaurant. -Advertising by a dental office. -Apples processed and canned by Del Monte. -Shipping canned apples from a Del Monte plant to customers. -Insurance on a Bausch & Lomb factory producing contact lenses. -Insurance on IBM's corporate headquarters. -Salary of a supervisor overseeing production of printers at Hewlett-Packard. -Commissions paid to automobile salespersons. -Depreciation of factory lunchroom facilities at a General Electric plant. -Steering wheels installed in BMWs.

VC, PR FC PE VC PR VC PE FC PR FC PE FC PR VC PE FC PR VC PR

unadjusted cost of goods sold

add undersupplied or subtract over applied to get adjusted

Schedule of COG Manufactured

beg WIP-c DM: Beg RM-d add purchases-d total RM available-d subtract end RM-d rm used in production-d subtract IM-d DM used in production-d DL-d MOH applied to WIP-d total Manu cost add production-c total Manu cost to account for-c subtract end WIP-c cost of goods manufactured-c

what are differential costs

cost difference between 2 options

MOH is debited and credited when

debit incurred or actual, credit applied

adjustment for overapplied overhead

decreases COG sold (c) and increases net operating income

MOH ex

property taxes, utilities, depreciation, rent, insurance

A cost of goods manufactured schedule shows beginning and ending inventories for: a. raw materials and work in process only. b. work in process only. c. raw materials only. d. raw materials, work in process, and finished goods.

A

For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to: a. cost of goods manufactured. b. net purchases. c. total manufacturing costs. d. cost of goods purchased.

A

In recording the issuance of raw materials in a job order cost system, it would be incorrect to: a. debit Finished Goods Inventory. b. debit Work in Process Inventory. c. debit Manufacturing Overhead. d. credit Raw Materials Inventory.

A

Which of the following statements about contribution format income statements is false? a. Contribution format income statements compute Gross Margin as the difference between Sales and Total Variable Costs b. Contribution format income statements present some period costs at the top of the expenses section of the income statement and others at the bottom of the expenses section of the income statement, depending if they are variable or fixed c. In contribution format income statements assembled for merchandisers, Cost of Goods Sold is a variable cost that is included at the top of the income statement d. Net income will always be equal for a merchandiser whether they present a contribution format income statement or a traditional format income statement

A

Which one of the following transactions causes the Manufacturing Overhead account to be debited in a job order cost accounting system? a. Used indirect materials. b. Completed products during the period. c. Purchased raw materials on account. d. Incurred direct labor.

A

A credit entry made in the Finished goods account means a. Goods have been completed. b. Goods have been sold. c. Work in process has been completed. d. Cost of goods available for sale has increased

B

Assigning manufacturing costs to work in process results in credits to all of the following except: a. Manufacturing Overhead. b. Finished Goods Inventory. c. Salaries and wages payable. d. Raw Materials Inventory.

B

Warren Corporation requisitioned $40,000 of direct materials for use in production and incurred direct labor costs of $198,000. It had manufacturing overhead costs of $95,000, made up of indirect labor $5,000 and other manufacturing costs incurred of $40,000. Manufacturing overhead is assigned to production based on 40% of direct labor costs. How much total manufacturing costs were added to Work in Process last year? a. $243,000 b. $317,200 c. $328,000 d. $333,000

B

Warren Corporation uses a job-order costing system. The following data are available for last year: Estimated direct labor-hours...12,000 Estimated manufacturing overhead costs... $39,000 Actual direct labor hours...... 11,000 Actual manufacturing overhead costs..... $37,000 They apply overhead using a predetermined rate based on direct labor hours. What predetermined overhead rate per direct labor hours was used last year? a. $3.55 b. $3.25 c. $3.08 d. $3.36

B

Which of the following answer choices lists the three manufacturing costs? a. Indirect materials, indirect labor, and factory-related costs. b. Direct materials, direct labor, and manufacturing overhead. c. Raw materials, work in process, and finished goods. d. Work in process, finished goods, and cost of goods sold.

B

Which of the following costs is not considered a product cost a. Depreciation on factory machinery b. Cost of the salary for the vice president of finance c. Indirect Materials cost d. Cost of lubricant that keeps the manufacturing equipment running

B

Which of the following costs would be included in manufacturing overhead of a computer manufacturer? a. The cost of the memory chips. b. Depreciation on testing equipment. c. The cost of the disk drives. d. The wages earned by computer assemblers.

B

Which of the following is an example of a sunk cost when deciding between expanding production capacity at a presently operating manufacturing plant and retaining the current production capacity at this plant? a. Future period utilities costs for the manufacturing plant b. Direct labor cost for the manufacturing plant during the previous calendar year c. The additional supervisory costs that would occur if we expand production d. Interest on the loan needed to finance the expansion

B

Which of these costs will change with a decrease in activity within the relevant range? a. Total fixed costs and total variable cost. b. Unit fixed costs and total variable cost. c. Unit variable cost and unit fixed cost. d. Unit fixed cost and total fixed cost.

B

Having underapplied manufacturing overhead at the end of the period means: a. More overhead costs were transferred out than were incurred for the period. b. The predetermined manufacturing overhead rate was too high. c. The adjusted cost of goods sold will be higher than the unadjusted cost of goods sold. d. After the cost of goods sold account has been adjusted, net income will be higher.

C

Indirect labor is a: a. period cost. b. nonmanufacturing cost. c. product cost. d. raw material cost.

C

Prime costs consist of a. direct labor and manufacturing overhead. b. direct materials and manufacturing overhead. c. direct materials and direct labor. d. direct materials, direct labor and manufacturing overhead.

C

The cost applicable to units that have been put into production but not completed is shown as: a. finished goods inventory. b. merchandise inventory. c. work in process inventory. d. raw materials inventory.

C

The entry when direct factory labor is assigned to jobs is a debit to: a. Salaries Expense and a credit to Salaries and wages payable. b. Salaries and wages payable and a credit to Work in Process Inventory. c. Work in Process Inventory and a credit to Salaries and wages payable. d. Manufacturing Overhead and a credit to Salaries and wages payable.

C

When a job is completed in a job order cost accounting system, the cost of the job is transferred to: a. Cost of Goods Sold. b. Work in Process Inventory. c. Finished Goods Inventory. d. Manufacturing Overhead.

C

Which journal entry would record the cost of $50,000 of computer parts and $250 of glue being transferred from the storeroom to production: (answer c is continued on the next page) a. Direct Materials 50,000 Indirect Materials 250 Raw Materials 50,250 b. Raw Materials 50,000 Manufacturing overhead 250 Direct Materials 50,250 c. Work in process 50,000 Manufacturing overhead 250 Raw Materials 50,250

C

goods sold table

COG sold-d and FG-c

As the level of activity increases within the relevant range, which of these is true about a fixed cost? a. It will increase in total. b. It will decrease in total. c. The cost per unit will increase. d. The cost per unit will decrease.

D

Companies assign manufacturing overhead to work in process on an estimated basis through the use of a(n): a. assigned overhead Rate. a. previous year's overhead rate. b. actual overhead rate. c. predetermined overhead rate.

D

Companies compute cost of goods manufactured by subtracting ending work in process inventory from: a. cost of goods available for sale. b. total manufacturing overhead. c. total manufacturing costs. d. total cost of work in process.

D

Each of the following is a period cost except: a. nonmanufacturing costs. b. selling expenses. c. administrative expenses. d. indirect labor.

D

How much is cost of goods manufactured for March? a. $147,100 b. $146,200 c. $145,700 d. $142,700

D

Kovar, Inc. allocates overhead based on a predetermined overhead rate of $2.40 per direct labor hour. Employees are paid $12.00 per hour. Job 24 requires 4.2 pounds of direct materials at a cost of $15.00 per pound. Employees worked a total of 17.5 hours to complete the job. Actual manufacturing overhead costs totaled $80,000 for the year for the company. How much is the cost of Job 24? a. $117 b. $777 c. $273 d. $315

D

Using the Manufacturing Overhead account below, what statement is correct? a. The 5,000 balance in the account means manufacturing overhead was overapplied. b. Number (7) could be the cost of goods transferred to the Finished Goods inventory account. c. The 65,000 total shown on the debit side could be the amount of overhead transferred to work in process. d. Number (3) could be the amount of indirect labor.

D

When the cost object is a specific product's manufacturing process, which of the following costs is an indirect cost? a. Cost of materials used to produce units on that line's product b. Cost of labor used in production of that line's product c. Cost of the salary and benefits of the supervisor that supervises production of that product only d. Cost of the salary for the plant foreman, who supervises the production of that line and several others

D

Which group of costs consists of only product costs? a. Indirect labor, factory building depreciation, administrative expenses. b. Factory maintenance, sales commissions, salaries paid to sales clerks. c. Direct labor, direct materials, and selling expenses. d. Direct labor, indirect labor, factory utilities.

D

Work in Process Inventory is debited for all of the following except: a. Direct materials used. b. Manufacturing overhead applied. c. Direct factory labor used. d. Manufacturing overhead incurred

D

What are conversion costs?

DL plus MOH

total cost of job

DM, DL, MOH

what are sunk costs

cost that has already been incurred and cannot be changed now or in future

The manufacturing overhead account is a. Decreased for actual overhead costs incurred for the period. b. Decreased for overhead costs transferred to production. c. Often closed to cost of goods sold when it has a balance at the end of the period. d. Used to record all manufacturing costs that are not direct labor and direct materials. e. All of the statements above are true except a. f. All of the statements above are true.

E

MOH

POHR by actual amount of allocation base used to complete job

administration expenses

cost of general management of organization

what are period costs

all selling and administrative costs, expensed in period incurred

What are product costs

all the costs involved in acquiring or making a product. attach to a unit of product and stay with it until it is sold

under applied overhead

applies less overhead than it actually incurs

overapplied overhead

applies more overhead than it actually needs

POHR

estimated total MOH divided by estimated total allocation base

finished goods table

fg-d and wip-c

what is a mixed cost

has variable and fixed elements. ex. utility bills

adjustment for under applied

increases COG sold (d) and decreases net operating income

factory labor is debited when

labor incurred

unit product cost

total cost of job divided by units produced

Y=a+bX

y= total mixed cost a= total fixed cost b= variable cost per unit of activity x=level of activity