acct. test 4
Which of the following would be most likely to use process costing?
a lawn fertilizer manufacturer
Which of the following would most likely use a job order costing system?
a swimming pool installer
In most business organizations, the chief management accountant is called the
controller
In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?
debit Work in Process—Dept. B; credit Work in Process—Dept. A
In a job order cost accounting system, the entry to record the flow of direct materials into production is to
debit work in process, credit materials
The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as
direct labor cost
The two categories of cost comprising conversion costs are
direct labor, factory over head
A job order cost system would be appropriate for a crude oil refining business.
false
Conversion cost is the combination of direct materials cost and factory overhead cost.
false
Conversion costs consist of product costs and period costs.
false
Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
false
Custom-made goods would be accounted for using a process costing system.
false
Equivalent units are the sum of direct materials used and direct labor incurred.
false
If 30,000 units of materials enter production during the first year of operations, 25,000 of the units are finished, and 5,000 are 50% completed, the number of equivalent units of production would be 28,500.
false
If factory overhead applied exceeds the actual costs, overhead is said to be underapplied.
false
If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system.
false
Managerial accounting reports must be prepared according to generally accepted accounting principles.
false
Prime costs consist of factory overhead and direct labor.
false
Process manufacturing usually reflects a manufacturer that produces small quantities of unique items.
false
The first step in determining the cost of goods completed and ending inventory valuation using process costing is to calculate equivalent units of production.
false
The process cost system is appropriate where few products are manufactured and each product is made to customers' specifications.
false
For which of the following businesses would the job order cost system be appropriate?
hospital
At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to
increase by $1,700,000
A process cost system be appropriate for a
natural gas refinery
Managerial accounting reports are
prepared according to management needs
Which of the following is the correct flow of manufacturing costs?
raw materials, work in process, finished goods, cost of goods sold
In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a
receiving report
For which of the following businesses would a process cost system be appropriate?
shampoo manufacturer
A manufacturer may employ a job order cost system for some of its products and a process cost system for others.
true
A process cost accounting system is best used by manufacturers of like units of product that are not distinguishable from each other during a continuous production process.
true
A process cost accounting system provides product costs for each of the departments or processes within the factory.
true
Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as factory overhead cost.
true
Depreciation expense on factory equipment is part of factory overhead cost.
true
Depreciation on factory plant and equipment is an example of factory overhead cost.
true
Direct materials, direct labor, and factory overhead are assigned to each manufacturing process in a process costing system.
true
Factory overhead is an example of a product cost.
true
Factory overhead is applied to production using a predetermined overhead rate.
true
If 16,000 units of materials enter production during the first year of operations, 12,000 of the units are finished, and 4,000 are 75% completed, the number of equivalent units of production would be 15,000.
true
If the principal products of a manufacturing process are identical, a process cost system is more appropriate than a job order cost system.
true
If the underapplied factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the fiscal year.
true
Managerial accounting information includes both historical and estimated data.
true
Managerial accounting provides useful information to managers on product costs.
true
The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead cost.
true
The direct labor costs and factory overhead costs incurred by a production department are referred to as conversion costs.
true
Department M had 2,000 units 40% completed in process at the beginning of June, 12,000 units completed during June, and 1,200 units 25% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories?
$11,500
In the manufacture of 10,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,000. What is the total conversion cost?
$158,000
Compute conversion costs given the following data: Direct Materials, $367,000; Direct Labor, $207,800; Factory Overhead, $181,500 and Selling Expenses, $35,800.
$389,300
Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June. Using the first-in, first-out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period?
$5,850
The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is
$62 per machine hour
Jensen Company reports the following: Direct materials used $345,000 Direct labor incurred 250,000 Factory overhead incurred 400,000 Operating expenses 175,000 Jensen Company's product costs are
$995,000
