chapter 15-16 ACC 121
You would record the labor costs to an individual job by using the:
time tickets
At the end of the fiscal year, the balance in Factory Overhead is small. The balance would be
transferred to Cost of Goods Sold
True or False: Financial Accounting Reports must be prepared in accordance to GAAP.
true
All of the following employees hold line positions for a computer company except: vice president of production vice president of finance manager of the web design vice president of sales
vice president of finance
Each document in the cost ledger is called a
job cost sheet
Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as
Factory Overhead
The recording of the jobs completed would include a debit to
Finished Goods
The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The entry to record the transfer of costs from work in process to finished goods is
Finished Goods 540,000 Work In Process 540,000
Who are the individuals charged with the responsibility for directing the day-to-day operations of a business?
Managers
How are inventories listed?
Materials Work in Process Finished Goods
The journal entry to record the purchase of $45,000 of raw materials is
Materials Debit, Accounts Payable Credit
What cost show only on the income statement?
Period Costs
Costs that are incurred in generating revenues during the period, but are not involved in the manufacturing process are referred to as
Period Costs
What cost show only on the income statement?
Period Costs
During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. In addition, factory overhead charged to production was $32,000. The entry to record the direct labor costs is
Work In Process 150,000 Wages Payable 150,000
Which costs are product costs? direct materials sales and administrative expenses direct labor factory overhead
a) direct materials c) direct labor d)factory overhead
The entry to record the flow of direct labor costs into production in a job order cost accounting system is
debit Work in Process, credit Wages Payable
True or False: Managerial Accounting Reports must be prepared in accordance to GAAP.
false
The document authorizing the issuance of materials from the storeroom is a
materials requisition
The source document for the data for debiting Work in Process for direct materials is a
materials requisition
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
Aspen technologies has the following budget data: Estimated direct labor hours 15,000 Estimated direct labor dollars $90,000 Estimated Factory Ovehead costs $300,000 If the factory overhead is based on direct labor hours, the predetermined factory overhead rate is:
$300,000/15,000 = $20 per direct labor hour
Which 2 product costs are prime costs: 1.Direct materials 2. Direct labor 3. Factory Overhead
1. Direct Materials and 2 Direct Labor
Cost of materials used $45,000 Direct labor costs 48,000 Factory overhead 39,000 Work in process, beg. 28,000 Work in process, end. 18,000 Finished goods, beg. 28,000 Finished goods, end. 18,000 What is the cost of goods sold?
152,000
Which 2 product costs are conversion costs: 1.Direct materials 2. Direct labor 3. Factory Overhead
2 Direct labor and 3 Factory Overhead
The Darwin Company reports the following information: Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Determine the product cost:
35,000
Given the following data: Beginning raw materials inventory $60,000 Materials purchased 65,000 Ending raw materials inventory 40,000 What is the amount of raw materials used?
85,000
The following information is taken from the financial records of Gunner Manufacturing: Cost of materials used $65,000 Direct labor costs 48,000 Factory overhead 39,000 Work in process, beg. 18,000 Work in process, end. 28,000 What is cost of goods manufactured?
=Cost of goods manufactured---142,000
Formula for COGS
Beginning Finished Goods+ COGM= goods available for sale - ending finished goods = COGS
How to calculate Cost of Materials Used
Beginning materials + purchased= materials available for use - ending materials = COMU
What term refers to the cost of changing direct materials into a finished manufactured product?
Conversion (Cost)
Compute conversion costs given the following data: Direct Materials, $347,500; Direct Labor, $196,300; Factory Overhead, $187,900; and Selling Expenses, $45,290.
Conversion Cost $384,200
The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had production costs of $375,000. The entry to record the transfer of costs from finished goods to cost of goods sold is
Cost of Goods Sold 375,000 Finished Goods 375,000
How to calculate product costs:
DM+DL+FO
The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as
Direct Labor
Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Compute the conversion cost for Darwin Company:
Direct labor 10,500 Depreciation on factory equipment 4,700 Indirect labor 5,900 Factory rent 4,200 Factory utilities 1,200 Indirect materials 1,200 Total conversion cost----------------------------- 27,700
If the cost of a direct material is a small portion of total production cost, it may be classified as part of direct materials, direct labor or factory overhead?
Factory Overhead
Indirect labor and indirect materials are classified as
Factory Overhead
In a job order cost accounting system, the entry to record the flow of indirect materials into production is
Factory Overhead debit, Materials credit
Which of the following is an example of a factory overhead cost? repair and maintenance cost on the administrative building factory heating and lighting cost insurance premiums on salespersons' automobiles president's salary
b) Factory Heating and lighting cost
Insurance expense incurred on a factory building would be treated as a direct cost period cost product cost selling cost
c) Product cost
What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?
controlling
The details concerning the costs incurred on each job order are accumulated in a work in process account and supported by a
cost ledger
If the amount of factory overhead cost incurred is less than the amount applied, the factory overhead account will have a
credit balance and be overapplied
Which of the following is an example of direct materials cost for an automobile manufacturer cost of oil lubricants for factory machinery cost of wages of assembly worker salary of production supervisor cost of interior upholstery
d) cost of interior upholstery
In a job order cost accounting system, the entry to record the flow of direct materials into production is
debit Work in Process, and credit Materials
The Thomlin Company forecasts that total overhead for the current year will be $15,750,000 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
Predetetmined Factory Overhead Rate = 15,750,000/250,000 hours = $63 per machine hour
Costs that are treated as assets until the product is sold are
Product Costs
What costs show on the balance sheet and the income statement?
Product Costs
How to complete a cost of goods manufactured schedule:
See Review Problem 4: BWIP DM + DL + FO= TMI TMI + BWIP = TMC TMC - EWIP= COGM
Balance Sheet for a Manufacturing Business
See problem 2
What is the form for an Income statement of a manufacturing business?
See problem 4: Sales COGS: BFGI + COGM= COFG available for sale COFG- EFGI= COGS Sales- COGS= GP After Gross Profit, list operating expenses, administrative (office only) and selling selling expenses. GP - OE= NI/NL
How to calculate period costs
Selling expenses+ administrative expenses
Materials must have which two qualities in order to be classified as direct materials
They must be an integral part of the finished product and be a significant portion of the total product cost
The amount of time spent by an employee on an individual job are recorded on
Time Ticket
At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance. What would describes the nature of this balance and how it would be reported on the interim balance sheet?
Underapplied, deferred debit
