Chapter 16

The following information has been taken from the perpetual inventory system of Elite Manufacturing Company for the month ended August 31: Purchases of direct materials$ 61,000Direct materials used$ 40,000Direct labor costs assigned to production$ 15,000Manufacturing overhead costs incurred (and applied)$ 35,000 Balances in inventoryAugust 31August 1Materials$ ?$ 20,000Work in Process$ 66,000$ 47,500Finished Goods$ 50,000$ 43,300 The cost of finished goods manufactured in August is:

$71,500.

The cost of the employee who computes total manufacturing costs would be considered:

Administrative costs.

The payment of wages to factory employees who work directly on the goods being manufactured is recorded by an entry that includes a credit to:

Cash.

The amount transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

Cost of finished goods manufactured

Which of the following is not a period cost?

Depreciation on factory equipment

The preparation and use of accounting information designed to assist managers in planning and controlling the operations of a business.

Management accounting

All manufacturing costs other than direct materials used and direct labor.

Manufacturing overhead

Costs that are debited directly to expense accounts when the costs are incurred.

Period costs

Direct materials and direct labor used in manufacturing a product.

Product costs

The costs of purchasing or manufacturing inventory are called:

Product costs.

Amounts credited to the Work in Process inventory account may best be described as:

The cost of finished goods manufactured.

In a manufacturing company, the cost of goods sold is equal to:

The cost of goods available for sale, less the ending inventory of finished goods.

The account debited at the time that the Manufacturing Overhead account is credited.

Work in Process Inventory

The following information has been taken from the perpetual inventory system of Imperial Manufacturing Company for the month ended September 30: Purchases of direct materials$ 76,000Direct materials used$ 53,600Direct labor costs assigned to production$ 23,000Manufacturing overhead costs incurred$ 47,000 Balances in inventorySeptember 30September 1Materials$ ?$ 51,000Work in Process$ 39,000$ 47,000Finished Goods$ 43,000$ 72,000 The cost of goods sold in September is: Multiple Choice

$160,600.

The following information has been taken from the perpetual inventory system of Elite Manufacturing Company for the month ended August 31: Purchases of direct materials$ 71,000Direct materials used$ 55,000Direct labor costs assigned to production$ 25,000Manufacturing overhead costs incurred (and applied)$ 35,000 Balances in inventoryAugust 31August 1Materials$ ?$ 40,000Work in Process$ 55,000$ 52,500Finished Goods$ 60,000$ 46,300 The total amount of inventory to be included in Elite's August 31st balance sheet amounts to:

$171,000

Alton Company produces metal belts. During the current month, the company incurred the following product costs: Raw materials $100,000;Direct labor $75,000;Electricity used in the Factory $25,000;Factory foreperson salary $3,750; andMaintenance of factory machinery $2,000. Alton Company's direct product costs totaled:

$175,000.

Alton Company produces metal belts. During the current month, the company incurred the following product costs: Raw materials $100,000;Direct labor $75,000;Electricity used in the Factory $25,000;Factory foreperson salary $3,750; andMaintenance of factory machinery $2,000. Alton Company's indirect product costs totaled:

$30,750.

During its first year of operations, Brown Company incurred the following product costs: Direct materials used in production $157,500; Direct labor $81,000; and Manufacturing overhead $92,000. The Brown Company's ending Work in Process Inventory amounted to $25,000 at the end of the year. What is the company's cost of finished goods manufactured for the year?

$305,500

Which of the following should not be classified as a manufacturing cost?

Commissions paid to salespeople.

In a manufacturing company, the cost of finished goods manufactured is equal to:

The beginning inventory of Work in Process, plus total manufacturing costs for the period, less the ending inventory of Work in Process.

A manufacturing cost that can be traced conveniently and directly to manufactured units of product.

None

Direct labor costs in a paint factory would include wages of employees who:

Operate paint-mixing machines.

When a manufacturing company purchases raw materials or component parts to be used in manufacturing finished goods, these costs are initially debited to:

Raw Materials Inventory.

Manufacturing costs do not include:

Selling expenses related to goods manufactured during the period.

Since manufacturing costs (direct materials, direct labor, and overhead) are incurred in the process of manufacturing units of product, these costs are recorded in entries that include debits to:

The Work in Process Inventory account.

In a manufacturing company, the cost of goods sold is equal to:

The costs of direct materials, direct labor, and manufacturing overhead incurred in manufacturing the goods sold during the period.

The cost of finished goods manufactured will exceed the cost of goods sold whenever:

The inventory of finished goods increases over the period.

When direct materials are used:

Work in Process Inventory is debited.

The placing of direct materials into the production process is recorded by an entry debiting:

Work in Process Inventory.

When direct labor employees contribute to the production process, the cost of their labor is recorded by an entry that includes a debit to:

Work in Process Inventory.