Chapter 3 managerial accounting smartbook

The journal entry to record accrued property taxes for a factory building debits ______.

Manufacturing overhead and credits Property taxes payable

True or false: The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next.

True

The journal entry to record issuing both direct and indirect materials into production debits ______.

Work in process and Manufacturing overhead

Overhead is underapplied if ______.

actual overhead is more than applied overhead

The journal entry to record selling and administrative salaries debits ______.

an expense account and credits Cash or a liability

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______.

as they are incurred

Finished goods ______.

consists of completed, unsold goods

Selling and administrative costs first appear on the ______.

income statement

Gross margin minus selling and administrative expenses equals ______.

net operating income

A journal entry that debits Raw Materials and credits Accounts Payable is recording the ______.

purchase of materials

Net operating income is calculated by subtracting ______ from ______.

selling and administrative expenses; gross margin

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

$74,000

Select all that apply What methods can be used to dispose of underapplied or overapplied manufacturing overhead?

Close it to Cost of goods sold. Allocate it to Work in process, Finished goods, and Cost of goods sold.

George Corporation recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits ______.

Manufacturing overhead $1,000 and credits Property taxes payable $1,000

Overhead is overapplied if ______.

actual overhead is less than applied overhead

Select all that apply A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______.

rent expense on factory equipment factory utilities expense

Selling and administrative costs incurred are treated as ______.

period expenses

The Manufacturing Overhead account is debited when ______.

actual overhead costs are incurred

Select all that apply Manufacturing overhead costs include ______.

factory insurance the factory supervisor's salary

The (1) side of the manufacturing overhead account is always used to record manufacturing overhead applied to production and the (2) side is always used to record the actual manufacturing costs incurred. (Enter either debit or credit in each blank.)

1. credit 2. debit

Completed units that have not yet been sold are found in (1) (2) inventory. (Enter only one word per blank.)

1. finished 2. goods

The cost of goods (1) is the sum of all amounts transferred from Work in process to Finished goods during a period. (Enter only one word per blank.)

1. manufactured

The schedule of cost of goods (1) summarizes costs that remain in Work in process inventory and that have been transferred from Work in process to Finished goods inventory. (Enter only one word per blank.)

1. manufactured

A credit balance in the Manufacturing Overhead account means overhead was (1). (Enter either overapplied or underapplied.)

1. overapplied

Which of the statements regarding closing out over or underapplied overhead is correct?

Closing to Cost of goods sold is simpler, and allocating is more accurate.

Underapplied or overapplied manufacturing overhead can be disposed of by closing it to ______.

Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold

When a job is completed, its costs are transferred into ______.

Finished Goods

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead

Labor costs charged to Manufacturing Overhead represent ______.

indirect labor costs

A company reports Gross margin of $100,000, Cost of goods sold of $70,000, and Selling and administrative expenses of $45,000. Net operating income (loss) is ______.

$55,000

A debit balance in Manufacturing overhead means overhead was (1). (Enter either overapplied or underapplied.)

1. underapplied

Units of product that are only partially complete are contained in the (1) (2) (3) inventory. (Enter only one word per blank.)

1. work 2. in 3. process

Job #4260 consisted of 1,000 units at a total cost of $200,000. The cost transferred to Cost of Goods Sold for the sale of 600 of the units is ______.

$120,000

Raw materials inventory was $5,000 at the beginning of the year and $12,000 at the end of the year. During the year, a total of $27,000 in raw materials were purchased, including $4,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

$16,000

Select all that apply Which of the following costs are charged directly to the income statement?

Administrative costs Selling costs

Applied manufacturing overhead is entered on what side of the Manufacturing overhead account?

Always the credit side

Which of the following would not be charged to the Manufacturing overhead account?

Nonmanufacturing costs

The journal entry to record issuing materials to be used in production credits ______.

Raw materials

Select all that apply 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.

Manufacturing overhead is applied with a debit to ______.

Work in process

The journal entry to record $10,000 in manufacturing overhead applied to Job #40 debits ______.

Work in process $10,000 and credits Manufacturing overhead $10,000

A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction would debit ______.

Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000

The journal entry to record the purchase of materials credits ______.

accounts payable

A journal entry debiting Salaries expense and crediting Salaries and wages payable could record ______.

administrative salaries

The more accurate method of closing out the balance in Manufacturing overhead is ______.

allocating it among Work in process, Finished goods, and Cost of goods sold

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

application of manufacturing overhead costs

Select all that apply Work in Process consists of ______.

applied manufacturing overhead actual direct labor cost actual direct materials cost

The simpler method of closing out the balance of Manufacturing overhead is ______.

closing it out to Cost of goods sold

Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited

A journal entry that debits Manufacturing overhead and credits Accounts payable would not be used to record ______.

direct labor costs

To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract ______.

ending raw materials inventory and Indirect materials used

Manufacturing overhead consists of all ______.

manufacturing costs other than direct labor and direct materials

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

only direct labor costs

The journal entry to record the purchase of materials debits ______.

raw materials

A journal entry that debits Manufacturing overhead and credits Property taxes payable records the ______.

recognition of accrued property taxes

When calculating the cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials is ______.

subtracted from raw materials used in production

Cost of goods manufactured is the ______.

sum of all jobs transferred from Work in process to Finished goods

Costs of partially completed units are accounted for in ______.

work in process

When a job is completed, the job costs are transferred OUT OF ______.

work in process

Any purchased materials that will go into the finished product are first recorded in the (1) (2) inventory account. (Enter only one word per blank.)

1. raw 2. materials

The schedule of cost of goods (1) summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold. (Enter only one word per blank.)

1. sold

A journal entry that debits Work in process and Manufacturing overhead and credits Raw materials records the ______.

issuance of materials

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