Chapter 3 SmartBook Assignment

Meep Industries had unadjusted cost of goods sold of $300,000. Overhead was overapplied by $20,000. Adjusted cost of goods sold is ______. A) $280,000 B) $320,000 C) $300,000

A) $280,000 $300,000 - $20,000 = $280,000.

Himber, Inc. just completed a job that cost $14,000 in direct materials, $12,000 in direct labor, and $8,000 in applied manufacturing overhead. The journal entry to record completion of the job debits ______ A) Finished goods $34,000 and credits Work in process $34,000 B) Finished goods $34,000 and credits Work in process $26,000 and Manufacturing overhead $12,000 C) Cost of goods sold $34,000 and credits Work in process $26,000 D) Finished goods $26,000 and credits Work in process $26,000

A) Finished goods $34,000 and credits Work in process $34,000

Which of the following is a clearing account? A) Manufacturing overhead B) Work in process C) Finished goods D) Raw materials

A) Manufacturing overhead

Select all that apply. Work in Process consists of ______. A) actual direct labor cost B) applied direct materials cost C) applied direct labor cost D) applied manufacturing overhead E) actual direct materials cost F) actual manufacturing overhead

A) actual direct labor cost D) applied manufacturing overhead E) actual direct materials cost

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______. A) as they are incurred B) at the end of the period C) as the allocation base is used on a job D) when jobs are completed

A) as they are incurred

A journal entry that debits Finished goods and credits Work in process records the ______. A) completion of a job B) beginning of a job C) sale of a job D) end of a period

A) completion of a job

When overhead is underapplied, a _____ must be made to the Manufacturing overhead account to close it out. A) credit B) debit

A) credit

A journal entry that debits Depreciation expense and credits Accumulated depreciation records ______. A) depreciation on office equipment B) the sale of office equipment C) depreciation on factory machinery D) depreciation on the factory building

A) depreciation on office equipment

The cost of jobs still unfinished at the end of a period are included in ______. A) ending Work in process inventory B) Cost of goods manufactured C) the income statement D) beginning Finished goods inventory for the next period

A) ending Work in process inventory

Job cost sheets and the work in process account contain ______ manufacturing overhead. A) actual B) applied C) budgeted

B) applied

Given: Cost of goods manufactured of $410,000; beginning finished goods inventory of $110,000 and ending finished goods inventory of $125,000, calculate unadjusted cost of goods sold. A) $520,000 B) $535,000 C) $395,000 D) $425,000

C) $395,000 $110,000 + $410,000 - $125,000 = $395,000

When jobs are sold their costs are transferred out of ______. A) Cost of Goods Sold B) Work in Process C) Finished Goods D) Cost of Goods Manufactured

C) Finished Goods

Which of the following would not be charged to the Manufacturing overhead account? A) Factory rent B) Depreciation on factory equipment C) Nonmanufacturing costs D) Supervisor's salary

C) Nonmanufacturing costs

To calculate cost of goods manufactured add ______. A) ending work in process to total manufacturing costs, then deduct beginning work in process B) ending finished goods to total manufacturing costs, then deduct beginning finished goods C) beginning work in process to total manufacturing costs, then deduct ending work in process D) beginning finished goods to total manufacturing costs, then deduct ending finished goods

C) beginning work in process to total manufacturing costs, then deduct ending work in process

The difference between overhead applied to work in process and actual overhead is ______. A) cost of goods manufactured B) adjusted cost of goods sold C) overapplied or underapplied overhead D) ending work in process inventory

C) overapplied or underapplied overhead

Costs of partially completed units are accounted for in ______. A) raw materials B) finished goods C) work in process D) cost of goods manufactured

C) work in process

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

A credit balance in the Manufacturing Overhead account means overhead was ___________.

overapplied

Any purchased materials that will go into the finished product are first recorded in the _________ _________ inventory account.

raw materials

The schedule of cost of goods _________ summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold.

sold

Given the following, calculate total manufacturing costs: Direct materials cost: $62,000 Direct labor cost: $78,000 Manufacturing overhead applied: $46,000 Actual manufacturing overhead: $51,000 Beginning Work in process inventory: $32,000 Ending Work in process inventory: $35,000 A) $186,000 B) $183,000 C) $191,000 D) $188,000

A) $186,000 Total manufacturing costs = $62,000 +$78,000 + $46,000 = $186,000. Adjust for work in process when calculating the cost of goods manufactured.

Estimated manufacturing overhead $500,000 Estimated direct labor hours 200,000 Actual manufacturing overhead $625,000 Actual direct labor hours 260,000 The company applies overhead using direct labor hours as the cost driver. Calculate the amount that overhead was overapplied or underapplied. A) $25,000 overapplied B) $125,000 overapplied C) $187,500 underapplied D) $25,000 underapplied

A) $25,000 overapplied ($500,000 ÷ 200,000) = $2.50 × 260,000 = $650,000 applied. Actual overhead = $625,000, so overhead is $25,000 overapplied.

Selling and administrative costs incurred are treated as ______. A) liabilities B) period expenses C) product costs D) assets

B) period expenses

Raw materials inventory is an ______. A) liability B) revenue C) asset D) expense

C) asset

Labor costs charged to Manufacturing Overhead represent ______ labor costs. A) both direct and indirect labor B) direct C) indirect

C) indirect

A journal entry debiting Salaries expense and crediting Salaries and wages payable could record ______. A) maintenance salaries B) factory supervisors' salaries C) assembly workers' wages D) administrative salaries

D) administrative salaries

True or False: Period costs flow from Finished Goods to Cost of Goods Sold.

False

True or False: Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels.

True

When labor costs are incurred, _________ labor costs are added directly to the Work in Process account. A) only direct B) both direct and indirect C) only indirect

A) only direct

The Manufacturing Overhead account is debited when ______. A) overhead is applied to Work in Process B) actual overhead costs are incurred C) goods are completed

B) actual overhead costs are incurred

The journal entry to record expired prepaid insurance on factory equipment is debit ______. A) Work in Process and credit Prepaid Insurance B) Prepaid Insurance and credit Accounts Payable C) Insurance Expense and credit Prepaid Insurance D) Manufacturing Overhead and credit Prepaid Insurance

D) Manufacturing Overhead and credit Prepaid Insurance

Raw Materials is a(n) _________ account.

asset

The cost of goods _______ is the sum of all amounts transferred from Work in process to Finished goods during a period.

manufactured

The Period Ends

manufacturing overhead is closed

The journal entry to record issuing materials to be used in production credits ______. A) Raw materials B) Manufacturing overhead C) Accounts payable D) Work in process

A) Raw materials

Overhead is Applied to Work in Process

manufacturing overhead is credited

Actual Overhead is Incurred

manufacturing overhead is debited

Gemini had Sales of $50,000, Cost of goods sold of $20,000, and Selling and administrative expenses of $25,000. Gross margin is ______. A) $30,000 B) $45,000 C) $5,000 D) $25,000

A) $30,000 Sales - COGS = gross margin $50,000 - $20,000 = $30,000

What side of the Manufacturing overhead account is actual manufacturing overhead entered on? A) Always the debit side B) The credit side, if actual is greater than applied C) Always the credit side D) The debit side, if actual is greater than applied

A) Always the debit side

True or False: Actual overhead costs appear in the Work in Process account but not on the job cost sheet.

False

Completed units that have not yet been sold are found in ________ _________ inventory.

finished goods

The schedule of cost of goods ________ summarizes costs that remain in Work in process inventory and that have been transferred from Work in process to Finished goods inventory.

manufactured

Select all that apply. Which of the following are used to calculate Cost of goods available for sale on the schedule of cost of goods sold? A) Beginning finished goods inventory B) Cost of goods manufactured C) Cost of goods sold D) Ending finished goods inventory

A) Beginning finished goods inventory B) Cost of goods manufactured

If a company incurs $2,000 of factory rent, $1,000 of factory utilities, and $5,000 of miscellaneous factory costs, the journal entry to record these transactions would be to debit ______. A) Manufacturing overhead $8,000 and credit Accounts payable $8,000 B) Accounts payable $8,000 and credit Manufacturing overhead $8,000 C) Work in process $8,000 and credit Accounts payable $8,000 D) Accounts payable $8,000 and credit Work in process $8,000

A) Manufacturing overhead $8,000 and credit Accounts payable $8,000

Select all that apply. Which of the following costs are found on the balance sheet of a manufacturer? A) Raw Materials B) Selling and Administrative C) Manufacturing Overhead D) Direct Labor

A) Raw Materials C) Manufacturing Overhead D) Direct Labor

The journal entry to record labor costs credits ______. A) Salaries and wages payable B) Work in process C) Manufacturing overhead D) Direct labor

A) Salaries and wages payable

Select all that apply. Which of the following statements are true? A) When materials are purchased they are recorded in the Raw materials inventory account. B) Direct labor costs flow through the Raw materials inventory account. C) Raw materials inventory only includes the cost of direct materials. D) Raw materials inventory represents the cost of materials not yet used in production.

A) When materials are purchased they are recorded in the Raw materials inventory account. D) Raw materials inventory represents the cost of materials not yet used in production.

Applied manufacturing overhead will most likely ______ actual manufacturing overhead. A) not equal B) equal

A) not equal

Overhead is overapplied if ______. A) cost of goods manufactured is less than cost of goods sold B) actual overhead is less than applied overhead C) actual overhead is more than applied overhead D) adjusted cost of goods sold is more than unadjusted cost of goods sold

B) actual overhead is less than applied overhead

Cost of goods manufactured ______. A) is the same as cost of goods sold B) includes the manufacturing costs of goods finished during the period C) is generally recorded as an asset on the balance sheet

B) includes the manufacturing costs of goods finished during the period

Select all that apply. Actual overhead costs may not be proportional to the actual amount of the allocation base used because ______. A) overhead costs are all variable costs B) overhead spending may not be under control C) the predetermined rate might not be estimated correctly D) many actual overhead costs are fixed

B) overhead spending may not be under control D) many actual overhead costs are fixed

A journal entry that debits Advertising expense and credits Cash would record the incurrence of a ______. A) cost that is capitalized and expensed when the product is sold B) selling cost C) prepaid cost D) manufacturing cost

B) selling cost

When a job is completed, the job costs are transferred OUT OF ______. A) manufacturing overhead B) work in process C) finished goods D) cost of goods sold

B) work in 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 ______. A) $200,000 B) $600,000 C) $120,000 D) $80,000

C) $120,000 $200,000 ÷ 1,000 × 600 = $120,000

Which account is credited when manufacturing overhead is applied? A) Accounts payable B) Cost of goods sold C) Work in process D) Manufacturing overhead

D) Manufacturing overhead

The journal entry to record accrued property taxes for a factory building debits ______. A) Work in process and credits Manufacturing overhead B) Work in process and credits Property taxes payable C) Manufacturing overhead and credits Accounts payable D) Manufacturing overhead and credits Property taxes payable

D) Manufacturing overhead and credits Property taxes payable

All the costs appearing on the job cost sheets of the jobs that are being worked on are found in the ______ account. A) Manufacturing Overhead B) Finished Goods C) Raw Materials D) Work in Process

D) Work in Process

True or False: Job B was not completed by April 30. If an April balance sheet is prepared, the costs accumulated for Job B will NOT appear on it.

False - the costs will be included in Work in Process

When preparing financial statements in a job-order costing system, finished goods flow first to the _________ __________ and then to the ________ ________.

balance sheet ; income statement

Select all that apply. What methods can be used to dispose of underapplied or overapplied manufacturing overhead? A) Close it to Cost of goods sold. B) Close it to Work in process. C) Close it to Finished goods. D) Allocate it to Work in process, Finished goods, and Cost of goods sold. E) Allocate it to Raw materials, Work in process, and Finished goods.

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

The journal entry to record the purchase of materials debits ______. A) raw materials B) accounts payable C) manufacturing overhead D) work in process

A) raw materials

Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is ______. A) $450,000 B) $480,000 C) $420,000

B) $480,000 $450,000 + $30,000 = $480,000

Overhead is underapplied if ______. A) adjusted cost of goods sold is less than unadjusted cost of goods sold B) actual overhead is more than applied overhead C) actual overhead is less than applied overhead D) cost of goods manufactured is less than cost of goods sold

B) actual overhead is more than applied overhead

The journal entry to record a cash payment of $400 for insurance on administrative office equipment debits ______ and credits cash. A) work in process B) manufacturing overhead C) insurance expense D) depreciation expense

C) insurance expense

Manufacturing overhead applied to production is always recorded on the __________ side of the manufacturing overhead account and the ________ side is always used to record the actual manufacturing costs incurred.

credit ; debit

Sales minus cost of goods sold equals ______. A) selling and administrative expenses B) gross margin C) net operating income D) contribution margin

B) gross margin

Jonas Corporation used $20,000 of direct materials, incurred $40,000 of direct labor cost, and applied $30,000 of manufacturing overhead to jobs this period. No jobs were incomplete at the beginning of the period, but at the end of the period, jobs with a total cost of $25,000 were unfinished. What was the cost of goods manufactured for this period? A) $65,000 B) $115,000 C) $90,000 D) $25,000

A) $65,000 ($20,000 + $40,000 + $30,000) + $0 - $25,000 = $65,000

The journal entry that debits Work in Process and Manufacturing overhead and credits Salaries and Wages Payable is recording ______. A) direct and indirect labor costs B) direct labor costs only C) manufacturing overhead D) indirect labor costs only

A) direct and indirect labor costs

Select all that apply. Manufacturing overhead costs include ______. A) factory utilities B) assembly worker wages C) factory rent D) factory maintenance wages E) marketing costs

A) factory utilities C) factory rent D) factory maintenance wages

A journal entry that debits Raw Materials and credits Accounts Payable is recording the ______. A) purchase of materials B) issuance of materials into production C) completion of goods D) sale of goods

A) purchase of materials

Net operating income is calculated by subtracting ______ from ______. A) selling and administrative expenses; gross margin B) cost of goods sold; gross margin C) cost of goods sold; sales D) selling and administrative expenses; sales

A) selling and administrative expenses; gross margin

Given the following, calculate the cost of goods available for sale. Cost of goods manufactured of $234,000 Beginning Finished goods inventory of $18,000 Ending Finished goods inventory of $24,000 A) $240,000 B) $252,000 C) $258,000 D) $228,000

B) $252,000 $234,000 + $18,000 = $252,000

Given the following, calculate total manufacturing costs: Direct materials: $40,000; Direct labor: $100,000; Manufacturing overhead applied: $120,000; Beginning Work in process inventory: $30,000; Ending Work in process inventory: $12,000 A) $302,000 B) $260,000 C) $278,000 D) $242,000

B) $260,000 Total manufacturing costs = $40,000 + $100,000 + $120,000 = $260,000

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. A) $102,000 B) $74,000 C) $130,000 D) $70,000

B) $74,000 Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory $27,000 + $100,000 - $28,000 - $25,000 = $74,000

The journal entry to record selling and administrative salaries debits ______. A) manufacturing overhead and credits cash or a liability B) an expense account and credits Cash or a liability C) a liability account and credits manufacturing overhead D) a liability account and credits an expense account

B) an expense account and credits Cash or a liability

A journal entry that debits Work in process and credits Manufacturing overhead is recording the ______. A) purchase of indirect materials B) application of manufacturing overhead costs C) incurrence of actual manufacturing overhead D) completion of a job

B) application of manufacturing overhead costs

Finished goods ______. A) consists of goods that have been sold to customers during the period B) consists of completed, unsold goods C) is the same as cost of goods manufactured D) consists of goods that require additional processing before being sold

B) consists of completed, unsold goods

When only a portion of the units involved in a job are sold, the ______. A) unsold units are transferred to another job B) unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold C) entire cost of the job is transferred from finished goods to cost of goods sold D) cost is held in the finished goods account until all units in the job are sold

B) unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold

Milton Corporation sold goods costing $50,000 for $75,000. Journal entries to be made could include entries debiting ______. A) Sales for $50,000 and Finished goods for $75,000 B) Finished Goods for $50,000 and Sales Revenue for $75,000 C) Cost of Goods Sold for $50,000 and Accounts Receivable for $75,000 D) Cost of Goods Sold for $75,000 and Accounts Receivable for $50,000

C) Cost of Goods Sold for $50,000 and Accounts Receivable for $75,000

The accounts credited when goods are sold on account are ______. A) Finished goods and Accounts receivable B) Cost of goods sold and Accounts receivable C) Finished goods and Sales D) Cost of goods sold and Finished goods

C) Finished goods and Sales

The journal entry to record $20,000 in depreciation on factory equipment is debit ______. A) Accumulated Depreciation $20,000 and credit Manufacturing Overhead $20,000 B) Manufacturing Overhead $20,000 and credit Depreciation Expense $20,000 C) Manufacturing Overhead $20,000 and credit Accumulated Depreciation $20,000 D) Depreciation Expense $20,000 and credit Manufacturing Overhead $20,000

C) Manufacturing Overhead $20,000 and credit Accumulated Depreciation $20,000

George Corporation recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits ______. A) Work in process $1,000 and credits Property taxes payable $1,000 B) Property taxes payable $1,000 and credits Manufacturing overhead $1,000 C) Manufacturing overhead $1,000 and credits Property taxes payable $1,000 D) Property taxes payable $1,000 and credits Work in process $1,000

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

The journal entry to record depreciation on factory equipment debits ______. A) Work in process and credits Accumulated depreciation B) Manufacturing overhead and credits Depreciation expense C) Manufacturing overhead and credits Accumulated depreciation D) Work in process and credits Depreciation expense

C) Manufacturing overhead and credits Accumulated depreciation

The journal entry to record issuing both direct and indirect materials into production debits ______. A) Work in process and Raw materials B) Manufacturing overhead and Raw materials C) Work in process and Manufacturing overhead

C) Work in process and Manufacturing overhead

Overapplied or underapplied overhead is the difference between ______. A) actual total overhead and estimated total overhead B) estimated total overhead and total overhead applied C) actual total overhead and total overhead applied

C) actual total overhead and total overhead applied

The amount transferred from Work in Process to Finished Goods is ______. A) cost of goods sold B) ending inventory C) cost of goods manufactured

C) cost of goods manufactured

The difference between the entries to record depreciation on office equipment and depreciation on factory equipment is that one ______. A) credits Accumulated depreciation, while the other credits Manufacturing overhead B) debits Accumulated depreciation, while the other debits Manufacturing overhead C) debits Depreciation expense, while the other debits Manufacturing overhead D) debits Accumulated depreciation, while the other debits Depreciation expense

C) debits Depreciation expense, while the other debits Manufacturing overhead

Underapplied or overapplied overhead is the ______. A) overhead applied to work in process B) actual overhead C) difference between overhead applied to work in process and actual overhead D) sum of overhead applied to work in process and actual overhead

C) difference between overhead applied to work in process and actual overhead

Unadjusted cost of goods sold is calculated by subtracting ______. A) beginning finished goods inventory from cost of goods manufactured B) ending finished goods inventory from cost of goods manufactured C) ending finished goods inventory from goods available for sale D) beginning finished goods inventory from goods available for sale

C) ending finished goods inventory from goods available for sale

Manufacturing overhead consists of all ______. A) manufacturing costs B) costs other than direct labor and direct materials C) manufacturing costs other than direct labor and direct materials D) indirect costs

C) manufacturing costs other than direct labor and direct materials

When calculating the cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials is ______. A) added to beginning Raw materials inventory B) subtracted from beginning Raw materials inventory C) subtracted from raw materials used in production D) added to raw materials used in production

C) subtracted from raw materials used in production

Cost of goods manufactured is the ______. A) value of all jobs transferred from Finished goods to Cost of goods sold B) average value of the Work in process account C) sum of all jobs transferred from Work in process to Finished goods D) sum of all jobs in Finished goods at the end of a period

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

The value of work in process is equal to ______. A) the sales value of all unfinished jobs B) finished goods inventory minus cost of goods sold C) the cost of all unfinished jobs

C) the cost of all unfinished jobs

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. A) $30,000 B) $24,000 C) $20,000 D) $16,000

D) $16,000 Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory $5,000 + $27,000 - $12,000 - $4,000 = $16,000

What side of the Manufacturing overhead account is applied manufacturing overhead entered on? A) The debit side, if actual is greater than applied B) The credit side, if actual is greater than applied C) Always the debit side D) Always the credit side

D) Always the credit side

The journal entry to record expired prepaid factory insurance debits ______. A) Prepaid Insurance and credits Cash B) Work in Process and credits Prepaid Insurance C) Prepaid Insurance and credits Manufacturing Overhead D) Manufacturing Overhead and credits Prepaid Insurance

D) Manufacturing Overhead and credits Prepaid Insurance

The journal entry to record manufacturing labor costs debits ______. A) Manufacturing overhead and Salaries and wages payable B) Work in process and Salaries and wages payable C) Salaries and wages payable D) Work in process and Manufacturing overhead

D) Work in process and Manufacturing overhead

A journal entry that debits Manufacturing overhead and credits Accounts payable would NOT be used to record _________. A) rent on factory equipment B) factory utilities costs C) miscellaneous factory overhead costs D) direct labor costs

D) direct labor costs

A journal entry debiting Cost of goods sold and crediting Finished goods is made when ______. A) the period is completed B) goods are started C) goods are finished D) goods are sold

D) goods are sold

Gross margin minus selling and administrative expenses equals ______. A) cost of goods manufactured B) net operating assets C) cost of goods sold D) net operating income

D) net operating income