Managerial Acct Ch 2
Manufacturing Overhead Costs
Are indirect costs, include some materials and labor, and must be manufacturing costs
labor costs
Are recorded and basically the same way as material cost, and may be direct or indirect
labor costs
Are recorded in basically the same way as material cost, and may be direct or indirect
In a service firm, salaries of administrative personnel, rent and utilities, and non-billable employee time are
Assigned to client or account to using an allocation base
The most common driver used to assign costs in a service firm is
Billable hours
A journal entry that debits finished goods inventory and credits work in progress records the
Completion of a job
Finished goods
Consist of completed, unsold goods
Materials requisition forms are used to
Control the flow of materials from inventory into production, and record the cost of raw materials in the accounting system
What two accounts are involved when underapplied or overapplied overhead is disposed of?
Cost of good sold and manufacturing overhead
The total cost transferred out of work in process inventory into finished goods inventory is
Cost of goods manufactured
When overhead is underapplied, a _______ must be made to the manufacturing overhead account to eliminate the balance.
Credit
When overhead is over applied, a_______entry is required to dispose of the balance in the manufacturing overhead account
Debit
The journal entry to record depreciation on office equipment debits
Depreciation expense and credits accumulated depreciation
underapplied or overapplied overhead is the
Difference between overhead applied to jobs an actual overhead
A journal entry that debits work in process inventory and manufacturing overhead and credits we just payable records
Direct and indirect labor cost
Hands-on work that can be easily traced to a specific product is called_______ _______.
Direct labor
When materials are requisitioned into production,
Direct materials are recorded in work in process, and direct materials are recorded on the job cost sheet
A journal entry that involves manufacturing overhead and cost of good sold is recorded to
Dispose of underapplied or overapplied overhead
True or false: the cost of each individual unit is tracked to products under both job order and process costing.
FALSE Because units in process costing are all the same, there is no need to track the cost of each individual unit.
True or false: job-order costing can only be used in manufacturing firms
FALSE Job-order costing can be used in any company or firm where the products or services are not homogeneous.
True or false: materials purchases are initially recorded in raw materials and then all materials used are transferred to work in process.
False Direct materials are transferred to work in process and indirect materials are transferred to manufacturing overhead
The cost of jobs that have been completed but not yet sold are contained in______ _______Inventory.
Finished goods
What is the most common method for disposing of the balance in manufacturing overhead?
Making a direct adjustment to Cost of Goods Sold
Cost of goods_____is the total cost of jobs completed during the period
Manufactured
The cost of goods_____is the sum of all amounts transferred from work in process to finished goods during a period.
Manufactured or completed
Factory labor charges that cannot be easily traced to a job are treated as
Manufacturing Overhead (MOH)
Factory labor charges that cannot be easily traced to a job or treated as
Manufacturing overhead
Manufacturing Overhead Costs
Must be manufacturing cost, or indirect cost, and include some materials and labor
The difference between overhead applied to jobs and actual overhead is
Over applied or under applied overhead
The difference between overhead applied to jobs an actual overhead is
Overapplied or underapplied overhead
If the manufacturing overhead account has a credit balance at the end of the period that indicates that overhead was____and cost of goods sold must be____
Overapplied, decreased
Non-manufacturing cost incurred during a period are treated as
Period Expenses
A journal entry that debits work in process and manufacturing overhead and credits raw materials inventory records
Putting materials into production
When materials are purchased they are first recorded in the_____account
Raw materials inventory
When actual manufacturing overhead costs are incurred, ______.
the manufacturing overhead cost is debited
Costs are transferred out of finished goods inventory
when goods are sold
Costs of partially completed units are accounted for in
work in process
Given the following, compute the cost of goods manufactured. Direct material cost: $40,000 direct labor cost: $100,000 applied overhead: $120,000 beginning work in process inventory: $30,000 beginning work in process inventory: $12,000
$278,000
As jobs are worked on, the work in process account accumulates
Actual direct materials, actual direct labor, and applied overhead costs
The most common method for disposing of the balance in manufacturing overhead is
Adjusting cost of goods sold
Which methods can be used to dispose of under ply or over applied manufacturing overhead?
Allocate it to work in process, finished goods, and cost of goods sold, Or make a direct adjustment to cost of goods sold
A direct labor time ticket includes the
Amount of time spent on each job and job numbers of jobs worked on
On the job cost sheet and work in process accounts, the_____manufacturing overhead is recorded.
Applied
The cost of goods manufactured report includes____manufacturing overhead cost.
Applied
If the manufacturing overhead account has a____balance at the end of the period that indicates that overhead was under played in cost of goods sold must be____
Debit, increased
True or false: job-order costing can only be used in manufacturing firms
False
All materials that will be used in future production are first recorded in the______ ________Inventory count
Raw materials
The journal entry to record placing materials into production credits
Raw materials
Major inputs such as lumber and fixtures that can be easily traced to a specific job are called __ __
direct materials
When a job is completed, its costs are transferred into ______.
finished goods
When a job is completed, which account is debited?
finished goods inventory
Companies that use job-order costing
make unique products
Actual manufacturing overhead consists of all
manufacturing costs other than direct labor and direct materials
What document specifies the type and quantity of direct materials used on a specific job?
materials requisition form
If there is a credit balance in the manufacturing overhead account after overhead have been applied to all jobs it means overhead was
overapplied
The journal entry to record the purchase of materials debits
raw materials inventory
The balance of work in process inventory may be calculated by
summing the costs of all jobs in process
Non-manufacturing costs increase
the Selling and General & Administrative expense account.
Overhead Costs are debited to work in process when
they are applied to jobs
If there is a debit balance in manufacturing overhead after overhead has been applied to all jobs it means overhead was
underapplied
Materials requisition forms are used to
Record the cost of raw materials in the accounting system, and control the flow of materials from inventory into production
In a job-order costing system costs flow first to_________.
The inventory accounts and then to cost of goods sold
A direct labor________ __________Is a document used to record how long worker spend on each job and task.
Time ticket
In a service firm, salaries of administrative personnel, rent and utilities, and non-billable employee time are
Treated like manufacturing overhead
Cost of goods manufactured is the
Value of all jobs transferred from working process to finished goods
The major difference between job order and process costing is
Whether the products produced are similar or different
When a job is completed its cost or transferred out of
Work in process
When a job is completed, its costs are transferred out of
Work in process
A company requisition and $40,000 in direct materials and $30,000 in indirect materials from the store room to be used in production. The journal entry to record this transaction is debit
Work in process $40,000, debit manufacturing overhead $30,000. And credit raw materials inventory $70,000
Which accounts are debited in the Journal entry to record manufacturing labor costs?
Work in process and Manufacturing overhead
What accounts are debited in a journal entry that records putting both direct and indirect materials into production?
Work in process and manufacturing overhead
The Work-in-Process account accumulates
actual direct materials, actual direct labor, and applied overhead costs
A journal entry debiting salaries expense and crediting salaries and wages payable could record
administrative salaries
When goods are sold to customers,
costs are transferred from Finished Goods to Cost of Goods Sold.
What of the following may be credited in the journal entry to record the purchase of materials?
credit accounts payable (debit raw materials inventory)
underapplied or overapplied overhead is the
difference between overhead applied to work in process and actual overhead
Hands-on work that can be easily traced to a specific product is called
direct labor
Categories of manufacturing costs include:
direct materials, direct labor, manufacturing overhead
Costs are transferred from raw materials inventory to ______.
either Work in Process or Manufacturing overhead (MOH)
Costs are transferred from raw materials inventory to ______.
either work in process or manufacturing overhead
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