AC 361 Chapter 3

What side of the manufacturing overhead account is actual manufacturing overhead entered on?

always the debit side

Raw materials is a(n) __________ account.

asset

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

ending raw materials inventory and indirect materials used

When a job is completed, which account is debited?

finished goods

When jobs are sold their costs are transferred out of:

finished goods

Sales minus cost of goods sold equals:

gross margin

Cost of goods manufactured:

includes the manufacturing costs of goods finished during the period

Labor costs charged to manufacturing overhead represent:

indirect labor costs

The schedule of cost of goods __________ summarizes costs that remain in work in process inventory and that have been transferred out of work in process to finished goods inventory

manufactured

Which of the following is a clearing account?

manufacturing overhead

The journal entry to record $1,000 in expired prepaid insurance on factory equipment is debit:

manufacturing overhead $1,000 and credit prepaid insurance $1,000

The journal entry to record depreciation on factory equipment debits:

manufacturing overhead and credits accumulated depreciation

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

raw materials

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

A debit balance in manufacturing overhead means overhead was __________.

underapplied

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

Underapplied or overapplied overhead is the:

difference between overhead applied to work in process and actual overhead

When labor costs are incurred, __________ are added directly to the work in process account.

only direct labor costs

Work in process consists of:

- actual direct materials cost - actual direct labor cost - applied manufacturing overhead

What methods can be used to dispose of underapplied or overapplied manufacturing overhead?

- closing it out to cost of goods sold - allocating it among work in process, finished goods, and cost of goods sold

Finished goods __________.

consists of completed, unsold goods

A journal entry that debits manufacturing overhead and credits accounts payable could be made to record:

- factory utilities expense - rent expense on factory equipment