ACC Ch 17
If the Manufacturing Overhead account has a net debit balance, it indicates that ___.
Actual overhead costs are greater than those costs allocated to jobs.
If the Manufacturing Overhead account has a net credit balance, it indicates that ___.
Actual overhead costs are less than those allocated to jobs. This indicates that overhead has been overallocated; that is, the company has charged more overhead to production than they actually incurred.
Manufacturing overhead costs include ___.
All manufacturing costs OTHER THAN direct materials and direct labor.
The costs transferred to finished goods inventory are called ___.
Cost Of Goods Manufactured
Allocated overhead costs represent the ____ in the T-account.
Credit(s)
Actual overhead costs represent the ____ in the T-account.
Debit(s)
When a company finishes a job, the company totals the costs and transfers the cost from ___ to ___.
From WIP Inventory to Finished Goods (FG) Inventory
____ track costs as raw materials move from the storeroom to the production floor, where they are converted into finished products.
Job Order Costing Systems
As a company incurs costs related to a job, it adds costs to the job cost record, and the costs are added to the ____.
WIP inventory
Is "Depreciation on property, plant, and equipment" included in manufacturing overhead costs?
Yes
Is "Plant janitor's wages" included in manufacturing overhead costs?
Yes
Is "Property taxes on plant" included in manufacturing overhead costs?
Yes
Account for the purchase of Raw Materials (Journal Entry)
[Debit] Raw Materials Inventory [Credit] Accounts Payable
Account for the Raw Materials used in production (Journal Entry)
[Debit] WIP Inventory [Debit] Manufacturing Overhead [Credit] Raw Materials Inventory
Account for the labor incurred in production buy not yet paid. (Journal Entry)
[Debit] WIP Inventory [Debit] Manufacturing Overhead [Credit] Wages Payable
Cost systems are used to
accumulate product cost information so that managers can measure how much it costs to produce each unit of product. Knowing these unit costs help managers do the following: 1. Set selling prices that will lead to profits 2. Compute cost of goods sold for the income statement 3. Compute the cost of inventory for the balance sheet.
The predetermined overhead allocation rate is calculated ____.
before the year begins
In order, what are the three journal entries made relating to materials and labor?
1. Journalize the entry for the purchase of materials on account 2. Journalize the entry to record materials used in production 3.Journalize the entry to record the labor incurred in the production but not yet paid.
When the job's units are sold, the costing system moves the costs from FG Inventory (an asset), to ____.
Cost of Goods Sold (COGS), an expense.
How is the predetermined overhead allocation rate calculated?
Estimated overhead cost for the year (divided by) the estimated quantity of the overhead allocation base
Is "Delivery Drivers' wages" included in manufacturing overhead costs?
No
What are the two aspects to accounting for raw materials?
Purchasing Materials and Using Materials in production
1. When overhead is over-allocated, a ___ to the ___ account is needed to bring the account balance ___. 2. What account should be credited? AKA: the correction should ___ the ___ account.
1. debit / Manufacturing Overhead / to zero 2. decrease (credit) / Cost of Goods Sold
Is "Direct Labor Costs" included in manufacturing overhead costs?
No
Is "Sales Salaries" included in manufacturing overhead costs?
No
The predetermined overhead allocation rate is based on what two factors?
The Total estimated overhead costs for the year (and) The Total estimated quantity of the overhead allocation base.
