ACC CH. 3 SB

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.

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead

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

Nonmanufacturing costs

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.

Which of the following costs are charged directly to the income statement?

Selling costs Administrative costs

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

The journal entry to record the purchase of materials credits ___

accounts payable

Work in Process consists of ___

actual direct labor cost actual direct materials cost applied manufacturing overhead

The simpler method of closing out the balance of Manufacturing overhead is ___

closing it out to Cost of goods sold

Underapplied or overapplied overhead is the ___

difference between overhead applied to work in process and actual overhead

Unadjusted cost of goods sold is calculated by subtracting ___

ending finished goods inventory from goods available for sale

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

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 $200,000/1,000 = 200 200 x 600 = $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 Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($5,000 + $27,000 - $12,000 - $4,000 = $16,000)

Given: Cost of goods manufactured of $234,000; beginning finished goods inventory of $18,000; and ending finished goods inventory of $24,000, calculate unadjusted cost of goods sold.

$228,000 Beg. finished good inventory + Cost of goods manufactured - Ending finished goods inventory = Unadjusted cos of goods sold $18,000 + $234,000 - $24,000 = $228,000

What side of the Manufacturing overhead account is applied manufacturing overhead entered on?

Always the credit side

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

Always the debit side

When a job is completed, its costs are transferred into ___

Finished Goods

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

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 costs include ___

factory insurance the factory supervisor's salary

Gross margin minus selling and administrative expenses equals ___

net operating income

The difference between overhead applied to work in process and actual overhead is ___

overapplied or underapplied overhead

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

purchase of materials

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

raw 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

Units of product that are only partially complete are contained in ___ ___ process inventory

work in

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

work in process

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.

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

Luver Corporation's Gross margin is $100,000, Cost of goods sold equals $70,000, and Selling and administrative expenses total $45,000. Net operating income is ____

$55,000 $100,000-$45,000 = $55,000

Selling and administrative costs first appear on the ___

income statement

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

Manufacturing overhead costs include ___

factory maintenance wages factory rent factory utilities

Labor costs charged to Manufacturing Overhead represent ______ labor costs

indirect

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

Manufacturing overhead consists of all ___

manufacturing costs other than direct labor and direct materials

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

only direct

Actual manufacturing overhead is ______ to the Manufacturing overhead account

debited