ACC Chapter 3

Manufacturing overhead is closed when...

The period ends

ob cost sheets and the work in process account contain ______ manufacturing overhead.

applied

To calculate cost of goods manufactured add ______.

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

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

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

indirect

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

manufactured

Manufacturing overhead consists of all ______.

manufacturing costs other than direct labor and direct materials

Actual overhead costs may not be proportional to the actual amount of the allocation base used because ______.

many actual overhead costs are fixed -overhead spending may not be under control

Gross margin minus selling and administrative expenses equals ______.

net operating income

A journal entry that debits Manufacturing overhead and credits Property taxes payable records the ______.

recognition of accrued property taxes

Cost of goods manufactured is the ______.

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

The value of work in process is equal to ______.

the cost of all unfinished jobs

Manufacturing overhead costs include ______.

the factory supervisor's salary factory insurance

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______.

As they are incurred

Cost of direct materials =

Beginning Inventory + Purchases - Indirect Materials - Ending Inventory (B+P-I-F)

When overhead is underapplied, a _____ must be made to the Manufacturing overhead account to close it out.

credit

Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited

Actual manufacturing overhead was $50,000, while overhead applied to jobs was $45,000. Work in process contained 10% of applied overhead, Finished goods contained 40%, and Cost of goods sold contained 50%. The entry to dispose of underapplied or overapplied overhead using the allocation method ______.

debits Work in process $500

A journal entry that debits Manufacturing overhead and credits Accumulated depreciation records ______.

depreciation on factory equipment

The journal entry that debits Work in Process and Manufacturing overhead and credits Salaries and Wages Payable is recording ______

direct and indirect labor costs

A journal entry that debits Manufacturing overhead and credits Accounts payable would not be used to record ______.

direct labor costs

Applied manufacturing overhead will most likely ______ actual manufacturing overhead.

not equal

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

only direct

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

only direct

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

over or undersupplied overhead

Selling and administrative costs incurred are treated as ______.

period expenses

A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______.

rent expense on factory equipment factory utilities expense

A journal entry that debits Advertising expense and credits Cash would record the incurrence of a ______.

selling cost

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

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

Always the debit side

The equation for calculating cost of goods available for sale is:

COGM + Beg Finished goods inventory = Cost of goods available for sale

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

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

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.

The journal entry to record the more accurate allocation of overapplied or underapplied overhead includes entries to ______.

Cost of goods sold Manufacturing overhead Work in process Finished goods

The accounts credited when goods are sold on account are ______.

Finished goods and Sales

The equation for calculating net operating income is:

Gross Margin - Selling & Admin Expenses= NOI

The journal entry to record $20,000 in depreciation on factory equipment is debit ______.

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

The journal entry to record expired prepaid factory insurance debits ______.

Manufacturing Overhead and credits Prepaid Insurance

Underapplied or overapplied manufacturing overhead can be disposed of by closing it to ______.

Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold

To calculate cost of goods manufactured the equation is:

DM + DL + MOH applied + Jobs Completed= COGM

The formula for calculating total manufacturing costs is:

DM + DL + MOH applied= Total Manufacturing Costs

A journal entry that debits Work in process and Manufacturing overhead and credits salaries and wages payable is recording ______.

Direct and indirect labor costs

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

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 ______

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

The journal entry to record expired prepaid insurance on factory equipment is debit ______.

Manufacturing Overhead and credit Prepaid Insurance

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead

George Corporation recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits ______.

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

Manufacturing overhead is credited when...

overhead is applied to work in process

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

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

Carlisle, Inc. had Sales of $500,000, Cost of goods sold of $400,000, and Selling and administrative expenses of $50,000. Gross margin is ______.

$100,000

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

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.

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

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

$260,000 (40,000 + 100,000 + 120,000 = 260,000)

Gemini had Sales of $50,000, Cost of goods sold of $20,000, and Selling and administrative expenses of $25,000. Gross margin is ______.

$30,000

Given the following, calculate the cost of goods available for sale. Cost of goods manufactured of $410,000 Beginning Finished goods inventory of $110,000 Ending Finished goods inventory of $125,000

$520,000

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

False

Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is ______.

$480,000

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?

$65,000

Fillia, Inc. worked on three jobs this period: Job 14C, which cost $15,000; Job 23A, which cost $28,000, and Job 45B, which cost $23,000. At the end of the period, only Job 14C was still in process (unfinished). The cost of goods manufactured this period is ____.

51,000

The journal entry to record the purchase of materials credits ______.

Accounts payable

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

Administrative costs Selling costs

The journal entry to record depreciation on factory equipment debits ______.

Manufacturing overhead and credits Accumulated depreciation

The journal entry to record issuing materials to be used in production credits ______.

Raw materials

All the costs appearing on the job cost sheets of the jobs that are being worked on are found in the ______ account.

Work in Process

Manufacturing overhead is applied with a debit to ______.

Work in process

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 issuing both direct and indirect materials into production debits ______.

Work in process and Manufacturing overhead

Manufacturing overhead is debited when...

actual overhead is incurred

Overhead is overapplied if:

actual overhead is less than applied overhead

Overhead is underapplied if ______.

actual overhead is more than applied overhead

Overapplied or underapplied overhead is the difference between ______.

actual total overhead and total overhead applied

A journal entry debiting Salaries expense and crediting Salaries and wages payable could record ______.

administrative salaries

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

The journal entry to record selling and administrative salaries debits ______.

an expense account and credits Cash or a liability

A journal entry that debits Finished goods and credits Work in process records the ______.

completion of a job

The journal entry to record manufacturing labor costs debits ______.

Work in process and Manufacturing overhead

A journal entry that involves Manufacturing overhead, Work in process, Finished goods, and Cost of goods sold is recorded to ______.

dispose of underapplied or overapplied overhead

The cost of jobs still unfinished at the end of a period are included in ______.

ending Work in process inventory

Unadjusted cost of goods sold is calculated by subtracting ______.

ending finished goods inventory from goods available for sale