ACC200 ch. 6 smartbook

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 Reason: $200,000 ÷ 1,000 × 600 = $120,000

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

Administrative costs Selling costs

The accounts involved in closing underapplied or overapplied overhead using the simpler method are

Cost of goods sold and Manufacturing overhead

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

When a job is completed, its costs are transferred into

Finished Goods

The journal entry to record accrued property taxes for a factory building debits

Manufacturing overhead and credits Property taxes payable

The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next.

True

Manufacturing overhead is applied with a debit to

Work in process

Manufacturing overhead is applied with a debit to Blank______.

Work in process

The journal entry to record the purchase of materials credits

accounts payable

A journal entry debiting Salaries expense and crediting Salaries and wages payable could be recording

administrative salaries

The journal entry to record selling and administrative salaries debits

an expense account and credits Cash or a liability

A journal entry that debits Work in process and credits Manufacturing overhead is recording the

application of manufacturing overhead costs

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

as they are incurred

Applied manufacturing overhead is Blank______ to the Manufacturing overhead account

credited

Actual manufacturing overhead is Blank______ to the Manufacturing overhead account.

debited

Underapplied or overapplied overhead is the

difference between overhead applied to work in process and actual overhead

A journal entry that includes Manufacturing overhead and Cost of goods sold is recorded to

dispose of underapplied or overapplied overhead

Selling and administrative costs first appear on the

income statement

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

Gross margin minus selling and administrative expenses equals

net operating income

Selling and administrative costs incurred are treated as

period expenses

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

purchase of materials

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 is

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

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 Reason: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($5,000 + $27,000 - $12,000 - $4,000 = $16,000)

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

Overhead is overapplied if

actual overhead is less than applied overhead

Overhead is underapplied if

actual overhead is more than applied overhead

The sum of all amounts transferred from work in process to the finished goods accounts represents the cost of good

manufactured

A credit balance in Manufacturing overhead means overhead is

overapplied

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 Reason: $18,000 + $234,000 - $24,000 = $228,000

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

Methods to dispose of underapplied or overapplied manufacturing overhead are

- allocate it to Work in process, Finished goods, and Cost of goods sold - close it to Cost of goods sold

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

direct labor costs

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

overapplied or underapplied overhead

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

rent expense on factory equipment factory utilities expense

The schedule of cost of goods ___ summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.

sold

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