ACG2071 - Chapter 3: Job Costing: Calculating Inventory and COGS

To calculate cost of goods manufactured add ______. A. beginning work in process to total manufacturing costs, then deduct ending work in process B. beginning finished goods to total manufacturing costs, then deduct ending finished goods C. ending work in process to total manufacturing costs, then deduct beginning work in process D. ending finished goods to total manufacturing costs, then deduct beginning finished goods

A. beginning work in process to total manufacturing costs, then deduct ending work in process Work in process should be used, rather than finished goods.

To calculate total manufacturing costs, add direct materials, direct labor and ______. A. applied manufacturing overhead B. applied manufacturing overhead to beginning Work in process and subtract ending Work in process C. actual manufacturing overhead; then add ending Work in process and subtract beginning Work in process D. actual manufacturing overhead

A. applied manufacturing overhead

Sales minus cost of goods sold equals ______. A. contribution margin B. net operating income C. gross margin D. selling and administrative expenses

C. gross margin

Completed units that have not yet been sold are found in ______ ______ inventory. (Enter only one word per blank.)

finished goods

A credit balance in the Manufacturing Overhead account of Y dollars means that the overhead is ______ by of Y dollars. (Enter either overapplied or underapplied.)

overapplied

A debit balance in Manufacturing overhead means overhead was _______. (Enter either overapplied or underapplied.)

underapplied

Cost of goods manufactured ______. A. is generally recorded as an asset on the balance sheet B. is the same as cost of goods sold C. includes the manufacturing costs of goods finished during the period

C. includes the manufacturing costs of goods finished during the period

Overapplied or underapplied overhead is the difference between ______. A. actual total overhead and total overhead applied B. estimated total overhead and total overhead applied C. actual total overhead and estimated total overhead

A. actual total overhead and total overhead applied

Underapplied or overapplied overhead is the ______. A. difference between overhead applied to work in process and actual overhead B. sum of overhead applied to work in process and actual overhead C. overhead applied to work in process D. actual overhead

A. difference between overhead applied to work in process and actual overhead

Manufacturing overhead costs include ______. A. factory utilities B. factory rent C. marketing costs D. factory maintenance wages E. assembly worker wages

A. factory utilities B. factory rent D. factory maintenance wages Marketing costs are a nonmanufacturing cost. Assembly wages are direct labor.

The journal entry to record manufacturing labor costs debits: A. Work in process and Manufacturing overhead. B. Salaries and wages payable. C. Manufacturing overhead and Salaries and wages payable. D. Work in process and Salaries and wages payable.

A. Work in process and Manufacturing overhead. Salaries and wages payable is credited in the journal entry.

Overhead is underapplied if ______. A. actual overhead is more than applied overhead B. actual overhead is less than applied overhead C. adjusted cost of goods sold is less than unadjusted cost of goods sold D. cost of goods manufactured is less than cost of goods sold

A. actual overhead is more than applied overhead

A journal entry that debits Advertising expense and credits Cash would record the incurrence of a ______. A. prepaid cost B. manufacturing cost C. selling cost D. cost that is capitalized and expensed when the product is sold

C. selling cost

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______. A. as the allocation base is used on a job B. at the end of the period C. when jobs are completed D. as they are incurred

D. as they are incurred

The journal entry to record issuing both direct and indirect materials into production debits ______. A. Work in process and Manufacturing overhead B. Manufacturing overhead and Raw materials C. Work in process and Raw materials

A. Work in process and Manufacturing overhead

The difference between overhead applied to work in process and actual overhead is ______. A. overapplied or underapplied overhead B. ending work in process inventory C. adjusted cost of goods sold D. cost of goods manufactured

A. overapplied or underapplied overhead

A journal entry that debits Raw Materials and credits Accounts Payable is recording the ______. A. purchase of materials B. sale of goods C. issuance of materials into production D. completion of goods

A. purchase of materials

The cost of goods manufactured for a period is the ______. A. sum of all amounts transferred between the Work in process account and the Finished goods account during that period B. average value of the Work in process account C. value of all jobs transferred from Finished goods to Cost of goods sold D. sum of all jobs in Finished goods account at the end of the period

A. sum of all amounts transferred between the Work in process account and the Finished goods account during that period

Given the following, compute the cost of goods manufactured. Direct material cost: $40,000 Direct labor cost: $100,000 Applied overhead: $120,000 Beginning work in process inventory: $30,000 Ending work in process inventory: $12,000 A. $260,000 B. $302,000 C. $278,000 D. $242,000

C. $278,000 Cost of goods manufactured = $30,000 + $40,000 + $100,000 + $120,000 - $12,000 = $278,000

The journal entry to record labor costs credits ______. A. Work in process B. Manufacturing overhead C. Salaries and wages payable D. Direct labor

C. Salaries and wages payable

A journal entry that debits Depreciation expense and credits Accumulated depreciation records ______. A. depreciation on the factory building B. depreciation on factory machinery C. depreciation on office equipment D. the sale of office equipment

C. depreciation on office equipment

The journal entry that debits Work in Process and Manufacturing overhead and credits Salaries and Wages Payable is recording ______. A. manufacturing overhead B. indirect labor costs only C. direct and indirect labor costs D. direct labor costs only

C. direct and indirect labor costs

The journal entry to record a cash payment of $400 for insurance on administrative office equipment debits ______ and credits cash. A. manufacturing overhead B. depreciation expense C. insurance expense D. work in process

C. insurance expense

Costs of partially completed units are accounted for in ______. A. finished goods B. cost of goods manufactured C. raw materials D. work in process

D. work in process

Which account is credited when manufacturing overhead is applied? A. Manufacturing overhead B. Cost of goods sold C. Work in process D. Accounts payable

A. Manufacturing overhead

The journal entry to record issuing materials to be used in production credits ______. A. Raw materials B. Manufacturing overhead C. Accounts payable D. Work in process

A. Raw materials

For a given period, the manufacturing overhead applied is $500,000 , and the actual manufacturing overhead cost for that period is $625,000. Calculate the amount by which overhead is overapplied or underapplied. A. $125,500 underapplied B. $25,000 overapplied C. $125,000 overapplied D. $25,000 underapplied

A. $125,500 underapplied Manufacturing overhead = Actual overhead cost - Manufacturing overhead applied = $625,000 - $500,000 = $125,000 underapplied

Gemini had Sales of $50,000, Cost of goods sold of $20,000, and Selling and administrative expenses of $25,000. Gross margin is ______. A. $30,000 B. $5,000 C. $45,000 D. $25,000

A. $30,000 $50,000 - $20,000 = $30,000

Which of the following costs are found on the balance sheet of a manufacturer? A. Selling and Administrative B. Manufacturing Overhead C. Raw Materials D. Direct Labor

B. Manufacturing Overhead C. Raw Materials D. Direct Labor

Direct materials used for the period cost $66,000; Direct labor cost $80,000; Applied overhead was $60,000; Beginning work in process inventory was $27,000; and Ending work in process inventory was $25,000. Calculate the cost of goods manufactured. A. $204,000 B. $206,000 C. $208,000 D. $258,000

C. $208,000 Cost of goods manufactured = $27,000 + ($66,000 + $80,000 + $60,000) - $25,000 = $208,000

For a given period, the manufacturing overhead applied is $500,000 , and the actual manufacturing overhead cost for that period is $625,000. Calculate the amount by which overhead is overapplied or underapplied. A. $25,000 underapplied B. $125,000 overapplied C. $25,000 overapplied D. $125,500 undersupplied

D. $125,500 undersupplied Manufacturing overhead = Actual overhead cost - Manufacturing overhead applied = $625,000 - $500,000 = $125,000 underapplied

True or false: Period costs flow from Finished Goods to Cost of Goods Sold.

False Period costs are recorded as expenses as incurred and do not flow through the inventory accounts.

Manufacturing overhead is applied with a debit to ______. A. Manufacturing overhead B. Work in process C. Cost of goods sold D. Accounts payable

B. Work in process

The journal entry to record the purchase of materials debits ______. A. accounts payable B. manufacturing overhead C. work in process D. raw materials

D. raw materials

______ ______ ______ consists of units of product that are only partially complete and will require further work before they are ready for sale to the customer. (Enter only one word per blank.)

Work in process

When preparing financial statements in a job-order costing system, finished goods flow first to the ______ ______ and then to the _______ _______. (Enter only one word per blank.)

balance sheet; income statement

Manufacturing overhead applied to production is always recorded on the ______ side of the manufacturing overhead account and the ______ side is always used to record the actual manufacturing costs incurred. (Enter either debit or credit in each blank.)

credit; debit

What methods can be used to dispose of underapplied or overapplied manufacturing overhead? A. Allocate it to Raw materials, Work in process, and Finished goods. B. Closed proportionally to Work in process, Finished goods, and Cost of goods sold. C. Close it to Work in process. D. Close it to Finished goods. E. Close it to Cost of goods sold.

A. Close it to Cost of goods sold. C. Closed proportionally to Work in process, Finished goods, and Cost of goods sold.

What methods can be used to dispose of underapplied or overapplied manufacturing overhead? A. Close it to Cost of goods sold. B. Close it to Work in process. C. Closed proportionally to Work in process, Finished goods, and Cost of goods sold. D. Close it to Finished goods. E. Allocate it to Raw materials, Work in process, and Finished goods.

A. Close it to Cost of goods sold. C. Closed proportionally to Work in process, Finished goods, and Cost of goods sold.

When jobs are sold their costs are transferred out of ______. A. Work in Process B. Cost of Goods Manufactured C. Cost of Goods Sold D. Finished Goods

D. Finished Goods

The journal entry to record a completed job debits ______. A. Manufacturing overhead B. Cost of goods sold C. Finished goods D. Work in process

C. Finished goods

The cost of goods ______ is the sum of all amounts transferred from Work in process to Finished goods during a period. (Enter only one word per blank.)

manufactured, completed, produced, or finished

Given the following, calculate the total manufacturing costs added to production: Direct materials used in production: $40,000; Direct labor: $100,000; Manufacturing overhead applied to work in process: $120,000; Beginning work-in-process inventory: $30,000; Ending work-in-process inventory: $12,000 A. $242,000 B. $260,000 C. $278,000 D. $302,000

B. $260,000 Total manufacturing costs added to production = Direct materials used in production + Direct labor + Manufacturing overhead applied to work in process = $40,000 + $100,000 + $120,000 = $260,000

Underapplied or overapplied manufacturing overhead can be disposed of by closing it to ______. A. Cost of goods sold only B. Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold C. Finished goods only D. Finished goods or allocating it to Work in process, Finished goods, and Raw materials

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

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 ______ A. Cost of goods sold $34,000 and credits Work in process $26,000 B. Finished goods $34,000 and credits Work in process $34,000 C. Finished goods $34,000 and credits Work in process $26,000 and Manufacturing overhead $12,000 D. Finished goods $26,000 and credits Work in process $26,000

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

The journal entry to record labor costs credits ______. A. Work in process B. Salaries and wages payable C. Manufacturing overhead D. Direct labor

B. Salaries and wages payable

The Manufacturing Overhead account is debited when ______. A. goods are completed B. actual overhead costs are incurred C. overhead is applied to Work in Process

B. actual overhead costs are incurred

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______. A. when jobs are completed B. as they are incurred C. as the allocation base is used on a job D. at the end of the period

B. as they are incurred

Finished goods ______. A. consists of goods that require additional processing before being sold B. consists of completed, unsold goods C. is the same as cost of goods manufactured D. consists of goods that have been sold to customers during the period

B. consists of completed, unsold goods

The amount transferred from Work in Process to Finished Goods is ______. A. ending inventory B. cost of goods manufactured C. cost of goods sold

B. cost of goods manufactured

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

B. credit Debiting would be appropriate if overhead were overapplied.

The difference between the entries to record depreciation on office equipment and depreciation on factory equipment is that one: A. debits Accumulated depreciation, while the other debits Manufacturing overhead. B. debits Depreciation expense, while the other debits Manufacturing overhead. C. credits Accumulated depreciation, while the other credits Manufacturing overhead. D. debits Accumulated depreciation, while the other debits Depreciation expense.

B. debits Depreciation expense, while the other debits Manufacturing overhead.

A journal entry that debits Manufacturing overhead and credits Accumulated depreciation records ______. A. the purchase of indirect materials B. depreciation on factory equipment C. depreciation on office equipment D. the incurrence of general factory overhead costs

B. depreciation on factory equipment

A journal entry that includes Manufacturing overhead and Cost of goods sold is recorded to ______. A. apply manufacturing overhead to jobs B. dispose of underapplied or overapplied overhead C. recognize the sale of goods D. recognize the completion of goods

B. dispose of underapplied or overapplied overhead

The cost of goods manufactured for a period is the ______. A. average value of the Work in process account B. sum of all amounts transferred between the Work in process account and the Finished goods account during that period C. sum of all jobs in Finished goods account at the end of the period D. value of all jobs transferred from Finished goods to Cost of goods sold

B. sum of all amounts transferred between the Work in process account and the Finished goods account during that period

Given the following, calculate the total manufacturing costs added to production: Direct materials cost used in production: $62,000; Direct labor cost: $78,000; Manufacturing overhead applied to work in process: $46,000; Actual manufacturing overhead: $51,000; Beginning work-in-process inventory: $32,000; Ending work-in-process inventory: $35,000 A. $191,000 B. $183,000 C. $188,000 D. $186,000

D. $186,000 Total manufacturing costs added to production = Direct materials cost used in production + Direct labor cost + Manufacturing overhead applied to work in process = $62,000 + $78,000 + $46,000 = $186,000

The journal entry to record depreciation on factory equipment debits ______. A. Manufacturing overhead and credits Depreciation expense B. Work in process and credits Depreciation expense C. Work in process and credits Accumulated depreciation D. Manufacturing overhead and credits Accumulated depreciation

D. Manufacturing overhead and credits Accumulated depreciation

Overhead is overapplied if: A. actual overhead is more than applied overhead. B. cost of goods manufactured is less than cost of goods sold. C. adjusted cost of goods sold is more than unadjusted cost of goods sold. D. actual overhead is less than applied overhead.

D. actual overhead is less than applied overhead.