Ch 3 Job Order Costing: Cost Flows and External Reporting

Given the following, calculate the cost of goods available for sale: cost of goods manufactured of $234000, beginning finished goods inventory of $18000, and ending finished goods inventory of $24000

$252000

Martin Industries had unadjusted cost of goods sold of $450000. Overhead was underapplied by $30000. Adjusted cost of goods sold is

$480000

Luver Corporation's Gross margin is $100000, cost of goods sold equals $70000, and selling and administrative expenses total $45000. Net operating income is

$55000

overapplied overhead

a credit balance in the manufacturing overhead account that occurs when the amount of overhead cost applied to Work in Process exceeds the amount of overhead cost actually incurred during a period

underapplied overhead

a debit balance in the manufacturing overhead account that occurs when the amount of overhead cost actually incurred exceeds the amount of overhead cost applied to Work in Process during a period

Overhead is overapplied if

actual overhead is less than applied overhead

equation for underapplied (overapplied) overhead

actual total manufacturing overhead cost - total manufacturing overhead applied

Actual manufacturing overhead costs are recorded in the manufacturing overhead account

as they are incurred

When preparing financial statements in a job-order costing system, finished goods flow first to the _______ and then to the _______.

balance sheet; income statement

unadjusted cost of goods sold equation

beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory

raw materials equation

beginning raw materials inventory + purchases of raw materials - ending raw materials inventory

schedule of cost of goods sold

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that 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.

The simpler method of closing out the balance of manufacturing overhead is

closing it out to cost of goods sold

schedule of cost of goods manufactured

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods.

The amount transferred from Work in Process to Finished Goods is

cost of goods manufactured

Which is used to calculate cost of goods available for sale on the schedule of cost of goods sold?

cost of goods manufactured and beginning finished goods inventory

Milton Corporation sold goods costing $50000 for $75000. Journal entries to be made could include entries debiting

cost of goods sold for $50000 and accounts receivable for $75000

Gross margin is calculated by subtracting _______ from ______.

cost of goods sold; sales

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

credit

The ________ side of the manufacturing overhead account is always used to record manufacturing overhead applied to production and the ______ side is always used to record the actual manufacturing costs incurred.

credit; debit

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

The value of work in process is equal to

the cost of all unfinished jobs

In a normal costing system, the manufacturing overhead account is debited for

the cost of indirect materials and actual overhead costs

cost of goods manufactured

the manufacturing costs associated with units of product that were finished during the period

cost of goods manufactured equation

total manufacturing costs + beginning work in process inventory - ending work in process inventory

total manufacturing costs equation

direct materials + direct labor + manufacturing overhead applied to work in process

In a normal costing system, work in process is debited for

direct materials, direct labor, and manufacturing overhead applied

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

A predetermined overhead rate is calculated by dividing the ________ total manufacturing overhead by the ________ total amount of the allocation base.

estimated; estimated

A journal entry that debits manufacturing overhead and credits prepaid insurance records the:

expiration of prepaid factory insurance

Which costs are classified as manufacturing overhead?

factory rent, factory utilities, and factory maintenance wages

Completed units that have not yet been sold are found in _______ _______ inventory.

finished goods

When jobs are sold their costs are transferred out of

finished goods

Himber Inc just completed a job that costs $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

When the allocation method is used to close out the underapplied or overapplied balance remaining in manufacturing overhead, which accounts are affected?

finished goods, cost of goods sold, and work in process

A journal entry that debits advertising expense and credits cash would record the incurrence of a

selling cost

When labor costs are incurred, __________ are added directly to the work in process account.

only direct labor costs

A credit balance in the manufacturing overhead account means the overhead was

overapplied

Selling and administrative costs incurred are treated as

period expenses

equation for total manufacturing overhead applied

predetermined overhead rate x actual total amount of the allocation base incurred during the period

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

raw materials

The journal entry to record the purchase of materials debits

raw materials

A journal entry that debits manufacturing overhead and credits property taxes payable records the

recognition of accrued property taxes

A journal entry that debits manufacturing overhead and credits accounts payable could be made to record

rent expense on factory equipment; factory utilities expense

Job 4260 consisted of 1000 units at a total cost of $200000. The cost transferred to Cost of Goods Sold for the sale of 600 of the units is

$120,000

Applied manufacturing overhead is entered on what side of the manufacturing overhead account?

always the credit side

A journal entry that debits work in process and credits manufacturing overhead is recording the

application of manufacturing overhead costs

Which of the following appears on job cost sheets and in the work in process account?

applied manufacturing overhead

Actual manufacturing overhead was $50,000, while overhead applied to jobs was $45,000. The entry to dispose of underapplied or overapplied overhead...

credits manufacturing overhead $5,000

The difference between the entries to record depreciation on office equipment and depreciation on factory equipment is that one

debits depreciation expense, while the other debits manufacturing overhead

A journal entry that debits manufacturing overhead and credits accumulated depreciation records

depreciation on factory equipment

A journal entry that debits depreciation expense and credits accumulated depreciation records

depreciation on office equipment

Underapplied or overapplied overhead is the

difference between overhead applied to work in process and actual overhead

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 account payable would not be used to record

direct labor costs

Manufacturing overhead costs include

indirect labor and materials, factory insurance, the factory supervisor's salary

Labor costs charged to manufacturing overhead represent

indirect labor costs

The journal entry to record a cash payment of $400 for insurance on administrative office equipment debits _________ and credits cash.

insurance expense

The cost of goods _______ is the sum of all amounts transferred from work in process to finished goods during a period.

manufactured

If a company incurs $2000 of factory rent, $1000 of factory utilities, and $5000 of miscellaneous factory costs, the journal entry to record these transactions would be debit to

manufacturing overhead $8000 and credit accounts payable $8000

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

manufacturing overhead and credits property taxes payable

work in process

units of product that are only partially complete and will require further work before they are ready for sale to the customer

finished goods

units of product that have been completed but not yet sold to customers

Costs of partially completed units are accounted for in

work in process

The journal entry to record the issuance of direct materials into production debits

work in process

When a job is completed, the job costs are transferred out of

work in process

Which account is debited to record direct labor costs?

work in process

The journal entry to record $10,000 in manufacturing overhead applied to Job #40 debits

work in process and credits manufacturing overhead