Chapter 3 and 5 Managerial

Manufacturing overhead:

-are indirect costs -consists of only manufacturing costs -can include materials and labor

If overapplied overhead is closed out to Cost of goods sold, will Cost of goods sold be increased or decreased?

Decreased

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

Finished goods

An income statement constructed under the ________________ approach allows users to easily solve for the total sales , total costs, and profit for any sales volume.

contribution margin

The journal entry to record shipping goods to customers includes a debit to:

cost of goods sold

Place the following steps needed to compute the predetermined overhead rate in the order given in the textbook. A. Estimate the total manufacturing overhead for the upcoming period. B. Estimate the total number of the allocation base. C. Compute the predetermined overhead rate D. Estimate the total fixed manufacturing overhead and variable overhead per unit for the upcoming period.

1. B 2. D 3. A 4. C

Which of the following are assumptions of cost-volume-profit analysis? A. Fixed costs per unit stay the same within the relevant range B. Variable costs per unit increase over the relevant range of activity C. Costs are linear and can be accurately divided into variable and fixed elements D. In multi product companies, the same mix is constant

C and D

Which of the following items are needed to solve for net operating income at any projected sales volume above the break-even point? A. Total contribution margin B. Number of units produced C. Contribution margin per unit D. Projected unit sales E. Total variable expenses F. Break-even unit sales

C, D, and F

Which tool can be used to easily calculate the change in profit resulting from a change in sales price, sales volume variable costs, or fixed costs?

CVP analysis

To calculate profit, multiple the ______________ per unit by sales volume and then subtract total fixed cost.

Contribution margin

What accounts are debited when goods are sold on account?

Cost of goods sold and Accounts receivable

Which of the following would not be a good allocation base for manufacturing overhead? A. Units of product B. Direct labor hours C. Machine hours D. Accounting hours

D

CVP analysis focuses on how profits are affected by: A. Sales volume B. Mix of products sold C. Total fixed costs D. Break-even point E. Selling price F. Unit variable cost

A, B, C, E, and F

CVP analysis allows companies to easily identify the change in profit due to changes in: A. volume B. selling price C. costs D. management E. location

A, B, and C

The contribution margin income statement allows users to easily judge the impact of a change in _______________ on profit. A. Cost B. Selling price C. Volume D. Organizational structure

A, B, and C

To estimate the effect on profits for a planned increase in sales, multiply the increase in units sold by the unit ____________________.

Contribution margin

An accurate calculation of the cost of an order is important to a company because they need to ensure that the sales _______ of the order exceeds the cost of the order.

Price

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

Raw Materials

Which of the following is needed to calculate profit? A. Unit contribution margin, unit sales, and total fixed costs B. Unit contribution margin and total fixed costs C. Contribution margin ratio, unit sales, and total fixed costs D. Contribution margin ratio and total fixed costs

A

Labor costs that are easily traced to a job are called _________________ labor costs.

Direct

What kinds of costs are assigned to units of product in absorption costing?

Variable manufacturing costs and fixed manufacturing costs

Units that are only partially complete are in ______________________________.

Work in Progress

The United States requires _________________ costing for tax reports.

absorption

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

balance sheet; income statement

The journal entry to record depreciation on office equipment would:

debit Depreciation expense and credit Accumulated depreciation

Net operating income can be estimated for any sales volume above the break-even point by _________________ the number of units sold above the break-even point by the unit contribution margin

multiplying

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

work in progress

A job cost sheet contains:

-labor costs charged to the job -materials costs charged to the job -manufacturing overhead costs charged to the job

Solving for the sales level needed to attain a target profit of $______ is the same process as solving for the sales level needed to break-even.

0

Place the following steps in requisitioning and issuing materials in order. A. The storeroom clerk issues materials. B. A production order is issued. C. The production department prepares a materials requisition form. D. The materials requisition form is presented to the storeroom clerk

1. B 2. C 3. D 4. A

Which of the following costs can be directly traced to a particular product? A. Direct materials B. Manufacturing overhead C. Direct labor

A and C

A measure such as direct-labors or machine hours used to assign overhead costs to products and services is called a cost driver or a(n) ________________________.

Allocation base

Assuming all else remains the same, which of the following would increase profits according to the CVP analysis model? A. A decrease in unit selling price B. A decrease in the unit variable cost C. An increase in total fixed cost D. A change in sales mix

B

Categories of manufacturing costs include:

Manufacturing overhead, Direct materials, and Direct labor

The manufacturing overhead account contains:

Many different kinds of indirect costs

The amount by which sales can drop before losses are incurred is the ______________ of _______________.

Margin; safety

A measure of how sensitive net operating income is to a given percentage change in sales dollars is know as ____________________________________.

Operating leverage

What account is credited in the journal entry to record issuing materials to be used in production?

Raw materials

Variable expenses/Sales is the calculation of the __________________ ratio.

Variable expense

Which account(s) are debited in the journal entry to record manufacturing labor costs?

Work in progress and Manufacturing overhead

A cost driver is...

a factor that causes overhead costs to occur

The journal entry the purchase of materials credits:

accounts payable

The journal entry to record the purchase of materials credits:

accounts payable

Manufacturing overhead consists of:

all manufacturing costs other than direct labor and direct materials

The process used to assign overhead costs to products is called overhead __________________.

allocation

Manufacturing overhead costs:

are indirect costs and consist of many different items

Raw materials inventory is originally recorded in a(n) ____________ account.

asset

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find:

overhead applied to the job

A debit in Manufacturing overhead means overhead was ________________.

underapplied

Profit = (selling price per unit * quantity sold) - (variable expense per ____ * quantity sold) - _________ expenses.

unit; fixed

To calculate the impact on net income using the contribution margin ratio, ______________ the change in _________ by the contribution margin ratio.

Multiply; sales

Place the following steps needed to compute the predetermined overhead rate in the order given in the textbook. A. Estimate the total manufacturing overhead for the upcoming period B. Compute the predetermined overhead rate C. Estimate the total amount of the allocation base D. Estimate the total fixed manufacturing overhead and variable overhead per unit for the upcoming period

1. C 2. D 3. A 4. B

A journal entry that debits Manufacturing overhead and credits Accounts payable could record which of the following transactions? A. Rent expense on factory equipment B. Depreciation on factory equipment C. Factory utilities expense D. The purchase of indirect materials

A and C

Which of the following costs would be classified as manufacturing overhead? A. The factory supervisor's salary B. The CEO's salary C. Factory insurance D. Direct materials E. Office equipment depreciation

A and C

Terry's Trees has reached its break-even point and has calculated its contribution margin ratio to be 70%. Each $1 increase in sales will have which of the following effects? A. Net operating income will increase by $0.70 B. Net operating income will increase by $0.30 C. Total contribution margin will increase by $0.30 D. Total contribution margin will increase by $0.70

A and D

Which of the following costs are charged directly to the income statement? A. Administrative costs B. Manufacturing overhead C. Direct labor D. Direct materials E. Selling costs

A and E

Which of the following costs would be classified as manufacturing overhead? A. Factory rent B. Maintenance wages C. Factory utilities D. Marketing costs E. Assembly wages

A, B, C

Which of the following items are needed to solve for net operating income at any projected sales volume above break-even point? A. Contribution margin per unit B. Total contribution margin C. Projected unit sales D. Break-even unit sales E. Total variable expenses F. Number of units produced

A, C, and D

Match each event in the process of accounting for manufacturing overhead with the appropriate entry. A. Actual overhead is incurred B. A job is completed C. The period ends 1. Manufacturing overhead is credited 2. Manufacturing overhead is closed 3. Manufacturing overhead is debited

A-3 B-1 C-2

Which of the following is not one of the categories into which manufacturing costs are generally classified? A. Direct labor B. Selling and administrative expenses C. Manufacturing overhead D. Direct materials

B

Which of the following costs would be classified as manufacturing overhead? A. Marketing costs B. Factory rent C. Assembly wages D. Factory utilities E. Maintenance wages

B, D, and E

What kinds of manufacturing costs are assigned to units of product in absorption costing?

Both variable and fixed manufacturing costs

Which of the following is an example of an indirect labor cost? A. Sales B. Assembly C. Maintenance

C

Which of the following is the equation to solve for profit in terms of sales volume? A. Profit = Gross margin - Fixed expense B. Profit = (Selling price per unit x Unit sales) - Fixed expense C. Profit = (Unit contribution margin x Unit sales) - Fixed expense D. Profit = (Selling price per unit x Unit sales) - (Variable cost per unit x Unit sales)

C

What methods can be used to dispose of underapplied or overapplied manufacturing overhead? A. Closing it out to Work in process B. Allocating it among Raw materials, Work in progress, and Finished goods. C. Closing it out to Cost of Goods Sold D. Allocating it among Work in process, Finished goods, and Cost of Goods Sold E. Closing it out to Finished goods

C and D