Chapter 3

Selling and administrative costs incurred are treated as ______.

period expenses

Manufacturing overhead consists of all ______. Multiple choice question.

manufacturing costs other than direct labor and direct materials

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

raw materials

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

raw materials

Gross margin minus selling and administrative expenses equals ______.

net operating income

Net operating income is calculated by subtracting ______ from ______.

selling and administrative expenses; gross margin

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:Unadjusted cost of goods sold=$110,000 + $410,000 - $125,000=$395,000.

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

Always the credit side

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

Always the debit side

Which of the following would not be charged to the Manufacturing overhead account?

Nonmanufacturing costs

Manufacturing overhead is applied with a debit to ______.

Work in process

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

accounts payable

Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited

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

only direct

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

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

as they are incurred

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

indirect

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

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

True or false: The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next.

True

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

raw materials

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 1,000 units = 200,000 cost. 600 units = x $200,000/1000 x 600 = $120,000.

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 unadjusted cost of goods sold = $18,000+ 234,000 - 24,000 = 228,000.

Select all that apply: Which of the following statements are true?

-When materials are purchased they are recorded in the Raw materials inventory account. -Raw materials inventory represents the cost of materials not yet used in production.

Select all that apply: Manufacturing overhead costs include ______.

-factory utilities -factory maintenance wages -factory rent

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.

When a job is completed, its costs are transferred into ______.

Finished Goods

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.

Material Consumed = Direct Material purchased - Closing Stock + Opening Stock = (27000 - 4000) - 12000 + 5000 = $ 16000

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 underapplied if ______.

actual overhead is more than applied overhead

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 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

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

purchase of materials