Chapter 3

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

Always the debit side

Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is ______.

$480,000

The journal entry to record expired prepaid insurance on factory equipment is debit ______.

Manufacturing Overhead and credit Prepaid Insurance

George Corporation recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits ______.

Manufacturing overhead $1,000 and credits Property taxes payable $1,000

The journal entry to record selling and administrative salaries debits ______.

an expense account and credits Cash or a liability

To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract ______.

ending raw materials inventory and Indirect materials used

The cost of goods ______ is the sum of all amounts transferred from Work in process to Finished goods during a period.

finished

Manufacturing overhead consists of all ______.

manufacturing costs other than direct labor and direct materials

Which of the following is a clearing account?

manufacturing overhead

Gross margin minus selling and administrative expenses equals ______.

net operating income

Applied manufacturing overhead will most likely ______ actual manufacturing overhead.

not equal

Selling and administrative costs incurred are treated as ______.

period expenses

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

raw materials

A journal entry that debits Manufacturing overhead and credits Property taxes payable records the ______.

recognition of accrued property taxes

Net operating income is calculated by subtracting ______ from ______.

selling and administrative expenses; gross margin

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

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

The cost of goods manufactured for a period is the ______.

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

A debit balance in Manufacturing overhead means overhead was

underapplied

A debit balance in Manufacturing overhead means overhead was _____

underapplied

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

application of manufacturing overhead costs

To calculate total manufacturing costs, add direct materials, direct labor and ______.

applied manufacturing overhead

If overapplied overhead is closed out to Cost of goods sold, the Cost of goods sold account will be ______.

decreased

Work in Process consists of ______.

-actual direct labor cost -actual direct materials cost -applied manufacturing overhead

Manufacturing overhead costs include _____

-factory rent -factory maintenance wages -factory utilities

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

-rent expense on factory equipment -factory utilities expense

Manufacturing overhead costs include ______.

-the factory supervisor's salary -factory insurance

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

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

accounts payable

The Manufacturing Overhead account is debited when ______.

actual overhead costs are incurred

Overhead is overapplied if ______.

actual overhead is less than applied overhead

Overhead is underapplied if ______.

actual overhead is more than applied overhead

To calculate the adjusted cost of goods sold ______.

add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold

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

dispose of underapplied or overapplied overhead

A journal entry that debits Manufacturing overhead and credits Prepaid insurance records the ______.

expiration of prepaid factory insurance

Cost of goods manufactured ______.

includes manufacturing costs of goods finished during the period

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

indirect

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

overapplied or underapplied overhead

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.

produced

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

Costs of partially completed units are accounted for in _____

work in process

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

work in process

The journal entry to record a completed job credits ______.

Work in process

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

only direct

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

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 ______

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

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

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

$186,000

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

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

$260,000

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

What methods can be used to dispose of underapplied or overapplied manufacturing overhead?

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

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.

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.

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

Cost of goods sold and Manufacturing overhead

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

Finished Goods

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

Finished goods

The journal entry to record a completed job debits ______.

Finished goods

If a company incurs $2,000 of factory rent, $1,000 of factory utilities, and $5,000 of miscellaneous factory costs, the journal entry to record these transactions would be to debit ______.

Manufacturing overhead $8,000 and credit Accounts payable $8,000

The simpler method of closing out the balance of Manufacturing overhead is ______.

closing it out to Cost of goods sold

Finished goods ______.

consists of completed, unsold goods

The amount transferred from Work in Process to Finished Goods is ______.

cost of goods manufactured

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

credit

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

Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited

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

The journal entry to record depreciation on office equipment debits ______

Depreciation expense and credits Accumulated depreciation

The journal entry to record depreciation on office equipment debits ______.

Depreciation expense and credits Accumulated depreciation

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead

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

Nonmanufacturing costs

The journal entry to record issuing materials to be used in production credits ______.

Raw materials

Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels.

True

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.

-credit -debit

Actual overhead costs may not be proportional to the actual amount of the allocation base used because ______.

-overhead spending may not be under control -many actual overhead costs are fixed

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

Always the credit side

The journal entry to record issuing both direct and indirect materials into production debits ______.

Work in process and Manufacturing overhead

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

Underapplied or overapplied overhead is the ______.

difference between overhead applied to work in process and actual overhead

Unadjusted cost of goods sold is calculated by subtracting:

ending finished goods inventory from goods available for sale.

A credit balance in the Manufacturing Overhead account of Y dollars means that the overhead is _____ by of Y dollars.

overapplied

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

purchase of materials