Chapter 3 smart book - acct 201B

Cost of goods manufactured is the ______. sum of all jobs in Finished goods at the end of a period sum of all jobs transferred from Work in process to Finished goods average value of the Work in process account value of all jobs transferred from Finished goods to Cost of goods sold

sum of all jobs transferred from Work in process to Finished goods

Meep Industries had unadjusted cost of goods sold of $300,000. Overhead was overapplied by $20,000. Adjusted cost of goods sold is ______. $300,000 $280,000 $320,000

$280,000 Reason: $300,000 - $20,000 = $280,000.

A debit balance in Manufacturing overhead means overhead was ___________

Blank 1: underapplied

Labor costs charged to Manufacturing Overhead represent ______ labor costs. indirect direct both direct and indirect labor

indirect

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

overapplied or underapplied overhead

Units of product that are only partially complete are contained in _____________________ _____________________process inventory.

Blank 1: work Blank 2: In

The journal entry to record the purchase of materials credits ______. accounts payable work in process raw materials manufacturing overhead

accounts payable

Labor costs charged to Manufacturing Overhead represent ______ labor costs. indirect both direct and indirect labor direct

indirect

A journal entry that debits Work in process and Manufacturing overhead and credits Raw materials records the ______. purchase of materials application of manufacturing overhead completion of goods issuance of materials

issuance of materials

Manufacturing overhead consists of all ______. indirect costs manufacturing costs manufacturing costs other than direct labor and direct materials costs other than direct labor and direct materials

manufacturing costs other than direct labor and direct materials

Net operating income is calculated by subtracting ______ from ______. cost of goods sold; gross margin cost of goods sold; sales selling and administrative expenses; gross margin selling and administrative expenses; sales

selling and administrative expenses; gross margin

Cost of goods manufactured is the ______. sum of all jobs transferred from Work in process to Finished goods value of all jobs transferred from Finished goods to Cost of goods sold sum of all jobs in Finished goods at the end of a period average value of the Work in process account

sum of all jobs transferred from Work in process to Finished goods

When a job is completed, the job costs are transferred OUT OF ______. manufacturing overhead cost of goods sold work in process finished goods

work in process

A credit balance in the Manufacturing Overhead account means overhead was _____________________.

Blank 1: overapplied

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 Cost of goods sold $34,000 and credits Work in process $26,000 Finished goods $34,000 and credits Work in process $26,000 and Manufacturing overhead $12,000 Finished goods $26,000 and credits Work in process $26,000

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

The simpler method of closing out the balance of Manufacturing overhead is ______. allocating it among Work in process, Finished goods, and Cost of goods sold closing it out to Cost of goods sold closing it out to Finished goods closing it out to Work in process

closing it out to Cost of goods sold

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

decreased

A journal entry that debits Manufacturing overhead and credits Accounts payable would not be used to record ______. rent on factory equipment direct labor costs factory utilities costs miscellaneous factory overhead costs

direct labor costs

When labor costs are incurred, _________ labor costs are added directly to the Work in Process account. only indirect both direct and indirect only direct

only direct

Select all that apply Actual overhead costs may not be proportional to the actual amount of the allocation base used because ______. overhead spending may not be under control the predetermined rate might not be estimated correctly many actual overhead costs are fixed overhead costs are all variable costs

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

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.

Blank 1: manufactured or produced

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

Blank 1: manufactured, completed, produced, or finished

A credit balance in the Manufacturing Overhead account means overhead was _______________________.

Blank 1: overapplied

The schedule of cost of goods ______________ summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold.

Blank 1: sold

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

finished goods

Gross margin minus selling and administrative expenses equals ______. cost of goods sold net operating assets cost of goods manufactured net operating income

net operating income

The schedule of cost of goods _________________ summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold.

Blank 1: sold

A journal entry that debits Manufacturing overhead and credits Property taxes payable records the ______. payment of accrued property taxes recognition of accrued property taxes application of manufacturing overhead application of property taxes

recognition of accrued property taxes

When calculating the cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials is ______. subtracted from beginning Raw materials inventory added to beginning Raw materials inventory subtracted from raw materials used in production added to raw materials used in production

subtracted from raw materials used in production

Selling and administrative costs first appear on the ______. statement of owners' equity statement of cash flows income statement balance sheet

income statement

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

raw materials

Select all that apply Manufacturing overhead costs include ______. marketing costs factory utilities assembly worker wages factory rent factory maintenance wages

factory utilities factory rent factory maintenance wages

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

includes the manufacturing costs of goods finished during the period

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

depreciation on office equipment

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

applied manufacturing overhead

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

cost of goods manufactured

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.

Blank 1: credit Blank 2: debit

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. $258,000 $228,000 $252,000 $240,000

$228,000 Reason: $18,000 + $234,000 - $24,000 = $228,000

Select all that apply Work in Process consists of ______. applied direct materials cost actual manufacturing overhead applied direct labor cost actual direct labor cost applied manufacturing overhead actual direct materials cost

actual direct labor cost applied manufacturing overhead actual direct materials cost

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

actual overhead is more than applied overhead

Selling and administrative costs first appear on the ______. income statement statement of cash flows balance sheet statement of owners' equity

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.

Blank 1: credit Blank 2: debit

Completed units that have not yet been sold are found in ______________ ____________ inventory

Blank 1: Finished Blank 2: Goods

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

Blank 1: Raw Blank 2: Materials or Material

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 ______. $200,000 $120,000 $600,000 $80,000

$120,000 $200,000/1,000 x 600= $120,000

Select all that apply Manufacturing overhead costs include ______. the factory supervisor's salary the CEO's salary office equipment depreciation factory insurance direct materials

the factory supervisor's salary factory insurance

Given the following, calculate total manufacturing costs: Direct materials cost: $62,000 Direct labor cost: $78,000 Manufacturing overhead applied: $46,000 Actual manufacturing overhead: $51,000 Beginning Work in process inventory: $32,000 Ending Work in process inventory: $35,000 $188,000 $191,000 $186,000 $183,000

$186,000 Reason: Total manufacturing costs= $62,000 +$78,000 + $46,000 = $186,000. Adjust for work in process when calculating the cost of goods manufactured.

Meep Industries had unadjusted cost of goods sold of $300,000. Overhead was overapplied by $20,000. Adjusted cost of goods sold is ______. $320,000 $280,000 $300,000

$280,000 Reason: $300,000 - $20,000 = $280,000.

Select all that apply What methods can be used to dispose of underapplied or overapplied manufacturing overhead? Close it to Finished goods. Allocate it to Raw materials, Work in process, and Finished goods. Close it to Work in process. Allocate it to Work in process, Finished goods, and Cost of goods sold. Close it to Cost of goods sold.

Allocate it to Work in process, Finished goods, and Cost of goods sold. Close it 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 False

True

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

True

To calculate the adjusted cost of goods sold ______. subtract underapplied overhead from or add overapplied overhead to cost of goods manufactured subtract underapplied overhead from or add overapplied overhead to unadjusted cost of goods sold add underapplied overhead to or subtract overapplied overhead from cost of goods manufactured add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold

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

A journal entry debiting Salaries expense and crediting Salaries and wages payable could record ______. maintenance salaries assembly workers' wages administrative salaries factory supervisors' salaries

administrative salaries

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 $50,000 debits Manufacturing overhead $50,000 credits Manufacturing overhead $5,000 debits Manufacturing overhead $5,000

credits Manufacturing overhead $5,000 Reason: Underapplied overhead results in a $5,000 debit balance in the overhead account. To dispose of it, Manufacturing overhead is credited for $5,000.

Actual manufacturing overhead is ______ to the Manufacturing overhead account. credited debited

debited

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

debits Depreciation expense, while the other debits Manufacturing overhead

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. $425,000 $535,000 $520,000 $395,000

$395,000 Reason: $110,000 + $410,000 - $125,000 = $395,000

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. $520,000 $395,000 $425,000 $535,000

$395,000 Reason: $110,000 + $410,000 - $125,000 = $395,000

Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is ______. $450,000 $480,000 $420,000

$480,000 Reason: $450,000 + $30,000 = $480,000.

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. $70,000 $102,000 $130,000 $74,000

$74,000 Reason: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($27,000 + $100,000 - $28,000 - $25,000 = $74,000)

The accounts involved in closing underapplied or overapplied overhead using the simpler method are ______. Work in process and Manufacturing overhead Work in process and Finished goods Cost of goods sold and Manufacturing overhead Finished goods and Manufacturing overhead

Cost of goods sold and Manufacturing overhead

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

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

Unadjusted cost of goods sold is calculated by subtracting ______. beginning finished goods inventory from goods available for sale ending finished goods inventory from cost of goods manufactured beginning finished goods inventory from cost of goods manufactured ending finished goods inventory from goods available for sale

ending finished goods inventory from goods available for sale

Unadjusted cost of goods sold is calculated by subtracting ______. ending finished goods inventory from cost of goods manufactured ending finished goods inventory from goods available for sale beginning finished goods inventory from goods available for sale beginning finished goods inventory from cost of goods manufactured.

ending finished goods inventory from goods available for sale

When only a portion of the units involved in a job are sold, the ______. unsold units are transferred to another job cost is held in the finished goods account until all units in the job are sold unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold entire cost of the job is transferred from finished goods to cost of goods sold

unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold

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

as they are incurred

Which of the following would not be charged to the Manufacturing overhead account? Supervisor's salary Nonmanufacturing costs Factory rent Depreciation on factory equipment

Nonmanufacturing costs

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 Cost of goods sold only Finished goods or allocating it to Work in process, Finished goods, and Raw materials Finished goods only

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

The journal entry to record depreciation on office equipment debits ______. Depreciation expense and credits Accumulated depreciation Accumulated depreciation and credits Depreciation expense Manufacturing overhead and credits Accumulated depreciation Accumulated depreciation and credits Manufacturing overhead

Depreciation expense and credits Accumulated depreciation

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 Work in process $8,000 and credit Accounts payable $8,000 Accounts payable $8,000 and credit Work in process $8,000 Accounts payable $8,000 and credit Manufacturing overhead $8,000

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

Select all that apply Which of the following statements are true? Direct labor costs flow through the Raw materials inventory account. Raw materials inventory only includes the cost of direct materials. Raw materials inventory represents the cost of materials not yet used in production. 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. When materials are purchased they are recorded in the Raw materials inventory account.

The journal entry to record selling and administrative salaries debits ______. a liability account and credits an expense account an expense account and credits Cash or a liability a liability account and credits manufacturing overhead manufacturing overhead and credits cash or a liability

an expense account and credits Cash or a liability

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

actual overhead is more than applied overhead

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

actual overhead costs are incurred

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

as they are incurred

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

depreciation on office equipment

What side of the Manufacturing overhead account is actual manufacturing overhead entered on? Always the debit side The credit side, if actual is greater than applied The debit side, if actual is greater than applied Always the credit side

Always the debit side

Overhead is overapplied if ______. actual overhead is more than applied overhead actual overhead is less than applied overhead adjusted cost of goods sold is more than unadjusted cost of goods sold cost of goods manufactured is less than cost of goods sold

actual overhead is less than applied overhead

George Corporation recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits ______. Property taxes payable $1,000 and credits Work in process $1,000 Manufacturing overhead $1,000 and credits Property taxes payable $1,000 Work in process $1,000 and credits Property taxes payable $1,000 Property taxes payable $1,000 and credits Manufacturing overhead $1,000

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

The more accurate method of closing out the balance in Manufacturing overhead is ______. allocating it among Raw materials, Work in process, and Finished goods allocating it among Work in process, Finished goods, and Cost of goods sold closing it out to Cost of goods sold closing it out to Finished goods

allocating it among Work in process, Finished goods, and Cost of goods sold

A journal entry that debits Work in process and credits Manufacturing overhead is recording the ______. purchase of indirect materials incurrence of actual manufacturing overhead application of manufacturing overhead costs completion of a job

application of manufacturing overhead costs

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

applied manufacturing overhead

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

consists of completed, unsold goods

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

difference between overhead applied to work in process and actual overhead

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

Work in process

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 ______. Accounts payable $8,000 and credit Manufacturing overhead $8,000 Work in process $8,000 and credit Accounts payable $8,000 Accounts payable $8,000 and credit Work in process $8,000 Manufacturing overhead $8,000 and credit Accounts payable $8,000

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

The journal entry to record a completed job credits ______. Cost of goods sold Work in process Manufacturing overhead Finished goods

Work in process

A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction debits ______. Raw materials $70,000 and credit Work in process $70,000 Raw materials $70,000, credit Work in process $40,000 and credit Manufacturing overhead $30,000 Work in process $70,000 and credit Raw materials $70,000 Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000

Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000

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

includes the manufacturing costs of goods finished during the period