Managerial Accounting Ch. 3

The journal entry to record shipping goods to customers includes a DEBIT to: A. Work in Process B. Finished Goods C. Cost of Goods Sold

C. Cost of goods sold

An activity is defined as any event that causes the ____ of manufacturing overhead resources

Consumption

_____ Goods inventory consists of completed units that have not yet been sold

Finished Goods

_______ ________ is defined as units of product that have been completed but not yet sold to customers

Finished Goods

The schedule of costs of goods sold summarizes costs that remain in ________ goods inventory and that have been transferred to Cost of Goods Sold.

Finished Goods inventory

Sales minus Cost of Goods Sold gives you your _____ margin

Gross Margin

To compute the total Direct Materials in the Schedule of Costs of Goods Manufactured: Subtract Raw Materials Used in Production from ______ Materials

Indirect

The Job _____ _______ records the materials, labor, and manufacturing overhead costs charged to a job. Generated after a production order has been issued.

Job Cost Sheet

Over or under applied overhead is the difference between actual total overhead and total overhead ________

applied

To calculate DIRECT materials on the schedule of cost of goods MANUFACTURED, add purchases to _______ raw materials inventory, and subtract _______ raw materials and indirect materials used

beginning, ending

Overhead is under applied is actual overhead is MORE/LESS than applied overhead

more

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

This is a document that lists the TYPE & QUANTITY of each type of direct material that's required to complete one unit of product

Bill of Materials

Manufacturing Costs include what three things?

1. Direct Materials 2. Direct Labor 3. Manufacturing Overhead

Steps to compute Cost of Goods Manufactured 1. Total Manufacturing Costs 2. Add ______ Work in Process Inventory 3. Subtract ________ Work in Process Inventory 4. Cost of Goods Manufactured

2. Add Beginning WIP inventory 3. Subtract Ending WIP inventory

Raw materials are originally recorded in an asset account and reported on the _______ sheet

Balance sheet

An employee time ticket included $1,000 in direct labor costs. Which is debited and which is credited? Work in Process, Salaries payable

Work in Process is debited Salaries payable is credited

What is a costing method that includes all manufacturing costs, direct materials, direct labor, manufacturing overhead in the cost of a product

Absorption costing

Underapplied overhead costs are Debited where?

Manufacturing Overhead

The predetermined overhead rate is calculated by dividing the Estimated total _______ _______ cost by the Estimated total _______ ______

Manufacturing overhead cost by allocation base

Which of the following would NOT be a good allocation base for Manufacturing Overhead? A. Accounting Hours B. Machine Hours C. Direct labor Hours

A. Accounting Hours Not related to manufacturing

Which method is used by companies that make many different products each period? A. Job-Order Costing B. Process Costing

A. Job-Order Costing

Gross Margin minus selling and administrative expenses equals: A. Net operating income B. Cost of goods sold C. Cost of goods manufactured

A. Net operating income

When a job is completed, which account is credited? A. Work in Process B. Finished Goods C. Cost of Goods Sold

A. Work in Process

_______ Costing are all manufacturing costs are assigned to units of product that fully absorb manufacturing costs, this is the most common approach to product costing

Absorption Costing

_____ ________ Absorption Costing assigns all manufacturing overhead costs to products based on the activities to make those products

Activity Base

A measure of activity used to assign overhead costs to products and services and sometimes called a cost driver is a _______ ________

Allocation Base

To compute the amount of Under or Overapplied costs for the year, Multiply the Predetermined Overhead Rate by the ________

Allocation Base Overhead applied: POHR x Allocation Base then subtract from actual overhead cost

The _________ Base is a measure such as direct labor hours or machine hours used to assign overhead costs to products and services

Allocation base

Overhead is applied to products based on the: A. Actual overhead cost incurred B. Actual Allocation base incurred C. Estimated Allocation base incurred

B. Actual Allocation Base incurred

When a job is completed, its costs are transferred to.. A. Work in Process B. Finished Goods C. Cost of Goods Sold

B. Finished Goods

Sales minus cost of goods sold equals: A. Net Operating Income B. Gross Margin C. Contribution Margin

B. Gross Margin

Total manufacturing Cost is the sum of Direct Materials, Direct Labor, and _____________ A. Predetermined Overhead Rate B. Manufacturing Overhead Applied C. Unit Product Cost

B. Manufacturing Overhead Applied Total Manufacturing Cost= Direct Materials + Direct Labor + Manufacturing Overhead Applied

The difference between overhead applied to work in process and actual overhead is: A. Ending Work in process Inventory B. Over or Underapplied overhead C. Adjusted cost of goods sold

B. Over or under applied overhead

When calculating the cost of direct materials on the Schedule of Costs of Goods Manufactured, the cost of indirect materials must be: A. Added to raw materials used in production B. Subtracted from raw materials used in production

B. Subtracted

Unadjusted cost of goods sold is calculated by subtracting ending finished goods inventory from... A. costs of goods manufactured B. goods available for use

B. goods available for use

The predetermined overhead rate is computed BEFORE or AFTER the period begins

Before

Total Raw Materials available for use equals the sum of Raw Materials in _____ inventory plus the purchase of raw materials

Beginning Inventory

The journal entry for closing out costs of goods sold with over or under applied overhead includes a CREDIT to __________ and a debit to _______

Credit Cost of goods sold, debit Manufacturing Overhead

Over-applied overhead costs means there will be a... debit or credit balance?

Debit

When Raw materials are purchased on account, what is debited and what is credited in the journal entry?

Debit Raw Materials Credit Accounts Payable

A company just completed a job that cost X in direct materials, X in direct labor, and X in applied manufacturing overhead. What is debited and credited in the journal entry?

Debit: Finished goods Credit: Work in Process

Is actual manufacturing overhead DEBITED or CREDITED to the Manufacturing overhead account?

Debited

To compute the ESTIMATED Total Manufacturing Overhead Cost, you first multiply Estimated Variable Cost by ______ ______ ______, then add that to the Estimated total fixed cost.

Direct Labor Hours

To compute the Predetermined Overhead Rate you divide what by what?

Divide: Estimated Total Manufacturing Overhead cost by the total amount of the allocation base POHR= Est. Total MO/Allocation Base

True or False. Indirect labor costs are added to Work in Process

False, indirect labor costs are debited to Manufacturing Overhead

____ _____ Costing is used in situations where many different products with their own unique features are produced each period, or products are manufactured to order

Job Order Costing

To compute Manufacturing overhead Applied to Work in Process, you multiply ________ by quantity of direct labor hours

Predetermined Overhead Rate Manufacturing Overhead Applied= POHR x DLH

To compute Raw materials used in Production, you subtract __________ from Ending Raw Material Inventory

Raw materials available for use

What is an hour by hour summary of employees activities

Time Ticket

True or False. Sales, Cost of Goods Sold, minus Selling and administrative expenses gives you your Net Operating Income

True

If Direct materials are issued to production, _______ is debited and Raw materials are credited

Work in Process