Managerial Accounting - Chapter 2

Which of the following IS a manufacturing cost category?

- Manufacturing overhead - Direct Labor - Direct Materials

A journal entry debiting Salaries expense and crediting Salaries and wages payable could record ______.

Administrative salaries

The difference between overhead applied to jobs and actual overhead is ______.

Overapplied or underapplied overhead

Nonmanufacturing costs incurred during a period are treated as ______.

Period expenses

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

Raw Materials Inventory

When materials are purchased they are first recorded in the ______ account.

Raw Materials Inventory

A company purchases $40,000 of direct materials and $30,000 of indirect materials on account. The journal entry to record this transaction is debit ______.

Raw Materials Inventory $70,000 and credit Accounts Payable $70,000

All materials that will be used in future production are first recorded in the ______ _______ Inventory account.

Raw materials

What IS NOT a manufacturing cost category?

Selling & administrative costs

The balance of work in process inventory may be calculated by ______.

Summing the costs of all jobs in process

Nonmanufacturing costs increase ______.

The Selling, General & Administrative expense accounts

When actual manufacturing overhead costs are incurred, ______.

The manufacturing overhead cost is debited

Overhead costs are debited to Work in Process when ______.

They are applied to jobs

A direct labor _____ ______ is a document used to record how long workers spend on each job and task.

Time ticket

Raw Materials Inventory represents the cost of materials not yet used in production.

True.

When materials are purchased they are recorded in the Raw Materials Inventory account.

True.

The major difference between job order and process costing is ______.

Whether the products produced are similar or different

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

Work in Process

When a job is completed, which account is credited?

Work in process Inventory

Costs of partially completed units are accounted for in ______.

Work in process inventory

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. The purchases included $4,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

$16,000 Reason: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($5,000 + $27,000 - $12,000 - $4,000 = $16,000)

Direct materials used for the period cost $66,000; Direct labor cost $80,000; Applied overhead was $60,000; Actual overhead was $50,000; Beginning work in process inventory was $27,000; and Ending work in process inventory was $25,000. Calculate the cost of goods manufactured.

$208,000 Reason: $27,000 + ($66,000 + $80,000 + $60,000) - $25,000 = $208,000

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

Jonas Corporation used $20,000 of direct materials, incurred $40,000 of direct labor cost, and applied $30,000 of manufacturing overhead to jobs this period. No jobs were incomplete at the beginning of the period, but at the end of the period, jobs with a total cost of $25,000 were unfinished. What was the cost of goods manufactured for this period?

$65,000 Reason: ($20,000 + $40,000 + $30,000) + $0 - $25,000 = $65,000

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. The purchases included $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

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

Labor costs ______.

- are recorded in basically the same way as material costs - may be direct or indirect

Materials requisition forms are used to ______.

- control the flow of materials from inventory into production - record the cost of raw materials in the accounting system

When materials are requisitioned into production, ______.

- direct materials are recorded on the job cost sheet - direct materials are recorded in Work in Process

Process costing ______.

- is used for mass production - is used for homogeneous products

The first step in assigning manufacturing overhead is to determine the ______ _______ or cost driver.

Allocation base

The journal entry to record general selling and administrative costs is debit ______.

An expense account and credit Cash or a payable

Applied manufacturing overhead costs are credited to the Manufacturing Overhead account ______.

As the costs are applied to jobs

The basic formula for process costing is ______.

Average unit cost = total manufacturing cost ÷ total units produced

Predetermined overhead rates are ______.

Based on some secondary allocation measure

When is the predetermined overhead rate calculated?

Before the period begins

Because service firms tend to be labor-intensive, the primary driver used to assign cost is ______ ______.

Billable hours

The most common driver used to assign costs in a service firm is ______.

Billable hours

A journal entry that debits Finished Goods Inventory and credits Work in Process records the ______.

Completion of a job

Job-order costing would most likely be used in a(n) ______.

Construction company

The total cost transferred out of Work in Process inventory into Finished Goods inventory is ______.

Cost of goods manufactured

When overhead is underapplied, a _____ must be made to the Manufacturing overhead account to eliminate the balance.

Credit

When overhead is overapplied, a ______ entry is required to dispose of the balance in the Manufacturing Overhead account.

Debit

Underapplied or overapplied overhead is the ______.

Difference between overhead applied to jobs and actual overhead

The document used to record the time workers spend on each job and task is a ______.

Direct labor time ticket

T/F: Job-order costing can only be used in manufacturing firms.

False

T/F: The cost of each individual unit is tracked to products under both job order and process costing.

False

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

Finished Goods

When a job is completed, which account is debited?

Finished Goods Inventory

Cost of goods ______ is the total cost of jobs completed during the period.

Manufactured

Actual manufacturing overhead consists of all ______.

Manufacturing costs other than direct labor and direct materials

Factory labor charges that cannot be easily traced to a job are treated as ______.

Manufacturing overhead

What document specifies the type and quantity of direct materials used on a specific job?

Materials requisition form

An allocation base is a(n) ______.

Measure of activity used to assign overhead costs to products and services

Categories of manufacturing costs include ______.

manufacturing overhead, direct materials, direct labor