Managerial Accounting Learnsmart Chapter 1,2,

Find the Predetermined Overhead Rate per hour. Estimated MOH 300,000$ Estimated DL hours 2,500 Actual MOH 370,000$ Actual DL hours 3,000

$120 per DL hour = $300,000 ÷ 2,500 POHR = est.MOH ÷ est.Cost Driver

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 raw materials purchased includes $4,000 of indirect materials that were put into manufacturing overhead during the period. The cost of direct materials used during the period was:

$16,000

Gemini had sales of $50,000 unadjusted cost of goods sold of $23,000, overapplied manufacturing overhead of $3,000 and selling and administrative expenses of $25,000. Gross profit is:

$30,000

A company's calculated predetermined overhead rate is $90 per direct labor hour. If a job requires 4 direct labor hours:

$360 is assigned to the job to cover indirect costs

Given: cost of goods manufactured of $410,000; beginning finished goods inventory of $110,000 and ending finished goods inventory of $125,000, unadjusted cost of goods sold is:

$395,000

Which of the following items are included on a cost of goods manufactured report?

-Applied manufacturing overhead -Beginning and ending Work in Process Inventory -Beginning and ending Raw Materials Inventory

Which of the following statements is true?

-Classifying a cost a product or period can impact reported profitability -The distinction between product and period costs have more to do with financial accounting than managerial accounting

When comparing financial and managerial accounting, which of the following apply to managerial accounting?

-Emphasizes the future -Reports are prepared as needed -Reports at the decision making level.

Companies with strong ethical cultures:

-Have higher levels of customer satisfaction -Have higher productivity than those without such cultures.

Which of the following statements is true?

-Occupancy costs can be either direct or indirect -A regional sales manager's salary would be a direct cost of the regional office in which the sales manager works

Which of the following statements are true?

-Product costs "attach" to units of product as they are purchased for resale or produced -GAAP requires all manufacturing costs to be treated as product costs

Materials requisition forms are used for:

-Recording the cost of raw materials in the accounting system -Controlling the flow of materials into production

Fixed Costs:

-Remain constant in total -Become progressively smaller per unit as the level of activity increases.

Which of the following statements is true?

-Restaurants provide tangible products to consumers -Nonmanufacturing firms are increasing as a proportion of the marketplace

Nonmanufacturing costs include:

-Sales commissions -company president's salary

Which of the following statements is true?

-There are many different ways to categorize costs -Costs are treated differently in different situations

Which of the following statements are true?

-When materials are purchased they are recorded in the raw materials inventory -Raw materials traced to specific jobs are transferred to Work in process as direct materials

GAAP requires:

-all manufacturing costs be charged to products -that manufacturing costs be treated as assets until sold

What methods can be used to dispose of underapplied or overpplied manufacturing overhead (MOH)?

-allocate it to Work in Process, Finished Goods, and COGS. -make a direct adjustment to Cost of Goods Sold (COGS)

Cost objects include:

-anything for which cost data is desired -customers -activities.

Categories of manufacturing costs include:

-direct materials -direct labor -manufacturing over head

Manufacturing costs include:

-direct materials -direct labor -manufacturing overhead

When materials are requisitioned into production:

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

In an attempt to reduce the opportunities for error and fraud, SOX places additional responsibilities on:

-external auditors -boards of directors -all managers

Which of the following are examples of indirect labor costs?

-factory supervisor salary -factory security guard -Restaurant kitchen manager

The Sarbanes-Oxley (SOX) Act:

-has many implications for managers -was primarily aimed at renewing investor confidence.

When faced with an ethical dilemma:

-identify and evaluate the alternative courses of action -identify the parties that will be affected by the situation

Manufacturing overhead costs:

-include some materials and labor -are indirect costs -must be manufacturing costs

Process Costing:

-is used for homogeneous projects -is used for mass production

A job cost sheet contains:

-materials costs charged to the job -labor costs charged to the job -manufacturing overhead costs charged to the job

Labor costs:

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

Which of the following statements is true?

-most managers today are driven primarily by economic results -most public companies now issue corporate social responsibility reports -the triple bottom line is a component of sustainability accounting

A relevant cost:

-must pertain to the future -differ between alternatives -is a differential cost

A journal entry that debits Manufacturing overhead (MOH) and credits Accounts Payable could be made to record:

-rent expense on factory equipment -factory utilities expense

Decision-making:

-requires up-to-date information -uses feedback from other managerial processes

List the steps to assigning manufacturing overhead costs using a predetermined overhead rate in order

1. Determine the allocation base (cost driver) 2. Calculate the predetermined overhead rate 3.Assign manufacturing overhead to products

Put the steps from the schedule of Cost of Goods Manufactured (COGM) in the order in which they appear

1.Total Current Manufacturing Costs 2.Plus: Beginning Work-in-Process Inventory 3.Less: Ending Work-in-Process Inventory 4.(Equals) Cost of Goods Manufactured

The Sarbanes-Oxley Act increased the maximum jail sentence for fraudulent reporting to ____ years.

20

When are applied manufacturing overhead costs credited to the manufacturing overhead account?

As the costs are applied to jobs

Identifying a problem and taking corrective action is part of the ____ process.

Controlling

Direct labor and manufacturing overhead costs are known as ____ costs.

Conversion

Stiff fines and penalties are imposed by SOX in an effort to:

Counteract the incentive to commit fraud

In an automobile manufacturing plant, assembly-line workers' wages are____ ____ costs.

Direct Labor

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ____ cost.

Direct Material

Major inputs such as lumber and fixtures that can be easily traced to a specific job are called ____ ____.

Direct materials

____ refers to standards of conduct for judging right from wrong.

Ethics

____ ____ inventory consists of completed units that have not yet been sold.

Finished Goods

When a job is completed, which account is debited?

Finished goods inventory

____ costs remain constant in total and ____ costs remain constant per unit.

Fixed, Variable

Which of the following expenses are associated with running the overall business?

General & administrative

Decisions such as deciding how many employees to hire, salary schedules and training procedures are made during the ____ stage of the management process

Implementing

Hiring workers, dealing with suppliers and serving customers are all part of:

Implementing

Period costs are expensed:

In the period in which they occur

Salaries of managers and maintenance personnel are examples of ____ labor costs.

Indirect

Product costs are also called ____ costs.

Inventoriable

A(n) ____ cost will not influence a decision.

Irrelevant

A cost is treated as a direct cost when:

It is both possible and reasonable to trace it to a cost object

Chapter 2

Job Order Costing

What is the primary difference between managerial and financial accounting?

Managerial accounting provides information for internal use, and financial accounting provides information for external users

The Cost of Goods ____ is the sum of all amounts transferred from Work in Process to Finished Goods during a period.

Manufactured

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as:

Manufacturing overhead

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

Manufacturing overhead (MOH)

Controlling involves:

Measuring actual results

Wholesalers and retailers are both types of ____ companies.

Merchandising

Nonprofit organizations:

Must make decisions that use managerial accounting information

Gross Profit minus Selling and Administrative Expenses equals:

Net Operating Income

____ costs are expensed when incurred; ____ costs become part of inventory.

Period, Inventoriable

Tactics that management will use to achieve objectives is part of:

Planning

The first step in ____ is to establish goals or objectives and tactics to achieve them.

Planning

The continuous, ongoing cycle of management functions include:

Planning, Implementing, and Controlling

Direct materials, direct labor, and manufacturing overhead are all ____ costs.

Product

Which of the following statements is true?

Some firms operate as more than one type of organization- manufacturer, merchandiser, and/or service company

The definition of a(n) ____ cost is a cost that has already been incurred.

Sunk

Select the correct statement

The US economy is moving more towards the service industry

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

Time sheet

What accounts are debited in the journal entry to record issuing both direct and indirect materials to be used in production

Work in process and Manufacturing overhead

Which account is debited when manufacturing overhead is applied?

Work in process inventory

Chapter 1

a

The Work in Process account accumulates:

actual direct material, actual direct labor, and applied overhead costs

Overhead is underapplied if:

actual overhead is more than applied overhead

To calculate the Total Current Manufacturing Costs on the Cost of Goods Manufactured Report:

add direct materials, direct labor, and applied Manufacturing overhead (MOH)

A journal entry debiting salaries expenses and crediting salaries and wages payable could record:

administrative salary costs

Actual manufacturing overhead (MOH) consists of:

all manufacturing costs other than direct materials and direct labor.

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

allocation base

A journal entry that debits Work in Process inventory and credits Manufacturing overhead is recording the:

application of manufacturing overhead costs

A(n) ____ lays out plans in financial terms so that managers can determine the resources needed to achieve their objectives.

budget

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

completed (or manufactured)

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

construction company

When making a decision:

cost control is a critical concern for most organizations

When calculating a predetermined overhead rate (POHR), the ideal allocation base should be a ____ ____.

cost driver

What two accounts are involved when underapplied or overapplied overhead is disposed of?

cost of goods sold and manufacturing overhead

when goods are sold to customers:

costs are transferred from Finished Goods to Cost of Goods Sold.

What of the following may be credited in the journal entry to record the purchase of materials?

credit accounts payable (debit raw materials inventory)

A total of $10,000 in manufacturing overhead was applied to Job #40. The journal entry to record this would:

debit $10,000 to Work in process Inventory and credit $10,000 to manufacturing overhead.

A company incurred $10,000 in direct labor costs and $8,000 in indirect labor costs. The journal entry to record this transaction would:

debit Work in process inventory $10,000 and Manufacturing overhead $8,000 and credit Wages payable $18,000

If the Manufacturing overhead account has a ____ balance at the end of the period that indicates that overhead was underapplied and cost of goods sold must be ____.

debit, increased

Hands-on work that can be easily traced to a specific product is called ____ ____.

direct labor

A cost that can be reasonably traced to a specific cost object is a(n) ____ cost, whereas cost that cannot be traced or are not worth the effort are ____ costs.

direct, indirect

Costs are transferred from raw materials inventory to:

either Work in Process or Manufacturing overhead (MOH)

A Predetermined Overhead Rate (POHR) is calculated by dividing the ____ Total Manufacturing Overhead (MOH) by the ____ total cost driver

estimated;estimated

Managers need ___ information to budget and control spending.

financial

A journal entry debiting Cost of goods sold and crediting Finished Goods Inventory is made when

goods are sold

A journal entry that debits Work in Process and Manufacturing overhead and credits raw materials inventory records the

issuance of materials

The cost of goods ____ report summarizes the flow of manufacturing costs from raw materials to work in process inventory and into finished goods

manufactured

Apple and Harley Davidson are examples of ____ firms.

manufacturing

When classifying costs, ____ costs relate to making a product and ____ costs relate to delivering and selling a product.

manufacturing,nonmanufacturing

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

material requisition form

____ costing is a blend of job-order costing and process costing.

operations

A foregone benefit from choosing one path over another is a(n) ____ ____.

opportunity cost

If there is a credit balance in the Manufacturing overhead account after overhead have been applied to all jobs it means overhead was ____.

overapplied

The difference between overhead applied to jobs and actual overhead is:

overapplied or underapplied overhead

Materials are treated as ____ costs when it is not worth the cost or effort to trace them to specific products.

overhead

The predetermined overhead rate is multiplied by the actual cost driver usage for a job to find:

overhead applied to the job

Nonmanufacturing costs incurred during a period are treated as:

period expenses

Determining the key factors that are important to a company's success is a major component of the ____ function.

planning

Direct Materials and Direct Labor together are referred to as ____ costs.

prime

Managers must conduct a review of the company's internal control system and issue a report of their effectiveness. This was enacted as part of SOX in an attempt to:

reduce the opportunity for error and fraud

costs incurred to get the final product to the customer are known as ____ expenses.

selling

The job cost sheet serves as a ____ ____ to the overall work in process inventory account.

subsidiary ledger

The balance of work in process inventory may be calculated by:

summing the costs of all jobs in process.

When applied to business, ____ means a company can meet today's needs without sacrificing future generations from meeting their own needs.

sustainability

Differential cost is:

the difference in costs between two alternatives

Which of the following costs would NOT be classified as manufacturing overhead?

tires used to make vehicles

Which type of cost changes in total, in direct proportion to changes in activity level?

variable

The major difference between job order and process costing is:

whether the products produced are similar or different

To calculate total manufacturing costs you:

you CANNOT add prime costs (PC) to conversion costs (CC)