Managerial accounting smart book 3

A company reports Gross margin of $100,000, Cost of goods sold of $70,000, and Selling and administrative expenses of $45,000. Net operating income (loss) is ______. $25,000 $(15,000) $30,000 $55,000

$100,000-$45,000=$55,000

Raw materials inventory is an____. A. revenue B. asset C. expense D. liability

B

The value of work in process is equal to____. A. the sales value of all unfished jobs B. the cost of all unfished jobs C. finished goods inventory minus cost of goods sold.

B

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

B

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

B

Manufacturing overhead costs include_______. A. office equipment depreciation B. the factory supervisor's salary C. direct materials D. the CEO's salary E. factory insurance

B,E

When preparing financial statements in a job-order costing system, finished goods flow first to the________,_______ and then to the _______,_______.

Balance, sheet Income, statement

Define Overhead application

The process of assigning overhead costs to specific jobs using the following formula Overhead applied to a particular job= (Predetermined overhead rate X Amount of the allocation base incurred by the job)

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 $183,000 $186,000 $191,000

Total manufacturing cost = $62,000 +$78,000+$46,000= $186,000

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

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

manufactured

The schedule of costs of goods______ summarizes costs that remain in finished goods inventory and that have been transferred to costs of goods sold

sold

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

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 $420,000 $480,000

$450,000+ $30,000= $480,000

Raw materials is a(n)______ account

asset or inventory

A debit balance in manufacturing overhead means overhead was____

under-applied

Applied manufacturing overhead will most likely____ actual manufacturing overhead A. equal B. not equal

B

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

B

The cost of jobs still unfinished at the end of a period are included in ______. A. Cost of goods manufactured B. beginning Finished goods inventory for the next period C. ending Work in process inventory D. the income statement

C

Overhead is overapplied if_____ A. cost of goods manufactured is less than cost of goods sold B. adjusted cost of goods sold is more than unadjusted cost of goods sold C. actual overhead is more than applied overhead D. actual overhead is less than applied over

D

Define Job-costing

A costing system used in situations where many different products, jobs or services are produced each period

Which of the following statements are true? A. when materials are purchased they are recorded in the raw materials inventory account B. raw materials inventory only includes the cost of direct materials C. direct labor costs flow through the raw materials inventory account D. raw materials inventory represents the cost of materials not yet used in production

A,D

Gross margin minus selling and administrative expenses equals______. A. cost of goods sold B. net operating income C. cost of goods manufactured D. net operating assets

B

Given the following, calculate the cost of goods available for sale. Cost of goods manufactured of $234,000 Beginning Finished goods inventory of $18,000 Ending Finished goods inventory of $24,000 $228,000 $240,000 $258,000 $252,000

Cost of goods available for sale= $234,000 + $18,000 = $252,000

A credit balance in the manufacturing overhead account means overhead was ________

over-applied

Given the following, compute the cost of goods manufactured. Direct material cost: $40,000 Direct labor cost: $100,000 Applied overhead: $120,000 Beginning work in process inventory: $30,000 Ending work in process inventory: $12,000 $302,000 $242,000 $260,000 $278,000

Cost of goods manufactured = $30,000 + $40,000 + $100,000 + $120,000 - $12,000 =$278,000

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

D

Selling and administrative costs first appear on the _____. A. statement of cash flows B. statement of owners' equity C. balance sheet D. income statement

D

The accounts credited when goods are sold on account are_____ A. cost of goods sold and accounts receivable B. finished goods and accounts receivable C. cost of goods sold and finished goods D. finished goods and sales

D

The journal entry to record the purchase of materials debits_____. A. manufacturing overhead B. accounts payable C. work in process D. raw materials

D

To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract ______. A. beginning raw materials inventory and indirect materials used B. only ending raw materials inventory C. only beginning raw materials inventory D. ending raw materials inventory and indirect materials used

D

When a job is completed, the costs are transferred out of _____. A. manufacturing overhead B. finished goods C. cost of goods sold D. work in process

D

When jobs are sold their costs are transferred out of ______ A. cost of goods sold B. cost of goods manufactured C. work in process D. finished goods

D

What methods can be used to dispose of underapplied or overapplied manufacturing overhead? . A. Close it to Work in process. B. Close it to Finished goods. C. Allocate it to Work in process, Finished goods, and Cost of goods sold. D. Close it to Cost of goods sold. E. Allocate it to Raw materials, Work in process, and Finished goods.

D,E

Carlisle, Inc. had Sales of $500,000, Cost of goods sold of $400,000, and Selling and administrative expenses of $50,000. Gross margin is ______. $150,000 $50,000 $450,000 $100,000

Gross margin= $500,000-$400,000= $100,000

When jobs are sold their costs are transferred out of_____. A. finished goods B. work in process C. cost of goods sold D. cost of goods manufactured

A

True or false: Actual overhead costs appear in the Work in Process account but not on the job cost sheet.

False

True or false: Job B was not completed by April 30. If an April balance sheet is prepared, the costs accumulated for Job B will NOT appear on it.

False

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

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

Fillia, Inc. worked on three jobs this period: Job 14C, which cost $15,000; Job 23A, which cost $28,000, and Job 45B, which cost $23,000. At the end of the period, only Job 14C was still in process (unfinished). The cost of goods manufactured this period is $ _______.

$28,000+$23,000=$51,000

Estimated manufacturing overhead $500,000 Estimated direct labor hours 200,000 Actual manufacturing overhead $625,000 Actual direct labor hours 260,000 The company applies overhead using direct labor hours as the cost driver. Calculate the amount that overhead was overapplied or underapplied. $25,000 overapplied $125,000 overapplied $187,500 underapplied $25,000 underapplied

($500,000 ÷ 200,000) = $2.50 × 260,000 = $650,000 applied. Actual overhead = $625,000, so overhead is $25,000 overapplied.

Manufacturing overhead is applied with a debit to ______. A. work in process B. cost of goods sold C. manufacturing overhead D. accounts payable

A

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

A

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? $25,000 $65,000 $90,000 $115,000

Cost of goods manufactured = ($20,000 +$40,000+$30,000)-$25,000 = $90,000-$25,000 =$65,000

A journal entry debiting cost of goods sold and crediting finished goods is made when: A. goods are started B. goods are finished C. the period is completed D. goods are sold

D

A journal entry that debits raw materials and credits accounts payable is recording the ______. A. issuance of materials into production B. sale of goods C. completion of goods D. purchase of materials

D

True or False: period costs flow from finished goods to cost of goods sold

False

What is the equation used to compute Predetermined overhead rate?

Predetermined overhead rate= (Estimated total manufacturing overhead cost/ Estimated total amount of the allocation base

Any purchased materials that will go into finished product are first recorded in the_____,______ inventory account.

Raw, materials

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 $520,000 $535,000 $425,000

Unadjusted cost of goods sold= $110,000+ $410,000- $125,000= $395,000

Job cost Sheet

a form that records the direct materials, direct labor, and manufacturing overhead costs charged to a job

Completed units that have not yet been sold are found in______,______ inventory

finished goods

The cost of goods______ is the sum of all amounts transferred from work in process to finished goods during a period

manufactured

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, including $4,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. $30,000 $16,000 $20,000 $24,000

$5,000+ $27,000- $4,000- $12,000= $16,000

Gemini had Sales of $50,000, Cost of goods sold of $20,000, and Selling and administrative expenses of $25,000. Gross margin is ______. $5,000 $45,000 $30,000 $25,000

$50,000-$20,000 = $30,000

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

A

A journal entry that debits advertising expense and credits cash would record the incurrence of a ______. A. selling cost B. manufacturing cost C. prepaid cost D. cost that is capitalized and expensed when the product is sold

A

The Journal entry to record costs credits_____. A. salaries and wages payable B. work in process C. direct labor D. manufacturing overhead

A

Actual manufacturing overhead was $50,000, while overhead applied to jobs was $45,000. Work in process contained 10% of applied overhead, Finished goods contained 40%, and Cost of goods sold contained 50%. The entry to dispose of underapplied or overapplied overhead using the allocation method ______. A. debits Cost of goods sold $5,000 B. credits Cost of goods sold $2,500 C. debits Work in process $500 D. credits Work in process $500

C. debits Work in process $500Overhead is underapplied by $5,000. To dispose of the underapplied overhead, overhead is credited and the other accounts including Work in process, Finished goods, and Cost of goods sold are debited by $500 (10%), $2,000 (40%), and $2,500 (50%), respectively.

Select all that apply: Work in process consists of______ A. actual manufacturing overhead B. actual direct labor cost C. applied direct labor cost D. actual direct materials cost E. applied direct labor cost F. applied manufacturing overhead

F,B,D

A company incurred $10,000 in direct labor costs and $8,000 in indirect labor costs. The journal entry to record this transaction debits ______. A. Salaries and Wages payable $18,000 and credits Work in process $8,000 and Manufacturing overhead $10,000 B. Work in process $8,000 and Manufacturing overhead $10,000 and credits Salaries and wages payable $18,000 C. Work in process $10,000 and Manufacturing overhead $8,000 and credits Salaries and wages payable $18,000 D. Salaries and wages payable $18,000 and credits Work in process $10,000 and Manufacturing overhead $8,000

c

A journal entry that includes Manufacturing overhead, work in process, finished goods, and Cost of goods sold is recorded to ______. A. recognize the completion of goods B. recognize the sale of goods C. dispose of underapplied or overapplied overhead D. apply manufacturing overhead to jobs

c

The accounts debited when goods are sold on account are______ A. finished goods and accounts receivable B. cost of goods sold and finished goods C. cost of goods sold and accounts receivable D. finished goods and sales revenue

c

The journal entry to record a completed job debits_______. A. cost of goods sold B. work in process C. finished goods D. manufacturing overhead

c

The journal entry to record expired prepaid insurance on factory equipment is debit_______. A. insurance expense and credit prepaid insurance B. work in process and credit prepaid insurance C. manufacturing overhead and credit prepaid insurance D. prepaid insurance and credit accounts payable

c

A journal entry that debits manufacturing overhead and credits accumulated depreciation records____. A. depreciation on factory equipment B. depreciation on office equipment C. the purchase of indirect materials D. the incurrence of general factory overhead costs

A

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

A

The journal entry to record selling and administrative salaries debits_______. A. manufacturing overhead and credits cash or a liability B. an expense account and credits cash or a liability C. a liability account and credits an expense account D. a liability account and credits manufacturing overhead

B

Given the following, calculate total manufacturing costs: Direct materials: $40,000; Direct labor: $100,000; Manufacturing overhead applied: $120,000; Beginning Work in process inventory: $30,000; Ending Work in process inventory: $12,000 $260,000 $242,000 $302,000 $278,000

Total manufacturing costs = $40,000 + $100,000 + $120,000= $260,000

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

A

The amount transferred from work in process to finished goods is________. A. cost of goods manufactured B. ending inventory C. cost of goods sold

A

The journal entry to record a cash payment of $400 for insurance on administrative office equipment debits_____ and credits cash. A. insurance expense B. work in process C. manufacturing overhead D. depreciation expense

A

The journal entry to record a completed job credits______. A. work in process B. finished goods C. cost of goods sold D. manufacturing overhead

A

The journal entry to record accrued property taxes for a factory building debits______. A. manufacturing overhead and credits property taxes payable B. work in process and credits property taxes payable C. work in process and credits manufacturing overhead D. manufacturing overhead and credits accounts payable.

A

The journal entry to record manufacturing labor costs debits______ A. work in process and manufacturing overhead B. manufacturing overhead and salaries and wages payable C. salaries and wages payable D. work in process and salaries and wages payable

A

The journal entry to record the purchase of materials credits______. A. accounts payable B. raw materials C. manufacturing overhead D. work in process

A

The manufacturing overhead account is debited when______. A. actual overhead costs are incurred B. overhead is applied to work in process C. goods are completed

A

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

A

What side of the manufacturing overhead account is applied manufacturing overhead entered on? A. always the credit side B. always the debit side C. the debit side, if actual is greater than applied D. the credit side, if actual is greater than applied

A

When a job is completed, its costs are transferred into ______. A. finished goods B. work in process C. cost of goods sold D. sales revenue

A

Which of the following would not be charged to the manufacturing overhead account? A. nonmanufacturing costs B. supervisor's salary C. factory rent D. depreciation on factory equipment

A

unadjusted cost of goods sold is calculated by subtracting______. A. ending finished goods inventory from goods available for sale B. beginning finished goods inventory from goods available for sale C. ending finished goods inventory from cost of goods manufactured D. beginning finished goods inventory from cost of goods manufactured

A

Define Absorption costing

A costing method that includes ALL manufacturing costs- direct materials, direct labor, and both variable and fixed manufacturing overhead- in the cost of a product

Normal costing

A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.

Define allocation base

A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects

Define Predetermined overhead rate

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period.

A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______. A. rent expense on factory equipment B. factory utilities expense C. depreciation on factory equipment D. the purchase of indirect materials

A,B

Actual overhead costs may not be proportional to the actual amount of the allocation base used because______. A. overhead spending may not be under control B. many actual overhead costs are fixed C. overhead costs are all variable costs D. the predetermined rate might not be estimated correctly

A,B

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

A.

A journal entry that debits manufacturing overhead and credits prepaid insurance records the _____. A. payment of prepaid factory insurance B. expiration of prepaid factory insurance C. application of prepaid factory insurance D. application of manufacturing overhead

B

Actual manufacturing overhead costs are recorded in the manufacturing overhead account______ A. when jobs are completed B. as they are incurred C. as the allocation base is used on the job D. at the end of the period

B

All the costs appearing on the job cost sheets of the jobs that are being worked on are found in the ______ account. A. raw materials B. work in process C. manufacturing overhead D. finished goods

B

Milton Corporation sold goods costing $50,000 for $75,000. Journal entries to be made could include entries debiting ______. A. Sales for $50,000 and Finished goods for $75,000 B. Cost of Goods Sold for $50,000 and Accounts Receivable for $75,000 C. Cost of Goods Sold for $75,000 and Accounts Receivable for $50,000 D. Finished Goods for $50,000 and Sales Revenue for $75,000

B

Overapplied or underapplied overhead is the difference between ______. A. estimated total overhead and total overhead applied B. actual total overhead and total overhead applied C. actual total overhead and estimated total overhead

B

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

B

The journal entry to record $20,000 in depreciation on factory equipment is debit_____. A. Accumulated Depreciation $20,000 and credit Manufacturing Overhead $20,000 B. Manufacturing Overhead $20,000 and credit Accumulated Depreciation $20,000 C. Manufacturing Overhead $20,000 and credit Depreciation Expense $20,000 D. Depreciation Expense $20,000 and credit Manufacturing Overhead $20,000

B

Which account is credited when manufacturing overhead is applied? A. cost of goods sold B. manufacturing overhead C. work in process D. accounts payable

B

Which of the following are found on the balance sheet of a manufacturer? A. selling and administrative B. Direct Labor C. Manufacturing overhead D. Raw materials

B,C,D

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 ______. A. work in process $70,000 and credit raw materials $70,000 B. raw materials $70,000, credit work in process $40,000 and credit manufacturing overhead $30,000 C. Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000 D. raw materials $70,000 and credit work in process $70,000

C

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

C

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

C

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

C

Cost of goods manufactured_____. A. is the same as costs of goods sold B. is generally recorded as an asset on the balance sheet C. includes the manufacturing costs of goods finished during the period

C

Costs of partially completed units are accounted for in ______. A. finished goods B. raw materials C. work in process D. cost of goods manufactured

C

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 ______ A. Finished goods $26,000 and credits Work in process $26,000 B. Cost of goods sold $34,000 and credits Work in process $26,000 C. Finished goods $34,000 and credits Work in process $34,000 D. Finished goods $34,000 and credits Work in process $26,000 and Manufacturing overhead $12,000

C

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 ______ A. Finished goods $34,000 and credits Work in process $26,000 and Manufacturing overhead $12,000 B. Finished goods $26,000 and credits Work in process $26,000 C. Finished goods $34,000 and credits Work in process $34,000 D. Cost of goods sold $34,000 and credits Work in process $26,000

C

Job cost sheets and the work in process account contain_____ manufacturing overhead. A. actual B. budgeted C. applied

C

Labor costs charged to manufacturing overhead represent____ labor costs. A. direct B. both direct and indirect labor C. indirect

C

The amount transferred from work in process to finished goods is_____. A. cost of goods sold B. ending inventory C. cost of goods manufactured

C

The journal entry to record a completed job credits_______ A. finished goods B. manufactured overhead C. work in process D. cost of goods sold

C

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

C

The journal entry to record issuing materials to be used in production credits_______. A. accounts payable B. manufacturing overhead C. raw materials D. work in process

C

The manufacturing overhead account is debited when_____. A. goods are completed B. overhead is applied to work in process C. actual overhead term-27costs are incurred

C

Which of the statements regarding closing out over or underapplied overhead is correct? A. Allocating is simpler, and closing to Cost of goods sold is more accurate. B. Both methods are equally simple. C. Closing to Cost of goods sold is simpler, and allocating is more accurate. D. Both methods are equally accurate.

C

the journal entry to record costs credits______. A. work in process B. direct labor C. salaried and wages payable D. manufacturing overhead

C

Which of the following are used to calculate Cost of goods available for sale on the schedule of cost of goods sold? A. Ending finished goods inventory B. Cost of goods sold C. Beginning finished goods inventory D. Cost of goods manufactured

C,D