Mc Graw Hill Smartbook 17 - Accouting II

Select all that apply Which of the following statements is/are true regarding the preparation of job cost sheets? (Select all that apply). Multiple select question. Manufacturing costs are applied to job sheets using an estimated overhead application rate. Actual manufacturing overhead is charged to job cost sheets as soon as it can be traced to specific jobs. Actual direct labor costs are charged to job cost sheets as soon as they can be traced to specific jobs. Actual direct material costs are charged to job cost sheets as soon as they can be traced to specific jobs.

Manufacturing costs are applied to job sheets using an estimated overhead application rate. Actual direct labor costs are charged to job cost sheets as soon as they can be traced to specific jobs. Actual direct material costs are charged to job cost sheets as soon as they can be traced to specific jobs.

Select all that apply Undem uses a job order costing system. The following information pertains to the current period: (1) Overhead was applied to jobs at a rate of $25 per machine-hour; (2) Management had estimated that manufacturing overhead would total $110,000 by the end of the period; (3) Actual manufacturing overhead incurred during the period was $112,000; (4) Actual machine-hours used during the period totaled 4,000; and (5) Job #104 was started and completed during the current period. Management had estimated that it would require 25 machine-hours, but it actually required only 22 machine-hours. Which of the following statements is true? (Select all that apply). Multiple select question. Manufacturing overhead of $550 was applied to job #104. Management had estimated that the current period would require 4,480 total machine-hours. Management had estimated that the current period would require 4,400 total machine-hours. Manufacturing overhead of $625 was applied to job #104.

Manufacturing overhead of $550 was applied to job #104. Management had estimated that the current period would require 4,400 total machine-hours.

Costs flow through accounts in a job costing environment in which order? Multiple choice question. Materials Inventory, Work in Process Inventory Cost of Goods Sold, Finished Goods Inventory Materials Inventory, Cost of Goods Sold, Work in Process Inventory, Finished Goods Inventory Work in Process Inventory, Materials Inventory, Finished Goods Inventory, Cost of Goods Sold Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Cost of Goods Sold

Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Cost of Goods Sold

Actual manufacturing overhead costs are:

debited to the Manufacturing Overhead account.

Factory supervisor wages are

debited to the Manufacturing Overhead account.

Cost accounting systems are used by companies to: (Select all that apply).

evaluate and reward performance. value inventories and cost of goods sold to satisfy external reporting requirements. monitor resources consumed to create and deliver goods and services to customers.

A company applies overhead to jobs on the basis of direct labor hours. The following information relates to its overhead application rate: Estimated total overhead costs for the upcoming year = $500,000 Estimated direct labor hours for the upcoming year = 50,000 hours Estimated direct labor costs for the upcoming year = $1 million What is the company's overhead application rate?

$10 per direct labor hour

When jobs are delivered to customers: (Select all that apply).

Accounts Receivable (or Cash) is debited and Sales is credited. Cost of Goods Sold is debited and Finished Goods Inventory is credited.

When jobs are delivered to customers,

Cost of Goods Sold is debited and Finished Goods Inventory is credited.

True or false: Collectively, job cost sheets serve as a subsidiary ledger to the Finished Goods Inventory account. True false question.TrueFalse

False

Which of the following is likely to be an activity cost pool for a Maintenance Department?

Repair activities

True or false: Activity-based costing often aids managers in making more realistic pricing decisions.

True

True or false: Job order costing is used by manufacturing companies and by service organizations.

True

True or false: To gain a better understanding of what it costs to produce products or provide services, many companies now rely upon multiple activity bases to apply overhead costs. True false question.TrueFalse

True

A debit balance in the Manufacturing Overhead account at the end of a period indicates that: (Select all that apply).

actual manufacturing overhead exceeded applied overhead. manufacturing overhead was underapplied.

At the end of the year, any remaining balance in the Manufacturing Overhead account deemed material is:

apportioned among Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold.

At the end of the year, any remaining balance in the Manufacturing Overhead account deemed not material is

closed directly to Cost of Goods Sold.

As costs flow through a job costing environment, each inventory control account is supported by a (blank) ledger.

subsidiary

At the end of a period, a credit balance in the Direct Labor account is reported in: Multiple choice question. the balance sheet as a contra-asset. the balance sheet as a liability. the income statement as an expense. the income statement as deferred revenue.

the balance sheet as a liability.

A company applies overhead to jobs on the basis of direct labor hours. The following information relates to its overhead application rate: Estimated total overhead costs for the upcoming year = $750,000 Estimated direct labor hours for the upcoming year = 25,000 hours Estimated direct labor costs for the upcoming year = $1.5 million How much overhead was applied to Job #87 during the year if it took 5,000 direct labor hours to complete? Multiple choice question. $75,000 $10,000 $150,000 $300,000

$150,000

Undem uses a job order costing system. The company applies overhead to jobs at a rate of $25 per machine-hour. It's actual manufacturing overhead costs for the period amounted to $110,000, and its machine-hours totaled 4,000. The journal entry to apply manufacturing overhead to jobs for the period includes which of the following? (Select all that apply).

A credit to Manufacturing Overhead of $100,000. A debit to Work in Process Inventory of $100,000.

The journal entry to charge direct materials to jobs in a job order costing system requires which of the following? Multiple choice question. A debit to Work in Process Inventory and a credit to Materials Inventory. A debit to Cost of Goods Sold and a credit to Materials Inventory. A debit to Finished Goods Inventory and a credit to Materials Inventory. A debit to Materials Inventory and a credit to Work in Process Inventory.

A debit to Work in Process Inventory and a credit to Materials Inventory.

Pilfer Manufacturing maintains 4 activity cost pools: (1) the repair activity cost pool, which averages $50,000 per month; (2) the set-up activity cost pool, which averages $12,000 per month; (3) the heating and air conditioning cost pool (HVAC), which averages $20,000 per month; and (4) the machinery cost pool, which averages $40,000 per month. The company uses the following cost drivers to allocate activity cost pools to individual products: (1) the repair cost pool is allocated on the basis of work orders; (2) the set-up cost pool is allocated on the basis of production runs; (3) the HVAC cost pool is allocated on the basis of square footage occupied; and (4) the machinery cost pool is allocated on the basis of machine-hours. One of the company's products is called Zorbs. The production of Zorbs is responsible for: (1) 10% of monthly work orders; (2) 20% of monthly production runs; (3) 30% of occupied square footage; and (4) 25% of monthly machine-hours. The monthly allocation of the repair cost pool to Zorbs is $________. The monthly allocation of the set-up cost pool to Zorbs is $________. The monthly allocation of the HVAC cost pool to Zorbs is $__________. The monthly allocation of the machinery cost pool to Zorbs is $____________.

Blank 1: 5,000 Blank 2: 2,400 Blank 3: 6,000 Blank 4: 10,000

Hensel Manufacturing separates its manufacturing overhead costs into 2 broad categories: (1) maintenance costs and (2) utility costs. Maintenance costs average $100,000 per month, whereas utility costs average $8,000 per month. Maintenance costs are allocated to 2 activity cost pools: (1) the repair cost pool and (2) the set-up cost pool. Utility costs also are allocated to 2 activity cost pools: (1) the heating and air conditioning cost pool (HVAC) and (2) the machinery cost pool. Maintenance costs are allocated to their unique activity cost pools on the basis of the number of employees associated with each pool. Utility costs are allocated to their unique activity cost pools on the basis of kilowatt-hour (kWh) consumption. Of the company's maintenance employees, 70% engage primarily in repair activities, whereas 30% engage primarily in set-up activities. Approximately 75% of the company's kWh consumption can be traced to HVAC use, whereas 25% of its kWh consumption can be traced to machinery operation. Monthly maintenance costs allocated to the repair cost pool are $__________. Monthly maintenance costs allocated to the set-up cost pool are $_____________. Monthly utility costs allocated to the HVAC cost pool are $_____________. Monthly utility costs allocated to the machinery cost pool are $_______________.

Blank 1: 70,000 Blank 2: 30,000 Blank 3: 6,000 Blank 4: 2,000

The journal entry to charge direct materials to jobs in a job costing environment requires a debit to _______ _______ _______Inventory and a credit to ___________ Inventory account.

Blank 1: Work Blank 2: in Blank 3: Process or Progress Blank 4: Materials

Overhead application rates express expected relationships between manufacturing overhead costs and specific (blank) bases related to the production process.

Blank 1: activity

There are two stages associated with allocating manufacturing overhead in an activity-based costing system. The first stage is to identify and create separate _____ _____ pools. The second is to allocate the identified pools to production using appropriate _____ _____ (or activity bases).

Blank 1: activity Blank 2: cost Blank 3: cost Blank 4: drivers

Manufacturing Overhead is a account with multiple subsidiary accounts.

Blank 1: control

Companies use (blank) (blank) systems to measure the resources they consume to create and deliver goods and services to customers.

Blank 1: cost Blank 2: accounting

A __________ balance in the Manufacturing Overhead account at the end of a period indicates that manufacturing overhead was overapplied.

Blank 1: credit

The summary journal to assign manufacturing overhead to production in a job order costing environment requires a ________ to Work in Process Inventory and a ________ to Manufacturing Overhead.

Blank 1: debit Blank 2: credit

Unit costs provide a basis for inventory valuation and are used to determine the cost of (blank) (blank) reported in a company's income statement.

Blank 1: goods Blank 2: sold

The combination of multiple cost accounting approaches is sometimes referred to as a _______ cost system.

Blank 1: hybrid

Unit costs are used to value (blank) reported in a company's balance sheet.

Blank 1: inventory

In job costing environments, Work in Process Inventory is supported by (blank) (blank) (blank) that keep a detailed account of manufacturing costs charged to individual jobs.

Blank 1: job Blank 2: cost Blank 3: sheets

In a job order costing system, manufacturing costs are accumulated and assigned to specific (blank).

Blank 1: jobs or job

Estimated (blank) (blank) rates are used throughout an accounting period to assign overhead costs to jobs as services are being provided or as units are being produced.

Blank 1: overhead Blank 2: application

Individual product lines are assigned manufacturing overhead costs from activity cost _______ using various cost ________.

Blank 1: pools Blank 2: drivers

As discussed previously, a ________ overhead application rate is used to assign overhead costs to work in process.

Blank 1: predetermined

An auto repair shop is an example of a(n) _______ company that uses job order costing.

Blank 1: service

True or false: If the number of units produced during the period equals the number of units sold, manufacturing overhead per unit should be computed by dividing total manufacturing overhead costs by the number of units produced and sold. True false question.TrueFalse

False

Select all that apply Which of the following explain(s) why a company's total manufacturing overhead costs are not assigned to individual units simply by dividing actual annual overhead costs by the number of units produced during the year? (Select all that apply). Multiple select question. It simply is not possible to determine the actual dollar amount of manufacturing overhead incurred during the year. Not all products consume equal amounts of manufacturing overhead. Actual overhead costs and units produced are not known until the end of the year. Estimated overhead costs per unit are needed throughout the year so that managers know whether too much overhead is being used in production.

Not all products consume equal amounts of manufacturing overhead. Actual overhead costs and units produced are not known until the end of the year. Estimated overhead costs per unit are needed throughout the year so that managers know whether too much overhead is being used in production.

Select all that apply Which of the following explain(s) why a company's total manufacturing overhead costs are not assigned to individual units simply by dividing actual annual overhead costs by the number of units produced during the year? (Select all that apply). Multiple select question. Not all products consume equal amounts of manufacturing overhead. Actual overhead costs and units produced are not known until the end of the year. Estimated overhead costs per unit are needed throughout the year so that managers know whether too much overhead is being used in production. It simply is not possible to determine the actual dollar amount of manufacturing overhead incurred during the year.

Not all products consume equal amounts of manufacturing overhead. Actual overhead costs and units produced are not known until the end of the year. Estimated overhead costs per unit are needed throughout the year so that managers know whether too much overhead is being used in production.

Charging direct labor costs to jobs in a job order costing environment requires a: (Select all that apply).

credit to the Direct Labor account. debit to the Work in Process Inventory account.

Select all that apply Charging direct labor costs to jobs in a job order costing environment requires a: (Select all that apply). Multiple select question. credit to the Direct Labor account. debit to the Work in Process Inventory account. credit to the Work in Process Inventory account. debit to the Direct Labor account. credit to the Manufacturing Overhead account.

credit to the Direct Labor account. debit to the Work in Process Inventory account.

Select all that apply There are two stages associated with allocating manufacturing overhead in an activity-based costing system. They are: Multiple select question. allocating the activity cost pools to production using multiple cost drivers. identifying and creating a single activity cost pool. identifying and creating separate activity cost pools. allocating the activity cost pools to production using the same cost driver for each pool.

allocating the activity cost pools to production using multiple cost drivers. identifying and creating separate activity cost pools.

Which of the following companies are likely to use job order costing? (Select all that apply). Multiple select question. soft drink companies architectural firms construction companies auto body repair shops

architectural firms construction companies auto body repair shops

Activity-based costing is often used by:

companies that use numerous processes to manufacture a variety of different products.

Which of the following would most likely not be a significant cost driver in a highly automated manufacturing environment? Multiple choice question. direct labor hours equipment maintenance costs machine hours kilowatt hours

direct labor hours

Historically, which of the following were viewed as the primary cost driver of manufacturing overhead? Multiple choice question. direct labor hours (or direct labor costs) machine hours batches of product manufactured direct material costs

direct labor hours (or direct labor costs)

A job cost sheet reports: (Select all that apply). Multiple select question. direct material costs associated with a particular job. the amount to charge the customer for a particular job and the gross profit (margin) associated with the job. manufacturing overhead costs applied to a particular job. direct labor costs associated with a particular job.

direct material costs associated with a particular job. manufacturing overhead costs applied to a particular job. direct labor costs associated with a particular job.

Select all that apply A job cost sheet reports: (Select all that apply). Multiple select question. the amount to charge the customer for a particular job and the gross profit (margin) associated with the job. direct material costs associated with a particular job. manufacturing overhead costs applied to a particular job. direct labor costs associated with a particular job.

direct material costs associated with a particular job. manufacturing overhead costs applied to a particular job. direct labor costs associated with a particular job.

Cost account systems designed to take advantage of multiple costing approaches are sometimes referred to as:

hybrid systems

A company has two product lines: Product A and Product B. The indirect costs associated with each product line are unique. Product A is produced primarily by hand and is responsible for most of the company's direct labor costs. Product B is mass-produced by automated manufacturing equipment, and much of the company's total manufacturing overhead relates to resources consumed by Product B's numerous automated processes. If the company uses direct labor hours as its single cost driver (instead of activity-based costing), it is likely that: Multiple choice question. units of Product A will receive a disproportionate amount of manufacturing overhead allocated to them. units of Product B will receive a disproportionate amount of manufacturing overhead allocated to them. units of both Product A and Product B will have too little manufacturing overhead allocated to them. units of both Product A and Product B will have too much manufacturing overhead allocated to them.

units of Product A will receive a disproportionate amount of manufacturing overhead allocated to them.

Select all that apply Activity-based costing: Multiple select question. uses multiple cost drivers to apply manufacturing overhead to products. tends to provide less detailed information about overhead costs than traditional allocation methods that use a cost driver. recognizes the unique overhead considerations of each product line. tends to provide more detailed information about overhead costs than traditional allocation methods that use a cost driver.

uses multiple cost drivers to apply manufacturing overhead to products. recognizes the unique overhead considerations of each product line. tends to provide more detailed information about overhead costs than traditional allocation methods that use a cost driver.

To be considered a cost driver, an activity base must: (Select all that apply). Multiple select question. vary in proportion to the direct labor costs incurred. vary in proportion to the overhead costs incurred. vary in proportion to the number of units sold. be a causal factor related to incurring overhead costs.

vary in proportion to the overhead costs incurred. be a causal factor related to incurring overhead costs.