ACC Exam 1

Cost of Goods Manufactured

Direct materials + Direct labor + Manufacturing overhead applied + Beginning work in process inventory - Ending work in process inventory

The document record that summarizes the costs incurred on a specific job, project, or client is called a(n)

Job cost

What is the most common method for disposing of the balance in Manufacturing Overhead?

Making a direct adjustment to Cost of Goods Sold

A company was assessed property taxes of $1,000 on its manufacturing facility. The journal entry to record this is debit

Manufacturing Overhead $1,000 and credit Property Taxes Payable $1,000

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

Which of the following statements are true? -Raw Materials Inventory represents the cost of materials not yet used in production. -Raw Materials Inventory only includes the cost of direct materials. -When materials are purchased they are recorded in the Raw Materials Inventory account. -Direct labor costs flow through the Raw materials inventory account.

Raw Materials Inventory represents the cost of materials not yet used in production, When materials are purchased they are recorded in the Raw Materials Inventory account

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

Tires used to make vehicles

A company incurs $10,000 in direct labor costs and $8,000 in indirect labor costs. The journal entry to record this transaction is debit _______.

Work in Process Inventory $10,000 and Manufacturing Overhead $8,000 and credit Wages Payable $18,000

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

Work in process Inventory $10,000 and credit Manufacturing Overhead $10,000

Which account(s) are debited in the journal entry to record manufacturing labor costs?

Work in process inventory and Manufacturing overhead

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

accounts payable

Unadjusted cost of goods sold consists of

actual materials and labor and applied overhead

The most common method for disposing of the balance in Manufacturing Overhead is

adjusting cost of goods sold

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

administrative salaries

Cost driver is also known as

allocation base

On the job cost sheet and work in process accounts, the ______ manufacturing overhead is recorded.

applied

Indirect costs

are not easily traced to products or services

Labor costs

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

Applied manufacturing overhead costs are credited to the Manufacturing Overhead account

as the costs are applied to jobs

A group-level activity for a service company is the same as a(n) _________-level activity for a manufacturing company

batch

Unadjusted cost of goods sold

beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory

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

billable hours

Ideally an allocation base should

cause or influence the amount of overhead incurred

When calculating a predetermined overhead rate, the ideal allocation base should be a(n)

cost driver

When goods are sold to customers

costs are transferred from Finished Goods to Cost of Goods Sold

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

costs of goods sold and manufacturing overhead

Applied manufacturing overhead is recorded with a _________ to Manufacturing Overhead and a _________ to Work in Process Inventory

credit, debit

Actual manufacturing overhead costs are accumulated on the ______ side of the Manufacturing Overhead account and applied costs are shown on the ______ side.

debit, credit

The first step in assigning manufacturing overhead costs using a predetermined overhead rate is to

determine the cost driver

Underapplied or overapplied overhead is the

difference between overhead applied to jobs and actual overhead

A journal entry that debits Work in Process Inventory and Manufacturing Overhead and credits Wages Payable records

direct and indirect labor costs

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

direct labor

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

direct material

total current manufacturing costs

direct materials + direct labor + manufacturing overhead applied

When materials are issued into production

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

Costs are transferred from raw materials inventory to

either work in process or manufacturing overhead

To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the

estimated cost driver

The formula for a predetermined overhead rate is

estimated total manufacturing overhead cost ÷ estimated total cost driver

T/F Companies choose to use predetermined overhead rates based on estimates in order to make costing products easier.

false

When a job is completed, which account is debited?

finished goods inventory

Predetermined overhead rates are usually calculated

for an entire year

Companies that use job-order costing

make unique products

The flow of manufacturing costs from Raw Materials to Work in Process Inventory and into Finished Goods is summarized on the cost of goods ________ report

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 recorded as

manufacturing overhead

Which account is credited when manufacturing overhead is applied?

manufacturing overhead

Applied overhead rate formula

manufacturing overhead / actual total direct labor hours

An allocation base is a(n)

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

Manufacturing overhead costs

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

Which of the following would most likely NOT be classified as a direct material? Automobile engine Drywall Laptop keyboard Nails and screws

nails and screws

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

overapplied or underapplied overhead

The predetermined overhead rate is multiplied by the actual cost driver usage for a job to calculate the _________ the job.

overhead applied to

Indirect costs are also referred to as

overhead costs

Nonmanufacturing costs incurred during a period are treated as Blank______. Multiple choice question.

period expenses

The formula for applying overhead to a specific job is

predetermined overhead rate × the actual cost driver usage for the specific job

Calculating the predetermined overhead rate is the _________ step in assigning manufacturing overhead costs.

second

Hard copy receipts, bar codes and QR codes are all examples of _____________documents a company may use to track costs.

source

The balance of work in process inventory may be calculated by

summing the costs of all jobs in process

Which of the following would NOT be part of direct labor cost?

supervisor salaries

Nonmanufacturing costs increase

the Selling, General & Administrative expense accounts

A journal entry that debits Work in Process inventory and credits Manufacturing Overhead is recording

the application of manufacturing overhead costs

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

cost of direct material

total raw materials purchased - (end of year raw materials inventory + indirect materials - beginning of year raw materials inventory)