Accounting Chapter 19

A process cost accounting system is best used by manufacturers of like units of product that are not distinguishable from each other during a continuous production process.

True

As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the balance sheet as inventory.

True

Hide or show questions Job cost sheets can be used to analyze the possible reasons for increased materials costs for a type of job.

True

Which of the following is a period cost?

salary of telephone receptionist in the sales office

Period costs are costs that are incurred for the production requirements of a certain period.

False

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The journal entry for the transfer of costs from work in process to finished goods is

Finished Goods540,000 Work in Process540,000

Which of the following costs are not included in finished goods inventory?

chief financial officer's salary

The journal entry for the flow of direct labor costs into production in a job order cost accounting system is to

debit Work in Process, credit Wages Payable

For which of the following businesses would the job order cost system be appropriate?

hospital

The document authorizing the issuance of materials from the storeroom is a

materials requisition

For which of the following businesses would the process cost system be appropriate?

paper mill

Selected accounts with some amounts omitted are as follows: Work in Process Oct. 1 Balance 23,900 (debit) Oct. 31 Direct materials 90,700 (debit) Oct. 31 Direct labor 188,300 (debit) Oct. 31 Factory overhead X (debit) Oct. 31 Goods finished X (credit) Finished Goods Oct. 1 Balance 14,500 (debit) Oct. 31 Goods finished 330,100 (debit) If the balance of Work in Process on October 31 is $200,500, what was the amount of factory overhead applied in October?

$227,700 Goods finished + Oct 31 work in progress = direct materials + direct labor + oct 1 balance + factory overhead 330,100 + 200,500 = 530,600 - 90,700 - 188,300 - 23,900 = factory overhead

Cavy Company estimates that the total factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The machine hours for the month of April for all of the jobs were 4,780. If the actual factory overhead totaled $141,800, determine the over- or underapplied amount for the month.

$7,575 overapplied

A process cost accounting system provides for a separate record of the cost of each particular quantity of product that passes through the factory.

False

A service organization will not use job order costing because it has no direct materials.

False

In the job order cost system, the finished goods account is the controlling account for the factory overhead ledger.

False

Job order cost accounting systems may be used for evaluating and controlling costs in a service business.

True

Perpetual inventory controlling accounts and subsidiary ledgers are maintained for materials, work in process, and finished goods in job order cost systems.

True

The document that serves as the basis for recording direct labor on a job cost sheet is the time ticket.

True