ACCOUNTING II EXAM I
For the month of October, Janus Corporation used $30,000 worth of direct materials in production and incurred direct labor costs of $60,000. Actual manufacturing overhead costs were $40,000, whereas $45,000 was the manufacturing overhead applied to work in process. What is the amount of total manufacturing costs that would appear in the Schedule of Cost of Goods Manufactured for October? $130,000 $90,000 $175,000 $135,000
$135,000 three amounts are added together--direct materials used in production of $30,000, direct labor of $60,000 and manufacturing overhead applied to work in process of $45,000--to yield the total manufacturing costs of $135,000
Company: Estimated MO= $500,000 Estimated DL cost= $250,000 Actual MO= $720,000 Actual DL cost= $300,000 Dept. A: Estimated MO= $338,000 Estimated DL cost= $130,000 Actual MO= $400,000 Actual DL cost= $160,000 Dept B: Estimated MO= $162,000 Estimated DL cost= $120,000 Actual MO= $320,000 Actual DL cost= $140,000 Based on this info the POHR per DL dollar for Dept B is $ _______
$162,000 / $120,000 = $1.35
Company: POHR per DL-Hr= $2.10 DL-Hrs worked on JOb ABC= 30 Dept. A: POHR per DL-Hr= $2.40 DL-Hrs worked on JOb ABC= 17 Dept B: POHR per DL-Hr= $1.80 DL-Hrs worked on Job ABC= 13 Based on this info, the overhead applied to JOb ABC using multiple POHR is _______ a. $54 b. $72 c. $64.20 d. $63
$2.40 * 18 + $1.80 * 22= $82.80
Company: POHR per DL-Hr= $2.10 DL-Hrs worked on JOb ABC= 40 Dept. A: POHR per DL-Hr= $2.40 DL-Hrs worked on JOb ABC= 18 Dept B: POHR per DL-Hr= $1.80 DL-Hrs worked on Job ABC= 22 Based on this info, the overhead applied to JOb ABC using multiple POHR is _______
$2.40 * 18 + $1.80 *22 = $82.80
Estimated MO= $450,000 Estimated DL-Hrs= 150,000 Actual MO= $405,000 Actual DL-Hrs= 180,000 Based on this info, the POHR per DL-Hr is $________
$450,000/150,000 = $3.00 per DL-Hr
Estimated MO= $450,000 Estimated DL-Hrs= 150,000 Actual MO= $405,000 Actual DL-Hrs= 180,000 Based on this info, the amount of overhead allocated to a job that used 300 DL-Hrs is $________
$450,000/150,000 = $3.00 per DL-Hr * 300 = $900
Job XYZ has a total manufacturing cost of $600. If the mark-up percentage is 40% the job will sell for $ _______
$600+($600*.4) = 840
Match each event in the process of accounting for MO with the appropriate entry 1. actual overhead is incurred 2. overhead is applied to work in process 3. the period ends a. MO is credited b. MO is debited c. MO is closed
1b, 2a, 3c
Jones Company uses a job-order costing system with a POHR of 120% of DL cost. The job cost sheet for Job #420 showed that the Jones Company spent $4,000 onDM cost and $5,000 in DL cost on the job. What is the total cost of Job #420: a. $10,000 b. $9,000 c. $15,000 d. $11,000
Cost of Job #420 = DM + DL + POHR * DL cost $4,000 + $5,000 + 120% * $5,000 = $15,000
Direct or indirect cost? Cost: heating the hospital Cost object: the pediatric department
Indirect cost
Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job's unit product cost (per audio controller)? a. $52 b. $62 c. $100 d. $124
Total cost associated with the job = Direct material + Direct labor + Manufacturing overhead applied Total cost associated with the job = $4,000 + $1,200 + ($10 × 100 DLHs) = $6,200 Unit product cost = Total cost associated with the job ÷ Number of units Unit product cost = $6,200 ÷ 50 Units = $124
A company incurred $10,000 in DL costs and $8,000 in indirect labor costs. The journal entry to record this transaction debits _______ a. work in process $10,000 and MO $8,000 and credit salaries and wages payable $18,000 b. work in process $8,000 and MO $10,000 and credit salaries and wages payable $18,000 c. salaries and wages payable $18,000 and credit work in process $10,000 and MO $8,000
a
Underapplied or overapplied overhead is the _______ a. difference between overhead applied to work in process and actual overhead b. sum of overhead applied to work in process and actual overhead c. difference between estimated and actual overhead d. overhead applied to work in process
a
When labor costs are incurred, _______ are added directly to the work in process account. a. only DL costs b. only indirect labor costs c. both direct and indirect labor
a
Which of the following is only true in a multiple POHR system? a. each production department may have its own POHR b. multiple types of overhead are included to calculate the POHR c. overhead is applied multiple times throughout the period
a
in the formula y = a + bX, b represents the estimated: a. variable manufacturing overhead cost per unit b. total amount of allocation base c. total fixed manufacturing overhead cost d. total manufacturing overhead cost
a
A journal entry that debits MO 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. rent on the administrative office e. the purchase of indirect materials
a, b
manufacturing overhead (pick all that apply): a. is an indirect cost b. consists of many different types of costs c. contains fixed costs d. is directly traceable to units produced
a, b, c
A measure such as direct labor hours of machine hours used to assign overhead costs to products and services is called a cost driver or a(n) ________ ________
allocation base
Raw materials is a(n) _______ account
asset
When companies incur selling and administrative costs =, those costs _______ a. should be treated as product costs b. do not flow through the three inventory accounts c. should flow through the MO account d. should flow through the work in process account
b selling and administrative costs which are nonmanufacturing costs should be treated as period expenses and charged directly to the income statement. nonmanufacturing costs should not go into the MO account
which of the following would not be a good allocation base for manufacturing overhead? a. machine hours b. accounting hours c. direct labor hours d. units of product
b (accounting hours are not related to manufacturing)
What methods can be used to dispose of underapplied or overapplied MO a. close it to work in process b. close it to finished goods c. allocate it to work in process, finished goods, and COGS d. close it to COGS e. allocate it to raw materials, work in process, and finished goods
c, d
Categories of manufacturing costs include _______ a. administrative expenses b. selling expenses c. manufacturing overhead d. direct materials e. direct labor
c, d, e
A cost driver is a factor that ________ overhead costs.
causes
A _____ is a cos that is incurred to support a number of cost objects but cannot be traced to them individually
common cost
When overhead is underapplied a _______ must be made to the MO account to close it out a. debit b. credit
credit
The _______ side of the manufacturing overhead account is always used to record manufacturing overhead applied to production and the _______ side is always used to record the actual manufacturing costs incurred
credit, debit
A ________ is used to keep track of the materials, labor, and manufacturing overhead costs charged to each job. a. bill of materials b. materials requisition form c. materials ticket d. job order cost sheet
d
A factor that causes overhead costs is called a _______ a. manufacturing cost b. cost object c. POHR d. cost driver
d
Labor costs that are easily traced to a job are called ________ labor costs
direct
Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _____ of the branch
direct cost
a predetermined overhead rate is calculated by dividing the ________ total manufacturing overhead by the ________ total amount of the allocation base
estimated, estimated
T or F: actual overhead costs appear in the work in process account but not on the job cost sheet
f
Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _____ of selling a tour package
indirect cost
Sales commission is considered to be a (product/period) cost
period
Product or period cost? Depreciation on salespersons' cars.
period cost
product or period cost? Advertising costs.
period cost
product or period cost? Cost of leasing the corporate jet used by the company's executives.
period cost
product or period cost? Materials used for boxing products for shipment overseas. (Units are not normally boxed.)
period cost
When all overhead is assigned using DL-Hrs the company has chosen to use a(n) _______ POHR
plantwide
A normal costing system applies OH by job by multiplying a(n) ________ ________ rate by the ________ amount of the allocation base incurred by the job
predetermined overhead, actual
Product or period cost? Rent on equipment used in the factory.
product cost
product or period cost? Depreciation on chairs and tables in the factory lunchroom.
product cost
product or period cost? Factory supervisors' salaries.
product cost
product or period cost? Heat, water, and power consumed in the factory.
product cost
product or period cost? Lubricants used for machine maintenance.
product cost
product or period cost? Soap and paper towels used by factory workers at the end of a shift.
product cost
Any purchased materials that will go into the finished product are first recorded in the _______ _______ inventory account
raw materials
The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate? a. $6.00 per machine hour. b. $8.00 per machine hour. c. $10.00 per machine hour. d. $12.50 per machine hour.
Estimated total overhead cost = $300,000 + ($4per MH * 50000 MHs) = $500000 POHR = Estimated total overhead cost of $500,000 / 50,000 MHs = $10 per MH
T or F: Job-order costing can only be used in manufacturing firms
F
Direct or indirect cost? Cost: lab tests by outside contractor Cost object: a particular department
Indirect cost
Direct or indirect cost? Cost: lab tests by outside contractor Cost object: a particular patient
Indirect cost
Direct or indirect cost? Cost: the salary of the head of pediatric Cost object: a particular pediatric patient
Indirect cost
Transaction: lubricating oil, waste cotton, and solder are used in the factory Debit: _______ Credit: ________
MO, raw materials when indirect materials such as lubricating oil, waste cotton, and solder, are used in the factory the costs should be treated as MO. the MO account is increased with a debit and the raw materials account is decreased with a credit
Transaction: salary of the production supervisor is payable Debit: _______ Credit: ________
MO, salaries and wages payable product supervisor salary is an example of indirect labor. as a result the balance of the MO account should be increased with a debit and the balance of the salaries and wages payable account should be increased with a credit
The journal entry to record the purchase of materials debits _______ a. raw materials b. accounts payable c. MO d. work in process
a
When only a portion of the units in a job are sold the _______ a. entire cost of the job is transferred from finished goods to COGS b. unsold units are transferred to another job c. cost is held in the finished goods account until all units in the job are sold d. unit product cost is used to calculate the amount transferred from finished goods to COGS
d
Which of the statements regarding closing out over or underapplied overhead is correct a. both methods are equally accurate b. both methods are equally simple c. allocating is simpler, and closing to COGS is more accurate d. closing to COGS is simpler, and allocating is more accurate
d
overhead application is the process of: a. calculating a predetermined overhead rate b. calculating the total cost of a job c. adjusting accounts for the difference between applied and actual overhead d. assigning manufacturing overhead cost to jobs
d
Which of the following occurs when MO is applied to Work in Process a. debit to COGS b. debit to MO c. credit to Work in Process d. credit to MO
d the entry to apply MO cost to jobs includes a debit to work in process and credit to MO
product or period cost? Salaries of personnel who work in the finished goods warehouse.
period cost
product or period cost? The cost of renting rooms at a Florida resort for the annual sales conference.
period cost
product or period cost? The wages of the receptionist in the administrative offices.
period cost
product or period cost? The cost of packaging the company's product.
product cost
product or period cost? Workers' compensation insurance for factory employees.
product cost
Allocation bases that do not drive overhead costs: a. can cause product costs to be distorted b. are difficult to keep track of c. cannot be used to calculate overhead
a
When preparing financial statements in a job-order system, finished goods flow first to the _______ _______ and then to the _______ ________
balance sheet, income statement
MO costs include _______ a. office equipment depreciation b. DM c. factory insurance d. the factory supervisor's salary e. the CEO's salary
c, d
A credit balance in the MO account means overhead was _______
overapplied
Direct or indirect cost? Cost: catered food served to patients Cost object: a particular patient
Direct cost
Direct or indirect cost? Cost: the wages of pediatric nurses Cost object: the pediatric department
Direct cost
Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours? a. $2,000 b. $4,000 c. $6,000 d. $10,000
Predetermined overhead rate = $200,000 / 10,000 DLHs = $20 per DLH For 200 DLHs, the manufacturing overhead that would applied is = $20 per DLH * 200 DLHs = $4,000
T or F: One reason to use a POHR is to eliminate the effect of seasonal factors
T
Murphy Manufacturing estimated total MO for 2017 to be $100,000 and uses DL-Hrs as the allocation base. They estimated that 5,000 hours would be used. Actual OH for 2017 was $120,000 and actual DL-Hrs were 7,500. How much OH was applied to a job completed during 2017 that used 200 DL-Hrs? a. $100,000 b. $4,800 c. $4,000 d. $3,200
The POHR = $100,000/5,000 DL-Hrs = $20 per DL-Hr. The OH rate applied to the job = $20 per DL-Hr *200 DL-Hrs = $4,000
Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job? a. $5,000 b. $5,200 c. $6,000 d. $6,200
Total cost associated with the job = Direct material + Direct labor + Manufacturing overhead applied Total cost associated with the job = $4,000 + $1,200 + ($10 * 100 DLHs) = $6,200
Smith, Inc. uses a job-order costing system with the predetermined overhead rate of $12 per M-Hrs. The job cost sheet for Job #42A listed $12,000 in DL cost, $18,000 in DM cost, 1,200 DL-Hrs and 1,100 machine hours. The total cost of job #42A is $______________.
Total cost of Job # 42A = DM + DL + POHR * actual M-Hrs $18,000 + $12,000 + ($12 per M-Hr * 1,100 M-Hrs) = $43,200
Jones Company uses a job-order costing system with a POHR of 120% of DL cost. The job cost sheet for Job #420 listed $4,000 in DM cost and $5,000 in DL cost to manufacture 7,5000 units. The unit cost of Job #420 is: a. $2.00 b. $1.33 c. $1.20
Total cost of Job #420 = DM + DL + OH (POHR * DL cost) $4,000 + $5,000 + 1.20 * $5,000 = $15,000 Unit product cost = $15,000/7,5000 units = $2.00 per unit
A job-order costing system may inaccurately assign costs to jobs due to: a. an inappropriate allocation base b. inaccurate allocation of DM c. inaccurate allocation of DL
a
A journal entry that debits finished goods and credits work in process records the _______ a. completion of a job b. end of a period c. sale of a job d. beginning of a job
a
In the formula Y = a + bX, X represents the estimated: a. total amount of allocation base b. total MO cost c. V manufacturing cost per unit d. total fixed MO cost
a
Milton Corp. sold goods costing $50,000 for $75,000. Journal entries to be made could include entries debiting _______ a. COGS for $50,000 and accounts receivable for $75,000 b. sales for $50,000 and finished goods for $75,000 c. finished goods for $50,000 and sales revenue for $75,000 d. COGS for $75,000 and accounts receivable for $50,000
a
The direct materials required to manufacture each unit of product are listed on a ________. a. bill of materials b. materials requisition form c. materials ticket d. job order cost sheet
a
The document that records the materials, labor, and manufacturing overhead costs changed to a job is the: a. job cost sheet b. time ticket c. production order d. materials requisition form
a
The journal entry to record $20,000 in depreciation on factory equipment is debit _______ a. MO $20,000 and credit accumulated depreciation $20,000 b. MO $20,000 and credit depreciation expense $20,000 c. accumulated depreciation $20,000 and credit MO $20,000
a
The journal entry to record accrued property taxes for a factory building debits _______ a. MO and credits property taxes payable b. MO and credits accounts payable
a
The journal entry to record depreciation on factory equipment debits _______ a. MO and credits accumulated depreciation b. work in process and credit accumulated depreciation
a
Job #4260 consisted of 1,000 units at a total cost of $200,000. The cost transferred to COGS for the sale of 600 of the units is ________ a. $120,000 b. $200,000 c. $80,000 d. $600,000
a $200,000 / 1,000 * 600= $120,000
The following info is available for the current year ending Dec 31: MO applied= $150,000 actual amount of MO costs= 120,000 What is the balance of the MO account and is overhead underapplied or overapplied at the end of the year a. credit of $30,000, overapplied b. credit of $30,000, underapplied c. debit of $30,000, overapplied d. debit of $30,000, underapplied
a 150,000 - 120,000= $30,000 over what was applied
The following info is available for the current year ending in Dec 31: MO applied= $150,000 actual amount of MO costs= 120,000 amount of overhead applied during the yr that is in: work in process= $37,500 finished goods= 52,500 COGS= 60,000 total overhead applied= $150,000 if the MO account is closed to COGS the related entry will _______ a. decrease the COGS sold by $30,000 b. increase the COGS by $30,000 c. decrease the COGS sold by $150,000 d. increase the COGS sold by $150,000
a The Manufacturing Overhead account has a credit balance of $30,000 before the adjustment to close the balance of this clearing account because the credits to the account for the amount applied of $150,000 exceed the debits to the account for the actual overhead costs of $120,000 by $30,000. The closing entry will include a debit to Manufacturing Overhead for $30,000 (to offset the existing credit balance) and a credit to Cost of Goods Sold for the same amount. That credit will decrease the balance in the Cost of Goods Sold account. That makes sense because too much overhead was applied to jobs and, as a result, the cost of goods sold was overstated.
Which of the following occurs when finished jobs are shipped to customers a. debit to COGS b. debit to finished goods c. debit to work in process d. credit to raw materials
a when goods are sold COGS is debited and finished goods is credited
When the allocation method is used to close out the underapplied or overapplied balance remaining in MO which accounts are affected a. COGS b. work in process c. raw materials d. finished goods e. sales revenue
a, b, d
Widely used allocation bases in manufacturing are: a. DL-Hrs b. units of product c. nonmanufacturing costs d. M-Hrs e. DL cost f. product revenue
a, b, d, e
In a normal costing system, the MO account is debited for (pick all that apply): a. the cost of indirect materials b. the cost of direct and indirect labor c. actual overhead costs d. overhead cost applied to work in process
a, c
Materials requisition forms are used for a. controlling the flow of materials into production b. summarizing the cost of a job c. making journal entries in accounting records d. specifying the cost of materials to be ordered
a, c
The unit product cost is the same as the (pick all that apply): a. average product cost per unit b. cost that would be incurred if another unt were produced c. total job cost divided by number of units d. incremental unit cost
a, c
Companies assign costs to products and services to (pick all that apply): a. understand product profitability b. determine the best supplier of raw materials c. value ending inventory d. establish selling prices
a, c, d
Which of the following costs are charged directly to the income statement a. administrative costs b. DL c. MO d. selling costs e. DM
a, d
When a company creates overhead rates based on the actions it performs it is employing an approach called _______-_______ costing
activity based
A POHR is calculated by dividing the _______ total MO by the _______ total amount of the allocation base a. actual; actual b. estimated; estimated c. estimated; actual d. actual; estimated
b
A ________ form identifies the materials drawn from the storeroom that must then be charged to each job. a. bill of materials b. materials requisition form c. materials ticket d. job order cost sheet
b
A journal entry debiting COGS and crediting finished goods is made when _______ a. goods are started b. goods are sold c. the period is completed d. goods are finished
b
A normal cost system applies overhead to jobs ________. a. by multiplying a predetermined overhead rate by the estimated amount of the allocation base incurred by the job b. by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job c. using the actual amount of overhead caused by each job d. using the normal amount of overhead caused by each job
b
George Corp. recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits _______ a. work in process $1,000 and credits property taxes payable $1,000 b. MO $1,000 and credits property taxes payable $1,000
b
The adjustment for overapplied overhead _______ a. decreases both COGS and net income b. decreases COGS and increases net income c. increases COGS and decreases net income d. increases both COGS and net income
b
The adjustment for overapplied overhead ________. a. decreases cost of goods sold and decreases net operating income. b. decreases cost of goods sold and increases net operating income. c. increases cost of goods sold and decreases net operating income. d. increases cost of goods sold and increases net operating income.
b
The formula for applying overhead to a specific job is: a. estimated manufacturing overhead * amount of allocation base incurred by job b. predetermined overhead rate * amount of allocation base incurred by job c. estimated manufacturing overhead / amount of allocation base incurred by job d. estimated manufacturing overhead / estimated allocation base
b
The journal entry to record $10,000 in MO applied to Job #40 debits _______ a. COGS $10,000 and credits MO $10,000 b. work in process $10,000 and credits MO $10,000 c. COGS $10,000 and credits work in process $10,000 d. MO $10,000 and credits work in process $10,000
b
The journal entry to record expired factory insurance debits _______ a. prepaid insurance and credits cash b. MO and credits prepaid insurance c. prepaid insurance and credits MO
b
The journal entry to record issuing materials to be used in production credits _______ a. accounts payable b. raw materials c. MO d. work in process
b
Underapplied or overapplied overhead is the _______ a. sum of overhead applied to work in process and actual overhead b. difference between overhead applied to work in process and actual overhead c. overhead applied to work in process d. difference between estimated and actual overhead
b
Which of the following appears on job cost sheets and in the work in process account a. budgeted MO b. applied MO c. actual MO
b
Bailliere Company recorded cash sales of $300,000 and cost of goods sold relating to those sales of $120,000 on its Excel spreadsheet during the month of June. At the end of June, the company closed its underapplied overhead in the amount of $5,000 to cost of goods sold and reflected that transaction on its spreadsheet. What is the amount of cost of goods sold that will be reported on the company's income statement for the month of June? a. $120,000 b. $125,000 c. $115,000 d. $175,000
b MO was underapplied by $5,000. Not enough overhead was added to production during the period, so the cost of goods sold was understated. The company would record this transaction by decreasing MO and RE by $5,000. The decrease in RE reflects the fact that the company is increasing COGS. In the schedule of COGS that is derived from that spreadsheet, the company would add the underapplied overhead of $5,000 to the unadjusted COGS of $120,000 to arrive at the COGS reported on its income statement of $125,000.
Actual MO was $50,0000 while overhead applied to jobs was $45,000. Work in process contained 10% of applied overhead, finished goods contained 40%, and COGS contained 50%. The entry to dispose of underapplied or overapplied overhead using the allocation method _______ a. credits work in process $500 b. debits work in process $500 c. debits COGS $5,000 d. credits COGS $2,500
b Overhead is underapplied by $5,000. To dispose of the underapplied overhead, overhead is credited and the other accounts including work in process, finished goods, nd COGS are debited by $500 (10%), $2,000 (40%), and $2,500 (50%), respectively
The following info is available for the current year ending in Dec 31: MO applied= $150,000 actual amount of MO costs= 120,000 amount of overhead applied during the yr that is in: work in process= $37,500 finished goods= 52,500 COGS= 60,000 total overhead applied= $150,000 if the MO account is closed proportionally to work in process, finished goods, and COGS, the related entry will include a _______ a. debit to COGS for $12,000 b. credit to COGS for $12,000 c. credit to COGS for $30,000 d. debit to work in process for $7,500
b The Manufacturing Overhead account has a credit balance of $30,000 before the adjustment to close the balance of this clearing account because the credits to the account for the amount applied of $150,000 exceed the debits to the account for the actual overhead costs of $120,000 by $30,000. The closing entry will include a debit to Manufacturing Overhead for $30,000 (to offset the existing credit balance), a credit to Work in Process for $7,500 (or $30,000 × 25%), a credit to Finished Goods for $10,500 (or $30,000 × 35%), and a credit to Cost of Goods Sold for $12,000 (or $30,000 × 40%).
Sexton Company uses an Excel spreadsheet to track its account balances. When the company applies overhead to production for the month of May, how will the company's account balances be affected on that spreadsheet? a. Accounts Payable will increase. b. Work in Process will increase. c. Manufacturing Overhead will increase. d. Retained Earnings will decrease.
b The manufacturing overhead applied increases Work in Process and decreases Manufacturing Overhead.
Actual overhead costs may not be proportional to the actual amount of the allocation base used because (pick all that apply) a. the predetermined rate might not be estimated correctly b. many actual overhead costs are fixed c. overhead spending may not be under control d. overhead costs are all variable costs
b, c
A job sheet contains (pick all that apply): a. selling costs charged to the job b. labor costs charged to the job c. materials costs charged to the job d. manufacturing overhead costs charged to the job e. the selling price of the job
b, c, d
The total cost of a job includes (pick all that apply): a. nonmanufacturing cost b. applied MOH c. DM cost d. DL cost e. actual MOH
b, c, d
Which of the following costs are classified as MO a. assembly wages b. factory rent c. factory maintenance wages d. factory utilities e. marketing costs
b, c, d
The journal entry to record the move accounts allocation of overapplied and underapplied overhead includes entries to _______ a. raw materials b. COGS c. MO d. work in process e. finished goods
b, c, d, e
In a normal costing system, work in process is debited for (pick all that apply): a. actual MO b. MO applied c. indirect labor d. DM e. cost of goods manufactured
b, d
A journal entry debiting salaries expense and crediting salaries and wages payable could record _______ a. maintenance salaries b. factory supervisor's salaries c. administrative salaries d. assembly worker's wages
c
A journal entry that debits MO and credits accumulated depreciation records _______ a. the insurance of general factory overhead costs b. depreciation on office equipment c. depreciation on factory equipment
c
A journal entry that debits advertising expense and credits cash would record the incurrence of a _______ a. manufacturing cost b. cost that is capitalized and expensed when the product is sold c. selling cost d. prepaid cost
c
A journal entry that involves MO, work in process, finished goods, and COGS is recorded to _______ a. recognize the sale of goods b. apply MO to jobs c. dispose of underapplied or overapplied overhead d. recognize the completion of goods
c
All of the following are product costs except _______ a. MO costs b. raw materials c. sales commissions d. DL
c
Companies can improve job cost accuracy by using ________. a. a plantwide overhead rate b. direct-labor hours to apply overhead c. multiple predetermined overhead rates d. number of units in the job to apply overhead
c
Direct materials costs are recorded on the job cost sheet when the: a. requisition form is submitted to the storeroom clerk b. job is complete c. materials are issued to the job d. job is sold to a customer
c
The difference between overhead applied to work in process and actual overhead is _______ a. COGS manufactured b. adjusted COGS c. overapplied or underapplied overhead d. ending work in process inventory
c
The journal entry to record a cash payment of $400 for insurance on administrative office equipment debits _______ and credits cash a. MO b. work in process c. insurance expense d. depreciation expense
c
Total MO costs tend to: a. vary greatly with production b. be easily traceable to jobs c. remain fairly constant d. be impossible to assign to jobs
c
When a job is completed, its costs are transferred into _______ a. work in process b. sales revenue c. finished goods d. COGS
c
When a job is completed, which account is debited a. work in process b. COGS c. finished goods d. MO
c
Which of the following would not be considered a job in a service firm that uses job-order costing? a. a repair job at an auto repair shop b. a patient in a hospital c. the tax department in an accounting firm d. a client at a law firm
c
Why do companies use a predetermined overhead rate rather than an actual overhead rate? a. POHR is easier to use b. POHR is more accurate c. an actual OH rate is not known until the end of the period d. an actual OH rate can never be calculated
c
Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced a. the POHR changes with each unit produced b. the cost that would be incurred if another unit were produced cannot be calculated c. the cost to produce another unit is the incremental or marginal cost d. there would be no additional cost to produce another unit
c
a normal cost system assigns overhead to jobs using: a. budgeted production standards b. an actual overhead rate c. a predetermined overhead rate
c
Carmen, Inc. started the year with $100,000 of retained earnings. The company reported $125,000 of net operating income and declared $35,000 of dividends. What is the amount of the company's ending retained earnings? a. $35,000 b. $100,000 c. $190,000 d. $260,000
c Ending balance in retained earnings = Beginning balance in retained earnings + Net operating income - Dividends. Ending balance in retained earnings = $100,000 + $125,000 - $35,000 = $190,000
Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production? a. debit work in process and credit raw materials b. debit work in process, debit MO, and credit DM c. debit work in process, debit MO, and credit raw materials d. debit MO and credit raw materials
c amount of DM is debited to Work in Process amount of indirect materials used in debited to MO the total amount of raw materials use is credited to raw materials
Which of the following best describes the journal entry to record the use as direct and indirect materials in production? a. debit work in process and credit salaries and wages payable b. debit work in process, debit MO, and credit DL c. debit work in process, debit MO, and credit salaries and wages payable d. debit MO and credit salaries and wages payable
c the amount of the DL costs is debited to Work in Process the amount of indirect labor costs are debited to MO the total amount of the labor costs are credited to salaries and wages payable
A bill of materials contains the (pick all that apply): a. type of materials to be drawn from the storeroom b. quantity of materials to be drawn from the storeroom c. type of each direct material needed to complete a unit of product d. quantity of each direct material needed to complete a unit of product
c, d
In a normal coating system the MO account is devoted for (pick all that apply): a. The cost of direct and indirect labor b. Overhead cost applied to work in process c. Actual overhead costs d. The cost of indirect materials
c, d
Zimmer, Inc. started the month of January with a beginning finished goods inventory of $20,000. The cost of goods manufactured during the month was $120,000. If the ending finished goods inventory was $50,000, calculate the unadjusted cost of goods sold for January. $140,000 $90,000 $120,000 $150,000
cost of goods available for sale= beg finished good inventory + cost of good manufactured cost of goods available for sale= $20,000 + $120,000= $140,000 unadjusted COGS= cost of goods available for sale - end finished goods inventory unadjusted cost of goods sold= $140,000 - $50,000= $90,000
An allocation base should be: a. M-Hrs b. a cost object c. DL-Hrs d. a cost driver
d
Bar codes can be used to: a. reduce the amount of DL time spent on a job b. trace indirect costs to jobs c. automatically record and post indirect labor costs to jobs d. automatically record and post DL costs to jobs
d
In the formula Y = a + bX, a represents the estimated: a. total MO cost b. variable MO cost per unit c. total amount of the allocation base d. total fixed MO cost
d
The POHR is calculated: a. as soon as actual overhead is known b. as the period progresses c. after the period is over d. before the period begins
d
The journal entry to record $1,000 is expired prepaid insurance on factory equipment is debit a. work in process $1,000 and credit prepaid insurance $1,000 b. insurance expense $1,000 and credit prepaid insurance $1,000 c. prepaid insurance $1,000 and credit accounts payable $1,000 d. MO $1,000 and credit prepaid insurance $1,000
d
What is the term used when a company applies less overhead to production than it actually incurs? a. Misapplied b. Overapplied c. Unadjusted d. Underapplied
d
When all of a company's job cost sheets are viewed collectively they form what is known as a ________. a. general ledger b. inventory c. job-order costing system d. subsidiary ledger
d
When goods are sold on account, what accounts are credited a. COGS and accounts receivable b. finished goods and accounts receivable c. COGS and finished goods d. finished goods and sales
d
Which of the following occurs when a job has been completed and transferred to the finished goods warehouse a. debit to cost of goods manufactured b. debit to COGS c. credit to finished goods d. credit to work in process
d when a job has been completed and transferred to the finished goods warehouse finished goods is debited and work in process is credited
The allocation base should ________ the overhead cost
drive
Completed units that have not yet been sold are found in _______ _______ inventory
finished goods
The COGS _______ is the sum of all amounts transferred from work in process to finished goods during a period
manufactured
An hour-by-hour summary of an employee's activities throughout the day is found on the _______ _______
time ticket
Units of product that are only partially complete are contained in the _______ _______ _______ inventory
work in process
Transaction: MO is applied to jobs using a POHR Debit: _______ Credit: ________
work in process, MO when MO is applied to jobs the work in process account is increased with a debit and the MO account is decreased with a credit
Transaction: DM are issued into production for a specific job Debit: _______ Credit: ________
work in process, raw materials when direct raw materials are used the balance of work in process increases with a debit whereas raw materials decreases with a credit
Transaction: the wages of direct laborers who worked on a particular job are payable Debit: _______ Credit: ________
work in process, salaries and wages payable direct manufacturing costs such as DL are added to the work in process account with a debit and the salaries and wages payable account is increased with a credit
