Acct 2 Test 2

Which two terms below describe the wages paid to security guards that monitor a factory 24 hours a day? A. Variable cost and direct cost B. Fixed cost and direct cost C. Variable cost D. Fixed cost and indirect method

D. Fixed cost and indirect method

An example of a period cost is A. Fire insurance on a factory building B. Salary of a factory supervisor C. Direct materials D. Rent on a headquarters building

D. Rent on a headquarters building

Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record the completion of Job KN668 at a total cost of $7,600?

Debit Finished Goods $7,600 Credit Work in Process $7,600

Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record $9,500 of depreciation on its printing presses?

Debit Manufacturing Overhead $9,500 Credit Accumulated Depreciation $9,500

What is the journal entry recorded when recognizing factory overhead?

Debit factory overhead, credit the appropriate accounts. For every factory cost except direct materials and direct labor, you debit factory overhead and credit the factory cost

What is the journal entry used to recognize finished jobs/goods?

Debit finished goods, Credit work in process

What is the journal entry recorded once we buy raw materials?

Debit materials, Credit accounts payable

What is the journal entry recorded when we use the predetermined factory overhead rate?

Debit work in process, Credit factory overhead

What is the journal entry recorded once we begin production and start using the direct materials?

Debit work in process, Credit materials

What is the journal entry recorded when recognizing direct labor?

Debit work in process, Credit wages payable

Direct labor is a _________ cost, ________________ cost, and a _____________ cost, but not a ____________ cost

Direct Labor is a Prime cost, conversion cost, and a product cost, but not a period cost

The wages of factory workers who directly hands on work with the inventory

Direct labor

What are wages of those who work on the machines classified as?

Direct labor

The materials that directly become part of the product.

Direct materials

What is paper used to make magazines classified as?

Direct materials

What is included in factory costs?

Direct materials, Direct labor, and Factory overhead

The cost of inventory is the sum of ____________.

Direct materials, direct labor, and factory overhead

__________ costs make up the cost of inventory.

Factory

All factory costs other than direct materials and direct labor

Factory overhead

What is the maintenance on printing machines classified as?

Factory overhead

True or False: Wages paid to production supervisors would be considered direct labor

False

True or False: When completed goods are sold, the transaction is recorded as a debit to Cost of Goods Sold and a credit to Work in Process

False

Is the factory supervisor's salary variable, fixed, or mixed?

Fixed

Costs that are constant as production varies

Fixed cost

What kind of cost is depreciation?

Fixed cost

What kind of cost is factory rent?

Fixed cost

What kind of cost is indirect labor?

Fixed cost

What kind of cost is property taxes?

Fixed cost

What is the formula for Investment Turnover?

Investment Turnover = Sales / Invested Assets

Why is inventory important?

It goes on the balance sheet as ending inventory and the income statement as cost of goods sold.

The costs of selling the product

Marketing expenses

What are the three inventory accounts for each job that manufacturers have?

Materials, work in process, and finished goods

Costs that are partially fixed and partially variable

Mixed cost

What kind of cost is utilties?

Mixed cost

When is the work in process inventory account used?

Once we begin production We charge factory costs here Contains jobs that are not yet complete

Costs that are expensed immediately

Period cost

What is the formula for predetermined factory overhead rate?

Predetermined Factory Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Activity Base

During December, Fleeger Corporation incurred $51,000 of direct labor costs and $5,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a: A. Debit to Work in Process of $56,000 B. Credit to Work in Process of $51,000 C. Debit to Work in Process of $51,000 D. Credit to Work in Process of $56,000

C. Debit to Work in Process of $51,000

The cost of materials are classified as: A. Conversion cost, manufacturing cost, and prime cost B. Conversion cost and manufacturing cost C. Manufacturing cost and prime cost

C. Manufacturing cost and prime cost

Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following? A. Product cost B. Manufacturing overhead C. Period cost D. Administrative cost

C. Period cost

Freeman Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labor-hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor-hours. The cost records for the year will show: A. Overapplied overhead of $30,000 B. Underapplied overhead of $30,000 C. Underapplied overhead of $6,000 D. Overapplied overhead of $6,000

C. Underapplied overhead of $6,000

What kind of cost would salaries for the supervisor be?

Conversion cost

What is the formula for conversion costs?

Conversion cost = direct labor + factory overhead

The following costs were incurred in August: Direct materials: $20,000 Direct labor: $18,000 Manufacturing overhead: $21,000 Selling expenses: $16,000 Administrative expenses: $21,000 Prime costs during the month totaled:

$38,000

The following costs were incurred in August: Direct Materials: $37,000 Direct Labor: $14,000 Manufacturing Overhead: $38,000 Selling Expenses: $10,000 Administrative Expenses: $28,000 Conversion costs during the month totaled:

$52,000

In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include: A. A credit to the Manufacturing Overhead account B. A credit to the Work in Process inventory account C. A debit to Cost of Goods Sold D. A debit to the Manufacturing Overhead account

A. A credit to the Manufacturing Overhead account

Which of following situations always results in underapplied overhead? A. Actual overhead is greater than applied overhead B. Actual overhead is less than applied overhead C. Estimated overhead is greater than actual overhead D. Estimated overhead is less than actual overhead

A. Actual overhead is greater than applied overhead

Which of the following terms could be used to correctly describe the wages paid to the workers that cut up the cloth into the jean pattern shape? A. Conversion cost and variable cost B. Conversion cost C. Variable cost

A. Conversion cost and variable cost

During October, Kreitner Inc. transferred $73,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $76,000. The journal entries to record these transactions would include a: A. Credit to Work in Process of $73,000 B. Credit to Cost of Goods Sold of $76,000 C. Debit to Finished Goods of $76,000 D. Credit to Finished Goods of $73,000

A. Credit to Work in Process of $73,000

Prime cost consists of direct materials combines with A. Direct Labor B. Manufacturing Overhead C. Indirect Materials D. Cost of Goods Manufactured

A. Direct labor

The cost of fire insurance for a manufacturing plant is generally considered to be A. Product Cost B. Period Cost C. Variable Cost D. All of these

A. Product cost

The corporate controller's salary would be considered a(n)

Administrative cost

The costs of operating the company

Administrative expenses

What is included in non-factory costs?

Administrative expenses and Marketing expenses

Which of the following companies would be most likely to use a job-order costing system rather than a process costing system? A. Fast food restaurant B. Shipbuilding C. Crude oil refining D. Candy making

B. Shipbuilding

Is direct labor a prime cost, conversion cost, or both?

Both

For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system? A. A steel factory that processes iron ore into steel bars B. A factory that processes sugar and other ingredients into black licorice C. A costume maker that makes specialty costumes for figure skaters D. All of these

C. A costume maker that makes speciality costumes for figure skaters

What is the formula for prime costs?

Prime cost = direct materials + direct labor

All factory costs are ____________ costs.

Product

Costs that are capitalized and charged to an asset

Product cost

What is the formula for Profit Margin?

Profit Margin = Operating Income / Sales

What is the formula for Return on Investments (ROI)?

Return on Investments = Operating Income / Invested Assets

What are conversion costs?

The cost of converting raw materials into a finished product

What are prime costs?

The prime/direct cost in making a product

True or False: Direct labor is a part of both prime cost and conversion cost

True

True or False: The cost of goods manufactured for a period is the amount transferred from work in process inventory to finished goods inventory during the period

True

True or False: The sum of all amounts transferred from the Work in Process account and into the Finished Goods account represents the Cost of Goods Manufactured for the period

True

A cost that varies with changes in the level of production

Variable cost

What kind of cost is direct labor?

Variable cost

What kind of cost is direct materials?

Variable cost

What kind of costs are factory costs?

Variable cost and product cost

When is the finished goods inventory account used?

We charge factory costs here once they are complete

When do we use job order costing?

When we have seperate distinct different jobs

When is the materials inventory account used?

When we purchase raw materials We debit the materials account

When do we use predetermined factory overhead rate?

When you assign the overhead jobs based on labor worked and pay rate