ACCT 2020 - Chapter 2 - Smart Book Practice
The basic formula for process costing is Blank______. Multiple choice question. -total cost = actual direct materials + actual direct labor + applied overhead -average unit cost = total manufacturing cost ÷ total units produced -average unit cost = total units produced ÷ total manufacturing costs
average unit cost = total manufacturing cost ÷ total units produced
The formula for a predetermined overhead rate is Blank______. Multiple choice question. actual total cost driver ÷ actual total manufacturing overhead cost estimated total manufacturing overhead cost ÷ estimated total cost driver estimated total cost driver ÷ estimated total manufacturing overhead cost actual total manufacturing overhead cost ÷ actual total cost driver
estimated total manufacturing overhead cost ÷ estimated total cost driver
Ideally an allocation base should ______. Multiple choice question. be calculated using a predetermined overhead rate should not be a cost driver explain or influence the amount of overhead incurred be a cost associated with producing the firm's goods
explain or influence the amount of overhead incurred
Labor costs Blank______. Multiple select question. may be direct or indirect are always recorded directly into Work in Process are recorded in basically the same way as material costs are determined from the job cost sheets
may be direct or indirect are recorded in basically the same way as material costs
Costs are transferred out of Finished Goods inventory Blank______. Multiple choice question. when goods are sold when a customer places an order to purchase the goods at the end of the accounting period when goods are completed
when goods are sold
Given the following, compute the cost of goods manufactured. Direct material cost: $40,000, Direct labor cost: $100,000, Applied overhead: $120,000, Actual overhead: $130,000; Beginning work in process inventory: $30,000 Ending work in process inventory: $12,000. Multiple choice question. $278,000 $288,000 $260,000 $242,000
$278,000 Reason: $30,000 + $40,000 + $100,000 + $120,000 - $12,000 = $278,000
Which of the following statements are true? Multiple select question. -Raw Materials Inventory represents the cost of materials not yet used in production. -Raw Materials Inventory only includes the cost of direct materials. -Direct labor costs flow through the Raw materials inventory account. -When materials are purchased they are recorded in 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.
The first step in assigning manufacturing overhead is to determine the _________ ______________ or Cost Driver.
Allocation Base
On the job cost sheet and work in process accounts, the Blank______ manufacturing overhead is recorded. Multiple choice question. applied budgeted actual
Applied
Which of the following items are included on a cost of goods manufactured report? Multiple select question. Applied manufacturing overhead Beginning and ending finished goods inventory Actual manufacturing overhead Beginning and ending raw materials inventory Beginning and ending work in process inventory
Applied manufacturing overhead Beginning and ending raw materials inventory Beginning and ending work in process inventory
When is the predetermined overhead rate calculated? Multiple choice question. As soon as actual overhead is known Before the period begins Throughout the year After the period is over
Before the period begins
When is the predetermined overhead rate calculated? Multiple choice question. As soon as actual overhead is known Throughout the year After the period is over Before the period begins
Before the period begins
Job-order costing would most likely be used in a(n) Blank______. Multiple choice question. construction company Dairy farm that produces raw milk Oil refinery Soda bottling factory Construction Company
Construction Company
A direct labor____________ _____________ is a document used to record how long workers spend on each job and task.
Time Ticket
Which of the following statements are true? Multiple select question. 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. Raw Materials Inventory represents the cost of materials not yet used in production.
The basic formula for process costing is Blank______. Multiple choice question. average unit cost = total manufacturing cost ÷ total units produced average unit cost = total units produced ÷ total manufacturing costs total cost = actual direct materials + actual direct labor + applied overhead
average unit cost = total manufacturing cost ÷ total units produced
Because service firms tend to be labor-intensive, the primary driver used to assign cost is ___________ ____________ .
billable hours
The most common driver used to assign costs in a service firm is Blank______. Multiple choice question. billable hours machine hours number of clients labor dollars
billable hours
Finished Goods Inventory Blank______. Multiple choice question. is the same as cost of goods manufactured consists of goods that have been sold to customers during the period consists of completed, unsold goods consists of goods that require additional processing before being sold
consists of completed, unsold goods
Underapplied or overapplied overhead is the Blank______. Multiple choice question. total overhead applied to work in process sum of overhead applied to jobs and actual overhead difference between overhead applied to jobs and actual overhead same as actual overhead
difference between overhead applied to jobs and actual overhead
The document used to record the time workers spend on each job and task is a Blank______. Multiple choice question. job cost sheet materials requisition form direct labor time ticket production order
direct labor time ticket
When materials are requisitioned into production, ______. Multiple select question. direct materials are recorded in Work in Process indirect materials are recorded as a separate line item on the job cost sheet indirect materials are recorded in Work in Process direct materials are recorded on the job cost sheet
direct materials are recorded in Work in Process direct materials are recorded on the job cost sheet
To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the Blank______. Multiple choice question. estimated units of production estimated total direct labor hours estimated total cost driver actual total manufacturing overhead
estimated total cost driver
A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total cost driver.
estimated; estimated
The cost of jobs that have been completed but not yet sold are contained in _____________ ________________ Inventory.
finished goods
Companies that use job-order costing Blank______.
make unique products
Cost of goods ____________ is the total cost of jobs completed during the period.
manufactured
Cost of goods sold ________________ is the total cost of jobs completed during the period
manufactured
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
Factory labor charges that cannot be easily traced to a job are treated as ______. Multiple choice question. nonmanufacturing costs direct labor manufacturing overhead
manufacturing overhead
Categories of manufacturing costs include ______. Multiple select question. manufacturing overhead direct labor administrative expenses direct materials selling expenses
manufacturing overhead direct labor direct materials
Categories of manufacturing costs include ______. Select all that apply administrative expenses manufacturing overhead direct labor direct materials selling expenses
manufacturing overhead direct labor direct materials
Labor costs Blank______. Multiple select question. may be direct or indirect are determined from the job cost sheets are always recorded directly into Work in Process are recorded in basically the same way as material costs
may be direct or indirect are recorded in basically the same way as material costs
An allocation base is a(n) Blank______. Multiple choice question. activity that causes overhead costs to change measure used to assign all manufacturing costs to products and services measure of activity used to assign overhead costs to products and services
measure of activity used to assign overhead costs to products and services
Nonmanufacturing costs incurred during a period are treated as Blank______. Multiple choice question. assets period expenses product costs liabilities
period expenses
Materials requisition forms are used to Blank______. Multiple select question. record the cost of raw materials in the accounting system control the flow of materials from inventory into production specify the cost of materials to be ordered summarize the cost of a job
record the cost of raw materials in the accounting system control the flow of materials from inventory into production
The major difference between job order and process costing is Blank______. whether the products produced are similar or different whether the products produced are hand made or machine made job order costing is used for products and process costing is used for services
whether the products produced are similar or different
Raw materials inventory was $5,000 at the beginning of the year and $12,000 at the end of the year. During the year, a total of $27,000 in raw materials were purchased. The purchases included $4,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. Multiple choice question. $16,000 $30,000 $24,000 $20,000
$16,000 Reason: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($5,000 + $27,000 - $12,000 - $4,000 = $16,000)
True or false: The cost of each individual unit is tracked to products under both job order and process costing.
False - Because each unit is the same, there is no reason to track the costs of each unit individually under process costing.
When a job is completed, its costs are transferred into Blank______. Multiple choice question. Cost of Goods Sold Finished Goods Work in Process Sales Revenue
Finished Goods
What document specifies the type and quantity of direct materials used on a specific job? Multiple choice question. Bill of materials form Materials requisition form Direct labor time ticket Job cost sheet
Materials requisition form
When materials are purchased they are first recorded in the ______ account. Multiple choice question. Finished Goods Inventory Manufacturing Overhead Raw Materials Inventory Work in Process Inventory
Raw Materials Inventory
The total cost transferred out of Work in Process inventory into Finished Goods inventory is ______. Multiple choice question. net operating income cost of goods manufactured gross profit cost of goods sold
cost of goods manufactured
Direct materials used for the period cost $66,000; Direct labor cost $80,000; Applied overhead was $60,000; Actual overhead was $50,000; Beginning work in process inventory was $27,000; and Ending work in process inventory was $25,000. Calculate the cost of goods manufactured. Multiple choice question. $206,000 $198,000 $208,000 $258,000
$208,000 Reason: $27,000 + ($66,000 + $80,000 + $60,000) - $25,000 = $208,000
Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased. The purchases included $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. Multiple choice question. $70,000 $102,000 $74,000 $130,000
$74,000 Reason: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($27,000 + $100,000 - $28,000 - $25,000 = $74,000)
When a job is completed, its costs are transferred out of Blank______. Multiple choice question. Manufacturing Overhead Cost of Goods Sold Finished Goods Work in Process
Work in Process
When a job is completed, its costs are transferred out of Blank______. Multiple choice question. Work in Process Cost of Goods Sold Finished Goods Manufacturing Overhead
Work in Process
On the job cost sheet and work in process accounts, the Blank______ manufacturing overhead is recorded. Multiple choice question. applied budgeted actual
applied
Predetermined overhead rates are ______. Multiple choice question. based on some secondary allocation measure generally calculated for each month of the year calculated using estimated costs and actual cost driver usage used to assign both direct and indirect manufacturing costs to jobs
based on some secondary allocation measure
When goods are sold to customers, Blank______. Multiple choice question. costs are transferred from Work in Process to Finished Goods costs are transferred from Finished Goods to Cost of Goods Sold costs are transferred from Finished Goods to Sales Revenue the inventory accounts are not affected
costs are transferred from Finished Goods to Cost of Goods Sold
he first step in assigning manufacturing overhead costs using a predetermined overhead rate is to Blank______. Multiple choice question. calculate the predetermined overhead rate determine the cost driver assign manufacturing overhead
determine the cost driver
The first step in assigning manufacturing overhead costs using a predetermined overhead rate is to Blank______. Multiple choice question. calculate the predetermined overhead rate assign manufacturing overhead determine the cost driver
determine the cost driver - Step 1 calculate the predetermined overhead rate - Step 2 assign manufacturing overhead - Step 3
To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the Blank______. Multiple choice question. estimated units of production actual total manufacturing overhead estimated total cost driver estimated total direct labor hours
estimated total cost driver Reason: Estimated manufacturing overhead is divided by estimated units of production only if units of production is the allocation base. Reason: Estimated manufacturing overhead is divided by estimated direct labor hours only if direct labor hours is the allocation base.
Process costing Blank______. Multiple select question. is used for mass production uses job cost sheets accumulates costs by customer is used for homogeneous products
is used for mass production is used for homogeneous products
Actual manufacturing overhead consists of all Blank______. Multiple choice question. manufacturing costs other than direct labor and direct materials indirect costs costs other than direct labor and direct materials manufacturing costs
manufacturing costs other than direct labor and direct materials
An allocation base is a(n) Blank______. Multiple choice question. measure used to assign all manufacturing costs to products and services measure of activity used to assign overhead costs to products and services activity that causes overhead costs to change
measure of activity used to assign overhead costs to products and services
The difference between overhead applied to jobs and actual overhead is Blank______. Multiple choice question. cost of goods sold cost of goods manufactured overapplied or underapplied overhead ending work in process inventory
overapplied or underapplied overhead
Materials requisition forms are used to Blank______. Select all that apply record the cost of raw materials in the accounting system control the flow of materials from inventory into production summarize the cost of a job specify the cost of materials to be ordered
record the cost of raw materials in the accounting system control the flow of materials from inventory into production
The balance of work in process inventory may be calculated by Blank______. Multiple choice question. subtracting the cost of finished goods inventory from the sum of all manufacturing costs summing the costs of all jobs in process summing the sales value of all jobs in process subtracting the cost of goods sold from the sum of all manufacturing costs
summing the costs of all jobs in process
In a job-order costing system costs flow first to ______. Multiple choice question. cost of goods manufactured and then to the inventory accounts the income statement and then to the inventory accounts the inventory accounts and then to the Finished Goods account the inventory accounts and then to cost of goods sold
the inventory accounts and then to cost of goods sold
When actual manufacturing overhead costs are incurred, Blank______. Multiple choice question. the manufacturing overhead cost is debited work in process inventory is debited the manufacturing overhead cost is credited work in process inventory is credited
the manufacturing overhead cost is debited
Overhead costs are debited to Work in Process when Blank______. Multiple choice question. the actual costs are incurred the job is sold the job is started they are applied to jobs
they are applied to jobs
Overhead costs are debited to Work in Process when Blank______. Multiple choice question. the actual costs are incurred the job is started they are applied to jobs the job is sold
they are applied to jobs Reason: Actual incurred overhead costs are debited to Manufacturing Overhead.
Costs of partially completed units are accounted for in Blank______. Multiple choice question. work in process inventory raw materials inventory finished goods inventory cost of goods manufactured
work in process inventory
Jonas Corporation used $20,000 of direct materials, incurred $40,000 of direct labor cost, and applied $30,000 of manufacturing overhead to jobs this period. No jobs were incomplete at the beginning of the period, but at the end of the period, jobs with a total cost of $25,000 were unfinished. What was the cost of goods manufactured for this period? Multiple choice question. $65,000 $115,000 $90,000 $25,000
$65,000 Reason: ($20,000 + $40,000 + $30,000) + $0 - $25,000 = $65,000
Process costing Blank______. Multiple select question. accumulates costs by customer is used for homogeneous products is used for mass production uses job cost sheets
is used for homogeneous products is used for mass production
All materials that will be used in future production are first recorded in the _________________ ___________________ Inventory account.
Raw materials
The cost of goods manufactured report includes Blank______ manufacturing overhead costs. Multiple choice question. actual applied
applied
Predetermined overhead rates are ______. Multiple choice question. used to assign both direct and indirect manufacturing costs to jobs calculated using estimated costs and actual cost driver usage based on some secondary allocation measure generally calculated for each month of the year
based on some secondary allocation measure Reason: A predetermined overhead rate is used for indirect costs only. Reason: A predetermined overhead rate is calculated using estimated costs and cost driver usage. Reason: Overhead rates are generally calculated for the entire year to avoid seasonal fluctuations.
Nonmanufacturing costs increase Blank______. Multiple choice question. various asset and liability accounts the Cost of Goods sold account the Selling, General & Administrative expense accounts the Manufacturing Overhead account
the Selling, General & Administrative expense accounts
Which of the following is not a manufacturing cost category? Multiple choice question. Direct materials Manufacturing overhead Selling & administrative costs Direct labor
Selling & administrative costs
The formula for a predetermined overhead rate is Blank______. Multiple choice question. actual total manufacturing overhead cost ÷ actual total cost driver actual total cost driver ÷ actual total manufacturing overhead cost estimated total manufacturing overhead cost ÷ estimated total cost driver estimated total cost driver ÷ estimated total manufacturing overhead cost
estimated total manufacturing overhead cost ÷ estimated total cost driver