Chapter 3. Job-Order Costing: Cost Flows and External Reporting

the manufacturing overhead account is debited when

actual overhead costs are incurred

when overhead is applied to work in process, manufacturing overhead is

credited

the journal entry to record expired prepaid factory insurance debits

manufacturing overhead and credits prepaid insurance

when labor costs are incurred, (1) are added directly to the work in process account

only direct labor costs

a journal entry that debits raw materials and credits accounts payable is recording the

purchase of materials

any purchased materials that will go into the finished product are first recorded in the (1) inventory account

raw materials

the journal entry to record the purchase of materials debits

raw materials

how is gross margin calculated?

sales - cost of goods sold

the schedule of cost of goods (1) summarizes costs that remain in finished goods inventory and that have been transferred to cost of goods sold

sold

cost of goods manufactured is the

sum of all jobs transferred from work in process to finished goods

the value of work in process is equal to

the cost of all unfinished jobs

applied manufacturing overhead will most likely (1) actual manufacturing overhead

not equal

overhead is underapplied if

actual overhead is more than applied overhead

true or false: actual overhead costs appear in the work in process account but not on the job cost sheet

false

true or false: period costs flow from finished goods to cost of goods sold

false

a journal entry debiting cost of goods sold and crediting finished goods is made when

goods are sold

when a job is completed, which account is debited?

finished goods

which of the following statements are true?

- 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 journal entry to record the more accurate allocation of overapplied or underapplied overhead includes entries to

- work in process - finished goods - manufacturing overhead - cost of goods sold

job #4260 consisted of 1000 units at a total cost of $200000. the cost transferred to cost of goods sold for the sale of 600 of the units is

$120000

when preparing financial statements in a job-ordering costing system, finished goods flow first to the (1) and then to the (2)

(1) balance sheet (2) income statement

gross margin is calculated by subtracting (1) from (2)

(1) cost of goods sold (2) sales

what methods can be used to dispose of underapplied or overapplied manufacturing overhead?

- allocate it to work in process, finished goods, and cost of goods sold - close it to cost of goods sold

work in progress consists of

- applied manufacturing overhead - actual direct materials cost - actual direct labor cost

which of the following are used to calculate cost of goods available for sale on the schedule of cost of goods sold?

- beginning finished goods inventory - cost of goods manufactured

which of the following costs are classified as manufacturing overhead?

- factory maintenance wages - factory rent - factory utilities

in a normal costing system, work in process is debited for

- manufacturing overhead applied - direct materials

actual overhead costs may not be proportional to the actual amount of the allocation base used because

- many actual overhead costs are fixed - overhead spending may not be under control

to calculate the adjusted cost of goods sold

add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold

to calculate adjusted cost of goods sold

add underapplied overhead to or subtract overapplied overhead from unajusted cost of goods sold

applied manufacturing overhead is entered on what side of the manufacturing overhead account ?

always the credit side

the journal entry to record general selling and administrative costs debits

an expense account and credit cash or a liability

actual manufacturing overhead costs are recorded in the manufacturing overhead account

as they are incurred

raw materials inventory is an

asset

when the period ends, manufacturing overhead is

closed

the simpler method of closing out the balance of manufacturing overhead is

closing it out to cost of goods sold

the amount transferred from work in process to finished goods is

cost of goods manufactured

how is unadjusted cost of goods sold calculated?

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

underapplied or overapplied manufacturing overhead can be disposed of by closing it to

cost of goods sold or allocating it to work in process, finished goods, and cost of goods sold

when overhead is underapplied, a (1) must be made to the manufacturing overhead account to close it out

credit

when actual overhead is incurred, manufacturing overhead is

debited

the journal entry to record depreciation on office equipment debits

depreciation expense and credits accumulated depreciation

a journal entry that debits depreciation expense and credits accumulated depreciation records

depreciation on office equipment

underapplied or overapplied overhead is the

difference between overhead applied to work in process and actual overhead

how do you calculate total manufacturing costs?

direct materials costs + direct labor costs + manufacturing overhead applied

to calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract

ending raw materials inventory and indirect materials used

the cost of jobs still unfinished at the end of a period are included in

ending work in process inventory

to calculate a predetermined overhead rate, divide estimated manufacturing overhead by the

estimated allocation base

cost of goods manufactured

includes the manufacturing costs of goods finished during the period

the schedule of cost of goods (1) summarizes costs that remain in work in process inventory and that have been transferred from work in process to finished goods inventory

manufactured

which account is credited when manufacturing overhead is applied?

manufacturing overhead

which of the following is a clearing account?

manufacturing overhead

george corporation recognized $1000 of accrued property taxes on its manufacturing facility. the journal entry to record this debits

manufacturing overhead $1000 and credits property taxes payable $1000

the journal entry to record the issuance of direct materials into production debits

work in process

when a job is completed, which account is credited?

work in process

a company requisitioned $40000 in direct materials and $30000 in indirect materials from the storeroom to be used in production. the journal entry to record this transaction would debit

work in process $40000, debit manufacturing overhead $30000 and credit raw materials $70000

which accounts are debited in the journal entry to record manufacturing labor costs?

work in process and manufacturing overhead

units of product that are only partially complete are contained in the (1) inventory

work in progress

if a company incurs $2000 of factory rent, $1000 of factory utilities, and $5000 of miscellaneous factory costs, the journal entry to record these transactions would be to debit

manufacturing overhead $8000 and credit accounts payable $8000

the journal entry to record 20000 in depreciation on factory equipment is debit

manufacturing overhead 20000 and credit accumulated depreciation 20000

gross margin minus selling and administrative expenses equals

net operating income

a debit balance in manufacturing overhead means overhead was

underapplied

fillia, Iinc. worked on three jobs this period: job 14c, which cost $15000; job 23a, which cost $28000, and job 45b, which cost $23000. at the end of the period, only job 14c was still in process (unfinished). The cost of goods manufactured this period is

$51000

completed units that have not yet been sold are found in (1) inventory

finished goods

when jobs are sold their costs are transferred out of

finished goods

the journal entry to record $20000 in depreciation on factory equipment is debit

manufacturing overhead $20000 and credit accumulated depreciation $20000

selling and administrative costs incurred are treated as

period expenses

how is adjusted cost of goods sold calculated?

unadjusted cost of goods sold + overhead underapplied