Cost Acct

Job #4260 consisted of 1,000 units at a total cost of $200,000. The cost transferred to Cost of Goods Sold for the sale of 600 of the units is ______.

$120,000

Which of the following would not be a good allocation base for manufacturing overhead?

Accounting hours

Which of the following costs are charged directly to the income statement?

Administrative costs, Selling costs

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.

What side of the Manufacturing overhead account is applied manufacturing overhead entered on?

Always the credit side

Why do companies use a predetermined overhead rate rather than an actual overhead rate?

An actual overhead rate is not known until the end of the period.

Which of the statements regarding closing out over or underapplied overhead is correct?

Closing to Cost of goods sold is simpler, and allocating is more accurate.

Nonmanufacturing costs include ______.

Company presidents salary, sales commissions.

Which of the following statements is true when referring to fixed costs?

Discretionary fixed costs can often be reduced to zero for short periods of time without seriously impairing the long-run goals of the company.

When a job is completed, its costs are transferred into ______.

Finished Goods

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead

If a company incurs $2,000 of factory rent, $1,000 of factory utilities, and $5,000 of miscellaneous factory costs, the journal entry to record these transactions would be to debit ______.

Manufacturing overhead $8,000 and credit Accounts payable $8,000

The journal entry to record accrued property taxes for a factory building debits ______.

Manufacturing overhead and credits Property taxes payable

Which of the following would not be charged to the Manufacturing overhead account?

Nonmanufacturing costs

Which of the following would be considered direct materials in a service firm that uses job-order costing?

Paperwork at a law firm

Which of the following is not a manufacturing cost category?

Selling & administrative costs

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing?

The salary of the manager at a hair salon

Which of the following would not be considered a job in a service firm that uses job-order costing?

The tax department in an accounting firm

Manufacturing overhead is applied with a debit to ______.

Work in process

The journal entry to record $10,000 in manufacturing overhead applied to Job #40 debits ______.

Work in process $10,000 and credits Manufacturing overhead $10,000

A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction debits ______.

Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000

Cost-plus pricing occurs when ______.

a markup percentage is added to the cost of a job

All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under costing.

absorption

The journal entry to record the purchase of materials credits ______.

accounts payable

When a company creates overhead rates based on the actions it performs, it is employing an approach called

activity based costing

Overhead is overapplied if ______.

actual overhead is less than applied overhead

Overhead is underapplied if ______.

actual overhead is more than applied overhead

A journal entry debiting Salaries expense and crediting Salaries and wages payable could record ______.

administrative salaries

The more accurate method of closing out the balance in Manufacturing overhead is ______.

allocating it among Work in process, Finished goods, and Cost of goods sold

A measure such as direct labor-hours or machine hours used to assign overhead costs to products and services is called a cost driver or a(n)______________ .

allocation base

The journal entry to record selling and administrative salaries debits ______.

an expense account and credits Cash or a liability

A journal entry that debits Work in process and credits Manufacturing overhead is recording the ______.

application of manufacturing overhead costs

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and ______.

applied manufacturing overhead cost

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______.

as they are incurred

The predetermined overhead rate is calculated ______.

before the period begins

How individual costs react to changes in activity level is referred to as cost _________________.

behavior

The type and quantity of each type of direct material needed to complete a unit of product is listed on the ______.

bill of materials

Costs assigned to units of product in absorption costing include ______ manufacturing costs.

both variable and fixed

The difference between direct labor and indirect labor is that direct labor ______.

can be easily traced to jobs, while indirect labor cannot

The simpler method of closing out the balance of Manufacturing overhead is ______.

closing it out to Cost of goods sold

Manufacturing overhead costs ______.

consist of many different items, are indirect costs

Finished goods ______.

consists of completed, unsold goods

A factor that causes overhead costs is called a ______.

cost driver

Any item for which cost data is desired is called a(n)___________ .

cost object

Product costs that have become expenses can be found in:

cost of goods sold

The relative proportion of variable, fixed, and mixed costs in a company is known as the company's:

cost structure

Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited

The adjustment for overapplied overhead ______ net income.

decreases cost of goods sold and increases

Underapplied or overapplied overhead is the ______.

difference between overhead applied to work in process and actual overhead

When a company uses a departmental approach rather than a plantwide approach to applying overhead, the selling price of the product will always be ______.

different

The total cost of a job includes ______.

direct labor cost applied manufacturing overhead direct materials cost

A journal entry that debits Manufacturing overhead and credits Accounts payable would not be used to record ______.

direct labor costs

Unadjusted cost of goods sold is calculated by subtracting ______.

ending finished goods inventory from goods available for sale

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 appeal of using predetermined departmental overhead rates is they presumably provide ______.

enhanced information for decision making

To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the ______.

estimated total allocation base

The formula for a predetermined overhead rate is ______.

estimated total manufacturing overhead cost ÷ estimated total allocation base

Manufacturing overhead costs include ______.

factory rent factory utilities factory maintenance wages

A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______.

factory utilities expense, rent expense on factory equipment

If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used.

false

In a job-order cost system, indirect labor is assigned to a job using information from the employee time ticket.

false

true or false Direct labor costs flow through the Raw materials inventory account.

false

true or false Raw materials inventory only includes the cost of direct materials.

false

Completed units that have not yet been sold are found in _______________inventory.

finished goods

Within the relevant range of activity, ______ costs remain constant in total.

fixed

In a system that uses multiple predetermined overhead rates, overhead is applied ______.

in each department as jobs proceed through the department

Selling and administrative costs first appear on the ______.

income statement

The adjustment for underapplied overhead ______ net income.

increases cost of goods sold and decreases

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

indirect

Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs.

indirect

A journal entry that debits Work in process and Manufacturing overhead and credits Raw materials records the ______.

issuance of materials

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the ______.

job cost sheet

Companies that make many different products each period use _______________costing.

job-order

Typical cost drivers include ______.

machine-hours flight-hours computer time

The cost of goods______________ is the sum of all amounts transferred from Work in process to Finished goods during a period.

manufactured

The schedule of cost of goods ______________summarizes costs that remain in Work in process inventory and that have been transferred from Work in process to Finished goods inventory.

manufactured

Factory labor charges that cannot be easily traced to a job are treated as ______.

manufacturing overhead

Categories of manufacturing costs include ______.

manufacturing overhead, direct labor, direct materials

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.

manufacturing overhead, indirect materials

Manufacturing overhead consists of ______.

many different kinds of indirect costs

Companies that use job-order costing make ______.

many different products

Direct materials costs are recorded on the job cost sheet when the ______.

materials are issued to the job

An allocation base is a(n) ______.

measure of activity used to assign overhead costs to products and services

When compared to a departmental approach, using activity-based costing results in ______ overhead rates.

more

Compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is ______ accurate.

more complex and more

Gross margin minus selling and administrative expenses equals ______.

net operating income

When labor costs are incurred, _________ labor costs are added directly to the Work in Process account.

only direct

The difference between overhead applied to work in process and actual overhead is ______.

overapplied or underapplied overhead

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find ______.

overhead applied to the job

Selling and administrative costs incurred are treated as ______.

period expenses

The formula for applying overhead to a specific job is ______.

predetermined overhead rate × amount of allocation base incurred by job

Direct materials, direct labor, and manufacturing overhead are all ______ costs.

product

A journal entry that debits Raw Materials and credits Accounts Payable is recording the ______.

purchase of materials

A bill of materials contains the ______.

quantity of each direct material needed to complete a unit of product

The materials that go into the final product are called ________materials.

raw

Any purchased materials that will go into the finished product are first recorded in the ________________ inventory account.

raw materials

The journal entry to record issuing materials to be used in production credits ______.

raw materials

A journal entry that debits Manufacturing overhead and credits Property taxes payable records the ______.

recognition of accrued property taxes

The assumption that cost behavior is strictly linear is reasonably valid within the________________ of activity.

relevant range

Net operating income is calculated by subtracting ______ from ______.

selling and administrative expenses; gross margin

The schedule of cost of goods____________ summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold.

sold

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n)

subsidiary ledger

When calculating the cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials is ______.

subtracted from raw materials used in production

Cost of goods manufactured is the ______.

sum of all jobs transferred from Work in process to Finished goods

Period costs are always expensed on the income statement in the period in which ______.

they are incurred

An income statement focusing on product and period costs has been prepared using a(n) ____________format, while a(n)_______________ format income statement makes a distinction between fixed and variable costs.

traditional, contribution

Actual overhead costs are not assigned to jobs in a job costing system.

true

The fact that one department may be labor intensive while another department is machine intensive explains in part why multiple predetermined overhead rates are often used in larger companies.

true

True or false: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

true

True or false: The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next.

true

true or false Raw materials inventory represents the cost of materials not yet used in production.

true

true or false When materials are purchased they are recorded in the Raw materials inventory account.

true

A debit balance in Manufacturing overhead means overhead was___________ .

underapplied

A debit balance in Manufacturing overhead means overhead was_____________.

underapplied

When only a portion of the units involved in a job are sold, the ______.

unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold

Widely used allocation bases in manufacturing include ______.

units of product machine hours direct labor cost direct labor hours

Costs assigned to units of product under absorption costing include ______.

variable manufacturing

Costs of partially completed units are accounted for in ______.

work in process

Units of product that are only partially complete are contained in the ________________ inventory

work in process

When a job is completed, the job costs are transferred OUT OF ______.

work in process