fin 8T

C

16. Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves? A. Machine-hours B. Power consumption C. Direct labor-hours D. Machine setups

A

17. What document is used to determine the actual amount of direct labor to record on a job cost sheet? A. Time ticket B. Payroll register C. Production order D. Wages payable account

D

19. In a job-order costing system, direct labor cost is ordinarily debited to: A. Manufacturing Overhead. B. Cost of Goods Sold. C. Finished Goods. D. Work in Process.

T

2. A job cost sheet is used to accumulate costs charged to a job.

B

20. In a job-order costing system, the use of direct materials that have been previously purchased is recorded as a debit to: A. Raw Materials inventory. B. Work in Process inventory. C. Finished Goods inventory. D. Manufacturing Overhead.

A

22. Which of the following accounts is debited when direct labor is recorded? A. Work in process B. Salaries and wages expense C. Salaries and wages payable D. Manufacturing overhead

T

1. The use of predetermined overhead rates in a job-order cost system makes it possible to estimate the total cost of a given job as soon as production is completed.

T

10. When a job has been completed, the goods are transferred from the production department to the finished goods warehouse and the journal entry would include a credit to Work in Process.

T

11. Underapplied or overapplied manufacturing overhead represents the difference between actual overhead costs and applied overhead costs.

T

12. Top management salaries should not go into the Manufacturing Overhead account.

T

13. If manufacturing overhead applied exceeds the actual manufacturing overhead costs of the period, then manufacturing overhead is overapplied.

B

14. In computing its predetermined overhead rate, Marple Company inadvertently left its indirect labor costs out of the computation. This oversight will cause: A. Manufacturing Overhead to be overapplied. B. the Cost of Goods Manufactured to be understated. C. the debits to the Manufacturing Overhead account to be understated. D. the ending balance in Work in Process to be overstated.

B

15. Which of the following is the correct formula to compute the predetermined overhead rate? A. Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. B. Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. C. Actual total manufacturing overhead costs divided by estimated total units in the allocation base. D. Estimated total manufacturing overhead costs divided by actual total units in the allocation base.

C

23. The balance in the Work in Process account equals: A. the balance in the Finished Goods inventory account. B. the balance in the Cost of Goods Sold account. C. the balances on the job cost sheets of uncompleted jobs. D. the balance in the Manufacturing Overhead account.

B

24. In a job-order costing system, indirect materials that have been previously purchased and that are used in production are recorded as a debit to: A. Work in Process inventory. B. Manufacturing Overhead. C. Finished Goods inventory. D. Raw Materials inventory.

B

25. Martinez Aerospace Company uses a job-order costing system. The direct materials for Job #045391 were purchased in July and put into production in August. The job was not completed by the end of August. At the end of August, in what account would the direct material cost assigned to Job #045391 be located? A. Raw materials inventory B. Work in process inventory C. Finished goods inventory D. Cost of goods manufactured

B

26. Which terms will make the following statement true? When manufacturing overhead is overapplied, the Manufacturing Overhead account has a balance and applied manufacturing overhead is greater than manufacturing overhead. A. debit, actual B. credit, actual C. debit, estimated D. credit, estimated

C

27. Which of the following is correct with respect to closing out overapplied manufacturing overhead to Cost of Goods Sold versus closing it out to Cost of Goods Sold and Finished Goods and Work in Process inventories? A. The balance in the Work in Process account after allocation will be higher if the overapplied manufacturing overhead is closed out by allocating it to all appropriate accounts. B. The balance in the Work in Process account after allocation will be the same under either method. C. Net operating income will be higher if all of the overapplied manufacturing overhead is closed out to Cost of Goods Sold. D. Cost of Goods Sold will be lower if the overapplied manufacturing overhead is closed out by allocating it to the inventory accounts as well as to Cost of Goods Sold.

A

28. Overapplied manufacturing overhead occurs when: A. applied overhead exceeds actual overhead. B. applied overhead exceeds estimated overhead. C. actual overhead exceeds estimated overhead. D. budgeted overhead exceeds actual overhead.

T

5. The process of assigning overhead cost to jobs is known as overhead application.

T

8. Period costs are expensed as incurred, rather than going into the Work in Process account.