Lesson 11

Managers use the process cost summary for all of the following except:

evaluate company as a whole

A Schedule of Cost of Goods Manufactured includes all of the following costs:

factory overhead applied direct labor used work in process inventory direct materials used

Customer orientation

focuses on customer orientation

A cost accounting system: (Check all that apply.)

is used to control costs of manufacturing activities. helps managers' determine selling prices.

custom orders

job order operations

Producing products that are individually designed to meet the needs of a specific customer where each customized product is manufactured separately is the definition of:

job order production

The cost object in a job order system is the ______ and the cost object in a process costing system is the ______.

job; process or department

Process operations is defined as a manufacturing process that includes: (Check all that apply.)

large volumes of similar products. series of sequential processes.

Characteristics of process operations include: (Check all that apply.)

low product flexibility. identical units high volume production.

Companies use job cost sheets to track the costs of:

materials, labor, and overhead costs of a job

Understanding the cost of partially completed goods allows the manufacturer to:

measure production activity for the period

Job cost sheets can be used to: (Check all that apply.)

monitor costs incurred and to predict costs for each job. provide a record for the Cost of Goods Sold account. provide a subsidiary ledger for the Finished Goods Inventory account.

Continuous processing

movement of materials continuously through the manufacturing process

All of the following are manufacturing costs except:

office salaries

The journal entry to record indirect labor costs used in production includes a debit to Factory

overhead

The three types of manufacturing costs in a job order costing system include:

overhead direct labor direct materials

The mass production of similar products in a continuous flow of sequential processes is referred to as ________ operations.

process

The cost of the beginning work in process inventory was comprised of $3,000 of direct materials, $10,000 of direct labor, and $10,000 of factory overhead. Costs incurred during the period were comprised of $15,000 of direct materials costs, and $100,000 of conversion costs. The equivalent units of production (EUP) for the period were 9,000 for direct materials and 6,000 for conversion. The costs per EUP were:

$2.00 per EUP for direct materials and $20.00 per EUP for conversion.

The mass production of products in a continuous flow of steps is the definition of:

process operations

mass production

process operations

Manufacturing of products in a repetitive manner is referred to as (process/job order)_________operations while manufacturing custom products is referred to as (process/job order)______operations.

process, job order

A focus on customer orientation leads to improved_______

processes

List the four steps involving analysis when accounting for a department's activity, with the first step listed on top.

1. Physical flow 2. Equivalent units 3. Cost per equivalent unit 4. Assignment and reconciliation

List the following documents in the order in which they are used when recording indirect materials costs in job order cost accounting, with the first document on top.

1. Receiving report 2. Materials ledger report 3. Materials requestion 4. Factory overhead ledger

List the following documents in the order in which they are used when recording indirect labor costs in job order costing, with the first document on top.

1. Time tickets 2. Factory overhead ledger 3. Allocated to specific jobs through factory overhead

List the following documents in the order in which they are used when recording direct labor costs in job order costing, with the first document on top.

1. Time tickets 2. Job cost sheets 3. Factory wages payable

A company uses direct labor costs as its allocation base. Management estimates the company will incur $150,000 of direct labor cost during the year and total overhead costs of $200,000. What is their predetermined overhead rate?

1.33%

A company completes 21,000 units this month and has ending goods in process inventory of 3,000 units which are estimated to be 40% complete. Direct materials cost per EUP is $5.00 and Conversion cost per EUP is $1.50. The cost transferred to Finished Goods Inventory is $

136500

Department X started 550 units during the accounting period, completed and transferred out 500 units and had an ending balance of 200 units.______units were in beginning goods in process inventory for the department.

150

Bridge Building Company estimates that it will incur $1,200,000 in overhead costs for the year. Additionally, the company estimates 50,000 direct labor hours will be spent building custom walking bridges for the year at a total direct labor cost of $600,000. What is the predetermined overhead rate for Bridge Building Company if direct labor costs are to be used as an allocation base?

200% of direct labor cost Explanation: 1200000/600000

During the period, the Mixing Department completed 500 units and transferred them out to the Baking Department. At the end of the period, there were 4,000 units that are 40% complete as to direct materials in the Mixing Department. The equivalent units of production for direct materials equal:

2100 EUP

A company works on three jobs and incurs the following: Direct materials - $50,000 and Direct labor - $100,000. The company uses a predetermined overhead rate of 60% of direct labor costs. How much overhead will be allocated to the three jobs?

60000

Allocate overhead costs to jobs

Credit Factory Overhead

Sold job

Credit Finished Goods Inventory

Use direct materials

Credit Raw Materials Inventory

Use indirect materials

Credit Raw Materials Inventory

Allocate indirect labor

Credit factory wages payable

Bridge Builders Company examined its Factory Overhead account at the end of the year and discovered a credit balance of $2,000. The journal entry to close this account includes which of the following?

Credit to Cost of Goods Sold

All of the following are included on a job cost sheet except?

Customer's signature when job is complete

Job order

Customized home

Manufacturing costs flow in which order?

raw materials inventory, work in process inventory, finished goods inventory

Process design

reorganizes production processes to make them more efficient

Equivalent units of production refers to the number of units that could have been:

started and completed

The total number of physical units to account for equals the:

total number of units accounted for.

True or false: A production department in a process operation has a manager that works for two departments. Since the manager is in a supervisory position, the labor is considered indirect labor and the cost is charged to Factory Overhead.

true

In Step 4, the EUP from Step 2 and the cost per EUP from Step 3 are used to assign costs to the:

units completed and transferred to finished goods units in ending work in process inventory

Robotics and automation

use results in reduced labor costs and increased efficiency

Just-in-time production

uses minimal inventory levels

The correct order of cost flows in a job order costing system is:

work in process; finished goods, cost of goods sold

Pay factory property tax

Debit Factory Overhead

Pay factory utilities

Debit Factory Overhead

Complete job

Debit Finished Goods Inventory

Purchase indirect materials

Debit Raw Materials Inventory

Purchase materials

Debit Raw Materials Inventory

Direct labor used

Debit Work in Process Inventory

The journal entry to record the use of utilities in a factory includes which of the following:

Debit to Factor Overhead Credit to Utilities Payable

The journal entry to purchase materials on credit for factory use includes which of the following?

Debit to Raw Materials Inventory Credit to Accounts Payable

The journal entry to assign costs of direct labor used in production includes which two of the following?

Debit to Work in Process Inventory Credit to Factory Wages Payable

A cost accounting system includes which of the following?

It accumulates production costs and assigns them to products and services.

Bridge Builders Company examined its Factory Overhead account at the end of the year and discovered a debit balance. What does this indicate?

Overhead has been underapplied.

What account is debited when materials are purchased on credit for later use in production?

Raw Materials Inventory

What is the chronological order of the material cost flows through the subsidiary records?

Receiving Reports, Materials Ledger Card, Requisitions, Job Cost Sheets

Process

Soft drinks

True or false: Using the weighted-average method, the computation of EUP separates units into direct materials and conversion.

True

If the factory overhead is overapplied, then: (Check all that apply.)

applied overhead costs > actual overhead costs. the Factory Overhead account has a credit balance.

Manufacturing costs include direct materials, direct labor, and

applied overhead costs.

The predetermined overhead rate is calculated:

at the start of the accounting period

Process and job order operations are similar in that both: (Check all that apply.)

combine materials, labor, and overhead in producing products. are used to determine the cost per unit of product or service.

After determining the physical flow of units, the next step in process costing is:

compute equivalent units of production

The parts of the process cost report include: (Check all that apply.)

cost assignment and reconciliation. physical flow of units. equivalent units of production.

A Schedule of Cost of Goods Manufactured includes all of the following costs except:

cost of goods sold

A process cost report summarizes the following process costing steps: (Check all that apply).

costs per equivalent unit of production physical flow of units equivalent units of production

Job order production is most likely used by companies that produce:

customized wedding cakes

The journal entry to record depreciation on factory equipment is to:

debit Factory Overhead and credit Accumulated Depreciation - Equipment

The journal entry to record indirect labor used in production is to:

debit Factory Overhead and credit Factory Wages Payable

The journal entry to record the accrual of factory utilities is to:

debit Factory Overhead and credit Utilities Payable

The journal entry to record the transfer of completed work in process to finished goods in process costing is to:

debit Finished Goods Inventory and credit Work in Process Inventory

The journal entry to record the purchase of materials on account in process cost accounting is:

debit Raw Materials Inventory and credit Accounts Payable

The journal entry to record the purchase of materials on account is to:

debit Raw Materials Inventory and credit Accounts Payable

The journal entry to record the transfer of units from Process 1 to the Process 2 in process costing is:

debit Work in Process Inventory - 2 and credit Work in Process Inventory - 1

The journal entry to record direct labor in production is to:

debit Work in Process Inventory and credit Factory Wages Payable.

The journal entry to record the use of direct labor in process costing is to:

debit Work in Process Inventory and credit Factory Wages Payable.

Common overhead allocation methods for companies with process operations includes ______ hours or _____ hours than labor hours to allocate overhead.

direct labor machine

In a process operation, each process has a separate department which will accumulate costs for each of the following:

direct materials overhead direct labor

The three manufacturing costs include:

direct materials, direct labor and overhead

Direct materials, direct labor, and overhead costs are commonly associated with which production system?

Both job order and process systems

Process cost information is prepared for the following reasons. (Check all that apply.)

To provide cost information for financial statements To help factory managers evaluate department managers' performances To help department managers control costs

The journal entry to apply Factory Overhead includes:

a credit to Factory Overhead

When indirect materials are used in process costing, the effect on the Raw Materials Inventory account is:

a decrease

When a customized product is manufactured separately, it is referred to as ____ production:

a job order

The journal entry to record direct labor will result in a(n):

increase in assets and a increase in liabilities

The journal entry to record the purchase of materials on account in process cost accounting is a(n):

increase in assets and an increase in liabilities

The journal entry to record the purchase of materials on account is a(n):

increase in assets and an increase in liabilities

The journal entry to record direct labor used in process costing is a(n):

increase in assets and an increase in liabilities.

The journal entry to record the use of direct materials in process costing is a(n):

increase in one asset and a decrease in another asset.

All of the following are inventory accounts for a manufacturer except:

indirect materials inventory