Managerial ACC ch 3

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 ($200,000 ÷ 1,000 × 600 = $120,000)

Luver Corporation's Gross margin is $100,000, Cost of goods sold equals $70,000, and Selling and administrative expenses total $45,000. Net operating income is ______.

$55,000 ($100,000 - $45,000 = $55,000)

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, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

$74,000 (Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($27,000 + $100,000 - $28,000 - $25,000 = $74,000) )

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.

Applied manufacturing overhead is entered on what side of the Manufacturing overhead account?

Always the credit side (Recording applied overhead is not dependent on whether overhead is overapplied or 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

Costs of partially completed units are accounted for in ______

work in process

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

work in process

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. Both methods are equally accurate. Both methods are equally simple. Allocating is simpler, and closing to Cost of goods sold is more accurate.

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

Which of the following costs are classified as manufacturing overhead? Assembly wages Marketing costs Factory rent Factory utilities Factory maintenance wages

Factory rent Factory utilities Factory maintenance wages

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

Finished Goods

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead

George Corporation recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits ______.

Manufacturing overhead $1,000 and credits Property taxes payable $1,000

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? Factory rent Supervisor's salary Depreciation on factory equipment Nonmanufacturing costs

Nonmanufacturing costs

T/F - Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels.

True

Which of the following statements are true?

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 journal entry to record issuing both direct and indirect materials into production debits ______.

Work in process and Manufacturing overhead

The journal entry to record the purchase of materials credits ______

accounts payable

The Manufacturing Overhead account is debited when ______

actual overhead costs are incurred

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

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

Work in Process consists of ______

applied manufacturing overhead actual direct materials cost actual direct labor cost

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

as they are incurred

Finished goods ______

consists of completed, unsold goods

The amount transferred from Work in Process to Finished Goods is ______

cost of goods manufactured

The ___ side of the manufacturing overhead account is always used to record manufacturing overhead applied to production and the ___ side is always used to record the actual manufacturing costs incurred.

credit; debit

Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited (Applied overhead is credited to the account.)

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

factory utilities expense rent expense on factory equipment

Completed units that have not yet been sold are found in ___ ___ inventory

finished goods

Cost of goods manufactured ______

includes the manufacturing costs of goods finished during the period

Selling and administrative costs first appear on the ______.

income statement

Labor costs charged to Manufacturing Overhead represent ______.

indirect labor costs

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

issuance of materials

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

Gross margin minus selling and administrative expenses equals ______.

net operating income

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

only direct labor costs

A credit balance in the Manufacturing Overhead account means overhead was ___

overapplied

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

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

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

raw materials

The journal entry to record the purchase of materials debits ______

raw materials

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 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

Given: Cost of goods manufactured of $234,000; beginning finished goods inventory of $18,000; and ending finished goods inventory of $24,000, calculate unadjusted cost of goods sold.

$228,000 ($18,000 + $234,000 - $24,000 = $228,000)

Given: Cost of goods manufactured of $410,000; beginning finished goods inventory of $110,000 and ending finished goods inventory of $125,000, calculate unadjusted cost of goods sold.

$395,000 ($110,000 + $410,000 - $125,000 = $395,000)

What two accounts are involved when underapplied or overapplied overhead is closed out using the simpler method?

Cost of goods sold and Manufacturing overhead

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

Manufacturing overhead is applied with a debit to ______.

Work in process

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 would debit ______.

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

A journal entry that debits Manufacturing overhead and credits Accounts payable would NOT be used to record ______. miscellaneous factory overhead costs rent on factory equipment factory utilities costs direct labor costs

direct labor costs

A journal entry that includes Manufacturing overhead and Cost of goods sold is recorded to ______.

dispose of underapplied or overapplied overhead

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