Managerial Act 220

Which of the following statements are incorrect regarding accounting for manufacturing overhead?

Actual manufacturing overhead will always equal applied manufacturing overhead. The manufacturing overhead account is increased by the manufacturing overhead applied

Manufacturing overhead is underapplied when actual manufacturing overhead is ______ manufacturing overhead.

greater than applied

Under applied manufacturing overhead ______ cost of goods sold.

increases

Manufacturing overhead is overapplied when actual manufacturing overhead is ______ manufacturing overhead. Multiple choice question.

less than applied

The product-costing system that uses a predetermined overhead rate is referred to as ---- costing.

normal

The product-costing system that uses a predetermined overhead rate is referred to as -----costing.

normal

Selling and administrative costs are ______.

period costs

The average amount of time it takes to convert raw materials to finished goods is time.

throughput or cycle

The cost of goods manufactured schedules shows the amount of goods ______.

transferred into finished goods inventory

When actual manufacturing overhead costs are incurred ______.

various accounts are credited based on the costs incurred

In traditional product-costing systems, the measure of productive activity used as a basis for overhead application is usually some - -------cost driver or activity base.

volume based

When a company choses to use a single,-----------cost driver, it should be some productive input that is common across all the firm's products.

volume based

Which of the following entries to used to record direct labor costs in a job-costing system?

work-in-process wages payable

When choosing a cost driver consideration should be given to ______.

-a correlation between the cost and the activity chosen as the driver -an activity that is common across all products

The fact that payments for some overhead costs are not spread evenly throughout the year is a drawback of using -------costing.

actual

The overhead rate is computed at the end of the period when using ______.

actual costing only

Which account(s) is/are credited when a production job is completed?

Work-in-Process Inventory

What entry(s) are made when goods are sold?

-Cost of goods sold Finished goods inventory -Accounts receivable Sales revenue

Which of the following entries reflect actual indirect production costs incurred?

-Manufacturing overhead Factory property taxes payable -Manufacturing overhead Prepaid factory insurance -Manufacturing overhead Accumulated depreciation-factory equipment

The cost of goods sold schedule shows the ______.

-changes in finished goods inventory for the period -cost of goods manufactured

The proration of under/over applied manufacturing overhead involves the ______ accounts.

-cost of goods sold -work-in-process inventory -finished goods inventory

Reasons that direct labor may not be the best choice for a cost driver include ______.

-increasing proportion of manufacturing overhead to total production costs -increasing automation -decreasing proportion of direct labor to total production costs

The difference between normal costing and actual costing is ______.

-normal costing uses predetermined overhead rates -actual costing uses actual overhead rates

Under or over applied manufacturing overhead is the result of ______.

-the inaccuracy of the predetermined overhead rate -actual manufacturing overhead being greater than applied manufacturing overhead. -actual manufacturing overhead being less than applied manufacturing overhead.

Weaknesses of actual costing include ______.

-the same product could appear to be profitable or unprofitable, depending upon when it was produced -the variance of costs during a production cycle -actual overhead costs are not timely

Some common alternatives to direct labor as a cost driver for manufacturing overhead are ______.

-throughput time -machine hours

True or false: Raw-Materials inventory is moved into production by crediting Work-in-Process inventory.

False

Which account is debited when factory utility bills are paid? A. Manufacturing Overhead B. Utilities Payable C. Cash D. Work-in-Process Inventor

Manufacturing Overhead

When goods are sold, entries are made that include a (debit/credit) to Sales Revenue and a (debit/credit) to Cost of Goods.

credit, debit

Manufacturing overhead costs are applied to jobs with journal entries that ______.

debit Work-in-process inventory and credit Manufacturing overhead

A more accurate, but complicated procedure to dispose of underapplied or overapplied manufacturing overhead is called --------.

proration

Selling and administrative costs include ______.

sales commissions insurance expense - showroom advertising expense office supplies expense

Changes in the finished goods inventory for the period are shown on the ______.

schedule of cost of goods sold

When a company choses to use a single, - cost driver, it should be some productive input that is common across all the firm's products.

volume based

Which of the following statements are incorrect regarding accounting for manufacturing overhead? Multiple select question.

-The manufacturing overhead account is increased by the manufacturing overhead applied -Actual manufacturing overhead will always equal applied manufacturing overhead.

The right side of the Manufacturing Overhead account ______. Multiple select question. will usually equal the left side of the account at the end of the year accumulates overhead costs as they are incurred accumulates entries based on estimated overhead records overhead applied to Work-in-Process Inventory

-accumulates entries based on estimated overhead -records overhead applied to Work-in-Process Inventory

The cost of goods manufactured schedule shows the ______.

-total manufacturing costs -direct labor cost

Which of the following entries is made upon completion of a job?

Finished goods inventory Work-in-process inventory

True or false: Departmental overhead rates are frequently used by organizations because the relationship between overhead costs and a single cost driver are substantially different between production departments.

True

Given the following information, what is the entry to apply overhead to the job? Predetermined overhead rate $25 per direct labor hour Cost driver Direct labor hours Direct labor hours required by job 1,800 hours Machine hours required by job 2,300 hours

Work-in-process inventory 45,000 Manufacturing overhead 45,000

Which of the following entries records the release of direct materials to production in a job-order costing system?

Work-in-process inventory Raw materials inventory

The most accurate assignment of overhead costs is generally achieved by using ______.

activity-based costing

Under and over applied manufacturing overhead is most commonly ______.

closed into cost of goods sold