ACC 2020 Ch. 3

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

only direct labor costs

Selling and administrative costs incurred are treated as ______.

period expenses

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

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

Finished Goods

Selling and administrative costs first appear on the ______.

income statement

Labor costs charged to Manufacturing Overhead represent ______.

indirect labor costs

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

Overhead is underapplied if ______.

actual overhead is more than applied overhead

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

as they are incurred

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

closing it out to Cost of goods sold

Unadjusted cost of goods sold is calculated by subtracting ______.

ending finished goods inventory from goods available for sale

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead. Work in Process is debited

Manufacturing overhead costs include ______.

the factory supervisor's salary factory insurance

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

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.

228000

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

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

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 ______.

55000

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

Always on the credit side.

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

Always the debit side

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.

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

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

Which of the following costs are classified as manufacturing overhead?

Factory rent Factory maintenance wages Factory utilities

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

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

accounts payable

Overhead is overapplied if ______.

actual overhead is less than applied overhead

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

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 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