ACC 2033 Exam 1
A relevant cost....?
Differs between alternatives and pertains to the future
Manufacturing costs include
direct labor, direct materials and manufacturing overhead
Beg+raw-in-en=
direct materials BEG RAW - IN EN!!!!
Managers must review their internal system and report it to....?
reduce error and fraud
Average of unit=
total manufacturing cost divided by total units produced
Job order is ____________________ while process costing is _________________
unique product, custom homogenous, mass produced
Running processing equipment is which level in activity based costing?
unit level
individual customer or unit
unit level
in an automobile production line, assembly line workers are considered _____________ _______________ costs.
DIRECT labor
Predetermined overhead rate uses the....
DIRECT labor hours
DM= 300 DL=200 MOH= 400 what is prime cost? what is conversion cost?
DL+Dm= prime $500 Conversion= DL+ MOH $600
Sales- manufacturing=
Gross margin
Gemini had sales of $50,000. Cost of goods sold unadjusted was $23,000. Overapplied manufacturing overhead was $3,000. And selling and administrative expenses of $25,000. Calculate gross profit.
Gross profit = sales- cost of goods sold. MOH is over applied so you SUBTRACT $3000 from $23,000, equals $20,000. 50,000-20,000 = $30,000
Material are considered __________ costs when it's not worth the cost or effort to trace the product.
INDIRECT
sustainability means
company can meet today's needs without sacrificing future generations
Prime costs are...
direct labor + direct materials
Conversion costs are....
direct labor + manufacturing overhead
Labor time ticket will show
direct labor hours
Allocation base is based off of
direct labor hours, direct labor dollars or machine hours
Material requisition form will show
direct materials cost
Which of the following are most likely fixed costs? a. property taxes b. utilities c. rent d. administrative salaries
property taxes, rent and administrative salaries
implementing involves?
putting plan into action
Applied is recorded on
right or "credit" side
hotels and airlines are considered what kind of company?
service company
planning involves?
short term and long term objectives
activity rate =
total actiivity rate / total hours
An indirect cost are costs such a depreciation of oven, utilities, advertising. True or False
true
Product costs are manufacture costs, true or false
true
direct labor ---> WIP Indirect labor --> Manufacturing overhead true or false?
true
period costs are nonmanufacture costs true or false
true
If it's debit it is ___________ applied. If it's credit it's ___________ applied.
under over
A "just in time" system is...
used to help reduce costs, is a demand-pull system
Target costing is
what costs should be in order to earn an acceptable profit across the products life cycle
Direct labor is a ___________________ account on the journal entry
work in process
Raw materials inventory are transferred to either
work in process inventory or manufacturing overhead
do service firms have billable hours?
yes
managerial accounting is
-future -internal -as needed -by product
financial accounting is
-historical -GAAP guided -external -periodically -whole company
COG MAnufactured formula?
Beginning WIP +total manufactured costs - ending WIP
Unadjusted cost of goods sold equals...?
Beginning finished goods inventory + cost of goods manufactured - ending cost of goods inventory
total manufacturing costs + beginning WIP - ending WIP =????
COG manufactured
Prepare a journal entry to transfer OH balance to COGS of 34,000
COGS 34,000 MOH 34,000
Identifying a problem and conducting a plan to fix it is which function?
Control
Milton Corp. sold goods costing 50,000 for 75,000. You would debit....?
Cost of goods sold for 50,000 and Accounts receivable for 75,000
What accounts are affected in over or under applied?
Increase or debit COGS Decrease or credit MOH
How do you calculate ending finished goods inventory?
Job 201 beginning finsihed goods inventory + Direct materials + direct labor + MOH= finished goods inventory
record actual and applied in a journal entry for the following : estimated total OH cost = 325,000 estimated machine hrs = 25,000 actual MOH= 372000 actual machine hours= 26000
MOH 372,000 Cash/Ap/Raw Mat 372,000 WIP 338,000 MOH 338,000
What is the primary difference between financial and managerial accounting??
Managerial provides information for the internal users, while financial provides info for external users.
Product costs are known as what type of cost, and which do they relate to?
Manufacturing cost & relate to making the product
What document specifies the type and quantity of materials used on a specific job?
Material requisition form
wholesalers and retail companies are both kinds of _____________ companies?
Merchandising
Period costs are known as what type of cost and they relate to?
Non-manufactoring costs & relate to delivering and selling the product
Purchase $20,000 worth of materials on account
Raw materials inventory $20,000 ACC Pay $20,000
DM= $300 Overhead applied is 200% of direct labor cost The total manufacturing cost is $900 How do you solve?
Total manufacturing = DM+ DL+ MOH so...... you take 900= 300 + DL + DL(2) 600= 3DL 600/3= 200 200= Direct Labor cost MOH = 400
True or false? Managers need more detail than financial reports can capture.
True
If you have indirect an direct labor costs , the account credited is?
Wages payable
Anything that goes to a job will be debited in the journal entry as?
Work in process
when manufacturing overhead is applied, the _______________ account is debited.
Work in process
Is it impossible or difficult to trace MOH costs?
YES
estimated total OH cost = 325,000 estimated machine hrs = 25,000 actual MOH= 372000 actual machine hours= 26000 a. predetermined OH rate? b. Applied MOH? c. Over or under applied MOH?
a. $13 b. 338,000 c. under applied by 34,000
the cost of goods manufactured is the sum of?
all amounts transferred from work in process to finished goods in the same period
Processing a purchase order is which level in activity based costing?
batch level
group or batch
batch level
How do you find direct materials used??
beg. raw materials + raw materials produced - indirect materials - ending raw materials
COGS= ???
cost of goods manufactured + beginning finished goods - ending finished goods
Raw material --> work in process --> finished goods -> once the product is sold, it is called
cost of goods sold
completed and sold would be completed and not sold would be in process would be
cost of goods sold finished goods work in process
Reports that detail resources required to prevent, correct or detect problems are
cost of quality reports
If it's overapplied, the Cost of goods needs to be _______________
decreased
Traditional costing systems tend to overcost high volume products because?
don't allow for complex activities and use more labor & machine hours
estimated total cost driver also means
estimated direct labor cost
To calculate the predetermined overhead rate, divide estimated total manufacturing overhead by the??
estimated total cost driver, or the estimated direct labor hours if that is the allocation base.
Examples of indirect labor costs include?
factory security guards, factory supervisors and restaurant kitchen managers. **not kitchen cooks**
when goods are sold on account, which accounts are credited?
finished goods inventory and sdales revenue
Process costing is used for
homogenous (same) product and mass production
manufacturing overhead includes
indirect labor
Factory costs such as cleaning supplies, taxes, insurance and janitor wages are classified as?
manufacturing overhead
Payroll, supervisors etc. is an indirect labor cost. that falls under whch category? period direct labor direct material or manufacturing overhead
manufacturing overhead
To calculate manufacturing overhead using ABC you divide total
manufacturing overhead by total items produced
Indirect labor is a ____________________ account on the journal entry
manufacturing overhead cost
Inside the factory is
manufacturing overhead cost
Rent, insurance, utilities, indirect labor, production supervisor salary, insurance and depreciation are all..?
manufacturing overhead costs
Manufacturing costs include?
manufacturing overhead, direct labor and direct materials
Manufacturing overhead costs include
material and labor, indirect costs and they must be manufacturing costs
controlling involves?
measuring and monitoring
Net operating income is ...?
net operating income= Gross profit - selling and administrative expenses
Estimated direct labor cost is 600,000. Estimated MOH is 900,000. actual direct labor cost in 550,000 actual MOH is 850,000. what is the predetermined overhead rate? what is the applied over head? is it under or over applied?
predetermined rate is = 1.50% (MOH/DL) applied OH is = 825,000 (predetermined rate * DL) Is it under or over? Actual was 850,000. Applied was 825,000 Actual Applied 850,000 825,000 25,000 under.
research and development is a _____________ level
product
Maintaining inventory parts for products is which level in activity based costing?
product level
specific product or offer?
product level
sales- targeted cost =??
target profit
Total life cycle=
targeted cost * units* years
Record the purchase of $150,000 raw materials on account
DR: Raw materials inventory $150,000 CR: Accounts payable $150,000
Issued $100,000 of raw materials to job 2719 and $40,000 to Job 3335. Indirect materials $10,000 issued.
DR: Work in Process $140,000 DR: Manufacturing overhead $10,000 CR: Raw materials $150,000
A ________ cost does not change in total, and a ___________ cost does not change per unit.
FIXED does not change in total VARIABLE cost does not change per unit
Factory management salaries is which level in activity based costing?
Facility level
activity that supports whole company?
Facility level
when a job is FINISHEd, which account is debited?
Finished goods inventory
Cost of goods manufactured report summarizes?
Raw materials to work in process inventory to finished goods
If it's over-applied you must subtract or add to COG?
SUBTRACT
You can calculate work in process inventory by?
Summing all sales values of jobs in process
Making a direct adjustment to costs of goods sold is the ....?
best way to close out over/under applied MOH
Depreciation on factory equipment depreciation on delivery trucks wood used to build bookcase Production supervisor salary glue and screws used in bookshelf wages of people who assembled bookshelf cost to run an advertisement rent for factory CEO salary wages of persons who sands the wood
1. manufacturing overhead 2. period cost 3. direct material 4. manufacturing overhead 5. manufacturing overhead 6. direct labor 7. period cost 8. manufacturing overhead 9. Period cost 10. direct labor
Estimated to spend $89600 with 2,000 direct labor hours. Actual was $11,000. What was the applied manufacturing overhead?
89600/2000= $8 $8*$11,000 = $88,000
which is irrelevant and should be disregarded when making decisions? opportunity, sunk or differential?
Sunk costs should not be considered when making the decision to continue investing in an ongoing project, since these costs cannot be recovered.
Direct costs are ___________ to products while overhead costs are ______________
TRACED & APPLIED
A direct cost is easily traced to product. True or False
TRUE
Period is outside costs an manufacturing overhead is inside costs, true or false?
TRUE
which of the following is not a volume based cost driver? -direct labor dollars -direct material costs -sales revenue -machine set ups
machine set ups, this is an ABC batch level cost driver
Which method can be used to dispose of under or over applied manufacturing overhead?
make a direct adjustment to the cost of goods sold account OR allocate it to work in process, finished goods or cost of goods sold
Predetermined overhead rate is multiplied by the actual cost driver to calculate....
overhead applied to
outside factory is
period or nonmanufacturing costs
Manufacturing overhead is assigned using?
predetermined overhead rate
