ACC CH 3 QUIZ

how do you compute the total manufacturing costs within a schedule of cost of goods manufactured?

DM + DL + MO applied to WIP

What is the link that connects the schedule of cost of goods manufactured to the schedule of cost of goods sold?

Finished Goods Inventory

What account is credited when overhead cost is applied to work in process? Would you expect the amount of overhead applied for a period to equal the actual overhead costs of the period? Why or why not

Manufacturing Overhead would be credited. No applied and actual would not equal each other because because applied is merely a guess with the POHR

How does direct labor costs flow through a job-order cost system?

Salaries & Wages Payable Debit WIP (Job Cost Sheet) Becomes COGM in WIP credit side Debit to Finished Goods as COGM Becomes COGS in Finished Goods credit side Debit to COGS

What adjustment is made for underapplied overhead on the schedule of cost of goods sold? What adjustment is made for overapplied overhead?

Underapplied is added to the unadjusted COGS Overapplied is subtracted from the unadjusted COGS

What is underapplied overhead? Overapplied overhead? What disposition is made of these amounts at the end of the period?

Underapplied overhead is when the amount of OH applied is less than total amount of actual MOH for the period. Overapplied overhead is when the amount of OH applied is more than total amount of actual MOH for the period. The disposition is you can close it to close of goods sold, credit COGS if underapplied, debit if overapplied.

How do you compute raw materials used in production?

You start with the beginning inventory for RM, and subtract that from the ending inventory to get how many RMs you used

Provide two reasons why overhead might be underapplied in a given year

-poor control over overhead spending can result in actual being more than applied -you could have way more orders for the period

How do you compute the unadjusted cost of goods sold?

Beginning Finished Goods inventory + Cost of Goods Manufactured (Ending Finished Goods inventory) ------------------------ Unadjusted COGS

How do you compute the cost of goods manufactured?

DM Beg RM + purchased RM = total RM available -end RM = Total RM in production -Indirect Materials in MO =DM +DL +MO applied to WIP = Total Manufacturing costs +Beg WIP -End WIP =COGM