Accounting Exam 3
In job-order costing the predetermined overhead rate is used to apply manufacturing overhead costs to service departments.
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In managerial accounting, product costs are needed to value inventory on the balance sheet and to compute cost-of-goods-sold expense on the income statement.
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Job costing only applies to specific jobs with a single physical unit.
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Job-order costing can be used only in manufacturing environments.
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Job-order costing is not used in nonmanufacturing organizations.
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Manufacturing overhead is a homogeneous pool of indirect production costs.
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Predetermined overhead application rate = Total actual factory overhead/total budgeted amount of the cost driver
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The entry to record the requisition of direct materials would include a debit to Raw-Materials Inventory.
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Time cards record the materials used in particular jobs.
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Unlike job-order costing, process costing requires only one work-in-process account.
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cost other than materials cost and direct labor that are incurred in the manufacturing process.
factory overhead
All of the following would probably be considered a direct material except:
glue
making changes
improving
increases are based on receiving reports, decreases are based on materials requisitions for particular jobs
materials ledger
serves as bases for recording materials used
materials requisition
What 3 types of inventory are reported on the balance sheet?
materials, work in process, finished goods
selling and administrative costs
period costs
the 5 basic phases of the management process:
planning, directing, controlling, improving, decision making
factory overhead costs are normally allocated or applied to jobs using
predetermined factory overhead rate
direct materials and direct labor costs
prime costs
provides product costs for each manufacturing department or process
process cost system
manufacturing costs: direct materials, direct labor, factory overhead
product costs
What is the primary goal of managerial accounting?
provide info for internal decision making
There should be a correlation between the incurrence of overhead costs and use of the chosen activity base for overhead application.
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Work-in-Process Inventory is partially completed inventory.
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record amount of time they have worked
time tickets
Cost of goods manufactured is equal to:
total manufacturing costs plus beginning work in process inventory less ending work in process inventory
Job 89 was completed with 100 units produced. Direct materials totaled 3,000; Direct labor totaled 4,500; and factory overhead totaled 6,000. The cost per unit is:
$135
Cost of Materials Used $40,000 Direct Labor costs $55,000 Factory Overhead $32,000 Work in Process, beg. $28,000 Work in Process, end. $18,000 Finished Goods,beg. $28,000 Finished Goods, end. $18,000 What is Cost of Goods Sold?
$147,000
A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $21,000 respectively, the cost of goods manufactured was:
$229,000
Beginning Raw Materials Inventory $75,000 Materials purchased $20,000 Ending Raw Materials Inventory $30,000 What is the amount of Raw Materials Used?
$65,000
Howard Industries reported the following data: Sales $1,000,000 Cost of Goods Sold 300,000 Cost of Goods Manufactured 400,000 Selling and Administrative expense 150,000 What is Howard's Gross Profit?
$700,000
Given the following data calculate the predetermined overhead rate per direct labor hour. Estimated factory overhead $450,000 Estimated direct labor hours 50,000 Actual factory overhead $480,000 Actual direct labor hours 60,000
$9.00
such as opening a new business
decision making
The chemical and glass industries normally use job costing.
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involves setting goals and objectives for the company and determining how to achieve
Planning
Product costs appear as cost of goods sold in income statements and as finished-goods inventory values in balance sheets.
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A company sells goods for $300,000 that cost $140,000 to manufacture. Which statement(s) are true?
The company will decrease finished goods by $140,000.
An example of a period cost is:
advertising expense
A plant manager's salary may be referred to as:
an indirect cost
What is cost of goods manufactured? Be able to calculate.
cost of finished goods avalible for sale-ending finished goods inventory
evaluating the results of business operations against the plan and making adjustments
controlling
direct labor and factory overhead
conversion costs
measure, record, and report product costs
cost accounting systems
process by which factory overhead are assigned to a cost object
cost allocation
anything for which managers want a separate measurement of cost
cost object
a cost that can be traced to the cost object
direct cost
integral part of finished product, significant portion of the total cost of the product
direct labor
integral part of finished product, significant portion of the total cost of the product
direct materials
overseeing the company's day-to-day operations
directing
predetermined factory overhead rate
estimated total factory overhead costs/estimated activity base
A schedule of cost of goods sold shows the cost of goods sold during an accounting period and details the changes in Work-in-Process Inventory during the period.
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A time ticket is a form that records the length of time needed to manufacture a product.
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Actual overhead rates are used to apply factory overhead to products.
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In financial accounting, product costs are needed for planning and cost control and to provide managers with data for decision making.
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a cost that relates to the cost to run a manufacturing plant; this includes utilities, property taxes, depreciation
indirect cost
make up the work in process subsidiary ledger
job cost sheets
provides product costs for each quantity of product that is manufactured
job order cost system
2 main types of cost accounting systems for manufacturing
job order, process cost systems
prepared when materials that have been ordered are received and inspected
receiving report
A document, such as a material requisition form, which is used as the basis for an accounting entry, is called a source document.
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Construction and printing industries normally use job-order costing.
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Conversion costs include all manufacturing costs other than direct materials.
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Each job has its own job-cost record in a job-costing system.
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If actual overhead is more than applied overhead, the difference is called underapplied overhead.
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In job-order costing the costs assigned to each job are averaged over the units of production in a job to get an average cost per unit.
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In nonprofit organizations, the product is usually called a program or a class of service.
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Managers need to know product costs to make ongoing decisions such as which products to emphasize or deemphasize and the pricing of products.
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Procedures similar to those used in job-order costing are also used in many service organizations.
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Process costing accumulates costs for a period and divides them by quantities produced during the period to get average costs.
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Process costing averages costs over large numbers of nearly identical products.
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Process-costing systems apply costs to like products that are usually mass-produced in continuous fashion through a series of production processes.
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The entry to record applied overhead would include a debit to Work-in-Process Inventory.
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The entry to record the completion of units in process would include a debit to Finished Goods Inventory.
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The entry to record the sale of goods would include a debit to Cost of Goods Sold.
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How does this differ from a merchandising business?
they only put merchandise inventory