accounting test 2

equivalent units of production

= (Ending units * %) + units transferred out

Cost per equivalent unit

= (beg. cost + cost added )/Equivalent units of prod.

cost of transferred out

= A(transferred out units * cost of unit)+ B(transferred out units * cost of unit)

Predetermined overhead rate

= Estimated total MO/ estimated total allocation base "Direct labor hours or machine hours"

Applied MOH

= Predetermined overhead rate * Direct labor cost or total manufacturing cost.

Beg+new-end

= cost of direct materials used , or COGM, or COGS

cost of good manufactured

= total manufactured cost + beg - end

Total manufacturing cost

=DM+DL+applied MO

Cost ending WIP

A(Ending * %) * cost per unit +B (Ending * %) * cost per unit

Hudek Inc., a manufacturing Corporation, has provided the following data for the month of July. The balance in the Work in Process inventory account was $20,000 at the beginning of the month and $10,000 at the end of the month. During the month, the Corporation incurred direct materials cost of $50,000 and direct labor cost of $22,000. The actual manufacturing overhead cost incurred was $58,000. The manufacturing overhead cost applied to Work in Process was $56,000. The cost of goods manufactured for July was: A. $138,000 B. $140,000 C. $128,000 D. $130,000

A. $138,000 ...

Clear Colors Corporation uses a predetermined overhead rate based on direct labor costs to apply manufacturing overhead to jobs. At the beginning of the year the Corporation estimated its total manufacturing overhead cost at $350,000 and its direct labor costs at $200,000. The actual overhead cost incurred during the year was $362,000 and the actual direct labor costs incurred on jobs during the year was $208,000. The manufacturing overhead for the year would be: A. $2,000 overapplied B. $2,000 underapplied C. $12,000 underapplied D. $12,000 overapplied

A. $2,000 overapplied

Jameson Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: *Picture* Jameson estimates that 24,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be: A. $2.00 B. $3.00 C. $4.00 D. $2.79

A. $2.00

Lumb Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: *Picture* The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to: A. $23,325 B. $32,892 C. $38,696 D. $17,413

A. $23,325

Lumb Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: The cost per equivalent unit for conversion costs for the first department for the month is closest to: A. $34.17 B. $33.83 C. $35.88 D. $32.54

A. $34.17

Dillon Corporation applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost. Any under or overapplied manufacturing overhead cost is closed out to Cost of Goods Sold at the end of the month. During May, the following transactions were recorded by the company: *Picture* The balance on May 1 in the Raw Materials inventory account was: A. $5,000 B. $11,000 C. $7,000 D. $9,000

A. $5,000

Kuzuck Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: *Picture* The total cost transferred from the first processing department to the next processing department during the month is closest to: A. $527,219 B. $543,200 C. $536,200 D. $562,368

A. $527,219

The Assembly Department started the month with 35,000 units in its beginning work in process inventory. An additional 472,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 34,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month? A. 473,000 B. 471,000 C. 541,000 D. 507,000

A. 473,000

Fabian Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 9,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 90,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 87,000 units were completed in the Assembly Department and transferred to the next processing department. There were 12,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month? A. 89,400 B. 87,000 C. 93,000 D. 83,100

A. 89,400

On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents A. the amount of cost of goods completed during the current year whether they were started before or during the current year. B. the amount of cost placed into production during the period. C. the amount of cost charged to Work in Process during the period. D. the amount of cost transferred from Finished Goods to Cost of Goods Sold during the period.

A. the amount of cost of goods completed during the current year whether they were started before or during the current year.

Overapplied manufacturing overhead means that: A. the applied manufacturing overhead cost was greater than the actual manufacturing overhead cost. B. the estimated manufacturing overhead cost was less than the applied manufacturing overhead cost. C. the applied manufacturing overhead cost was less than the actual manufacturing overhead cost. D. the estimated manufacturing overhead cost was less than the actual manufacturing overhead cost.

A. the applied manufacturing overhead cost was greater than the actual manufacturing overhead cost.

Galbraith Corporation applies overhead cost to jobs on the basis of 70% of direct labor cost. If Job 201 shows $28,000 of manufacturing overhead applied, the direct labor cost on the job was: A. $19,600 B. $40,000 C. $36,400 D. $28,000

B. $40,000

When the weighted-average method of process costing is used, a department's equivalent units are computed by: A. subtracting the equivalent units in beginning inventory from the equivalent units for work performed during the period. B. adding the units transferred out to the equivalent units in ending inventory. C. subtracting the equivalent units in beginning inventory from the sum of the units transferred out and the equivalent units in ending inventory. D. subtracting the equivalent units in beginning inventory from the equivalent units in ending inventory.

B. adding the units transferred out to the equivalent units in ending inventory.

Lumb Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: What are the equivalent units for materials for the month in the first processing department? A. 7,400 B. 8,100 C. 7,995 D. 595

C. 7,995

Which of the following statements about a process costing system is incorrect? A. In a process costing system, overhead can be underapplied or overapplied just as in job-order costing. B. In a process costing system, equivalent units are separately computed for materials and for conversion costs. C. In a process costing system, materials costs are traced to units of products. D. In a process costing system, each processing department has a work in process account.

C. In a process costing system, materials costs are traced to units of products.

Which of the following companies would be most likely to use a process costing system? A. Hospital. B. Furniture manufacturer C. Oil refinery. D. Movie studio.

C. Oil refinery.

Kuzuck Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: *picture* The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to: A. $28,118 B. $35,148 C. $5,272 D. $15,981

D. $15,981

Hibshman Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 10,000 machine-hours. The estimated variable manufacturing overhead was $6.82 per machine-hour and the estimated total fixed manufacturing overhead was $230,200. The predetermined overhead rate for the recently completed year was closest to A. $23.15 per machine-hour B. $6.82 per machine-hour C. $23.02 per machine-hour D. $29.84 per machine-hou

D. $29.84 per machine-hour

EMIT

D. $4,300

During May at Shatswell Corporation, $57,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $7,000. The journal entry to record this requisition would include a debit to Manufacturing Overhead of: A. $0 B. $57,000 C. $50,000 D. $7,000

D. $7,000

Which of the following journal entries would be used to record application of manufacturing overhead to work in process in a process costing system with two processing departments, department A and department B? A. Option C B. Option A C. Option D D. Option B

D. Option B

Dillon Corporation applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost. Any under or overapplied manufacturing overhead cost is closed out to Cost of Goods Sold at the end of the month. During May, the following transactions were recorded by the company: The entry to dispose of the under or overapplied manufacturing overhead cost for the month would include: A. a credit of $2,500 to the Manufacturing Overhead account. B. a credit of $2,500 to Cost of Goods Sold. C. a debit of $2,000 to the Manufacturing Overhead account. D. a debit of $2,000 to Cost of Goods Sold.

D. a debit of $2,000 to Cost of Goods Sold.

For which situation(s) below would an organization be more likely to use a process costing system of rather than a job-order costing system? A. a masonry company that builds brick walls, bulkheads, and walkways designed by architects B. a shop that restores old cars to "showroom" quality C. a framing shop that builds picture frames to order for individual customers D. a paper mill that processes wood pulp into large rolls of paper

D. a paper mill that processes wood pulp into large rolls of paper

Costs in an operation costing system are accumulated by: A. by department. B. by individual job. C. by neither job nor department. D. by both job and departments.

D. by both job and departments.

Departmental overhead rates are generally preferred to plant-wide overhead rates when: Answers: A. all departments in the plant are heavily automated. B. the activities of the various departments in the plant are homogeneous. C. most of the overhead costs are fixed. D. the activities of the various departments in the plant are not homogeneous.

D. the activities of the various departments in the plant are not homogeneous.

Pulo Corporation uses a weighted-average process costing system. The company has two processing departments. Production starts in the Assembly Department and is completed in the Finishing Department. The units completed and transferred out of the Assembly department during April will become the: A. units started in production in Finishing for May. B. units in May's beginning work in process in Finishing. C. units in April's ending work in process in Finishing. D. units started in production in Finishing for April.

D. units started in production in Finishing for April.

Equivalent units of production is calculated for each product.

False

IRS has no specific requirement for costing methods.

False

In calculating cost per equivalent unit under the weighted-average method, prior period costs are not combined with current period costs.

False

Job-order costing is one type of ABC costing methods.

False

Job-order costing uses several different WIP accounts for different processes.

False

Materials and labors are always considered as direct costs.

False

Process costing is used in those situations where many different products or services are produced each period to customer specifications.

False

The beginning balance of manufacturing overhead account should be carefully considered.

False

The sum of all amounts transferred from the Work in Process account to the Finished Goods account represents the Cost of Goods Sold for the period.

False

Under the weighted-average method, the equivalent units used to compute the unit costs of ending inventories relate only to work done during the current period.

False

When a job is completed, the goods are transferred from the production department to the finished goods warehouse and the journal entry would include a debit to Work in Process.

False

If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be underapplied.

True

When completed goods are sold, the transaction is recorded as a debit to Cost of Goods Sold and a credit to Finished Goods.

True

When materials are purchased in a process costing system, a materials account is debited with the cost of the materials.

True

under applied

applied < actual ; debit to MOH; COGS goes UP

Over applied

applied > actual ; credit to MOH; COGS goes DOWN