ACCT 2302 - CH. #2 LECTURE

Cost information is used for:

ALL OF THE ABOVE determine the price to charge for a product, to plan for the future, to monitor spending, and to evaluate performances.

All of the following are broad categories of manufacturing costs except for:

Indirect materials The broad categories of manufacturing costs are direct materials, direct labor and manufacturing overhead. Indirect materials and indirect labor are included in manufacturing overhead.

The cost of materials used on a specific job is summarized on which document?

Job cost sheet

Manufacturing overhead was estimated to be $200,000 for the year along with 5,000 direct labor hours. Actual manufacturing overhead was $240,000, and actual labor hours were 5,500. The amount debited (left-side) to the Manufacturing Overhead account would be:

$240,000 Actual manufacturing overhead costs of $240,000 are debited (left-side) to the Manufacturing Overhead account.

Stoneside Inc. has provided you with the following information for its Manufacturing Overhead account at the end of the period. Actual manufacturing overhead costs incurred total $31,910. The company applied manufacturing overhead cost in the amount of $28,900. What is the overapplied or underapplied manufacturing overhead?

$3,010 Underapplied The difference between actual overhead incurred and the overhead applied gives us underapplied or overapplied manufacturing overhead. The underapplied overhead is $3,010 (Actual overhead of $31,910 − Overhead applied of $28,900).

A __________ influences manufacturing overhead costs incurred. The predetermined overhead rate is calculated by taking:

- Cost driver - Estimated manufacturing overhead cost divided by estimated total cost driver

1. What is the correct journal entry for a company that issues $100,000 of raw material, which includes $10,000 of indirect material? 2. What is the correct journal entry to record actual factory utilities cost as incurred on the account? 3. What is the correct journal entry to record applied manufacturing cost to Work in Process?

1. Debit Work in Process $90,000, debit Manufacturing Overhead $10,000, and credit Raw Materials Inventory $100,000 When raw materials are used in production, the amount of direct materials used is debited to Work in Process, the amount of indirect materials used is debited to Manufacturing Overhead, and the total amount of raw materials used is credited to Raw Materials. 2. Debit Manufacturing Overhead and credit Accounts Payable - The entry includes a debit to Manufacturing Overhead (for the actual amount of factory utilities cost as incurred), and a credit to Accounts Payable (for the total amount of utilities cost). 3. Credit to Manufacturing Overhead - The entry to apply manufacturing overhead cost to jobs includes a debit to Work in Process and a credit to Manufacturing Overhead.

Match the term and the definition. 1. The cost of jobs completed but not yet sold. 2. The costs of jobs sold during the period 3. The accumulated costs of incomplete jobs 4. The costs of materials purchased but not yet issued to production

1. Finished goods Inventory 2. Cost of goods sold 3. Work in process inventory 4. Raw materials inventory

Which of the following is the correct way to adjust overapplied manufacturing overhead?

Deduct from cost of goods sold Overapplied manufacturing overhead is deducted from cost of goods sold to obtain the adjusted cost of goods sold.

Which of the following costs is usually immaterial in most service firms?

Direct materials Most service firms tend to be labor intensive and require very few materials to serve their clients, therefore their material costs are negligible.

Which of the following will be listed in a materials requisition form?

Quantity and cost of direct materials used on a specific job

Which of the following is true of direct labor time tickets?

They are used to record direct labor costs in a job order cost system