ACCT Chapter 3 Job-Order Costing: Cost flows and External Reporting

Jonas Corporation used 20,000 of direct materials, incurred 40,000 of direct labor cost, and applied 30,000 of manufacturing overhead to jobs this period. No jobs were incomplete at the beginning of the period, but at the end of the period, jobs with a total cost of 25,000 were unfinished. What was the cost of goods manufactured for this period?

(20,000 + 40,000 + 30,000)=90,000 + 0 - 25,000 = 65,000

estimated manufacturing overhead 500,000 estimated direct labor hours 200,000 actual manufacturing overhead 625.000 actual direct labor hours 260.000 The company applies overhead using direct labor hours as the cost driver. Calculate the amount that overhead was overapplied or underapplied.

500,000/200,000 = 2.50 X 260,000 = 650,000 applied - actual overhead (650,000 - 625.000) overapplied by 25,000

The journal entry to record $20,000 in depreciation on factory equipment is debit

Manufacturing overhead $20,000 credit accumulated depreciation $20,000

Any purchased materials that will go into the finished product are first recorded in _______ ________ inventory account.

Raw materials

Which of the following costs are charged directly to the income statement?

a. administrative costs b. direct materials c. manufacturing overhead d. direct labor e. selling costs A,E

The cost of jobs still unfinished at the end of a period are included in:

a. ending work in process inventory b. beginning finished goods inventory for the next period c. the income statement d. cost of goods manufactured A

The journal entry to record the purchase of materials credits:

accounts payable

Overhead is underapplied if__________.

actual overhead is more than applied overhead

Over or underapplied overhead is the difference between:

actual total overhead and total overhead applied

A journal entry debiting Salaries expense and crediting salaries and wages payable could record ____________.

administrative salaries

The journal entry to record general selling and administrative costs debits:

an expense account and credit cash or a liability

To calculate total manufacturing costs, add direct materials, direct labor and

applied manufacturing overhead

Which of the following appears on job cost sheets and in the work in process account?

applied manufacturing overhead

Raw materials is a(n) ________________ account.

asset

When preparing financial statements in a job-order costing system, finished goods flow first to the _______________ ________________and then to the ____________ __________________.

balance sheet income statement

A journal entry that debits finished goods and credits work in process records the:

competion of a job

What accounts are debited when goods are sold on account?

cost of goods sold and acccounts receivable

Milton Corporation sold goods costing $50,000 for $75,000. Journal entries to be made could include entries debiting:

cost of goods sold for $50,000 and accounts recievable for $75,000

The difference between the entries to record depreciation on office equipment and depreciation on factory equipment is that one:

debits depreciation expense, while the other debits manufacturing overhead

If overapplied overhead is closed out to cost of goods sold, the cost of goods sold account will be:

decreased

A journal entry that involves manufacturing overhead, work in process, finished goods, and cost of goods sold is recorded to:

dispose of underapplied or overapplied overhead

A predetermined overhead rate is calculated by dividing the _______ total manufacturing overhead by the ________total amount of the allocation base.

estimated estimated

Cost of goods manufactured:

includes the manufacturing costs of goods finished during the period

Labor costs charged to Manufacturing Overhead represent:

indirect labor costs

Applied manufacturing overhead will most likely_________ actual manufacturing overhead.

not equal

When labor costs are incurred, _________________ are added directly to the work in process account.

only direct labor costs

Actual overhead costs may not be proportional to the actual amount of the allocation base used because:

overhead spending may not be under control many actual overhead costs are fixed

A journal entry that debits raw materials and credits accounts payable is recording the:

purchase of materials

The journal entry to record issuing materials to be used in production credits:

raw materials

The journal entry to record the purchase of materials debits:

raw materials

A journal entry that debits manufacturing overhead and credits property taxes payable records the:

recognition of accrued property taxes

When calculating the cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials is:

subtracted from raw materials used in production

The value of work in process is equal to:

the cost of all unfinished jobs

A debit balance in manufacturing overhead means overhead was ___________.

underapplied

The journal entry to record the issuance of direct materials into production debits:

work in process

When a job is completed, which account is credited?

work in process

cost of partially completed units are accounted for in ______.

work in process

Applied manufacturing overhead is entered on what side of the manufacturing overhead account?

Always on the credit side

Which of the statements regarding closing out over or underapplied overhead is correct?

Closing to costs of goods sold is simpler, and allocating is more accurate.

underapplied or overapplied overhead is the:

The difference between the overhead cost applied to Work in Process and the actual overhead costs of a period

What methods can be used to dispose of underapplied or overapplied manufacturing overhead?

a. closing it out to work in process b. closing it out to cost of goods sold c. allocating it among raw materials, work in process, and finished goods d. closing it out to finished goods B, E e. allocating it among work in process, finished goods, and cost of goods sold

Which of the following costs would be classified as manufacturing overhead?

a. factory maintenance wages b. factory rent c. assembly wages d. marketing costs e. factory utilities A,B,E

A journal entry that debits manufacturing overhead and credits accounts payable could NOT record the incurrence of:

a. miscellaneous factory overhead costs b. direct labor costs c. rent on factory equipment d. factory utilities costs B

Work in process consists of

actual direct labor cost applied manufacturing overhead actual direct material cost

Which of the following are used to calculate cost of goods available for sale on the schedule of cost of goods sold?

beginning finished goods inventory cost of goods manufactured

The formula for a predetermined overhead rate is:

estimated total manufacturing overhead cost/ estimated total amount of the allocation base.

A journal entry that debits manufacturing overhead and credits prepaid insurance records the:

expiration of prepaid factory insurance

True or False: Period costs flow from Finished Goods to Cost Of Goods Sold.

false

True or false: Actual overhead costs appear in the work in process account but not on the job cost sheet.

false

Completed units that have not yet been sold are found in ____________ __________ inventory.

finished goods

A journal entry that debits Advertising expense and credits cash would record the incurrence of a:

selling cost

The schedule of cost of goods _________________________ summarizes costs that remain in finished goods inventory and that have been transferred to cost of goods sold.

sold

True or false: Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels.

true

When only a portion of the units involved in a job are sold, the :

unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold.

Which of the following statements are true?

a. raw materials inventory only includes the cost of direct materials. b. direct labor costs flow through the raw materials inventory account. c. raw materials inventory represents the cost of materials not yet used in production. d. when materials are purchased they are recorded in the raw materials inventory account. C,D

When a job is completed, which account is debited?

finished goods

Job #4260 consisted of 1,000 units at a total cost of $200,000. The cost transferred to cost of goods sold for the sale of 600 of the units is:

120,000 200,000/1000 = 200 X 600 = 120,000

the _______________________ (debit/credit) side of the manufacturing overhead account is always used to record manufacturing overhead applied to production and the ___________ (debit/credit) side is always used to record the actual manufacturing costs incurred.

credit debit

A company incurred $10,000 in direct labor costs and $8,000 in indirect labor costs. The journal entry to record this transaction would:

a.. debit Salaries and Wages payable $18,000 and credit Work in process $8,000 and Manufacturing overhead $10,000. b. debit Work in process $8,000 and Manufacturing overhead $10,000 and credit Salaries and wages payable $18,000 c. debit Work in process $10,000 and Manufacturing overhead $8,000 and credit Salaries and wages payable $18,000 d. debit Salaries and wages payable $18,000 and credit Work in process $10,000 and Manufacturing overhead $8,000 C.

When jobs are sold their costs are transferred out of:

finished goods

Himber Inc. just completed a job that cost 14,000 in direct materials, 12,000 in direct labor, and 8,000 in applied manufacturing overhead. The journal entry to record completetion of the job would debit:

finished goods 34,000 and credit work in process 34,000

When goods are sold on accountm what accounts are credited?

finished goods and sales

The journal entry to record a cash payment of 400 for insurance on administrative office equipment debits _________ and credits cash

insurance expense

A journal entry that debits work in process and manufacturing overhead and credits raw materials records the

issuance of materials

Which account is credited when manufacturing overhead is applied?

manufacturing overhead

Which of the following is a clearing account?

manufacturing overhead

George Corporation recognized 1,000 of accured property taxes on its manufacturing facility. The journal entry to record this would debit:

manufacturing overhead 1,000 and credit property texes payable 1,000

The journal entry to record 20,000 in depreciation on factory equipment is debit__________

manufacturing overhead 20,000 and credit to accumulated depreciation 20,000

The journal entry to record depreciation on factory equipment debits:

manufacturing overhead and credits accumulated depreciation

Actual manufacturing overhead was 50,000, while overhead applied to jobs was 45,000. Work in process contained 10% of applied overheadm finished goods contained 40% and cost of goods sold contained 50%. The entry to dispose of underapplied or overapplied overhead using the allocation method would:

overhead is underapplied by 5,000=50,000 - 45,000. to dispose of the underapplied overhead, overhead is credited and the other accounts including work in process, finished goods, and cost of goods sold are debited by 500 (10%), 2,000 (40%), and 2,500 (50%), respectively