ACG2071 Chapter 2 Study Set

Kilt Company used a predetermined overhead rate of $42 per direct labor hour for the year and estimated that direct labor hours would total 5,500 hours. Assume the only inventory balance is an ending Work in Process balance of $17,000. How much overhead was applied during the year?

$42.00 x 5,000 = $210,000.

What was the ending Work in Process Inventory balance on 12/31?

$20,000; Current manufacturing costs = $200,000 + $150,000 + $160,000 = $510,000. Cost of goods manufactured = 525,000 = $35,000 + $510,000 - ending Work in Process Inventory, so ending Work in Process Inventory = $35,000 + $510,000 - $525,000 = $20,000.

Manufacturing overhead was estimated to be $200,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $215,000, actual labor hours were 21,000. The predetermined overhead rate would be

$200,000/20,000 = $10.00

Compute the current manufacturing costs.

$245,000; Direct materials used = $20,000 + $100,000 - $0 - $30,000 = $90,000. Current manufacturing costs = $90,000 + $75,000 + $80,000 = $245,000.

Ragtime Company used a predetermined overhead rate of $35 per direct labor hour for the year. Assume the only inventory balance is an ending Work in Process Inventory balance of $17,000. What was adjusted cost of goods sold?

$409,000; Applied manufacturing overhead = $35 x 5,000 = $175,000. Cost of goods manufactured = $110,000 + $150,000 + $175,000 + $0 - $17,000 = $418,000. Overapplied overhead = $175,000 - $166,000 = $9,000. Unadjusted cost of goods sold = $0 + $418,000 - $0 = $418,000. Adjusted cost of goods sold = $418,000 - $9,000 = $409,000.

Manufacturing overhead was estimated to be $200,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual labor hours were 21,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct?

Cost of Goods Sold would be debited for $5,000; Predetermined overhead rate = $200,000/20,000 = $10.00. Applied manufacturing overhead = $10.00 x 21,000 = $210,000. Underapplied overhead = 215,000 - $210,000 = $5,000, which is debited to Cost of Goods Sold.

Which of the following would be used to apply manufacturing overhead to production for the period?

Credit to Manufacturing Overhead; When manufacturing overhead is applied to production, Work in Process Inventory is debited and the Manufacturing Overhead account is credited.

A predetermined overhead rate is calculated using which formula?

Estimated manufacturing overhead cost/estimated units in the allocation base

When units are completed, the cost associated with the job is debited to which account?

Finished Goods Inventory; When a job is completed, its cost is transferred from Work in Process Inventory (with a credit) to Finished Goods Inventory (with a debit).

Manufacturing overhead was estimated to be $400,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual labor hours were 21,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct?

Manufacturing Overhead would be debited for $5,000; Predetermined overhead rate = $400,000/20,000 = $20.00. Applied manufacturing overhead = $20.00 x 21,000 = $420,000. Overapplied overhead = $420,000 - $415,000 = $5,000, which is debited to Manufacturing Overhead.

Which of the following would be used to record the property taxes on a factory building?

Manufacturing Overhead would be debited; Actual indirect manufacturing costs are accumulated in the Manufacturing Overhead account on the debit side of the account.

When units are completed, the cost associated with the job is credited to which account?

Work in Process Inventory; When a job is completed, its cost is transferred from Work in Process Inventory (with a credit) to Finished Goods Inventory (with a debit).

Overhead costs are overapplied if the amount applied to Work in Process is

greater than actual overhead incurred; Overhead cost is overapplied if the amount applied is more than the actual overhead cost.

Overhead costs are underapplied if the amount applied to Work in Process is

less than actual overhead incurred; Overhead cost is underapplied if the amount applied is less than the actual overhead cost.

The most common method for disposing of over- or underapplied overhead is to

make a direct adjustment to Cost of Goods Sold; The most common method for disposing of the balance in Manufacturing Overhead is to make a direct adjustment to Cost of Goods Sold.

Cost of goods sold is the amount of cost transferred

out of Finished Goods Inventory and into Cost of Goods Sold; When goods are sold, their cost is transferred out of Finished Goods Inventory and into Cost of Goods Sold.

Cost of goods manufactured is the amount of cost transferred

out of Work in Process Inventory and into Finished Goods Inventory; The total cost that is transferred out of Work in Process Inventory and into Finished Goods Inventory is called the cost of goods manufactured.

Sawyer Company used a predetermined overhead rate using estimated overhead of $320,000 and 8,000 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods Inventory balance of $9,000. What was cost of goods manufactured?

$715,000; Predetermined overhead rate = $320,000/8,000 = $40. Applied manufacturing overhead = $40 x 7,000 = $280,000. Cost of goods manufactured = $190,000 + $245,000 + $280,000 + $0 - $0 = $715,000.

Manufacturing overhead was estimated to be $400,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual labor hours were 21,000. Which of the following would be correct?

Overhead is overapplied by $5,000; Predetermined overhead rate = $400,000/20,000 = $20.00. Applied manufacturing overhead = $20.00 x 21,000 = $420,000. Overapplied overhead = $420,000 - $415,000 = $5,000.

Manufacturing overhead was estimated to be $200,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $215,000, actual labor hours were 21,000. The amount of manufacturing overhead applied to production would be

Predetermined overhead rate = $200,000/20,000 = $10.00. Applied manufacturing overhead = $10.00 x 21,000 = $210,000.

Manufacturing overhead was estimated to be $400,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual labor hours were 21,000. The amount credited to the Manufacturing Overhead account would be

Predetermined overhead rate = $400,000/20,000 = $20.00. Applied manufacturing overhead = $20.00 x 21,000 = $420,000, which is credited to Manufacturing Overhead.

Manufacturing overhead is applied to each job using which formula?

Predetermined overhead rate x actual value of the allocation base for the job

When units are sold, the cost associated with the units is credited to which account?

Finished Goods Inventory; When units are sold, their cost is transferred from Finished Goods Inventory (with a credit) to Cost of Goods Sold (with a debit).