BADM 226 Chapter 3 Smartbook 2.0

Units of production that are only partially complete are contained in the __________ ________ ________ inventory. (one word per blank)

1. work 2. in 3. process or progress

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

74,000

Work in process consists of

Actual direct materials cost, actual direct labor cost, applied manufacturing overhead

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

Close it to Cost of goods sold. Allocate it to Work in process, Finished goods, and Cost of goods sold.

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

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

Underapplied or overapplied manufacturing overhead can be disposed of by closing it to ______

Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold.

Which account is credited when manufacturing overhead is applied?

Manufacturing overhead

If a company incurs $2,000 of factory rent, $1,000 of factory utilities, and $5,000 of miscellaneous factory costs, the journal entry to record these transactions would be to debit ______.

Manufacturing overhead $8,000 and credit accounts payable $8,000

The journal entry to record accrued property taxes for a factory building debits ______.

Manufacturing overhead and credits property taxes payable

Which of the following statements are true?

Raw materials inventory represents the cost of materials not yet used in production. When materials are purchased they are recorded in the Raw materials inventory account.

The journal entry to record the purchase of materials credits ____.

accounts payable

The Manufacturing Overhead account is debited when _________.

actual overhead costs are incurred

The simpler method of closing out the balance of Manufacturing overhead is ______.

closing it out to cost of goods sold

Finished goods ______.

consists of completed, unsold goods.

Raw materials inventory was $5,000 at the beginning of the year and $12,000 at the end of the year. During the year, a total of $27,000 in raw materials were purchased, including $4,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

$16,000

A company reports Gross margin of $100,000, Cost of goods sold of $70,000, and Selling and administrative expenses of $45,000. Net operating income (loss) is ______.

$55,000

A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction debits ______.

Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000.

Overhead is overapplied if ______.

actual overhead is less than applied overhead

Overhead is underapplied if ______.

actual overhead is more than applied overhead

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

administrative salaries

What side of the Manufacturing overhead account is applied manufacturing overhead entered on?

always the credit side

What side of the Manufacturing overhead account is actual manufacturing overhead entered on?

always the debit side

The journal entry to record selling and administrative salaries debits ______.

an expense account and credits Cash or a liability

A journal entry that debits Work in process and credits Manufacturing overhead is recording the ______.

application of manufacturing overhead costs

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______.

as they are incurred

Manufacturing overhead applied to production is always recorded on the __________ side of the manufacturing overhead account and the ________ side is always used to record the actual manufacturing costs incurred.

credit, debit

A journal entry that debits Manufacturing overhead and credits Accounts payable would not be used to record ______.

direct labor costs

A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______.

factory utilities expense, rent expense on factory equipment

Completed units that have not yet been sold are found in _____ ______ inventory.

finished goods

Selling and administrative costs first appear on the ______.

income statement

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

indirect

The schedule of cost of goods __________ summarizes costs that remain in Work in process inventory and that have been transferred from Work in process to Finished goods inventory.

manufactured or produced

The cost of goods ___________ is the sum of all amounts transferred from Work in process to Finished goods during a period.

manufactured, completed, produced, or finished

Manufacturing overhead consists of all ________.

manufacturing costs other than direct labor and direct materials

Which of the following would not be charged to the Manufacturing overhead account?

nonmanufacturing costs

When labor costs are incurred, _________ labor costs are added directly to the Work in Process account.

only direct

A credit balance in the Manufacturing Overhead account means overhead was

overapplied

Selling and administrative costs incurred are treated as ______.

period expenses

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

raw materials

The journal entry to record the purchase of materials debits _______.

raw materials

Net operating income is calculated by subtracting ______ from ______.

selling and administrative expenses; gross margin

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

selling costs and administrative costs

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

Manufacturing overhead costs include _________.

the factory supervisor's salary, factory insurance

A debit balance in Manufacturing overhead means overhead was

underapplied

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

Costs of partially completed units are accounted for in _____.

work in process

The journal entry to record issuing both direct and indirect materials into production debits _________.

work in process and manufacturing overhead