managerial accounting (chp 15)

Producing products that are individually designed to meet the needs of a specific customer where each customized product is manufactured separately is the definition of:

job order production

Companies use job cost sheets to track the costs of:

materials, labor, and overhead costs of a job

All of the following are manufacturing costs except: a. direct materials b. office salaries c. overhead costs d. direct labor

office salaries

The journal entry to record indirect materials costs used in production includes a debit to factory _____

overhead

The predetermined overhead rate is based on total ______ costs and activity base.

overhead

The three types of manufacturing costs in a job order costing system include:

overhead, direct materials, direct labor

Designate mass production as either from job order or process operations.

process operations

Manufacturing of products in a repetitive manner is referred to as (process/job order) _______ operations while manufacturing custom products is referred to as (process/job order) _______ operations.

process, job order

A tax accounting firm pays tax preparers $44 per hour. The firm has a predetermined overhead rate of $24 per labor hour. The Jones tax return required 2.5 hours to complete. The total cost of this job is $

$44 x 2.5 = $110 $24 x 2.5 = $60 60+110= $170

Job cost sheets can be used to

provide a record for the Cost of Goods Sold account. provide a subsidiary ledger for the Finished Goods Inventory account. monitor costs incurred and to predict costs for each job.

The architecture firm of Dream Design Company uses a job order cost system in pricing the home blueprints it designs for its clients. The company's predetermined overhead rate is 130% of direct labor cost (which, in this situation, is the amount paid to the company's designers). Dream Design Company estimates that it will take 32 labor hours (paying the designers $3,200) to complete the home designs for its client Joan Smitte. What is the total cost to Dream Design Company to complete this project?

$7,360

List the following documents in the order in which they are used when recording direct materials costs in job order cost accounting, with the first document on top. -Materials Ledger cards -Job cost sheets -Materials Requistion -Receiving Reports

1. Receiving Reports 2.Materials Ledger cards 3.Material requistion 4.Job cost sheets

If the factory overhead is overapplied, then:

1. applied overhead costs > actual overhead costs. 2. the Factory Overhead account has a credit balance.

List the following documents in the order in which they are used when recording indirect materials costs in job order cost accounting, with the first document on top.

1. receiving reports 2. materials ledger cards 3. materials requisitions 4. factory overhead ledger

List the following documents in the order in which they are used when recording indirect labor costs in job order costing, with the first document on top.

1. time tickets 2. factory overhead ledger 3. allocated to specific jobs through factory overhead

List the following documents in the order in which they are used when recording direct labor costs in job order costing, with the first document on top. -time tickets -factory wages payable -job cost sheets

1. time tickets 2. job cost sheets 3. factory wages payable

A consulting firm has a predetermined overhead rate of $120 per labor hour. The Smith job required 5 hours to compete. The overhead cost applied to this job is $_____

120 x 5hrs = $600

A company uses direct labor costs as its allocation base. Management estimates the company will incur $150,000 of direct labor cost during the year and total overhead costs of $200,000. What is their predetermined overhead rate?

133% $200,000/$150,000 = 1.33% x100 = 133%

Bridge Building Company estimates that it will incur $1,200,000 in overhead costs for the year. Additionally, the company estimates 50,000 direct labor hours will be spent building custom walking bridges for the year at a total direct labor cost of $600,000. What is the predetermined overhead rate for Bridge Building Company if direct labor costs are to be used as an allocation base?

200%

All of the following are included on a job cost sheet except? Customer's name and address Customer's signature when job is complete Direct materials cost Direct labor cost Overhead costs

Customer's signature when job is complete

Manufacturing costs flow in which order?

raw materials inventory, work in process inventory, finished goods inventory

One important difference between service companies and manufacturing companies is that:

service companies do not have raw materials inventory

f the factory overhead is underapplied, then:

the Factory Overhead account has a debit balance. actual overhead cost > applied overhead costs.

A _____ _____ is used to track each employee's direct labor time.

time ticket

True or false: The principle of customization is applicable to both service and manufacturing companies.

true

The correct order of cost flows in a job order costing system is

work in process; finished goods, cost of goods sold

The journal entry to record the allocation of factory overhead is:

Debit Work in Process Inventory and credit Factory Overhead

A cost accounting system includes which of the following?

It accumulates production costs and assigns them to products and services

Designate custom orders as either from job order or process operations.

Job order operations

Bridge Builders Company examined its Factory Overhead account at the end of the year and discovered a debit balance. What does this indicate?

Overhead has been underapplied

What account is debited when materials are purchased on credit for later use in production?

Raw Materials Inventory Correct

What is the chronological order of the material cost flows through the subsidiary records?

Receiving Reports, Materials Ledger Card, Requisitions, Job Cost sheets

A company incurs factory overhead costs of $1,200 and applied $1,500. If the difference is considered immaterial, then the:

adjusting entry will require a credit to Cost of Goods Sold. Factory Overhead account has a credit balance of $300 before adjusting.

Manufacturing costs include direct materials, direct labor, and

applied overhead costs

The predetermined overhead rate is calculated:

at the start of the accounting period

A cost accounting system: (Check all that apply.) a. is used to control costs of manufacturing activities. b. is used only with a perpetual inventory system. c. provides general information used by investors. d. helps managers' determine selling prices.

b. is used to control costs of manufacturing activities. d. helps managers' determine selling prices

Bridge Builders Company examined its Factory Overhead account at the end of the year and discovered a credit balance of $2,000. The journal entry to close this account includes which of the following?

credit cost of goods sold

Match the following activities to their effect on the general ledger accounts. Allocate overhead costs to jobs

credit factory overhead

Match the following activities to their effect on the general ledger accounts. use indirect materials

credit raw materials inventory

If the factory overhead is overapplied, then the adjusting journal entry to close the factory overhead account includes a:

credit to Cost of Goods Sold. debit to Factory Overhead.

The journal entry to record indirect materials in production is to:

debit Factory Overhead and credit Raw Materials Inventory

The journal entry to record the allocation of factory overhead to work in process is:

debit Work in Process Inventory and credit Factory Overhead

Match the following activities to their effect on the general ledger accounts. pay factory utilities

debit factory overhead

Match the following activities to their effect on the general ledger accounts. purchase indirect materials

debit raw materials inventory

Match the following activities to their effect on the general ledger accounts. direct labor used

debit work in process inventory

Both service companies and manufacturing companies have:

direct labor, overhead

A Schedule of Cost of Goods Manufactured includes all of the following costs:

direct materials used, factory overhead applied, work in process inventory, direct labor used

Managers use a predetermined overhead rate for which of the following reasons?

To assist in setting prices for jobs To estimate total job costs before the job is completed

What account is debited when direct labor is recorded for the month?

Work in Process Inventory

Job Order Costing

a costing system used in situations where many different products, jobs, or services are produced each period

A Schedule of Cost of Goods Manufactured includes all of the following costs except: a. cost of goods sold b direct materials used c. factory overhead applied d. work in process e. direct labor

a. cost of goods sold

Job order production is most likely used by companies that produce a. customized wedding cakes b. cookie sheets c. cake pans d. chocolate chip cooks

a. customized wedding cakes

All of the following are inventory accounts for a manufacturer except: -raw materials inventory -work in process inventory -indirect materials inventory -finished goods inventory

indirect materials inventory