Ch. 3 - Job Order costing: Cost Flow and External Reporting

Labor costs charged to manufacturing overhead represent:

Indirect labor costs

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

Which account is credited when manufacturing overhead is applied?

MOH

Process of accounting for MOH

Actual OH is incurred; MOH debited OH is applied to WIP; MOH credited Period ends; MOH is closed

Work in process consists of:

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

Overhead is underapplied if:

Actual overhead is more than applied overhead

What appears on job sheet and in the WIP account?

Applied MOH

Cost of goods available for sale =

Beginning finished goods inventory + cost of goods manufactured

The schedule of _______________ summarizes cost that remain in finished goods inventory and that have been transferred to COGS

COG SOLD

What accounts are debited when goods are sold on account?

COGS and A/R

The DEBIT/CREDIT side of 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

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

Closing it out to COGS and allocating it among WIP, finished goods, and COGS

Closing out over or underapplied overhead:

Closing to COGS is simpler, allocating is more accurate

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

Completion of a job

Debit: Finished goods Credit: Work in process means?

Completion of a job

A debit balance in manufacturing overhead means overhead was

UNDERAPPLIED

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

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

The journal entry to record the more accurate allocation of overapplied/underapplied overhead includes entries to:

WIP, finished goods, COGS, MOH

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

Debit: An expense account Credit cash/liability

Journal entry to record expired PPI:

Debit: MOH Credit: PPI

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

Debit: MOH Credit: Property taxes payable

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

Debit: MOH $8,000 Credit: A/P $8,000

The journal entry to record $10,000 in manufacturing overhead applied to job #40 debits:

Debit: Work in process $10,000 Credit: Manufacturing overhead $10,000

a company requisitioned $40k in direct materials and $30k in indirect materials from the storeroom to be used in production. The journal entry to record this transaction would be

Debit: Work in process $40k Manufacturing Overhead $30k Credit: Raw materials $70k

Debit: Manufacturing OH Credit: Accumulated depreciation means:

Depreciation of factory equipment

Debit Depreciation expense Credit: Accumulated depreciation

Depreciation on office equipment

MOH and COGS records:

Disposal of underapplied/overapplied OH

The formula for a predetermined overhead rate is:

Estimated manufacturing overhead cost/estimated allocation base

T/F: Period costs flow from Finished Goods to COGS

FALSE

Manufacturing overhead costs include:

Factory insurance and factory supervisors salary

which of the following costs would be classified as manufacturing overhead:

Factory utilities, factory maintenance wages, factory rent

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

Finished goods

When a job is completed, its costs are transferred into:

Finished goods

When jobs are sold their costs are transferred out of:

Finished goods

When jobs are sold their costs are transferred out of:

Finished goods inventory

Accounts included when the allocation method is used to close out the underapplied or overapplied balance remaining in manufacturing overhead are:

Finished goods, work in process, cost of goods sold

Sales - cost of goods sold =

Gross margin

Manufacturing overhead is applied with a debit to:

Work in process

which accounts are debited in the journal entry to record manufacturing labor costs?

Work in process manufacturing overhead

Cost of goods manufactured:

Includes the manufacturing costs of goods finished during the period

Unadjusted COGS of $450,000. Overhead was underapplied by $30,000 Adjusted COGS is:

$480,000

Gross margin = selling/administrative expenses =

Net operating income

Debit to MOH means:

OH was overapplied

Difference between entry for depreciation on office equipment and depreciation on factory equipment?

One debits depreciation expense the other debits MOH

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

Any purchased materials that will go into the finished products are first recorded in the _____ _____ inventory account.

Raw materials

A journal entry that debits MOH and credits AP could be made to record:

Rent expense on factory equipment and factory utilities expense

The journal entry to record labor costs credits:

Salaries and wages payable

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

Selling cost and admin cost

Debit: Advertising expense Credit: Cash

Selling expense

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

Subtracted from raw materials used in production

Underapplied or overapplied overheas is the:

The difference between overhead applied to work in process and actual overhead is