Chapter 1,2,4 smart book Questions + homework
What document specifies the type and quantity of direct materials used on a specific job? - materials requisition form - direct labor time ticket - job cost sheet - bill of materials form
materials requisition form
Nonmanufacturing costs increase ______. Multiple choice question. various asset and liability accounts the Selling, General & Administrative expense accounts the Manufacturing Overhead account the Cost of Goods sold account
the Selling, General & Administrative expense accounts
Differential cost is ______. - never relevant to a product decision - the difference in cost between two alternatives - also known as irrelevant cost - the same as opportunity cost
the difference in cost between two alternatives
When actual manufacturing overhead costs are incurred, ______. Multiple choice question. the manufacturing overhead cost is credited work in process inventory is credited the manufacturing overhead cost is debited work in process inventory is debited
the manufacturing overhead cost is debited
Overhead costs are debited to Work in Process when ______. - the actual cost are incurred - the job is started - the job is sold - they are applied to jobs
they are applied to jobs
Which of the following would most likely NOT be classified as a direct material? Multiple choice question. Automobile engine Drywall Nails and screws Laptop keyboard
Nails and screws
Which of the following statements are true? Multiple select question. Direct labor costs flow through the Raw materials inventory account. When materials are purchased they are recorded in the Raw Materials Inventory account. Raw Materials Inventory represents the cost of materials not yet used in production. Raw Materials Inventory only includes the cost of direct materials.
When materials are purchased they are recorded in the Raw Materials Inventory account. Raw Materials Inventory represents the cost of materials not yet used in production.
What accounts are debited in a journal entry that records putting both direct and indirect materials into production? Multiple choice question. Work in process and Manufacturing overhead Work in process and Raw materials inventory Manufacturing overhead and Raw materials inventory
Work in process and Manufacturing overhead
A cost driver is ______. - the total estimated manufacturing overhead cost -the rate that is used to apply manufacturing overhead to products and services - another name for predetermined overhead rate - a measure that explains or influences the amount of manufacturing overhead cost incurred
a measure that explains or influences the amount of manufacturing overhead cost incurred
A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total cost driver. Multiple choice question. actual; estimated estimated; actual actual; actual estimated; estimated
estimated; estimated
True or false: Job-order costing can only be used in manufacturing firms.
false
True or false: Materials purchases are initially recorded in Raw Materials and then all materials used are transferred to Work in Process. True false question. True False
false
True or false: The cost of each individual unit is tracked to products under both job order and process costing.
false
The cost of jobs that have been completed but not yet sold are contained in ___ _____Inventory.
finished goods
Which of the following statements are true? - Inventoriable costs are expensed in the period in which they are incurred. - The distinction between product and period costs has more to do with financial accounting than managerial accounting. - All costs in a merchandising company are considered to be period costs. - Classifying a cost as product or period can impact reported profitability.
- Classifying a cost as product or period can impact reported profitability. -The distinction between product and period costs has more to do with financial accounting than managerial accounting.
Seth's Skateboard Company incurs the costs listed in the table below. Required:For each of the following costs, choose "Yes" to indicate the category of product cost and whether it is a prime cost, conversion cost, period cost. You may have more than one "Yes" for each item. (Select 'No' in the inappropriate cells.)
- Direct materials (yes): cost of fiberglass, cost of high-grade wheels - Direct labor: wages of assembly person, wages of skateboard painter - Manufacturing overhead: production supervision salary, screws, factory rent, factory utilities - Period cost: sales Commision, utilities for corporate office - Prime cost: cost of fiberglass, wages of assembly person, cost of high-grade wheel, wages of skateboard painter - Conversion cost: production supervision salary, wages of assembly person, screws, factory rent, wages of skateboard painter factory utilities
Which of the following statements are true? - GAAP requires all manufacturing costs be treated as product costs. - Product costs "attach" to units of product as they are purchased for resale or produced. - Product costs are always expensed in the same period in which the related products are produced. - Product costs include all costs involved in making and selling a product.
- GAAP requires all manufacturing costs be treated as product costs. - Product costs "attach" to units of product as they are purchased for resale or produced.
Which methods can be used to dispose of underapplied or overapplied manufacturing overhead? -Make a direct adjustment to Cost of Goods Sold -Allocate it to Raw Materials, Work in Process, and Finished Goods - Close it out to Work in process - Allocate it to Work in Process, Finished Goods, and Cost of Goods Sold - Make a direct adjustment to Finished Goods
- Make a direct adjustment to Cost of Goods Sold - Allocate it to Work in Process, Finished Goods, and Cost of Goods Sold
Cost objects include _______ - anything for which cost data is desired - actives - anything for which revenue data is desired - customers
- anything for which cost data is desired - actives - customers
Predetermined overhead rates are ______. - calculated using estimated costs and actual cost driver usage - based on some secondary allocation measure - used to assign both direct and indirect manufacturing costs to jobs - generally calculated for each month of the year
- based on some secondary allocation measure
Which of the following statements are true? - when making decisions regarding costs, GAAP rules must be followed - costs are treated different situations - there are many different ways to categorize costs
- costs are treated different situations - there are many different ways to categorize costs
Labor costs that can easily and conveniently traced to specific products are _______ costs. - direct labor - selling - manufacturing overhead - indirect labor
- direct labor
To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the ______. - actual total manufacturing overhead - estimated units of production - estimated total cost driver - estimated total direct labor hours
- estimated total cost driver
Manufacturing overhead costs include __________. - indirect materials, factory supervisors' salaries, and factory depreciation - administrative taxes and insurance, sales commissions, and factory assembly workers' wages - direct materials, sale commissions, and factory assembly workers' wages - direct materials, administrative taxes and insurance, and sales commissions
- indirect materials, factory supervisors' salaries, and factory depreciation
Manufacturing overhead costs include __________. - indirect materials, factory supervisors' salaries, and factory depreciation - direct materials, administrative taxes and insurance, and sales commissions - administrative taxes and insurance, sales commissions, and factory assembly workers' wages - direct materials, sales commissions, and factory assembly workers' wages
- indirect materials, factory supervisors' salaries, and factory depreciation
Process costing ____ - uses job cost sheets - is used for mass production - accumulated cost by customer - is used for homogenous products
- is used for mass production - is used for homogenous products
A direct labor time ticket includes the ______. - amount of time spent on each job - materials used on each job worked - job numbers of jobs worked on
- job numbers of jobs worked on - amount of time spent on each job
Direct materials and direct labor are both _____ costs. - selling and administrative - manufacturing - non manufacturing - period
- manufacturing
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ______. - direct materials - period costs - manufacturing overhead - indirect labor
- manufacturing overhead
a relevant cost ____ - pertains to the future - will not influence a decision - is always an opportunity cost - differs between alternatives
- pertains to the future -differs between alternatives
Variable costs _______ - reamin constant in total - remain constant per unit - vary per unit - vary in total
- remain constant per unit - vary in total
Variable costs _________ - vary both in total and per unit - remain constant per unit and vary in total - remain constant both in total and per unit - remain constant in total and vary per unit
- remain constant per unit and vary in total
The Sarbanes-Oxley (SOX) act _____________. - is focused on the managerial accounting system - puts more responsibility on accountants and less on managers - was primarily aimed at renewing investor confidence - has many implications for managers
- was primarily aimed at renewing investor confidence - has many implications for managers
Suppose you are a sales manager for Books on Wheels, Inc., which makes rolling book carts often used by libraries. The company is considering adding a new product aimed at university students. The new product will be a small, collapsible, wheeled tote designed specifically to aid students in transporting textbooks across campus. Suppose that, after a thorough investigation, Books on Wheels decided to go forward with the new product aimed at university students. The product, The Campus Cart, has gone into production, and the first units have already been delivered to campuses across the country. Required: Match each of the following steps that took place as Books on Wheels moved through the decision making, production, marketing, and sale of The Campus Cart with the correct phase of the management process. A. Planning B. Implementing C. Controlling 1. Identifying five college campuses to serve as test markets 2. Setting the goal of $1 million in annual sales by the year of 2018 3. Hiring workers for the manufacturing facility 4. overseeing the production and shipment of The Campus Cart 5. Preparing one-, three-, and five- year budgets that detail the necessary resources and costs that will be incurred to meet the projected sales forecast 6. Deciding which new markets to expand into based on the first year's sales results 7. Implementing a bonus system to reward employees for meeting sales and production goals. 8. Deciding to spend more adverting dollars in regions where sales were slower than expected
1. A 2. A 3. B 4. B 5. A 6. C 7. B 8.C
The following information is available for Wonderway, Inc., for 2018: Factory rent$28,800 Company advertising 20,500 Wages paid to laborers 84,800 Depreciation for president's vehicle 8,110 Indirect production labor 1,820 Utilities for factory 31,300 Production supervisor's salary 30,900 President's salary 60,600 Direct materials used 35,500 Sales commissions 7,590 Factory insurance 13,000 Depreciation on factory equipment 27,400 Required: 1. Calculate the direct labor cost for Wonderway. 2. Calculate the manufacturing overhead cost for Wonderway. 3. Calculate the prime cost for Wonderway. 4. Calculate the conversion cost for Wonderway. 5. Calculate the total manufacturing cost for Wonderway. 6. Calculate the period expenses for Wonderway.
1. Direct labor cost 84,800 2. Manufacturing overhead 133,220 3. Prime Cost 120, 300 4. Conversion cost 218,020 5. Total manufacturing cost 253,520 6. Period Expenses 96800
Cartwell Inc. makes picture frames which are sold in a local retail store and through various websites. - Wood for frames $19,000 - Rent for retail store 4,800 - Depreciation on office equipment 760 - Assembly worker wages 2,900 - CEO's salary 4,400 -Glue and nails 1,100 - Online sales commissions 2,350 - Glass for frames 7,600 - Depreciation on factory equipment 1,500 - Factory utilities 825 - Stain for frames 875 Required: 1. Determine the cost of direct material. 2. Determine the cost of direct labor. 3. Determine the cost of manufacturing overhead. 4. Determine the total manufacturing cost. 5. Determine the total period cost. 6. Determine the total variable cost. 7. Determine the total fixed cost. 8. Determine the total prime cost. 9. Determine the total conversion cost.
1. Direct material cost ( wood + glass) 26,600 2. Direct labor cost ( assembly workers wages) 2,900 3. Manufacturing overhead cost (glues + nails, depreciation, factory utilities stain for frames) 4,300 4. total manufacturing cost (direct material cost + direct labor + manufacturing overhead) 33,800 5. Total period cost ( rent for rental store + CEO salary + depreciation of office equipment + sales commissions) 12,310 6. Total variable cost (wood + glass + assembly workers wages + factory utilities + stain for frames, + glue and nails + online sales commision) 34,650 7. Total fixed cost ( CEO salary + rent for retail store + depreciation of office equipment + depreciation of factory equipment (11,460) 8. Total prime cost ( direct material cost + direct labor) 29,500 9. Total conversion cost ( direct labor + manufacturing overhead cost) 7,200
When is the predetermined overhead rate calculated? After the period is over Before the period begins Throughout the year As soon as actual overhead is known
Before the period begins
Which of the following items are included on a cost of goods manufactured report? Beginning and ending work in process inventory Applied manufacturing overhead Beginning and ending raw materials inventory Actual manufacturing overhead Beginning and ending finished goods inventory
Beginning and ending work in process inventory Applied manufacturing overhead Beginning and ending raw materials inventory
The journal entry to record the purchase of materials debits ______. Multiple choice question. Accounts Payable Manufacturing Overhead Work in Process Inventory Raw Materials Inventory
Raw Materials Inventory
Which of the following is not a manufacturing cost category? Selling & administrative costs Direct materials Manufacturing overhead Direct labor
Selling & administrative costs
The most common method for disposing of the balance in Manufacturing Overhead is ______. Multiple choice question. adjusting Cost of Goods Sold allocating it between Cost of Goods Sold and inventory accounts adjusting Finished Goods inventory allocating it between Work in Process and Finished Goods inventory
adjusting Cost of Goods Sold
The first step in assigning manufacturing overhead is to determine the ____ _____or cost driver.
allocation base
On the job cost sheet and work in process accounts, the ______ manufacturing overhead is recorded. Multiple choice question. actual budgeted applied
applied
In a service firm, salaries of administrative personnel, rent and utilities, and nonbillable employee time are ______. Multiple choice question. assigned to client or account using an allocation base deducted on the income statement as period expenses
assigned to client or account using an allocation base
the basic formula for process costing is ___ - average unit cost = total units produced ÷ total manufacturing costs - total cost = actual direct materials + actual direct labor + applied overhead - average unit cost = total manufacturing cost ÷ total units produced
average unit cost = total manufacturing cost ÷ total units produced
Finished Goods Inventory ______. Multiple choice question. consists of goods that have been sold to customers during the period is the same as cost of goods manufactured consists of completed, unsold goods consists of goods that require additional processing before being sold
consists of completed, unsold goods
Job-order costing would most likely be used in a(n) ______. - oil refinery - dairy farm that produces raw milk - construction company - soda bottling factory
construction company
Materials requisition forms are used to ______. - control the flow of materials from inventory into production - summarize the cost of a job - specify the cost of materials to be ordered - record the cost of raw materials in the accounting system
control the flow of materials from inventory into production - record the cost of raw materials in the accounting system
Direct labor and manufacturing overhead costs are known as ____ costs - period - opportunity - conversion - prime
conversion
Direct labor and manufacturing overhead costs are known as ______ costs. - opportunity - prime - conversion - period
conversion
When making a decision, - managers should only consider cost - cost control is a critical concern for most organizations - most of the information managers need is not based on cost data
cost control is a critical concern for most organizations
When calculating a predetermined overhead rate, the ideal allocation base should be a(n) ______ ______
cost driver
The total cost transferred out of Work in Process inventory into Finished Goods inventory is ______. Multiple choice question. net operating income gross profit cost of goods sold cost of goods manufactured
cost of goods manufactured
When goods are sold to customers, ______. Multiple choice question. the inventory accounts are not affected costs are transferred from Finished Goods to Sales Revenue costs are transferred from Work in Process to Finished Goods costs are transferred from Finished Goods to Cost of Goods Sold
costs are transferred from Finished Goods to Cost of Goods Sold
If overhead is underapplied, the Manufacturing Overhead account will have a balance at the end of the period. (Enter either debit or credit.)
debit
The first step in assigning manufacturing overhead costs using a predetermined overhead rate is to ______. Multiple choice question. calculate the predetermined overhead rate assign manufacturing overhead determine the cost driver
determine the cost driver
Underapplied or overapplied overhead is the ______. sum of overhead applied to jobs and actual overhead total overhead applied to work in process difference between overhead applied to jobs and actual overhead same as actual overhead
difference between overhead applied to jobs and actual overhead
The difference in costs between two alternatives is called a(n) ______ cost. - sunk - opportunity - differential - common
differential
In an automobile manufacturing plant, assembly-line workers' wages are ________ ________ costs. (enter only one word per blank)
direct labor
Labor costs that can be easily and conveniently traced to specific products are ________ costs. - selling - manufactring overhead - direct labor - indirect labor
direct labor
The document used to record the time workers spend on each job and task is a
direct labor time ticket
Major inputs such as lumber and fixtures that can be easily traced to a specific job are called _____ _____
direct materials
The components of prime costs are ______. - direct materials and direct labor - direct materials and manufacturing overhead - direct labor and manufacturing overhead
direct materials and direct labor
When materials are requisitioned into production, ______. Multiple select question. direct materials are recorded in Work in Process indirect materials are recorded in Work in Process indirect materials are recorded as a separate line item on the job cost sheet direct materials are recorded on the job cost sheet
direct materials are recorded on the job cost sheet direct materials are recorded in Work in Process
Categories of manufacturing costs include:
direct materials, direct labor, manufacturing overhead
Costs are transferred from raw materials inventory to ______. either finished goods or work in process manufacturing overhead only either work in process or manufacturing overhead finished goods inventory only work in process inventory only
either work in process or manufacturing overhead
To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract ______. Multiple choice question. ending raw materials inventory and indirect materials used beginning raw materials inventory and indirect materials used only beginning raw materials inventory only ending raw materials inventory
ending raw materials inventory and indirect materials used
To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the ______. estimated total cost driver estimated total direct labor hours actual total manufacturing overhead estimated units of production
estimated total cost driver
If cost data will be used for decision making, it is important to consider ______. - how cost will behave or change - whether or not the rules of GAAP are being followed - what costs are under the decision maker's direct control
how cost will behave or change
If cost data will be used for decision making, it is important to consider ______. - how costs will behave or change - whether or not the rules of GAAP are being followed - what costs are under the decision maker's direct control
how costs will behave or change
Sarbanes-Oxley Act focuses on three factors that affect the accounting reporting environment: __________, __________, and ___________.
incentive, opportunity, and, character
Costs that differ between decision alternatives are called differential or _____ costs.
incremental
When it is not worth the cost of effort to trace them to specific products, materials are considered ________ materials.
indirect
When it is not worth the cost or effort to trace them to specific products, materials are considered _________ materials.
indirect
A cost that will not influence a decision is a(n) ______ cost.
irrelevant
Manufacturing costs can be divided into three categories: direct materials, direct ________ and ________ _________
labor, manufacturing overhead
When classifying costs, ________ costs relate to making a product and ________ costs relate to delivering and selling a product.
manufacturing and non-manufacturing
When classifying costs, _________ costs relate to making a product and _______ costs relate to delivering and selling a product.
manufacturing and nonmanufcaturing
An allocation base is a(n) ______. Multiple choice question. - activity that causes overhead costs to change - measure used to assign all manufacturing costs to products and services - measure of activity used to assign overhead costs to products and services
measure of activity used to assign overhead costs to products and services
There are two broad classifications of costs: manufacturing costs and _____ costs.
non manufacturing
There are two broad classifications of costs: manufacturing costs and _______ costs. (Enter only one word per blank.)
non manufacturing
There are two broad classifications of costs: manufacturing costs and costs. (Enter only one word per blank.)
non- manufacturing
The difference between overhead applied to jobs and actual overhead is ______. - overapplied or underapplied overhead - cost of goods sold - ending work in process inventory - cost of goods manufactured
overapplied or underapplied overhead
The predetermined overhead rate is multiplied by the actual cost driver usage for a job to calculate the ______ the job. actual overhead for predetermined overhead rate for overhead applied to total cost of
overhead applied to
the difference between _____ costs and _______ costs determines how and when the cost will be matched up against revenue on the income statement
period, product
There are two broad classifications of costs: manufacturing costs and ________ costs. (Enter only one word per blank.)
period, support, nonmanufacturing
The formula for applying overhead to a specific job is ______. - estimated manufacturing overhead ÷ estimated total cost driver usage - estimated manufacturing overhead ÷ cost driver usage for the specific job - predetermined overhead rate × the actual cost driver usage for the specific job - actual manufacturing overhead rate × actual cost driver usage for the specific job
predetermined overhead rate × the actual cost driver usage for the specific job
Direct materials and direct labor together are referred as ________ costs.
prime
direct materials and direct labor together are referred to as _____ costs.
prime
Direct materials, direct labor, and manufacturing overhead are all ____ cost - period - conversion - variable - product - direct
product
All materials that will be used in future production are first recorded in the ____ _____ inventory account
raw materials
Indirect materials include ________ - supervisor salaries - salt and pepper - laptop computer keyboards - factory rent and insurance
salt and pepper
The balance of work in process inventory may be calculated by ______. - subtracting the cost of goods sold from the sum of all manufacturing costs - summing the sales value of all jobs in process - subtracting the cost of finished goods inventory from the sum of all manufacturing costs summing the costs of all jobs in process
summing the costs of all jobs in process
Costs that remain constant on a per unit basis are called _________ costs.
variable
Costs that remain constant on a per unit basis are called ________ costs.
variable
Which types of cost changes in total, in direct proportion to changes in activity level? - variable - fixed - opportunity - differential
variable
The major difference between job order and process costing is ______. - whether the products produced are hand made or machine made - whether the products produced are similar or different - job order costing is used for products and process costing is used for services
whether the products produced are similar or different
Costs of partially completed units are accounted for in ______. Multiple choice question. finished goods inventory work in process inventory raw materials inventory cost of goods manufactured
work in process inventory
