chapter 3 concepts

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

Unadjusted cost of goods sold is calculated by subtracting

ending finished goods inventory from goods available for sale

Net operating income is calculated by subtracting

selling and administrative expenses form gross margin

Overapplied manufacturing overhead would result if:

manufacturing overhead costs incurred were less than manufacturing overhead costs charged to production.

Gross margin minus selling and administrative expenses equals

net operating income

Zimmer, Inc. started the month of January with beginning finished goods inventory of $20,000. The cost of goods manufactured during the month was $120,000 and the ending finished goods inventory was $50,000. What is the unadjusted cost of goods sold for January?

$90,000 20,000 +1 20,000 = 140,000 140,000 - 50,000 = 90,000

For each of the five transactions described below, use the dropdown boxes to indicate which account should be debited and which account should be credited. Direct materials are issue into production for a specific job.

Debit: Work in process Credit: Raw materials

Job #4260 consisted of 1,000 units at a total cost of $200,000. The cost transferred to Cost of Goods Sold for the sale of 600 of the units is

$120,000 200,000 / 1,000 x 600 = 120,000

For the month of October, Janus Corporation used $30,000 worth of direct materials in production and incurred direct labor costs of $60,000. Actual manufacturing overhead costs were 440,000, whereas $45,000 was the manufacturing overhead applied to work in process. What is the amount of total manufacturing costs that would appear in the Schedule of Cost of Goods Manufactured for October?

$135,000 30,000 + 60,000 + 45,000 = 135,000

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 recored in the Raw materials inventory account -Direct labor costs flow through the Raw materials inventory account -Raw materials inventory only includes the cost of direct materials

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

Applied manufacturing overhead is entered on what side of the Manufacturing overhead account?

Always the credit side

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

Always the debit side

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 of the following occurs when finished jobs are shipped to customers?

Debit to Cost of Goods Sold

George Corporation recognized $1,000 of accrued property taxes on its manufacturing facility. The journal entry to record this debits

Manufacturing overhead $1,000 and credit Property taxes payable $1,000

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

Work in process $10,000 and credits Manufacturing overhead $10,000

The journal entry to record the purchase of materials credits

accounts payable

Overhead is overapplied if

actual overhead is less than applied overhead

Overhead is underapplied if

actual overhead is more than applied overhead

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

Actual manufacturing overhead is ___ to the Manufacturing overhead account

debited

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

direct labor costs

When companies incur selling and administrative costs, those costs

do not flow through three inventory accounts

Completed units that have not yet been sold are found in

finished goods inventory

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

manufacturing overhead and credits property taxes payable

A journal entry that debits Raw Materials and credits Accounts Payable is recording the

purchase of materials

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

subtracted from raw materials used in production

Given: Cost of goods manufactured of $234,000; beginning finished goods inventory of $18,000; and ending finished goods inventory of $24,000, calculate unadjusted cost of goods sold.

$228,000 18,000 + 234,000 - 24,000 = 228,000

For each of the five transactions described below, use the dropdown boxes to indicate which account should be debited and which account should be credited. The wages of direct of laborers who worked on a particular job are payable.

Debit: Work in process Credit: Salaries and wages payable

Luver Corporation's Gross margin is $100,000, Cost of goods sold equals $70,000, and Selling and administrative expenses total $45,000. Net operating income is ______.

$55,000 100,000 - 45,000 = 55,000

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. Multiple choice question.

$74,000 27,000 + 100,000 - 28,000 - 25,000 = 74,000

Manufacturing overhead costs include

-factory insurance -the factory supervisor's salary

Which of the following costs are classified as manufacturing overhead?

-factory rent -factory utilities -factory maintenance wages

What is the balance of the Manufacturing Overhead account and is overhead underapplied at the end of the year? Manufacturing overhead applied = $150,000 Actual amount of manufacturing overhead costs = 120,000

Credit of $30,000, overapplied

Which of the following occurs when the manufacturing overhead is applied to Work in Process? -Debit to Cost of goods sold -Debit to Manufacturing Overhead -Credit to Work in Process -Credit to Manufacturing Overhead

Credit to Manufacturing Overhead

Which of the following occurs when a job has been completed and transferred to the finished goods warehouse?

Credit to Work in Process

True or false: The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next.

True

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 would debit

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

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

administrative salaries

The more accurate method of closing out the balance in Manufacturing overhead is

allocating it among Work in process, Finished goods, and Cost of goods sold

The ___ side of the manufacturing overhead account is always used to record manufacturing overhead applied to production and the ___ side is always used to record the actual manufacturing costs incurred.

credit debit

Actual manufacturing overhead is ______ to the Manufacturing overhead account. Multiple choice question.

debited

When a job is completed, its costs are transferred into

finished goods

Selling and administrative costs first appear on the

income statement

A journal entry that debits Work in process and Manufacturing overhead and credits Raw materials records the

issuance of materials

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

manufactured

Manufacturing overhead consists of all

manufacturing costs other than direct labor and direct materials

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

work in process and manufacturing overhead

Units of product that are only partially complete are contained in the

work in process inventory

For each of the five transactions described below, use the dropdown boxes to indicate which account should be debited and which account should be credited. Salary of the Production Supervisor is payable.

Debit: Manufacturing overhead Credit: Salaries and wages payable

For each of the five transactions described below, use the dropdown boxes to indicate which account should be debited and which account should be credited. Manufacturing overhead is applied to jobs using a predetermined overhead rate.

Debit: Work in process Credit: Manufacturing overhead

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

Labor costs charged to Manufacturing Overhead represent

indirect labor costs

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

only direct labor costs

A credit balance in the Manufacturing Overhead account means overhead was

overapplied

Selling and administrative costs incurred are treated as

period expenses

The journal entry to record issuing materials to be used in production credits

raw materials

The journal entry to record the purchase of materials debits

raw materials

Any purchased materials that will go into the finished product are first recorded in the

raw materials inventory account

All of the following are product costs except: -manufacturing overhead costs -raw materials -sales commissions -direct labor

sales commissions

Cost of goods manufactured is the

sum of all jobs transferred from Work in process to Finished goods

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

When a job is completed, the job costs are transferred OUT OF

work in process

Work in Process consists of

-actual direct labor cost -applied manufacturing overhead -actual direct materials cost

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

-administrative costs -selling costs

Given: Cost of goods manufactured of $410,000; beginning finished goods inventory of $110,000 and ending finished goods inventory of $125,000, calculate unadjusted cost of goods sold.

$395,000 110,000 + 410,000 - 125,000 = 395,000

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 5,000 + 27,000 - 12,000 - 4,000 = 16,000

Which of the following best describes the journal entry to record the use of direct and indirect labor in production?

Debit work in process, debit manufacturing overhead, and Salaries and Wages Payable

The following information is available for the current year ending December 31: Manufacturing overhead applied = $150,000 Actual amount of manufacturing overhead costs = 120,000 Amount of overhead applied during the year that is in: -Work in process = $37,500, 25% -Finished Goods = 52,000, 35% -Cost of Goods Sold = 60,000, 40% Total overhead applied = $150,000, 100% If the Manufacturing Overhead account is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold, the related entry will include a

Credit to Cost of Goods Sold for $12,000

For each of the five transactions described below, use the dropdown boxes to indicate which account should be debited and which account should be credited. Lubricating oil, waste cotton, and solder are used in the factory.

Debit: Manufacturing overhead Credit: Raw materials

Which of the following statements about manufacturing overhead costs is not correct? -All manufacturing costs other than direct materials and direct labor are classified as manufacturing overhead costs. -All manufacturing costs other than direct materials and direct labor are entered directly into the Manufacturing Overhead account.. -Depreciation on factory equipment is recorded with a debit to Depreciation Expense. -Manufacturing overhead costs are recorded with a debit to Manufacturing Overhead account as they are incurred.

Depreciation on factory equipment is recorded with a debit to Depreciation Expense.

To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract

ending raw materials inventory and Indirect materials used

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

$55,000 100,000 - 45,000 = 55,000

The following information is available for the current year ending December 31: Manufacturing overhead applied = $150,000 Actual amount of manufacturing overhead costs = 120,000 Amount of overhead applied during the year that is in: -Work in process = $37,500, 25% -Finished Goods = 52,000, 35% -Cost of Goods Sold = 60,000, 40% Total overhead applied = $150,000, 100% If the Manufacturing Overhead account is closed to Cost of Goods Sold, the related entry will

Decrease the cost of goods by $30,000

Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?

Direct work in process, debit manufacturing overhead, and credit raw materials

Matthias Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of May. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $63,000 and the total of the credits to the account was $89,000. Which of the following statements is true?

Manufacturing overhead applied to Work in Process for the month was $89,000