Chapter 3 - Job-Order Costing: Cost Flows and External Reporting.

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

Cost of goods manufactured is the:

consists of completed, unsold goods

Finished goods:

cost of goods sold from sales

Gross margin is calculated by subtracting _______ from _______.

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

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:

indirect labor costs

Labor costs charged to Manufacturing Overhead represent:

actual overhead is less than applied overhead

Overhead is overapplied if:

actual overhead is more than applied overhead

Overhead is underapplied if:

asset

Raw Materials is a(n) _______ account.

credit (first blank) debit (second blank)

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.

manufactured

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

ending Work in process inventory

The cost of jobs still unfinished at the end of a period are included in:

overapplied or undersupplied overhead

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

Estimated manufacturing overhead cost divided by estimated allocation base

The formula for a predetermined overhead rate is:

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

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

Raw materials

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

accounts payable

The journal entry to record the purchase of materials credits:

sold

The schedule of cost of goods _______ summarizes costs that remain in Finished goods inventory that have been transferred to Cost of goods sold.

closing it out to Cost of goods sold

The simpler method of closing out the balance of Manufacturing overhead is:

add beginning work in process to total manufacturing costs, then deduct ending Work in process

To calculate cost of goods manufactured:

True

True or false: Manufacturing overhead cost consists of all manufacturing costs other than direct materials and direct labor.

False

True or false: Period costs flow from Finished Goods to Cost of Goods Sold.

True

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

Work in process

Which account is debited to record direct labor costs?

underapplied

A debit balance in Manufacturing overhead means overhead was _______.

net operating income

Gross margin minus selling and administrative expenses equals:

Debited

Is actual manufacturing overhead debited or credited to the Manufacturing overhead account?

Actual overhead is incurred - Manufacturing overhead is debited Overhead is applied to Work in Process - Manufacturing overhead is credited The period ends - Manufacturing overhead is closed

Match each event in the process of accounting for manufacturing overhead with the appropriate entry:

$280,000 $300,000 - $20,000 = $280,000

Meep Industries had unadjusted cost of goods sold of $300,000. Overhead was overapplied by $20,000. Adjusted cost of goods sold is:

Cost of Goods Sold for $50,000 and Accounts Receivable for $75,000

Milton Corporation sold goods costing $50,000 for $75,000. Journal entries to be made could include entries debiting:

ending raw materials inventory and indirect materials used

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

closing it out to Cost of goods sold or allocating it among Work in process, Finished goods, and Cost of goods sold

Underapplied or overapplied manufacturing overhead can be disposed of by:

difference between overhead applied to work in process and actual overhead

Underapplied or overapplied overhead is the:

balance sheet (first blanks) income statement (second blanks)

When preparing financial statements in a job-order costing system, finished goods flow first to the _______ _______ and then to the _______ _______.

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

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

decreased

If overapplied overhead is closed out to Cost of goods sold, the Cost of goods sold account will be:

the cost of all unfinished jobs

The value of work in process is equal to:

applied manufacturing overhead

To calculate total manufacturing costs, add direct materials, direct labor and:

d) Closing it out to Cost of goods sold e) Allocating it among Work in process, Finished goods, and Cost of goods sold

What methods can be used to dispose of underapplied or overapplied manufacturing overhead? (Select all that apply) a) Allocating it among Raw materials, Work in process, and Finished goods b) Closing it out to Work in process c) Closing it out to Finished goods d) Closing it out to Cost of goods sold e) Allocating it among Work in process, Finished goods, and Cost of goods sold

Finished goods and Sales

When goods are sold on account, what accounts are credited?

only direct labor costs

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

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

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

credit

When overhead is underapplied, a _______ must be made the the Manufacturing overhead account to close it out.

Applied manufacturing overhead

Which of the following appears on job cost sheets and in the work in process account?

dispose of underapplied or overapplied overhead

A journal entry that involves Manufacturing overhead, Work in process, Finished goods, and Cost of goods sold is recorded to:

manufacturing costs other than direct labor and direct materials

Manufacturing overhead consists of all:

a) manufacturing overhead applied b) direct materials

In a normal costing system, Work in Process is debited for: (Select all that apply) a) manufacturing overhead applied b) direct materials c) actual manufacturing overhead d) indirect labor e) cost of goods manufactured

a) Finished goods c) Manufacturing overhead d) Cost of goods sold e) Work in process

The journal entry to record the more accurate allocation of overapplied or underapplied overhead includes entries to: (Select all that apply) a) Finished goods b) Raw materials c) Manufacturing overhead d) Cost of goods sold e) Work in process

a) Work in process b) Cost of goods sold c) Manufacturing overhead f) Finished goods

The journal entry to record the more accurate allocation of overapplied or underapplied overhead includes entries to: (Select all that apply) a) Work in process b) Cost of goods sold c) Manufacturing overhead d) Raw materials e) Finished goods

b) Finished goods d) Cost of goods sold d) Work in process

When the allocation method is used to close out the underapplied or overapplied balance remaining in Manufacturing Overhead, which accounts are affected? (Select all that apply) a) Sales revenue b) Finished goods c) Raw materials d) Cost of goods sold e) Work in process

b) the cost of indirect materials d) actual overhead costs

In a normal costing system, the manufacturing overhead account is debited for: (Select all that apply) a) overhead cost applied to Work in Process b) the cost of indirect materials c) the cost of direct and indirect labor d) actual overhead costs

includes the manufacturing costs of goods finished during the period

Cost of goods manufactured:

work in process

Costs of partially completed units are accounted for in:

b) Raw materials traced to specific jobs are transferred to Work in process as direct materials c) When materials are purchased they are recorded in the Raw materials inventory account

Which of the following statements are true? (Select all that apply) a) Direct labor costs flow through the Raw materials inventory account b) Raw materials traced to specific jobs are transferred to Work in process as direct materials c) When materials are purchased they are recorded in the Raw materials inventory account d) Raw materials only include the cost of direct materials

Nonmanufacturing costs

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

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

Which of the statements regarding closing out over or underapplied overhead is correct? a) Both methods are equally accurate. b) Allocating is simpler, and closing to Cost of goods sold is more accurate c) Both methods are equally simple. d) Closing to Cost of goods sold is simpler, and allocating is more accurate

issuance of materials

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

application of manufacturing overhead costs

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

as they are incurred

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account:

Manufacturing overhead

What account is debited to record indirect labor costs?

Always the debit side

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

$51,000

Fillia, Inc. worked on three jobs this period: Job 14C, which cost $15,000 Job 23A, which cost $28,000 Job 45B, which cost $23,000 At the end of the period, only Job 14C was still in process (unfinished). The cost of goods manufactured this period is:

Manufacturing overhead $20,000 and credit Accumulated depreciation $20,000

Frank, Inc. recognized $20,000 in depreciation on factory equipment. The journal entry would debit:

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

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

$252,000 $234,000 + $18,000 = $252,000

Given the following, calculate the cost of goods available for sale: Cost of goods manufactured: $234,000 Beginning Finished goods inventory: $18,000 Ending Finished goods inventory: $24,000

b) actual direct materials cost c) actual direct labor cost f) applied manufacturing overhead

Work in Process consists of: (Select all that apply) a) applied direct labor cost b) actual direct materials cost c) actual direct labor cost d) actual manufacturing overhead e) applied direct materials cost f) applied manufacturing overhead

debits Depreciation expense, while the other debits Manufacturing overhead

The difference between the entries to record depreciation on office equipment and depreciation on factory equipment is that one:

Depreciation expense and credits Accumulated depreciation

The journal entry to record depreciation on office equipment debits:

Manufacturing overhead and credits Prepaid insurance

The journal entry to record expired prepaid factory insurance debits:

Work in process

The journal entry to record the issuance of direct materials into production debits:

Finished goods

When a job is completed, which account is debited?

overapplied

A credit balance in the Manufacturing Overhead account means overhead was _______

selling cost

A journal entry that debits Advertising expense and credits Cash would record the incurrence of a:

direct labor costs

A journal entry that debits Manufacturing overhead and credits Accounts payable could not record the insurance of:

recognition of accrued property taxes

A journal entry that debits Manufacturing overhead and credits Property taxes payable records the:

b) overhead spending may not be under control d) many actual overhead costs are fixed

Actual overhead costs may not be proportional to the actual amount of the allocation base used because: (Select all that apply) a) overhead costs are all variable costs b) overhead spending may not be under control c) the predetermined rate might not be estimated correctly d) many actual overhead costs are fixed

not equal

Applied manufacturing overhead will most likely ____ actual manufacturing overhead.

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

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

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

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. The cost of direct materials used during the period was:

a) Beginning finished goods inventory b) Cost of goods manufactured

Which of the following are used to calculate Cost of goods available for sale on the schedule of cost of goods sold? (Select all that apply) a) Beginning finished goods inventory b) Cost of goods manufactured c) Cost of goods sold d) Ending finished goods inventory