Chapter - 3 Job-Order Costing: Cost Flows and External Reporting SmartBook
Labor costs charged to Manufacturing Overhead represent ______ labor costs.
indirect
What side of the Manufacturing overhead account is actual manufacturing overhead entered on?
Always the debit side
A debit balance in Manufacturing overhead means overhead was _______ .
underapplied
the journal entry to record a cash payment of $400 for utilities in administrative offices debits ______ and credits cash.
utilities expense
When a job is completed, the job costs are transferred OUT OF ______.
work in process
The journal entry to record depreciation on office equipment debits ______.
Depreciation expense and credits Accumulated depreciation
The journal entry to record a completed job debits ______.
Finished goods
The accounts credited when goods are sold on account are ______.
Finished goods and Sales
The journal entry to record $20,000 in depreciation on factory equipment is debit ______.
Manufacturing Overhead $20,000 and credit Accumulated Depreciation $20,000
Which of the following is a clearing account?
Manufacturing overhead
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 ______.
Manufacturing overhead $8,000 and credit Accounts payable $8,000
The journal entry to record depreciation on factory equipment debits ______.
Manufacturing overhead and credits Accumulated depreciation
The journal entry to record accrued property taxes for a factory building debits ______.
Manufacturing overhead and credits Property taxes payable
Any purchased materials that will go into the finished product are first recorded in the _____ , _____ inventory account.
Raw , Materials
The journal entry to record labor costs credits ______.
Salaries and wages payable account
Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels.
True (Reason: Because it is likely that either or both of the estimates will be different than actual, the actual overhead will not equal the applied overhead.)
The journal entry to record manufacturing labor costs debits:
Work in process and Manufacturing overhead.
Select all that applyWork in Process consists of ______.
actual direct materials cost applied manufacturing overhead actual direct labor cost
Overapplied or underapplied overhead is the difference between _______.
actual total overhead and total overhead applied
Job cost sheets and the work in process account contain ______ manufacturing overhead.
applied
Raw materials inventory is a(n) ______.
asset
To calculate cost of goods manufactured add ______.
beginning work in process to total manufacturing costs, then deduct ending work in process
A journal entry that debits Finished goods and credits Work in process records the ______.
completion of a job
The difference between the entries to record depreciation on office equipment and depreciation on factory equipment is that one ______.
debits Depreciation expense, while the other debits Manufacturing overhead
A journal entry debiting Cost of goods sold and crediting Finished goods is made when ______.
goods are sold
Sales minus cost of goods sold equals ______.
gross margin
Selling and administrative costs first appear on the ______.
income statement
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
Applied manufacturing overhead will most likely ______ actual manufacturing overhead.
not equal
When labor costs are incurred, ______ labor costs are added directly to the Work in Process account.
only direct
A journal entry that debits Advertising expense and credits Cash would record the incurrence of a ______ cost.
selling
The Manufacturing Overhead account is debited when ______.
actual overhead costs are incurred
Overhead is overapplied if ________.
actual overhead is less than applied overhead
Given the following, calculate the cost of goods available for sale. Cost of goods manufactured of $410,000 Beginning Finished goods inventory of $110,000 Ending Finished goods inventory of $125,000
$520,000 ($410,000 + $110,000 = $520,000)
A journal entry that debits Manufacturing overhead and credits Property taxes payable records the ______.
recognition of accrued property taxes
Manufacturing overhead costs include ______.
1. factory utilities 2. factory rent 3. factory maintenance wages
Actual overhead costs may not be proportional to the actual amount of the allocation base used because _______.
1. many actual overhead costs are fixed 2. overhead spending may not be under control
Manufacturing overhead costs include ______.
1. the factory supervisor's salary 2. factory insurance
The journal entry to record selling and administrative salaries debits ______.
an expense account and credits Cash or a liability
A journal entry that debits Work in process and credits Manufacturing overhead is recording the ______.
application of manufacturing overhead costs
The cost of jobs still unfinished at the end of a period are included in ______.
ending Work in process inventory
Unadjusted cost of goods sold is calculated by subtracting:
ending finished goods inventory from goods available for sale.
Which of the following costs are charged directly to the income statement?
1. Administrative costs 2. Selling costs
The journal entry that debits Work in Process and Manufacturing overhead and credits Salaries and Wages Payable is recording ______.
direct and indirect labor costs
A journal entry that debits Manufacturing overhead and credits Prepaid insurance records the ______.
expiration of prepaid factory insurance
Cost of goods manufactured ______.
includes manufacturing costs of goods finished during the period
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 ; completed ; produced ; finished
Gross margin minus selling and administrative expenses equals _______.
net operating income
A credit balance in the Manufacturing Overhead account of Y dollars means that the overhead is _______ by of Y dollars.
overapplied
The difference between overhead applied to work in process and actual overhead is _______.
overapplied or underapplied overhead
The journal entry to record the purchase of materials debits ______.
raw materials
Given the following, compute the cost of goods manufactured. Direct material cost: $40,000 Direct labor cost: $100,000 Applied overhead: $120,000 Beginning work in process inventory: $30,000 Ending work in process inventory: $12,000
$278,000 (Cost of goods manufactured = $30,000 + $40,000 + $100,000 + $120,000 - $12,000 = $278,000)
Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is ______.
$480,000 (unadjusted cost of goods sold + underapplied overhead: $450,000 + $30,000 = $480,000)
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)
Which of the following costs are found on the balance sheet of a manufacturer?
Direct Labor , Raw Materials , Manufacturing Overhead
The amount transferred from Work in Process to Finished Goods is ______.
Cost of goods manufactured
The accounts debited when goods are sold on account are ______.
Cost of goods sold and Accounts receivable
Manufacturing overhead applied to production is always recorded on the side of the _________ manufacturing overhead account and the _________ side is always used to record the actual manufacturing costs incurred.
Credit, Debit
All the costs appearing on the job cost sheets of the jobs that are being worked on are found in the ______ account.
Work in Process
If overapplied overhead is closed out to Cost of goods sold, the Cost of goods sold account will be ______.
decreased (Reason: Overapplied overhead means that too much overhead cost was assigned which overstates inventory. To compensate, the overapplied overhead is subtracted from Cost of Goods Sold.)
Costs of partially completed units are accounted for in ______.
work in process
The journal entry to record expired prepaid factory insurance debits ______.
Manufacturing Overhead and credits Prepaid Insurance
The journal entry to record the purchase of materials credits ______.
accounts payable
Overhead is underapplied if ______.
actual overhead is more than applied overhead
To calculate the adjusted cost of goods sold ______.
add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold
Finished goods ______.
consists of completed, unsold 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
A journal entry that includes Manufacturing overhead and Cost of goods sold is recorded to _______.
dispose of underapplied or overapplied overhead
Given the following, calculate the total manufacturing costs added to production: Direct materials used in production: $40,000; Direct labor: $100,000; Manufacturing overhead applied to work in process: $120,000; Beginning work-in-process inventory: $30,000; Ending work-in-process inventory: $12,000
$260,000
Given the following, calculate the cost of goods available for sale. Cost of goods manufactured: $234,000 Beginning Finished goods inventory of $18,000 Ending Finished goods inventory of $24,000
$252,000
Given the following, calculate the cost of goods available for sale. Cost of goods manufactured: $234,000 Beginning Finished goods inventory of $18,000 Ending Finished goods inventory of $24,000
$252,000 ($234,000 + $18,000 = $252,000)
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 (Cost per unit = $200,000 / 1,000 units)
For a given period, the manufacturing overhead applied is $500,000 , and the actual manufacturing overhead cost for that period is $625,000. Calculate the amount by which overhead is overapplied or underapplied.
$125,000 underapplied ($625,000 - $500,000 = $125,000)
The value of work in process is equal to ______.
the cost of all unfinished jobs
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 (Total raw materials purchased = Beginning raw materials inventory + Raw materials purchased during the year - Ending raw materials inventory) ***we need to subtract the cost of indirect materials from the total raw materials purchased to determine the cost of direct materials used during the period***
Given the following, calculate the total manufacturing costs added to production: Direct materials cost used in production: $62,000; Direct labor cost: $78,000; Manufacturing overhead applied to work in process: $46,000; Actual manufacturing overhead: $51,000; Beginning work-in-process inventory: $32,000; Ending work-in-process inventory: $35,000
$186,000
Given the following, calculate the total manufacturing costs added to production: Direct materials cost used in production: $62,000; Direct labor cost: $78,000; Manufacturing overhead applied to work in process: $46,000; Actual manufacturing overhead: $51,000; Beginning work-in-process inventory: $32,000; Ending work-in-process inventory: $35,000
$186,000 (Total manufacturing costs= $62,000 +$78,000 + $46,000 = $186,000)
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)
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
Period costs flow from Finished Goods to Cost of Goods Sold.
False
The schedule of cost of goods _______ summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.
sold
Work in Process consists of ______.
1. Actual direct labor cost 2. Applied manufacturing overhead 3. Actual direct materials cost
Which of the following statements are true?
1. When materials are purchased they are recorded in the Raw materials inventory account. 2. Raw materials inventory represents the cost of materials not yet used in production.
A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______.
1. rent expense on factory equipment 2. factory utilities expense
What side of the Manufacturing overhead account is applied manufacturing overhead entered on?
Always the credit side
Actual overhead costs appear in the Work in Process account but not on the job cost sheet.
False
Job B was not completed by April 30. If an April balance sheet is prepared, the costs accumulated for Job B will NOT appear on it.
False
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
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 debits ______.
Work in process $40,000, debits Manufacturing overhead $30,000 and credits Raw materials $70,000.
Underapplied or overapplied overhead is the ______.
difference between overhead applied to work in process and actual overhead
The cost of goods manufactured for a period is the ______.
sum of all amounts transferred between the Work in process account and the Finished goods account during that period
Raw Materials is a(n) ______ account.
Asset
A journal entry debiting Salaries expense and crediting Salaries and wages payable could be recording ______.
administrative salaries
Gemini had Sales of $50,000, Cost of goods sold of $20,000, and Selling and administrative expenses of $25,000. Gross margin is ______.
$30,000 ($50,000 - $20,000 = $30,000)
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.
$74,000
