cost acct ch 3

absorption costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.

normal costing

A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.

job cost sheet

A form that records the direct materials, direct labor, and manufacturing overhead cost charged to a job.

c. depreciation on office equipment

A journal entry that debits Depreciation expense and credits Accumulated Depreciation records: a. depreciation on the factory building b. the sale of office equipment c. depreciation on office equipment d. depreciation on factory machinery

d. consists of completed, unsold goods

Finished goods______________. a. consists of goods that require additional processing before being sold b. consists of goods that have been sold to customers during the period c. is the same as cost of goods manufactured d. consists of completed, unsold goods

not equal

If actual and applied manufacturing overhead are ________________, a year-end adjustment is required.

d. $55,000

Luver Corporation's Gross margin is $100,000. Cost of goods sold equals $70,000, and Selling and Administration expenses total $45,000. Net operating income is: a. $25,000 b. $(15,000) c. $30,000 d. $55,000

expensed

Nonmanufacturing costs are not assigned to individual jobs, rather they are _______________ in the period incurred.

d. completed during the period

Under a job-order costing system, the dollar amount transferred from Work in Process to Finished Goods is the sum of the costs charged to all jobs: a. started in process during the period b. in process during the period c. completed and sold during the period d. completed during the period

c. 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: a. closing it out to finished goods only b. closing it out to finished goods or allocating it among work in process, finished goods, and raw materials c. closing it out to cost of goods sold or allocating it among work in process, finished goods, and cost of goods sold d. closing it out to cost of goods sold only

c. difference between overhead applied to work in process and actual overhead

Underapplied or overapplied overhead is the: a. overhead applied to work in process b. difference between estimated and actual overhead c. difference between overhead applied to work in process and actual overhead d. sum of overhead applied to work in process and actual overhead

work in process

Units of product that are only partially complete are contained in the ___________________ Inventory.

a. manufacturing overhead

What account is debited to record indirect labor costs? a. manufacturing overhead b. indirect labor c. salaries and wages payable d. work in process

d. work in process

When a job is completed, the job costs are transferred OUT OF: a. finished goods b. cost of goods sold c. manufacturing overhead d. work in process

raw materials

include any materials that go into the final product

cost of goods manufactured

includes the manufacturing costs associated with the goods that were finished during the period.

job-order costing

A costing system used in situations where many different products, jobs, or services are produced each period.

a. debited

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

a. cost of goods manufactured

The amount transferred from Work in Process to Finished Goods is: a. cost of goods manuactured b. cost of goods sold c. ending inventory

d. insurance expense

The journal entry to record a cash payment of $400 for insurance on administrative office equipment debits ___________________ and credits cash. a. work in process b. manufacturing overhead c. depreciation expense d. insurance expense

b. Manufacturing overhead and credits Property taxes payable

The journal entry to record accrued property taxes for a factory building debits: a. Manufacturing overhead and credits Accounts payable b. Manufacturing overhead and credits Property taxes payable c. Work in process and credits Property taxes payable d. Work in process and credits Manufacturing overhead

c. work in process and manufacturing overhead

The journal entry to record issuing both direct and indirect materials into production debits: a. work in process and raw materials b. manufacturing overhead and raw materials c. work in process and manufacturing overhead

c. salaries and wages payable

The journal entry to record labor costs credits: a. manufacturing overhead b. direct labor c. salaries and wages payable d. work in process

$74,000 ($27,000 + $100,000 - $25,000 - $28,000)

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.

asset

Raw materials is a(n) __________ account.

c. subtracted from raw materials used in production

When calculating the cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials is: a. subtracted from beginning raw materials inventory b. added to raw materials used in production c. subtracted from raw materials used in production d. added to beginning raw materials inventory

d. gross margin will increase

When closing overapplied manufacturing overhead to Cost of Goods Sold, which of the following would be true? a. Work in Process will decrease b. Cost of goods sold will increase c. net income will decrease d. gross margin will increase

c. work in process

Which account is debited to record direct labor costs? a. salaries and wages payable b. direct labor c. work in process d. manufacturing overhead

b. applied manufacturing overhead

Which of the following appears on job cost sheets and in the work in process account? a. actual manufacturing overhead b. applied manufacturing overhead c. budgeted manufacturing overhead

a. manufacturing overhead

Which of the following is a clearing account a. manufacturing overhead b. finished goods c. work in process d. raw materials

b. 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. allocating is simpler, and closing to cost of goods sold is more accurate b. closing to cost of goods sold is simpler, and allocating is more accurate c. both methods are equally accurate d. both methods are equally simple

inventory

all of the product costs eventually find their way into ______________ accounts

finished goods

consist of completed units of product that have not been sold to customers

work in process

consists of units of production that are only partially complete and will require further work before they are ready for sale to customers

d. estimated manufacturing overhead cost divided by estimated allocation base

the formula for a predetermined overhead rate is: a. estimated allocation base divided by estimated manufacturing overhead cost b. actual allocation base divided by actual manufacturing overhead c. actual manufacturing overhead divided by actual allocation base d. estimated manufacturing overhead cost divided by estimated allocation base

a. accounts payable

the journal entry to record the purchase of materials credits: a. accounts payable b. raw materials c. work in process d. manufacturing overhead

overhead application

the process of assigning overhead costs to specific jobs.

allocation base

A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects.

underapplied

A debit balance in Manufacturing overhead means overhead was __________________.

b. selling cost

A journal entry that debits Advertising expense and credits Cash would record the incurrence of a: a. cost that is capitalized and expenses when the product is sold b. selling cost c. prepaid cost d. manufacturing cost

c. completion of a job

A journal entry that debits Finished goods and credits Work in process records the: a. sale of a job b. end of a period c. completion of a job d. beginning of a job

predetermined overhead rate

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period

raw materials

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

b. not equal

Applied manufacturing overhead will most likely __________ actual manufacturing overhead. a. equal b. not equal

b. $120,000

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: a. $600,000 b. $120,000 c. $200,000 d. $80,000

c. indirect labor costs

Labor costs charged to Manufacturing Overhead represent: a. both direct and indirect labor costs b. direct labor costs c. indirect labor costs

d. 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: a. cost of goods sold for $75,000 and accounts receivable for $50,000 b. finished goods for $50,000 and sales revenue for $75,000 c. sales for $50,000 and finished goods for $75,000 d. cost of goods sold for $50,000 and accounts receivable for $75,000

c. period expenses

Selling and administrative costs incurred are treated as: a. liabilities b. product costs c. period expenses d. assets

credit, debit

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.

d. ending work in process inventory

The cost of jobs still unfinished at the end of a period are included in: a. the income statement b. cost of goods manufactured c. beginning finished goods inventory for the next period d. ending work in process inventory

a. overapplied or underapplied overhead

The difference between overhead applied to work in process and actual overhead is: a. overapplied or underapplied overhead b. ending work in process inventory c. adjusted cost of goods sold d. cost of goods manufactured

d. Manufacturing overhead $20,000 and credit Accumulated Depreciation $20,000

The journal entry to record $20,000 in depreciation on factory equipment is debit__________________ a. Manufacturing overhead $20,000 and credit Depreciation Expense $20,000 b. Accumulated Depreciation $20,000 and credit Manufacturing overhead $20,000 c. Depreciation expense $20,000 and credit Manufacturing overhead $20,000 d. Manufacturing overhead $20,000 and credit Accumulated Depreciation $20,000

sold

The schedule of cost of goods _____________ summaries costs that remain in Finished goods Inventory and that have been transferred to Cost of goods sold.

manufactured

The schedule of cost of goods _______________ summarizes costs that remain in Work in process inventory and that have been transferred fro Work in process to Finished goods Inventory.

c. the cost of all unfinished jobs

The value of work in process is equal to: a. the sales value of all unfinished jobs b. finished goods inventory minus cost of goods sold c. the cost of all unfinished jobs

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

To calculate cost of goods manufactured: a. add ending finished goods to total manufacturing costs, then deduct beginning finished goods b. add beginning work in process to total manufacturing costs, then deduct ending work in process c. add beginning finished goods to their manufacturing costs, then deduct ending finished goods d. add ending work in process to total manufacturing costs, then deduct beginning work in process

d. add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold

To calculate the adjusted cost of goods sold: a. add underapplied overhead to or subtract overapplied overhead from cost of goods manufactured b. subtract underapplied overhead from or add overapplied overhead to unadjusted cost of goods sold c. subtract underapplied overhead from or add overapplied overhead to cost of goods manufactured d. add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold

a. applied manufacturing overhead

To calculate total manufacturing costs, add direct materials, direct labor, and: a. applied manufacturing overhead b. applied manufacturing overhead to beginning work in process and subtract ending work in process c. actual manufacturing overhead; then add ending work in process and subtract beginning work in process d. actual manufacturing overhead

c. ending finished goods inventory from goods available for sale

Unadjusted cost of goods sold is calculated by subtracting: a. beginning finished goods inventory from cost of goods manufactured b. beginning finished goods inventory from goods available for sale c. ending finished goods inventory from goods available for sale d. ending finished goods inventory from cost of goods manufactured

b. cost of goods sold and manufacturing overhead

What two accounts are involved when underapplied or overapplied overhead is closed out using the simpler method? a. finished goods and manufacturing overhead b. cost of goods sold and manufacturing overhead c. work in process and manufacturing overhead d. work in process and finished goods

c. finished goods

When jobs are sold at their costs are transferred out of: a. cost of goods sold b. work in process c. finished goods d. cost of goods manufactured