I hate my life (the finale)

Landoll Manufacturing Corporation applies batch-related manufacturing overhead on the basis of the number of production runs. The following information is available:

$121,405 overapplied

Price Purification Systems gathered the following direct labor cost information for the month of April....The direct labor usage variance is

$21,150 F (67,300 Actual - 65,500 Std) x $11.75 standard rate = 1,800 x $11.75 = $21,150 Unfavorable

Price Purification Systems gathered the following direct labor cost information for the month of April....The direct labor price variance is

$47,110 F ($11.75 Std - $11.05 Actual) x 67,300 actual hours = 0.70 x 67,300 = $47,110 Favorable

If a company uses the perpetual and net price inventory methods and it purchases inventory on account worth $6,000 with terms 1/10 n/30 what will be the cost of the inventory when the inventory is purchased?

$5,940

Scout & Sons Manufacturing manufactures camping gear. Selected data regarding standard costs and actual results for the month of February are shown below....The direct materials usage variance is

$7,350 U (9,300 actual pounds - 8,250 standard pounds*) x $7 standard = 1,050 pounds x $7 per pound = $7,350 Unfavorable * (2,750 units x 3 pounds = 8,250 std pounds)

Scout & Sons Manufacturing manufactures camping gear. Selected data regarding standard costs and actual results for the month of February are shown below....The direct materials price variance is

$7,560 F ($7 Std - $6.36 Actual*) x 12,000 pounds = 7600 $76,400/12,000 = $6.36 per pound

Sales Price Variance

(Actual price - Budgeted price) x Actual quantity If the actual selling price is greater than the budgeted selling price, the result is a positive number indicating a "favorable" variance. If the actual selling price is less than the budgeted selling price, the result is a negative number indicating an "unfavorable" variance.

Sales Quantity Variance

(Actual quantity - Budgeted quantity) x Budgeted price If the actual number of units sold is greater than the budgeted number of units, the result is a positive number indicating a favorable variance. If the actual number of units sold is less than the budgeted number of units, the result is a negative number indicating an unfavorable variance.

Direct Labor Price (Rate) Variance

-If the actual price is less than the standard price per hour, the variance is favorable. -If the actual price is greater than the standard price per hour, the variance is unfavorable.

When actual amount of revenues earned is different than the planned amount of revenues there are three explanations

1. The selling price was different than budgeted. 2. The number of units sold was different than planned. 3. Both the selling price and the number of unit sold were different than planned

Pilgrim Thanksgiving Supply has a perpetual inventory system and uses the FIFO method of inventory costing. Pilgrim had a beginning inventory of 45 units and reported the following events during the month of March

20 units x $10 = $200

Peterson Home Decor has a perpetual inventory system and uses the LIFO method of inventory costing. Peterson reported the following events during the month of May:

50 units x $16 = $800

Peterson Home Decor has a perpetual inventory system and uses the LIFO method of inventory costing. Peterson reported the following events during the month of May:

75 x $17 = $1,275 15 x $16 = 240 Cost of Goods $1,515

Pilgrim Thanksgiving Supply has a perpetual inventory system and uses the FIFO method of inventory costing. Pilgrim had a beginning inventory of 45 units and reported the following events during the month of March:

80 ending inventory units x $13 = $1,040

Cost Flow Assumptions

A cost flow assumption is a method used to assign costs to cost of goods sold and ending inventory. It saves the company the time and trouble of identifying each individual item in inventory with a particular purchase price.

First-in, First-out (FIFO) Method

A cost flow assumption where costs are charged to Cost of Goods Sold in chronological order. The first costs recorded (first-in) are the first costs expensed to cost of goods sold (first-out). The ending inventory balance consists of the cost of the most recent goods purchased. Usually approximates the physical flow of goods.

Last-in, First-out (LIFO) Method

A cost flow assumption where costs are charged to Cost of Goods Sold in reverse chronological order. The last costs recorded (last-in) are the first costs expensed to cost of goods sold (first-out). The ending inventory balance consists of the cost of the oldest inventory. The IRS requires that any company using LIFO for tax purposes also use LIFO for financial statement reporting purposes.

Which of the following could not be used in determining whether a revenue could be recognized.

A receivable is deemed collectible

Which of the following entries is made when a discount is taken and the perpetual system uses the net method.

A/P Cash

To identify the individuals and the amount they owe the company is the purpose of which of the following?

Accounts Receivable Subsidiary Ledger

Revenue can be recognized before cash is collected.

Accounts Receivable xxx Service Revenue xxx We provide a service for a client who will pay us next period. This is a revenue because we have performed and, therefore, have a right to receive cash in the future.

Balance Sheet

Accounts receivable (gross, net realizable value) • Allowance for uncollectible accounts

Manufacturing Overhead

All costs other than direct materials and direct labor that are incurred to manufacture products.

Uncollectible Accounts

Allowance for Uncollectible Accounts xxx Accounts Receivable xxx In subsequent accounting periods, the company monitors customer subsidiary ledger accounts to identify specific balances that are not going to be paid. A company must make appropriate entries (known as a write-off) to remove these uncollectible balances from the company's accounting records.

Estimating Cash Receipts from Customers

Beginning accounts receivable (balance sheet) + Net sales (income statement) = Maximum amount owed by customers - Cash received from customers (calculated) = Ending accounts receivable (balance sheet)

Direct materials inventory:

Beginning balance -materials not used in a previous period + Purchases (net) = Cost of goods available for use - Direct materials issued into production = Ending balance—materials not used this period

Work-in-process inventory:

Beginning balance-costs to date of products started, but not finished in a previous period + Direct materials issued into production + Direct labor used in production + Manufacturing overhead assigned to production = Cost of goods in process - Cost of goods manufactured (cost of goods finished) = Ending balance—costs to date of products started, but not finished this period

Finished goods inventory

Beginning balance—cost of products finished, but not sold in a previous period + Cost of goods manufactured = Cost of goods available for sale - Cost of goods sold (Chapter 10) = Ending balance—cost of products finished, but not sold this period

Which of the following is not one of the activities of the conversion process?

Buy raw material

Which of the following entries reflects the use of a perpetual inventory system?

COGS Inventory

Statement of Cash Flows

Cash received from customers

Revenue can be recognized when cash is received.

Cash xxx Service Revenue xxx We provide, and are paid for, services simultaneously. This is revenue because we have performed.

To close underapplied overhead at the end of the period:

Cost of Goods Sold xxx Manufacturing Overhead xxx

In a sales journal only one amount is recorded but that amount is posted by

Debiting accounts receivable and crediting sales

Revenue Recognition

Earned (provided goods and/or services) Realized or realizable (collected or expect to collect) NEW: When the performance obligation is satisfied

Peterson Home Decor has a perpetual inventory system and uses the LIFO method of inventory costing. Peterson reported the following events during the month of May:

Ending Inventory consists of 165 units 100 × $15 = $1,500 10 × $16 = 160 55 × $18 = 990 Total Cost $2,650

not a characteristic of LIFO

Ending inventory on the balance sheet will be based on the most recent cost.

Which of the following revenue process events is an accounting event?

Estimate the amount of uncollectible accounts receivable

If prices are rising

FIFO will produce a higher ending inventory balance, a lower cost of goods sold, and higher net income than LIFO.

If prices are falling

FIFO will produce a lower ending inventory balance, a higher cost of goods sold, and lower net income than LIFO.

To record the transfer of the cost of manufactured products (cost of goods manufactured) from Work in Process Inventory to Finished Goods Inventory:

Finished Goods Inventory xxx Work in Process Inventory xxx

When the amount of over- underapplied manufacturing overhead is large, the Manufacturing Overhead account is generally closed out to

Finished Goods Inventory, Work-in-Process Inventory, and Cost of Goods Sold

Production order

Issued by the production function, pre-numbered; production cannot begin without a production order

Materials requisition

Issued by the production function, verified by the inventory control function; materials are released only when the requisition is received

Which of the following is true about the purchase discount lost account?

It is used when the net method is applied to either the periodic or perpetual systems and the terms of the discount are not met.

Job cost record

Maintained by the cost accounting function, updated daily, verified with the general ledger records and the production function

To record the purchase and use of other manufacturing items:

Manufacturing Overhead xxx Accounts Payable xxx Accumulated Depreciation xxx

To close overapplied overhead at the end of the period:

Manufacturing Overhead xxx Cost of Goods Sold xxx

To record the issue of indirect materials into productio

Manufacturing Overhead xxx Raw Materials Inventory xxx

To record the issue of indirect materials into production

Manufacturing Overhead xxx Raw Materials Inventory xxx

To record the purchase and use of indirect labor

Manufacturing Overhead xxx Wages Payable xxx

To record the purchase and use of indirect labor:

Manufacturing Overhead xxx Wages Payable xxx

A favorable sale quantity variance occurs when there is/are

More units sold than budgeted

What is net realizable value?

Net realizable value is the net dollar amount the company expects to eventually collect after making allowances for estimated uncollectible accounts

The total of the accounts payable subsidiary ledger is equal to the balance in the accounts payable account in the general ledger:

Only at the end of specified time periods.

Overapplied overhead

Overhead applied to Work in Process Inventory throughout the period is greater than the actual amount of manufacturing overhead cost incurred to produce the product. Cost of the products manufactured during the period is overstated.

Underapplied overhead

Overhead applied to Work in Process Inventory throughout the period was not as much as the actual amount of manufacturing overhead cost incurred to produce the product. Cost of the products manufactured during the period is understated.

Which of the following entries would not be associated with the use of a perpetual inventory system?

Purchases A/P

To record the purchase of indirect materials:

Raw Materials Inventory xxx Accounts Payable (Cash) xxx

To record the purchase of direct materials

Raw Materials Inventory xxx Accounts Payable xxx

Which of the following documents is not part of the revenue process?

Remittance advice

Income Statement

Sales (gross, net) • Sales returns and allowances • Sales discounts • Cost of goods sold • Uncollectible accounts expense (as part of selling and administrative expenses)

What type of accounts are Sales Returns and Allowances and Sales Discounts?

Sales Returns and Allowances and Sales Discounts are contra-revenue accounts and are subtracted from gross sales revenue to obtain net sales revenue for presentation on the income statement.

An accounts receivable subsidiary ledger would be associated with which of the following journals?

Sales journal

NONPRODUCT COST

Selling Expenses •Administrative Expenses

An unfavorable sales price variance occurs when

The actual selling price is less than what was budgeted

Direct Labor

The cost of employees who manufacture the product; "touch" labor

Direct Materials

The cost of materials that are directly traceable to the product and that are costly enough to warrant tracing them.

Indirect Labor

The cost of production employees who do not physically manufacture the product.

Indirect Materials

The cost of production materials that either cannot be traced to the product or whose cost is not enough to warrant tracing.

Finished Goods Inventory

The cost of products finished, but not sold. • Increased ... when goods are finished and transferred in from work in process. • Decreased ... when goods are sold (cost of goods sold).

Work-in-Process Inventory

The cost of products started, but not completed. • Increased ... when direct materials and direct labor are used in production and when manufacturing overhead is assigned to production. • Decreased ... when goods are finished and transferred out (cost of goods manufactured).

Raw Materials Inventory

The cost of raw materials on hand; includes both direct and indirect materials. • Increased ... when materials are purchased. • Decreased ... when materials are issued into production.

Sales Sales R & A

The journal entry to record the return of merchandise from a credit customer

Revenue can be recognized after cash is collected.

Unearned Service Revenue xxx Service Revenue xxx A client pays us in advance for services to be provided next period. This is not a revenue because we have not performed. Rather, we have an obligation to perform services in the future. Later, as the services are performed, we make adjusting entries to record the revenue earned.

Which of the following is not deducted from gross pay to determine net pay?

Unemployment Taxes

The gross method records the purchase discount

When it is taken

To record the application of manufacturing overhead to production

Work in Process Inventory xxx Manufacturing Overhead xxx

To record the issue of direct materials into productio

Work in Process Inventory xxx Raw Materials Inventory xxx

To record the purchase and use of direct labor:

Work in Process Inventory xxx Wages Payable xxx

A cost pool is a group of overhead costs that respond to changes in

a cost driver

Sales Discounts

a temporary account used to report cash discounts taken by customers. Cash xxx Sales Discounts xxx Accounts Receivable xxx

Sales Returns and Allowances

a temporary account which represents returns by customers and price allowance granted to customers. Sales Returns and Allowances xxx Accounts Receivable xxx

The journal entry to remove a specific customer's account, once it is identified as uncollectible, would debit ______, credit _____, and _____net accounts receivable

allowance for uncollectible accounts, accounts receivable, decrease

The activity "handling materials" is part of the activity level

batch related

The journal entry to record a customer's payment within the discount period is

cash sales discounts a/r

Peeves Party Supply purchased $4,000 of merchandise on account, terms 2/15, n/30. Assuming Peeves uses the net price method to account for purchase discounts, the journal entry to record the purchase would include a:

credit to Accounts Payable for $3,920

The journal entry to record the payment of the assembly line supervisor would include a:

debit to Manufacturing Overhead

The journal entry to record the requisition of raw materials for production would include a:

debit to Work-in-Process Inventory

The journal entry to record the application of manufacturing overhead to work-in- process inventory is:

debit to Work-in-Process and credit to Manufacturing Overhead

The journal entry to record the purchase of indirect materials on account would include a:

debit to raw materials inventory

The cost of the wages of assembly line supervisor is:

indirect labor

The activity "testing products" is part of the activity level

product sustaining

cash unearned rent revenue

revenue is being recognized after the cash is collected

variance

the difference between the standard and actual amounts of inputs and is used to evaluate the efficiency of the conversion proces

Direct Materials Usage (Quantity) Variance

• If the actual amount of materials used is less than the standard amount of materials allowed, the variance is favorable. •If the actual amount of materials used is greater than the standard amount of materials allowed, the variance is unfavorable.

Direct Materials Price Variance

• If the actual price is less than the standard price, the variance is favorable. •If the actual price is greater than the standard price, the variance is unfavorable.

Direct Materials Inventory Variance

•If the actual amount of materials purchased is less than the standard amount of materials used, the variance is favorable. •If the actual amount of materials purchased is greater than the standard amount of materials used, the variance is unfavorable

Direct Labor Usage (Quantity, Efficiency) Variance

•If the actual hours worked is less than the standard hours allowed, the variance is favorable. •If the actual hours worked is greater than the standard allowed, the variance is unfavorable.

DIRECT LABOR VARIANCES

•The wage rate per hour differs from the standard •The number of hours used differs from the standard allowed for the actual level of production •Both the wage rate and the number of hours allowed differs from the standard