ACCT 212 Quiz 1 Financial Statement Analysis and Managerial Accounting solutions complete answers

ACCT 212 Quiz 1 Financial Statement Analysis and Managerial Accounting solutions complete answers 

 

When direct labor costs are recorded:

 

The Cost of Goods Sold account balance equals costs on job cost sheets for all jobs that are sold and delivered during a period.

 

If overhead is underapplied, it means that individual jobs have not been charged enough overhead during the year and the cost of goods sold reported is too low.

 

A system that acquires inventory and produces products only after it receives an order is called:

 

Romeo Corporation reports the following for the year:
 

Finished goods inventory, January 1
$ 3,600
Finished goods inventory, December 31
4,400
Total cost of goods sold
15,000
 
The cost of goods manufactured for the year is:

 

The following information is available for the year ended December 31:
 

Beginning raw materials inventory
$ 11,700
Raw materials purchases
87,400
Ending raw materials inventory
11,100
Advertising expense
 830
 
The amount of raw materials used in production for the year is:

 

Refer to the following selected financial information from Helpful Hardware. Compute the company’s days’ sales in inventory for Year 2. (Use 365 days a year.)

 

Refer to the following selected financial information from Texas Electronics. Compute the company’s accounts receivable turnover for Year 2.

 

Powers Company reported net sales of $1,220,000, average Accounts Receivable, net of $76,500, and net income of $51,875. The accounts receivable turnover ratio is:

 

A corporation reported cash of $15,200 and total assets of $179,500 on its balance sheet. Its common-size percent for cash equals:

 

Stark Company's most recent balance sheet reported total assets of $1,700,000, total liabilities of $900,000, and total equity of $800,000. Its debt-to-equity ratio is:

 

The predetermined overhead rate is used to apply estimated overhead cost to jobs.

 

Overhead is applied to each job based on the actual amount of the activity base used for that job.

 

A company that uses job order costing purchases $100,000 in raw materials for cash. The journal entry to record this transaction consists of a debit to Cash for $100,000 and a credit to Work in Process Inventory for $100,000.

 

Managerial accounting reports and information are used by external users, and financial accounting is used by internal users.

 

Under a just-in-time manufacturing system, large quantities of inventory are acquired to produce products in advance of customer orders.

 

Ethics are beliefs that distinguish right from wrong. They are accepted standards of good and bad behavior.

 

Which of the following should not be included in direct materials costs for a bike manufacturer?

 

Conversion costs are costs incurred in converting raw materials to finished goods.

 

Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What journal entry should Andrew use to account for direct materials used in March:

 

At the current year-end, Ruiz Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Ruiz should:

 

Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. At year-end, Factory Overhead is:

 

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation used $2,100 of direct materials and used $3,600 of direct labor. The job was not finished in September. An additional $2,600 of direct materials and $5,700 of direct labor were needed to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at the end of September relative to Job A3B?

 

CWN Company uses a job order costing system and last period incurred $74,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $81,000. It also expects to incur $100,000 of direct labor cost. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:

 

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation used $2,900 of direct materials and used $4,400 of direct labor. The job was not finished in September. An additional $3,400 of direct materials and $6,900 of direct labor were needed to finish the job in October. The company applies overhead at the end of each month at a rate of 150% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October?

 

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.

 

The cost of jobs transferred to finished goods is:

 

At the beginning of the year, a company estimates total overhead costs of $1,228,020. The company applies overhead using machine hours and estimates that it will use 2,910 machine hours during the year. What amount of overhead should be applied to a job that uses 30 machine hours that year?

 

A company manufactures lawnmowers. Compute the total amount of period costs from the following costs.

 

Using the information below, calculate gross profit for the period:

 

Asteroid Industries accumulated the following cost information for the year:

 

Using the above information, total factory overhead costs equal:

 

A manufacturing company has a beginning finished goods inventory of $27,300, cost of goods manufactured of $57,500, and an ending finished goods inventory of $26,600. The cost of goods sold for this company is:

 

Refer to the following selected financial information from Helpful Hardware. Compute the company's inventory turnover for Year 2. (Use 365 days a year.)

 

Refer to the following selected financial information from Helpful Hardware. Compute the company’s days’ sales in inventory for Year 2. (Use 365 days a year.)

 

Refer to the following selected financial information from Gomez Electronics. Compute the company’s profit margin for Year 2.

 

A company reports basic earnings per share of $5.20, cash dividends per share of $2.10, and a market price per share of $65.60. The company's dividend yield equals:

 

Powers Company reported net sales of $1,250,000, average Accounts Receivable, net of $73,500, and net income of $53,150. The accounts receivable turnover ratio is:

 

Refer to the following selected financial information from Gomez Electronics. Compute the company’s return on total assets for Year 2.

 

Martinez Corporation reported net sales of $766,000, net income of $141,000, and total assets of $7,644,393. The profit margin is:

 

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.

 

The cost of jobs transferred to finished goods is:

 

B&T Company's production costs for May are: direct labor, $16,000; indirect labor, $6,000; direct materials, $14,400; property taxes on production facility, $840; factory heat, lights and power, $940; and insurance on plant and equipment, $140. B&T Company's factory overhead incurred for May is:

 

The Work in Process Inventory account of a manufacturing company has a $3,250 debit balance. The company applies overhead using direct labor cost. The cost sheet of the only job still in process shows direct material cost of $1,430 and direct labor cost of $810. Therefore, the amount of applied overhead is:

 

Use the cost information below for Laurels Company to determine the cost of goods manufactured during the current year:

 

If the cost of the beginning work in process inventory is $60,100, costs of goods manufactured is $895,000, direct materials cost is $331,000, direct labor cost is $211,000, and overhead cost is $316,000, calculate the ending work in process inventory.

 

Craigmont Company's direct materials costs are $4,600,000, its direct labor costs total $8,440,000, and its factory overhead costs total $6,440,000. Its prime costs total:

 

Use the following selected information from Whitman Corp. to determine the Year 1 and Year 2 common size percentages for cost of goods sold using Net sales as the base.

 

Use the following selected information from Whitman Corp. to determine the Year 1 and Year 2 trend percentages for net sales using Year 1 as the base.  

 

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $1,600 of direct materials and used $3,100 of direct labor. The job was not finished by the end of September, but needed an additional $2,100 of direct materials in October and additional direct labor of $5,600 to finish the job. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October?

 

An employee is dissatisfied with the resolution of an ethical conflict with his supervisor at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to:

 

Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable.

 

Classifying costs by behavior with changes in volume of activity involves:

 

Cost concepts such as variable, fixed, mixed, direct, and indirect apply only to manufacturers and not to service companies.

 

Products that have been completed and are ready to be sold by the manufacturer are called:

 

A manufacturer's total cost of making and finishing products in the period is called:

 

Which of the following items is not a management concept that was created to improve companies' performances?

 

The management concept of customer orientation encourages a company to set up its production system to produce large quantities of the same product for all customers.

 

Which one of the following items is normally not a manufacturing cost?

 

Copy Center pays an average wage of $13 per hour to employees for printing and copying jobs, and allocates $19 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. If Job M-47 used $360 of materials and took 20 hours of labor to complete, what is the total cost that should be assigned to the job?

 

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,100 of direct materials and used $4,600 of direct labor. The job was not finished by the end of the month, but needed an additional $3,600 of direct materials and additional direct labor of $7,100 to finish the job in October. The company applies overhead at the end of each month at a rate of 150% of the direct labor cost incurred. What is the total cost of the job when it is completed in October?

 

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $6,884 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,600 and direct labor cost of $1,400. Therefore, the company's overhead application rate is:

 

A perpetual record of a raw materials item that records data on the quantity and cost of units purchased, units issued for use in production, and units that remain in the raw materials inventory, is called a(n):

 

Materials requisitions and time tickets are cost accounting source documents.

 

A job order costing system would be appropriate for a manufacturer of automobile tires.

 

A job order costing system would best fit the needs of a company that makes:

 

The job order cost sheets used by Greene Company revealed the following:

 

Job No. 135 was completed during May and Jobs No. 134 and 135 were shipped to customers in May. What was the company's cost of goods sold for May and the Work in Process inventory on May 31?

 

A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a:

 

The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:

 

The raw materials used in manufacturing during the year totaled $1,083,000. Raw materials purchased during the year amount to:

 

Using the information below for Sundar Company; determine the total manufacturing costs added during the current year:

 

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.

 

The cost of units transferred to finished goods is:

 

Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the application of factory overhead to production is:

 

Use the cost information below for Laurels Company to determine the manufacturing costs added during the current year:

 

Use the cost information below for Sundar Company to determine the cost of goods manufactured during the current year:

 

Which of the following accounts would not appear on a schedule of cost of goods manufactured?

 

Both financial and managerial accounting affect user's decisions and actions.

 

A fixed cost:

 

Manufacturers usually have three inventories: raw materials, work in process, and finished goods.

 

Which of the following is not part of the materials activity in the flow of manufacturing activities?

 

An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called:

 

The balanced scorecard aids in continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance.

 

A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.

 

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $29,000; direct materials, $49,000; and factory overhead applied $5,900. The predetermined overhead rate was:

 

A materials requisition is a source document used for recording materials received.

 

Compared to a general accounting system, a cost accounting system for a manufacturing company emphasizes:

 

Large aircraft manufacturers normally use:

 

The total costs on job cost sheets for jobs that are not yet completed equals the balance in the Finished Goods Inventory account.

 

The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

 

 

Question 1
Craigmont Company's direct materials costs are $3,400,000, its direct labor costs total $7,360,000, and its factory overhead costs total $5,360,000. Its conversion costs total:
 
Question 2
Current information for the Healey Company follows:
 
Beginning raw materials inventory
Raw material purchases
Ending raw materials inventory
Beginning work in process inventory
Ending work in process inventory
Direct labor
Total factory overhead
 
All raw materials used were traceable to specific units of product. Healey Company's total manufacturing costs for the year are:
 
Question 3
Comet Company accumulated the following account information for the year:
 
Beginning raw materials inventory
Indirect materials cost
Indirect labor cost
Maintenance of factory equipment
Direct labor cost
 
Using the above information, total factory overhead costs would be:
 
Question 4
Using the information below for Laurels Company; determine the manufacturing costs added during the current year:
 
Direct materials used
Direct Labor
Total Factory overhead
Beginning work in process
Ending work in process
 
 
Question 5
Using the information below for Sundar Company; determine the cost of goods manufactured during the current year:
 
Direct materials used
Direct labor used
Factory overhead
Beginning work in process
Ending work in process
 
 
Question 6
Managerial accounting reports and information are used by external users and financial accounting by internal users.
 
Question 7
Managerial accounting is different from financial accounting in that:
 
Question 8
A fixed cost:
 
Question 9
Last year, Flash Company sold 15,000 units of its only product. If sales decreased by 17% in the current year, how will total variable cost and total fixed cost be affected?
 
Question 10
Raw materials inventory should not include indirect materials.
 
Question 11
Raw materials that become part of a product and are identified with specific units or batches of a product are called direct materials.
 
Question 12
Which of the following is not part of the production activity in the flow of manufacturing activities?
 
Question 13
Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that components are available each time that they are needed.
 
Question 14
The main goal of the lean business model is the elimination of waste while satisfying the customer and providing a positive return to the company.
 
Question 15
Which of the following items appears only in a manufacturing company's financial statements?
 
Question 16
Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. Jobs are marked up 15% above cost to determine the selling price. If Job M-47 used $370 of materials and took 20 hours of labor to complete, what is the selling price of the job?
 
Question 17
Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,300 of direct materials and used $4,800 of direct labor. The job was not finished by the end of the month, but needed an additional $3,800 of direct materials in October and additional direct labor of $7,300 to finish the job. The company applies overhead at the end of each month at a rate of 100% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October?
 
Question 18
Andrew Industries purchased $167,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,400, and the materials used to complete jobs during the month were $142,800 of direct materials and $13,200 of indirect materials. What is the ending Raw Materials Inventory balance for March?
 
Question 19
Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $3,750,000 (150,000 hours at $25/hour) and that factory overhead would be $1,450,000 for the current period. At the end of the period, the records show that there had been 130,000 hours of direct labor and $1,150,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate? (Round your answer to two decimal places.)
 
Question 20
When materials are used as indirect materials, their cost is debited to the Factory Overhead account.
 
Question 21
A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company.
 
Question 22
Features of a job costing system include all but which of the following:
 
Question 23
There are two basic types of cost accounting systems: job order costing and periodic costing.
 
Question 24
When actual overhead cost exceeds the overhead applied, overhead is said to be overapplied.
 
Question 25
The rate established prior to the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:
 

 

The following information pertains to the Packer Corporation. Calculate the cost of goods sold for the period:
   

  Beginning Raw Materials
$ 32,000   
  Ending Raw Materials
72,000   
  Beginning Work in Process Inventory
42,000   
  Ending Work in Process Inventory
48,000   
  Beginning Finished Goods Inventory
74,000   
  Ending Finished Goods Inventory
70,000   
  Cost of Goods Manufactured for the period
248,000   
 

Using the information below for Singing Dolls, Inc., determine cost of goods manufactured for the year:
  

  Work in Process, January 1
$53,000   
  Work in Process, December 31
38,500   
  Total Factory overhead
7,000   
  Direct materials used
14,000   
  Direct labor used
28,000   
 

Use the following information to compute the cost of goods manufactured:
 

  Beginning raw materials
$6,900   
  Ending raw materials
5,400   
  Direct labor
13,650   
  Raw material purchases
8,800   
  Depreciation on factory equipment
7,900   
  Factory repairs and maintenance
4,700   
  Beginning finished goods inventory
11,600   
  Ending finished goods inventory
10,300   
  Beginning work in process inventory
7,100   
  Ending work in process inventory
7,700   
 

Calculate the cost of goods sold using the following information:
  

  Direct materials
$ 299,700   
  Direct labor
133,200   
  Factory overhead costs
265,200   
  General and administrative expenses
86,700   
  Selling expenses
50,000   
  Work in Process inventory, January 1
119,700   
  Work in Process inventory, December 31
127,100   
  Finished goods inventory, January 1
233,300   
  Finished goods inventory, December 31
239,900   
 

Using the information below for Laurels Company; determine the manufacturing costs added during the current year:
    

  Direct materials used
$ 5,300   
  Direct labor
7,300   
  Total Factory overhead
5,400   
  Beginning work in process
3,300   
  Ending work in process
4,600   
 

A manufacturing company has a beginning finished goods inventory of $16,100, raw material purchases of $19,500, cost of goods manufactured of $35,500, and an ending finished goods inventory of $19,300. The cost of goods sold for this company is:
 

The following information is available for the year ended December 31:
  

Beginning raw materials inventory
$11,400
Raw materials purchases
86,800
Ending raw materials inventory
10,800
Manufacturing supplies expense
860
  

The amount of raw materials used in production for the year is:
 

If beginning and ending work in process inventories are $5,100 and $15,100, respectively, and cost of goods manufactured is $171,000, what is the total manufacturing cost for the period?
 

The following information is available for the year ended December 31:
   

  Beginning raw materials inventory
$ 3,800  
  Raw materials purchases
5,300  
  Ending raw materials inventory
4,300  
  Office supplies expense
2,300  
   

The amount of raw materials used in production for the year is:
 

Craigmont Company's direct materials costs are $4,200,000, its direct labor costs total $8,080,000, and its factory overhead costs total $6,080,000. Its prime costs total:
 

If the cost of the beginning work in process inventory is $51,000, direct materials cost is $341,000, direct labor cost is $207,000, and overhead cost is $310,000, and the ending work in process inventory is $46,000, calculate the cost of goods manufactured:
 

Craigmont Company's direct materials costs are $4,100,000, its direct labor costs total $7,990,000, and its factory overhead costs total $5,990,000. Its conversion costs total:
 

Comet Company accumulated the following account information for the year:
  

  Beginning raw materials inventory
$ 5,900  
  Indirect materials cost
1,900  
  Indirect labor cost
4,900  
  Maintenance of factory equipment
2,700  
  Direct labor cost
6,900  
  

Using the above information, total factory overhead costs would be:
 

The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:
 

 
Beginning
Ending
Raw materials inventory
$552,000
$615,000
 

The raw materials used in manufacturing during the year totaled $1,043,000. Raw materials purchased during the year amount to:
 

Using the information below for Sundar Company; determine the total manufacturing costs added during the current year:
 

Direct materials used
$20,600
Direct labor used
26,100
Factory overhead
47,100
Beginning work in process
12,300
Ending work in process
12,900
 

Current information for the Healey Company follows:

 

Beginning raw materials inventory
$16,000
Raw material purchases
68,000
Ending raw materials inventory
17,400
Beginning work in process inventory
23,200
Ending work in process inventory
28,800
Direct labor
46,800
Total factory overhead
30,800
 

All raw materials used were traceable to specific units of product. Healey Company's total manufacturing costs for the year are:
 

Using the information below, calculate gross profit for the period.

 

Sales revenues for the period
$1,314,000
Operating expenses for the period
$240,000
Finished Goods Inventory, January 1
36,100
Finished Goods Inventory, December 31
41,100
Cost of goods manufactured for the period
$545,000
 $779,000.

 $540,000.

 $774,000.

 $451,800.

 $535,000.

 

Calculate the cost of goods manufactured using the following information:
  

  Direct materials
$ 299,700   
  Direct labor
133,200   
  Factory overhead costs
265,200   
  General and administrative expenses
86,700   
  Selling expenses
50,000   
  Work in Process inventory, January 1
119,700   
  Work in Process inventory, December 31
127,100   
  Finished goods inventory, January 1
233,300   
  Finished goods inventory, December 31
239,900   
 $705,500.

 $698,100.

 $684,100.

 $690,700.

 $777,400.

 

Use the following data to compute total factory overhead costs for the month.

 

Sales commissions
$11,700
Direct labor
40,500
Indirect materials
16,100
Factory manager salaries
8,100
Factory supplies
9,900
Indirect labor
7,200
Depreciation—office equipment
5,900
Direct materials
41,400
Corporate office salaries
43,400
Depreciation—factory equipment
8,400
 

Using the information below, calculate gross profit for the period.

 

Beginning Raw Materials Inventory
$28,000
Ending Direct Materials Inventory
$33,000
Beginning Work in Process Inventory
$61,000
Ending Work in Process Inventory
$70,000
Beginning Finished Goods Inventory
$86,000
Ending Finished Goods Inventory
$73,000
Cost of Goods Sold for the period
$570,000
Sales revenues for the period
$1,314,000
Operating expenses for the period
$262,000
 

If one unit of Product Z2 used $3.10 of direct materials and $3.60 of direct labor, sold for $10.00, and was assigned overhead at the rate of 36% of direct labor costs, how much gross profit was realized from this sale? (Round your intermediate calculations and final answer to two decimal places.)
$6.70.

$10.00.

$1.30.

$2.00.

$3.30.

 

CWN Company uses a job order costing system and last period incurred $75,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $80,000. It also expects to incur $100,000 of direct labor. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:
 

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,900 of direct materials and used $4,400 of direct labor. The job was not finished by the end of the month, but needed an additional $3,400 of direct materials and additional direct labor of $6,900 to finish the job in October. The company applies overhead at the end of each month at a rate of 150% of the direct labor cost incurred. What is the total cost of the job when it is completed in October?
 

The job order cost sheets used by Greene Company revealed the following:
  

Job. No.
Bal., May 1
May Production Costs
134
$ 2,700     
$ - - -               
135
 2,200     
500               
136
- - - -     
1,100               
  

Job No. 135 was completed during May and Jobs No. 134 and 135 were shipped to customers in May. What was the company's cost of goods sold for May and the Work in Process inventory on May 31?
 

Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $113,500 and $124,800, respectively. During the year, actual overhead was $107,200 and actual direct labor cost was $118,500. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include (Round predetermined overhead rate to nearest whole percentage.):
 

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,300 of direct materials and used $4,800 of direct labor. The job was not finished by the end of the month, but needed an additional $3,800 of direct materials in October and additional direct labor of $7,300 to finish the job. The company applies overhead at the end of each month at a rate of 100% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October?
 

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.
 

Work in Process Inventory
 
DR
CR
 
Beginning balance
$4,600  
 
 
Direct materials
47,200  
 
 
Direct labor
29,700  
?
Finished goods
Applied overhead
15,900  
 
 
Ending balance
$9,100  
 
 
  

The cost of units transferred to finished goods is:
 

Lowden Company has an overhead application rate of 164% and allocates overhead based on direct material cost. During the current period, direct labor cost is $51,000 and direct materials used cost $81,000. Determine the amount of overhead Lowden Company should record in the current period.
 

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $3,300 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $1,460 and direct labor cost of $820. Therefore, the amount of the applied overhead is:
 

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $22,000; direct materials, $42,000; and factory overhead applied $5,200. The overhead application rate was:
 

Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $189,000 of raw materials on credit; issued materials to production of $214,000 of which $11,000 were indirect. Minstrel incurred a factory payroll of $158,000, paid in cash, of which $21,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $194,800 during the month, compute the amount of under- or overapplied overhead:
rev: 11_30_2015_QC_CS-34899

 

The B&T Company's production costs for May are: direct labor, $20,000; indirect labor, $5,600; direct materials, $14,000; property taxes on production equipment, $880; heat, lights and power, $900; and insurance on plant and equipment, $100. B&T Company's factory overhead incurred for May is:
 

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $5,220 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,200 and direct labor cost of $1,000. Therefore, the company's overhead application rate is:
 

Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. Jobs are marked up 20% above cost to determine the selling price. If Job M-47 used $325 of materials and took 20 hours of labor to complete, what is the selling price that should be assigned to the job?
 

Using the following accounts and an overhead rate of 150% of direct labor cost, compute the amount of applied overhead.
 

Work in Process Inventory
Finished Goods Inventory
DR
CR
DR
CR
Beg. Bal.
36,100
 
 
Beg. Bal.
5,900
 
D.M.
57,100
 
 
 
213,300
 
D.L.
 ?
 
 
 
 
 
O.H.
 ?
F.G.
213,300
 
 
 
End. Bal.
26,100
 
 
 
 
 
 

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,100 of direct materials and used $3,600 of direct labor. The job was not finished by the end of the month, but needed an additional $2,600 of direct materials and additional direct labor of $5,700 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at the end of September relative to Job A3B?
 

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $364,800; materials of $418,000 and direct labor of $228,000. During the year Adams incurred $426,000 in materials costs, $414,000 in overhead costs and $232,000 in direct labor costs. Compute the amount of overhead applied to jobs during the year.
 

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $363,800; materials of $404,000 and direct labor of $214,000. During the year Adams incurred $386,400 in materials costs, $382,200 in overhead costs and $218,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.
 

Andrew Industries purchased $166,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,200, and the materials used to complete jobs during the month were $141,900 direct materials and $13,100 indirect materials. What is the ending Raw Materials Inventory balance for March?
 

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $368,900; materials of $407,000 and direct labor of $217,000. During the year Adams incurred $415,000 in materials costs, $415,000 in overhead costs and $221,000 in direct labor costs. Compute the overhead application rate.
1. Managerial accounting is an activity that helps managers determine costs of products and services, plan future activities, and compare actual to planned results. 

 

2. Control is the process of setting goals and determining ways to achieve them. 

 

3. Control is the process of monitoring planning decisions and evaluating an organization’s activities and employees.

 

4. Managerial accounting provides financial and nonfinancial information to an organization's managers and other internal decision makers. 

 

5. One of the usual differences between financial and managerial accounting is the timeliness of the information reported. 

 

6. Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable. 

 

7.  Costs are important to managers because they impact both the financial position and profitability of a business.

 

8. Managerial accounting reports and information are used by external users and financial accounting by internal users. 

 

9. Both financial and managerial accounting rely on accepted principles that are enforced through an extensive set of rules and guidelines. 

 

10. Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information. 

 

11. Both financial and managerial accounting affect user’s decisions and actions. 

 

12. The focus of managerial accounting information is on the organization as a whole. 

 

13. Planning is the process of setting goals and making plans to achieve them. 

 

14. Feedback provided by the control function allows managers to revise their plans.

 

15. Enterprise risk management (ERM) includes the systems and process companies use to maximize the effect of risk.

 

16. The concept of total quality management focuses on continuous improvement. 

 

17. Just-in-time manufacturing is a system that acquires inventory and produces product only when needed for an order. 

 

18. When the attitude of continuous improvement exists throughout an organization, every manager and employee is challenged to continuously experiment with new and improved business practices. 

 

19. The main goal of the lean business model is the elimination of waste while satisfying the customer and providing a positive return to the company. 

 

20. The management concept of customer orientation motivates a company to spend large amounts on advertising to convince customers to buy the company's standard products. 

 

21. The management concept of customer orientation encourages a company to set up its production system to produce large quantities of the same product for all customers. 

 

22. Total quality management and just-in-time manufacturing focus on quality improvement as well as on time customer deliveries. 

 

23. Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that components are available each time that they are needed. 

 

24. The balanced scorecard aids in continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance. 

 

25. Adopting a lean business model should have no effect on cost in a modern manufacturing environment. 

 

26. The Institute of Management Accountants (IMA) Statement of Ethical Professional Practice requires that management accountants be competent and act with integrity. 

 

27. An employee overstates his reimbursable expenses in one period in order to receive needed additional cash. Since he intends to reduce his expenses the next period by the current overstatement, this act is not considered fraudulent. 

 

28. Direct materials are not easily traced to a product. 

 

29. Costs may be classified by many different cost classifications. 



30. Straight-line depreciation, rent, and manager salaries are examples of variable costs.

 

31. Cost concepts such as variable, fixed, mixed, direct, and indirect apply only to manufacturers and not to service companies. 

 

32. Total variable costs change in proportion to changes in the volume of activity. 

 

33. Variable costs per unit change in proportion to changes in the volume of activity. 

 

 

34.  Direct costs are incurred for the benefit of more than one cost object. 

 

35.  Indirect costs cannot be easily and cost-beneficially traced to a single cost object. 

 

36.  Product costs can refer to expenditures necessary to finish products and to the administrative support during the time period.

 

37. Period costs can refer to expenditures necessary to finish products during the time period.

 

38.  Product costs are capitalized as inventory on the balance sheet and period costs are expensed on the income statement.

 

39. The sales commission incurred based on units of product sold during the month is an example of a product cost.

 

40.  Period costs are incurred by purchasing merchandise or manufacturing finished goods. 

 

41.  Product costs can be classified as one of three types: direct materials, direct labor, or overhead. 

 

42.  Product costs are expenditures necessary and integral to finished products. 

 

43.  Selling and administrative expenses are normally period costs. 

 

44.  The cost of partially completed products is included in the balance of the Work in Process Inventory account. 

 

45.  Manufacturers usually have three inventories: raw materials, work in process, and finished goods. 

 

46.  The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the merchandiser includes cost of goods manufactured rather than cost of goods purchased. 

 

 

47.  The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the manufacturer includes cost of goods manufactured rather than cost of goods purchased. 

 

48.  Raw materials that become part of a product and are identified with specific units or batches of a product are called direct materials. 

 

49. . Raw materials inventory should not include indirect materials. 

 

50.  The Work in Process Inventory account is found only in the ledgers of merchandising companies. 

 

 

51. The Work in Process Inventory account is found only in the ledgers of manufacturing companies. 

 

52.  Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

 

53.  Four factors come together in production activity: beginning work in process inventory, raw materials, direct labor, and factory overhead. 

 

 

54. Newly completed units are combined with beginning finished goods inventory to make up total ending work in process inventory. 

 

55. Beginning finished goods inventory plus cost of goods manufactured equals cost of goods sold. 

 

56. Beginning finished goods inventory plus cost of goods manufactured equals cost of goods available for sale. 

 

57. Beginning finished goods inventory plus cost of goods manufactured minus ending finished goods inventory equals cost of goods sold. 

 

58.  The series of activities that add value to a company's products or services is called a value chain. 

 

 

59.   To be certified under ISO 9000 standards, companies must use a quality control system and document that it achieves the desired quality level. 

 

60.   A lean business model aims to eliminate waste while satisfying the customer and providing a positive return to the company. 

 

61.   Total quality management (TQM) focuses on quality improvement and applies this standard to all aspects of business activities. 

 

62.   Just-in-time manufacturing (JIT) focuses on quality improvement and applies this standard to all aspects of business activities. 

 

63.   Just-in-time manufacturing (JIT) is a system that acquires inventory and produces only when needed. 

 

64.   Total quality management (TQM) is a system that acquires inventory and produces only when needed. 

 

65.  The raw materials inventory turnover is raw materials purchased divided by the average raw materials inventory.  

 

66.  A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products. 

 

67.  Indirect materials are accounted for as factory overhead because they are not clearly identified with specific product units. 

 

 

68.  Indirect labor refers to the cost of the workers whose efforts are directly related to specific units of product. 

 

69.  Direct labor refers to the cost of the workers whose efforts are directly related to specific units of product. 

 

 

70.  Although direct labor and raw materials costs are treated as manufacturing costs and therefore make up part of the finished goods inventory cost, factory overhead is charged to expense as it is incurred because it is a period cost. 

 

71.  Factory overhead includes selling and administrative expenses because they are indirect costs of a product. 

 

72.  Prime costs consist of direct labor and factory overhead. 

 

73.  Prime costs consist of direct materials and direct labor. 

 

74.  The schedule of cost of goods manufactured is also known as a manufacturing statement. 
 

75.  The schedule of cost of goods manufactured must be prepared monthly as it is a required general-purpose financial statement. 

 

76.  Managerial accounting information: 



77. Managerial accounting is different from financial accounting in that:



78. Flexibility of practice when applied to managerial accounting means that 

 

79. Which of the following items does not represent a difference between financial and managerial accounting? 



80. Which of the following items is not a management concept that was created to improve companies' performances? 



81. A National Quality Award that encourages an emphasis on quality was established by: 



82. Continuous improvement: 



83. An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called: 



84. A management concept based on an understanding of the changing wants and needs of customers, and which leads to flexible product designs and production processes, is called: 



85. An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called: 



86. A management concept that seeks to uncover and eliminate waste in all aspects of business activities is called: 

 

87. Goals of a Total Quality Management process include all of the following except: 

 

88. The model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is: 



89. Jenny, an employee of Toucan Company, used company assets for her own personal gain. This is an example of:



90. An employee is dissatisfied with the resolution of an ethical conflict with his supervisor at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to:



91. A direct cost is a cost that is:

 

92. Classifying costs by behavior with changes in volume of activity involves: 

 

93. A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is: 



94. A fixed cost: 



95. Last year, Wesson Company sold 10,000 units of its only product. If sales increase by 12% in the current year, how will unit variable cost and unit fixed cost be affected?

Unit Variable Cost                          Unit Fixed Cost

A)       Remains constant                          Remains constant

B)       Increases                                     Decreases

C)       Decreases                                    Remains constant

D)       Remains constant                          Decreases

E)       Remains constant                          Increases                  

 

96. Last year, Wesson Company sold 10,000 units of its only product. If sales decrease by 15% in the current year, how will unit variable cost and unit fixed cost be affected?

Unit Variable Cost                          Unit Fixed Cost

A)       Remains constant                          Remains constant

B)       Increases                                     Decreases

C)       Decreases                                    Remains constant

D)       Remains constant                          Decreases

E)       Remains constant                          Increases                  

 

97.  Last year, Gordon Company sold 20,000 units of its only product. If sales increase by 20% in the current year, how will unit variable cost and total fixed cost be affected?

Unit Variable Cost                          Total Fixed Cost

A)       Remains constant                          Remains constant

B)       Increases                                     Decreases

C)       Decreases                                    Remains constant

D)       Remains constant                          Decreases

E)       Remains constant                          Increases                  

   

Last year, Gordon Company sold 20,000 units of its only product. If sales decrease by 20% in the current year, how will unit variable cost and total fixed cost be affected?

Unit Variable Cost                          Total Fixed Cost

A)       Remains constant                          Remains constant

B)       Increases                                     Decreases

C)       Decreases                                    Remains constant

D)       Remains constant                          Decreases

E)       Remains constant                          Increases                  

 

98. Last year, Flash Company sold 15,000 units of its only product. If sales decreased by 17% in the current year, how will total variable cost and total fixed cost be affected?

Total Variable Cost                          Total Fixed Cost

A)       Remains constant                          Remains constant

B)       Increases                                     Decreases

C)       Decreases                                    Remains constant

D)       Remains constant                          Decreases

E)       Remains constant                          Increases                  

 

99. Last year, Flash Company sold 15,000 units of its only product. If sales increased by 20% in the current year, how will total variable cost and total fixed cost be affected?

Total Variable Cost                          Total Fixed Cost

A)       Remains constant                          Remains constant

B)       Increases                                     Decreases

C)       Increases                                     Remains constant

D)       Remains constant                          Decreases

E)       Remains constant                          Increases                  

 

100. Period costs for a manufacturing company would flow directly to: 



101. For product costs associated with a particular product to be reported on the income statement: 



102. Costs that are capitalized as inventory when they are incurred are called: 



103. Costs that flow directly to the income statement as expenses are called: 



104. Marshall Corporation incurred costs for materials and labor needed to manufacture its products.  These costs are an example of: 



105. Product costs: 



106. Products that have been completed and are ready to be sold by the manufacturer are called: 



107. Goods a company acquires to use in making products are called: 
 

108. Products that are in the process of being manufactured but are not yet complete are called: 



109. Which of the following represents the correct formula for calculating raw materials inventory turnover for a manufacturer? 



 

110. Which of the following represents the correct formula for calculating days’ sales in raw materials inventory for a manufacturer? 

 

111. Which of the following statements is correct concerning the Days’ sales in raw materials inventory? 



112. The cost of workers who assist in, or supervise, the manufacturing process, not linked to specific units of product is called: 



113. Factory overhead costs may include all of the following except: 



114. Labor costs that are clearly associated with specific units of product because the labor is used to convert raw materials into finished products are called: 

 

115. Manufacturing costs other than direct materials and direct labor, and are not readily traceable to specific units or batches of production are called: 



116. Materials that are used in manufacturing but are not clearly identified with specific product units are called: 



117. The salary paid to the assembly line supervisor would normally be classified as: 



118. Which of the following items appears only in a manufacturing company's financial statements? 



119. Which of the following costs is not included in factory overhead? 



120. Which of the following should not be included in direct materials costs? 

 

121. Raw materials that are tangible components of the finished product and can be separately and readily traced through the manufacturing process are called: 



122. The three major cost components of manufacturing a product are: 



123. Which of the following costs would not be classified as factory overhead? 



124. A manufacturer’s total cost of making and finishing products in the period is called: 

 

125. A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's: 



126. Which one of the following items is normally not a manufacturing cost? 

 

127. Which of the following is not part of the materials activity in the flow of manufacturing activities?



128. Which of the following is not part of the production activity in the flow of manufacturing activities?



129. Which of the following is not part of the sales activity in the flow of manufacturing activities?



130. A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is: 



 

131. A manufacturing company has a beginning finished goods inventory of $28,300, cost of goods manufactured of $58,500, and an ending finished goods inventory of $27,600. The cost of goods sold for this company is: 



132. Romeo Corporation has accumulated the following accounting data for the year:

 

  Finished goods inventory, January 1 ……….      $3,200

  Finished goods inventory, December 31 …...      4,000

  Total cost of goods sold …………………….          14,200
 
The cost of goods manufactured for the year is: 

 

133. Mustang Corporation has accumulated the following accounting data for the month of April:

 

  Finished goods inventory, April 1 ….                $30,200

  Finished goods inventory, April 30 …                 24,600

  Total cost of goods manufactured…….               114,500
 
The cost of goods sold for the year is: 

 

134. A company's prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is: 

 

135. Craigmont Company’s direct materials costs are $3,000,000, its direct labor costs total $7,000,000, and its factory overhead costs total $5,000,000.  Its prime costs total: 

 

136. Craigmont Company’s direct materials costs are $3,000,000, its direct labor costs total $7,000,000, and its factory overhead costs total $5,000,000.  Its conversion costs total: 



137. A schedule of cost of goods manufactured is also known as a: 



138. The following information relates to the manufacturing operations of the JNR Printing Company for the year:

Beginning         Ending

Raw materials inventory……………………… $ 57,000         $60,000

Finished goods………………………………...       68,000           60,000

The raw materials used in manufacturing during the year totaled $118,000. Raw materials purchased during the year amount to:

 

139. The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:

Beginning         Ending

Raw materials inventory……………………… $ 547,000        $610,000


The raw materials used in manufacturing during the year totaled $1,018,000. Raw materials purchased during the year amount to: 



Comet Company accumulated the following account information for the year:

Beginning raw materials inventory............ 
$6,000
Indirect materials cost................................ 
2,000
Indirect labor cost ..................................... 
5,000
Maintenance of factory equipment............ 
2,800
Direct labor cost........................................ 
7,000
Using the above information, total factory overhead costs would be: 



140. Asteroid Industries accumulated the following cost information for the year:

 

Direct materials........................................... 
$16,000
Indirect materials........................................ 
4,000
Indirect labor.............................................. 
8,500
Factory depreciation................................... 
12,800
Direct labor................................................ 
37,000
Using the above information, total factory overhead costs would be: 



The following information is available for the year ended December 31:

Beginning raw materials inventory............ 
$21,500
Raw materials purchases............................ 
74,000
Ending raw materials inventory................ 
23,000
Office supplies expense............................. 
2,400
The amount of raw materials used in production for the year is: 



The following information is available for the year ended December 31:

Beginning raw materials inventory............ 
$11,000
Raw materials purchases............................ 
86,000
Ending raw materials inventory................ 
10,400
Manufacturing supplies expense............... 
    900
The amount of raw materials used in production for the year is: 



A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a: 



141. If beginning and ending work in process inventories are $5,000 and $15,000, respectively, and cost of goods manufactured is $170,000, what is the total manufacturing cost for the period?  

 

142. Using the information below for Singing Dolls, Inc., determine the total manufacturing costs incurred during the year:

Work in Process, January 1.............................................................. 
50,000
Work in Process, December 31.............................................................. 
37,000
Direct materials used.............................................................. 
$12,500
Total Factory overhead.............................................................. 
     5,500
Direct labor used.............................................................. 
26,500
143. Using the information below for Singing Dolls, Inc., determine cost of goods manufactured for the year: 

 

 
 
Work in Process, January 1........................ 
50,000
Work in Process, December 31.................. 
37,000
Total Factory overhead............................... 
5,500
Direct materials used.................................. 
$12,500
Direct labor used......................................... 
26,500
144. Using the information below for Laurels Company; determine the manufacturing costs added during the current year:

Direct materials used.................................. 
$5,000
Direct Labor................................................ 
7,000
Total Factory overhead ............................. 
5,100
Beginning work in process......................... 
3,000
Ending work in process.............................. 
   4,000
145. Using the information below for Laurels Company; determine the cost of goods manufactured during the current year:

Direct materials used.................................. 
$5,000
Direct Labor................................................ 
7,000
Total Factory overhead ............................. 
5,100
Beginning work in process......................... 
3,000
Ending work in process..................................................................... 125
4,000
 

Using the information below for Sundar Company; determine the total manufacturing costs added during the current year:

 

Direct materials used.................................. 
$19,000
Direct labor used........................................ 
24,500
Factory overhead ....................................... 
55,100
Beginning work in process......................... 
10,700
Ending work in process.............................. 
11,300
 

Using the information below for Sundar Company; determine the cost of goods manufactured during the current year:

 

 

Direct materials used.................................. 
$19,000
Direct labor used........................................ 
24,500
Factory overhead ....................................... 
55,100
Beginning work in process......................... 
10,700
Ending work in process.............................. 
11,300
146. Total manufacturing costs incurred during the year do not include: 



147. Which of the following accounts would appear on a schedule of cost of goods manufactured? 



148. Which of the following represents the correct formula for calculating cost of goods manufactured? 



149. Current information for the Healey Company follows:

Beginning raw materials inventory............. 
$15,200
Raw material purchases............................... 
60,000
Ending raw materials inventory.................. 
16,600
Beginning work in process inventory......... 
22,400
Ending work in process inventory.............. 
28,000
Direct labor.................................................. 
42,800
Total factory overhead................................ 
30,000
All raw materials used were traceable to specific units of product. Healey Company's direct materials used for the year is: 



Current information for the Healey Company follows:

Beginning raw materials inventory............. 
$15,200
Raw material purchases.............................. 
60,000
Ending raw materials inventory.................. 
16,600
Beginning work in process inventory......... 
22,400
Ending work in process inventory................... 
28,000
Direct labor.................................................. 
42,800
Total factory overhead................................ 
30,000

All raw materials used were traceable to specific units of product. Healey Company's total manufacturing costs for the year are: 



Current information for the Healey Company follows:

Beginning raw materials inventory............. 
$15,200
Raw material purchases.............................. 
60,000
Ending raw materials inventory.................. 
16,600
Beginning work in process inventory......... 
22,400
Ending work in process inventory................... 
28,000
Direct labor.................................................. 
42,800
Total factory overhead................................ 
30,000

All raw materials used were traceable to specific units of product. Healey Company's Cost of Goods Manufactured for the year is: 

 

150. The Duerr Company manufactures a single product.  All raw materials used are traceable to specific units of product.  Current information for the Duerr Company follows:
 
 
 
 
Beginning raw materials inventory
$8,000
Ending raw materials inventory
11,000
Raw material purchases
85,000
Beginning work in process inventory
20,000
Ending work in process inventory
30,000
Direct labor
 
110,000
Total factory overhead
 
85,000
Beginning finished goods inventory
60,000
Ending finished goods inventory
40,000
 
 
 
 
The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:
 

151. The Richards Company manufactures a single product.  All raw materials used are traceable to specific units of product.  Current information for the Richards Company follows:
 
 
 
 
Beginning raw materials inventory
$10,000
Ending raw materials inventory
12,000
Raw material purchases
90,000
Beginning work in process inventory
40,000
Ending work in process inventory
25,000
Direct labor
 
130,000
Total factory overhad
 
60,000
Beginning finished goods inventory
55,000
Ending finished goods inventory
45,000
 
 
 
 
The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:
 

152. Current information for the Stellar Corporation follows:

Beginning work in process inventory......... 
$17,900
Ending work in process inventory................... 
19,300
Direct materials........................................... 
147,000
Direct labor.................................................. 
85,000
Total factory overhead................................ 
63,100

Stellar Corporation’s Cost of Goods Manufactured for the year is: 

 

Use the following data to determine the cost of goods manufactured:



Beginning finished goods inventory........... 
$ 10,800
Direct labor.................................................. 
 30,600
Beginning work in process inventory......... 
  7,200
General and administrative expenses.......... 
13,500
Direct materials used.................................. 
40,500
Ending work in process inventory.............. 
  9,000
Indirect labor............................................... 
  6,300
Ending finished goods inventory................ 
  9,500
Indirect materials ....................................... 
13,500
Depreciation—factory equipment.............. 
        7,500
   

Use the following data to compute total factory overhead costs for the month. 



Sales commissions……………………….. 
$10,800
Direct labor.................................................. 
39,600
Indirect materials………………………….
15,200
Factory manager salaries............................. 
7,200
Factory supplies........................................... 
9,000
Indirect labor............................................... 
6,300
Depreciation—office equipment…………
5,000
Direct materials……………………………
40,500
Corporate office salaries............................. 
42,500
Depreciation—factory equipment.............. 
7,500
   

Use the following data to compute total manufacturing costs for the month. 



Sales commissions……………………….. 
$10,800
Direct labor.................................................. 
39,600
Indirect materials………………………….
15,200
Factory manager salaries............................. 
7,200
Factory supplies........................................... 
9,000
Indirect labor............................................... 
6,300
Depreciation—office equipment…………
5,000
Direct materials……………………………
40,500
Corporate office salaries............................. 
42,500
Depreciation—factory equipment.............. 
7,500
   

Use the following information to compute the cost of goods manufactured.  Assume that all raw materials used were traceable to specific units of product.

Beginning raw materials ........................... 
$5,500
Ending raw materials.................................. 
4,000
Direct labor.................................................. 
12,250
Raw material purchases ............................. 
7,400
Depreciation on factory equipment............ 
6,500
Factory repairs and maintenance................ 
3,300
Beginning finished goods inventory........... 
10,200
Ending finished goods inventory................ 
8,900
Beginning work in process inventory......... 
5,700
Ending work in process inventory.................. 
     6,300
 

153. The following information pertains to the Packer Corporation. Calculate the cost of goods sold for the period:

Beginning Raw Materials                                     $30,000

Ending Raw Materials                                             70,000

Beginning Work in Process Inventory               40,000

Ending Work in Process Inventory                            46,000

Beginning Finished Goods Inventory                         72,000

Ending Finished Goods Inventory                             68,000

Cost of Goods Manufactured for the period                 246,000
  

The following information pertains to the Frameworks Corporation for May. Calculate the cost of goods sold for the period:

Beginning Finished Goods Inventory              $19,500

Ending Finished Goods Inventory                    18,000

Cost of Goods Manufactured                       126,800
  

154. Using the information below, calculate the cost of goods manufactured for the period:

Beginning Raw Materials Inventory
$25,000
Ending Raw Materials Inventory
30,000
Beginning Work in Process Inventory
55,000
Ending Work in Process Inventory
64,000
Beginning Finished Goods Inventory
80,000
Ending Finished Goods Inventory
67,000
Cost of Goods Sold for the period
540,000
Sales revenues for the period
1,254,000
Operating expenses for the period
232,000
 

155. Using the information below, calculate gross profit for the period. 

Beginning Raw Materials Inventory
$25,000
Ending Raw Materials Inventory
30,000
Beginning Work in Process Inventory
55,000
Ending Work in Process Inventory
64,000
Beginning Finished Goods Inventory
80,000
Ending Finished Goods Inventory
67,000
Cost of Goods Sold for the period
540,000
Sales revenues for the period
1,254,000
Operating expenses for the period
232,000
 

156. Using the information below, calculate cost of goods sold for the period. 

Sales revenues for the period
$1,304,000
Operating expenses for the period
239,000
Finished Goods Inventory, January 1
36,000
Finished Goods Inventory, December 31
41,000
Cost of goods manufactured for the period
540,000
A. $774,000.
B. $769,000.
C. $530,000.
D. $535,000.
E. $448,000.

 

157. Using the information below, calculate gross profit for the period. 

Sales revenues for the period
$1,304,000
Operating expenses for the period
239,000
Finished Goods Inventory, January 1
36,000
Finished Goods Inventory, December 31
41,000
Cost of goods manufactured for the period
540,000
 

158. Using the information below, calculate net income for the period. 

Sales revenues for the period
$1,304,000
Operating expenses for the period
239,000
Finished Goods Inventory, January 1
36,000
Finished Goods Inventory, December 31
41,000
Cost of goods manufactured for the period
540,000
159. An internal control system consists of the policies and procedures managers use to do all of the following except:



160. The schedule of cost of goods manufactured is divided into four parts consisting of all of the following except:



 

161. All of the following statements regarding manufacturing costs are true except:



162. Using the information below, compute the raw materials inventory turnover:

 

Raw Materials Used
$85,500
Beginning Raw Materials Inventory
8,000
Ending Raw Materials Inventory
9,000
 

163. Using the information below, compute the Days’ sales in raw materials inventory:

 

Raw Materials Used
$85,500
Beginning Raw Materials Inventory
8,000
Ending Raw Materials Inventory
9,000
 

164. Using the information below, compute the raw materials inventory turnover:

 

Raw Materials Used
$121,600
Beginning Raw Materials Inventory
18,000
Ending Raw Materials Inventory
20,200
 

165. Using the information below, compute the Days’ sales in raw materials inventory:

 

Raw Materials Used
$121,600
Beginning Raw Materials Inventory
18,000
Ending Raw Materials Inventory
20,200
 

166. Just-in-time manufacturing techniques can be useful in _____________ days’ sales in raw materials inventory.  

 

Which of the following statements is true regarding product and period costs?



 

167. A company's prime costs total $4,500,000 and its conversion costs total $5,500,000. If direct materials are $2,000,000, calculate the overhead costs: 



168. If the cost of the beginning work in process inventory is $60,000, costs of goods manufactured is $890,000, direct materials cost is $330,000, direct labor cost is $210,000, and overhead cost is $315,000, calculate the ending work in process inventory: 

 

169. If the cost of the beginning work in process inventory is $60,000, direct materials cost is $350,000, direct labor cost is $216,000, and overhead cost is $319,000, and the ending work in process inventory is $55,000, calculate the cost of goods manufactured: 



170. Calculate the cost of goods manufactured using the following information: 

Direct materials
$298,500
Direct labor
132,000
Factory overhead costs
264,000
General and administrative expenses
85,500
Selling expenses
48,800
Work in Process inventory, January 1
118,500
Work in Process inventory, December 31
125,900
Finished goods inventory, January 1
232,100
Finished goods inventory, December 31
238,700
 

Calculate the cost of goods sold using the following information: 

Direct materials
$298,500
Direct labor
132,000
Factory overhead costs
264,000
General and administrative expenses
85,500
Selling expenses
48,800
Work in Process inventory, January 1
118,500
Work in Process inventory, December 31
125,900
Finished goods inventory, January 1
232,100
Finished goods inventory, December 31
238,700
 

171. The following cost items relate to the Henning Company. Classify each cost as a variable cost or a fixed cost by placing an X in the appropriate column. Each cost should be evaluated in terms of the volume of units of finished products produced. Also indicate with an X for each item if it is a product cost or a period cost. 

   

 
Variable or fixed cost?
Product or period cost?
Cost item
Variable
Fixed
Product
Period
Executive salary
 
 
 
 
Direct labor
 
 
 
 
Direct materials
 
 
 
 
Depreciation of

 factory equipment
 
 
 
 
Indirect labor
 
 
 
 
Delivery expense
 
 
 
 
Television advertising
 
 
 
 
Indirect materials
 
 
 
 
 

172. For each item shown below, classify it as a product cost or a period cost, by placing an X in the appropriate column. For each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product.    

 
Product or period cost?
Direct or indirect cost?
  Cost item
Product
Period
Direct
Indirect
  Administrative salaries
 
 
 
 
  Direct labor
 
 
 
 
  Advertising
 
 
 
 
  Property tax on the factory
 
 
 
 
  Factory maintenance
 
 
 
 
  Direct materials
 
 
 
 
  Depreciation on factory

  equipment
 
 
 
 
  Interest expense
 
 
 
 
  Factory supplies
 
 
 
 
 

173. Marv’s Furniture and Fixtures produces seats for movie theaters. Listed below are selected cost items for the seat production. Classify each cost as either fixed or variable, and either a product or a period cost by placing an x in the appropriate boxes.  



 
Cost by behavior
Cost by function
Variable
Fixed
Product
Period
Fabric for seats…………  
 
 
 
 
Assembly labor.................................
 
 
 
 
Factory property taxes  ……………..
 
 
 
 
Accounting staff salaries…………..
 
 
 
 
Sales office rent……………………
 
 
 
 
Sales manager's salary……………..
 
 
 
 
Depreciation on factory

equipment………………………….
 
 
 
 
Sales commissions…………………
 
 
 
 
 
 
 
 
 
 
 
 
 

174. Brotherton Company is a manufacturer of Blu-ray discs. Place each of the following costs in the appropriate column.

 
 
Product cost
 

Cost item
Period cost
Direct materials
Direct labor
Factory overhead
a.
Factory maintenance salary, $40,000
 
 
 
 
b.
Salary of factory supervisor, $70,000
 
 
 
 
c.
Salary of production worker, $42,000
 
 
 
 
d.
Salary of the company’s president, $100,000
 
 
 
 
e.
Television advertising, $25,000
 
 
 
 
f.
Property tax on factory, $15,000
 
 
 
 
g.
Sales commissions, $65,000
 
 
 
 
h.
Depreciation on factory equipment, $17,000
 
 
 
 
i.
Plastic used in the manufacture of the discs, $14,000
 
 
 
 
 

175. The following costs are incurred by Gonzalez Manufacturing Co. Classify each cost item as either a period cost or a product cost. If the cost is a product cost, identify it as a prime and/or conversion cost. 



 
Period Cost
Product Cost
Prime Cost
Conversion

Cost
Factory property taxes........................... ……….
 
 
 
Payroll taxes for assembly labor........... ………..
 
 
 
Depreciation of factory equipment....... ………..
 
 
 
Insurance on delivery vehicles.............. ……….
 
 
 
Indirect materials used.......................... ……….
 
 
 
Wages of production workers............... ……….
 
 
 
Production supervisor's salary............... ……….
 
 
 
Advertising............................................ ………..
 
 
 
Direct materials used............................. ……….
 
 
 
Sales salaries.......................................... ……….
 
 
 
 

176. Walter Products and Sandburg Industries report the following information at December 31:

                                                                              WALTER        SANDBURG
Accounts Receivable....................................... 
$41,000
$68,000
Cash................................................................. 
6,000
7,000
Finished Goods Inventory............................... 
 
25,000
Work in Process Inventory.............................. 
 
40,000
Merchandise Inventory................................... 
48,000
 
Prepaid Expenses............................................. 
1,000
2,000
Raw Materials Inventory................................. 
 
21,000

Required:
(a) Which company is a manufacturer? Explain.
(b) Prepare the Current Asset Section of the Balance Sheet for the manufacturer. 

 

177. Thornton Foods bakes and sells 2,000 dozen muffins each week to food service operations. Among the costs are bakers' salaries, $24,000; production management salaries, $16,000; production equipment operating costs, $32,000; and flour and ingredient costs, $15,000. Using this information, compute: (a) prime costs and (b) conversion costs. 

 

178. A manufacturing company's finished goods inventory on January 1 was $68,000; cost of goods manufactured was $147,000; and the December 31 finished goods inventory was $77,000. What is the cost of goods sold for that year? 

 

179. A manufacturing company's beginning finished goods inventory was $29,000; cost of goods manufactured was $316,000; and the ending finished goods inventory was $31,000. What is the cost of goods sold for that year? 

 

180. Calculate Cost of Goods Sold for the following two companies:

 

 

Beginning Inventory:
LEWIS, INC.
MERCER CO.
 
 
Merchandise............................. 
$250,000
 
Finished Goods........................ 
 
$550,000
Cost of Goods Purchased.............. 
460,000
 
Cost of Goods Manufactured........ 
 
688,000
Ending Inventory:
 
 
Merchandise............................. 
128,000
 
Finished Goods........................ 
 
350,000
 

181. The Tacky Company manufactures staples. Costs for October were direct labor, $84,000; indirect labor, $36,700; direct materials, $55,900; factory maintenance, $4,800; factory utilities, $3,200; and insurance on plant and equipment, $700. What is Tacky Company's factory overhead for October? 

 

182. The Langston Company manufactures coats. Costs for February were as follows:

Direct materials
$19,650
Direct labor
15,210
Factory insurance
950
Sales commissions
4,700
Corporate executive salaries
5,500
Factory supervisor salary
3,500
Indirect materials
1,920
Required: Calculate the total manufacturing cost for February. 

 

183. Information for Maxim Manufacturing is presented below. Compute both the cost of goods manufactured and the cost of goods sold for Maxim Manufacturing.



Beginning raw materials inventory................... 
$36,800
Beginning work in process inventory................ 
21,200
Direct labor........................................................ 
81,000
Beginning finished goods inventory.................. 
64,000
Total factory overhead....................................... 
126,000
Raw materials purchased................................... 
21,500
Ending raw materials inventory......................... 
40,000
Ending work in process inventory..................... 
20,000
Ending finished goods inventory....................... 
46,000
 

184. Information for Underwood Industries is presented below. Compute the cost of goods manufactured.



 
Beginning
Ending
Raw materials inventory
$26,800
30,100
Work in process inventory
41,200
39,000
Finished goods inventory
54,000
53,500
 
 
 
Raw materials purchased
93,500
 
Direct labor
61,000
 
Total factory overhead
117,300
 
 

185. Information for Eastman Industries is presented below. Compute the cost of goods manufactured.



Beginning work in process inventory................ 
21,200
Ending work in process inventory..................... 
20,000
Raw materials used in production
$46,800
Direct labor........................................................ 
81,000
Total factory overhead....................................... 
106,000
 

186. Use the following information to prepare the schedule of cost of goods manufactured for Graffstone Company for the month ended June 30.

 

Work in Process inventory, May 31 ................ 
$12,600
Work in Process inventory, June 30.................. 
16,500
Direct materials used during June..................... 
21,000
Direct labor used during June............................ 
31,000
Factory overhead:
 
Indirect material............................................ 
6,400
Indirect labor................................................. 
9,200
Factory rent................................................... 
12,000
Factory depreciation..................................... 
15,000
Factory utilities............................................. 
18,400
 

187. Duncan Crafts manufactures specialty key chains for tourist attractions. On January 1, the firm had 300 souvenir attraction disks used in the production of the chains that cost $3 each; and 600 completed key chains that cost $6 each. During the year Duncan Crafts purchased 1,500 souvenir disks costing $3 each and produced 1,100 key chains. Compute the total cost of raw materials inventory at December 31. 

 

188. Compute the ending work in process inventory for a manufacturer with the following information.

Raw materials purchased
131,700
Raw materials used in production
65,400
Direct labor used
44,000
Total factory overhead used
101,600
Work in process inventory, beginning of year
32,500
Cost of goods manufactured
212,900
 

189. The following items for Neptune Company are used to compute the cost of goods manufactured and the cost of goods sold. Indicate how each item should be used in the calculations by filling in the blanks with "+" if the item is to be added, "-" if the item is to be subtracted, or "0" if the item is not used in the calculation. The first item is completed as an example. 
 

 
Cost of Goods
Cost of Goods
 
Manufactured
Sold
Beginning finished goods inventory.......................................................................................... 
___0___
__+__
Ending finished goods inventory.......................................................................................... 
_______
______
Direct labor.......................................................................................... 
_______
______
Indirect labor.......................................................................................... 
_______
______
Beginning work in process inventory.......................................................................................... 
_______
______
Ending work in process inventory .......................................................................................... 
_______
______
General and administrative expenses.......................................................................................... 
_______
______
Indirect materials.......................................................................................... 
_______
______
Beginning raw materials inventory.......................................................................................... 
_______
______
Ending raw materials inventory.......................................................................................... 
_______
______
Raw material purchases.......................................................................................... 
_______
______
Depreciation of factory building.......................................................................................... 
_______
______
Cost of goods manufactured
_______
______
 
 
 
 

190. Information for Stanton, Inc., as of December 31 follows. Prepare a schedule of cost of goods manufactured for the year ended December 31. 



Administrative salaries........................................ 
$ 35,000
Depreciation of factory equipment...................... 
25,000
Depreciation of delivery vehicles ........................ 
6,000
Direct labor......................................................... 
68,000
Factory supplies used.......................................... 
9,000
Finished goods inventory, January 1 ................... 
57,000
Finished goods inventory, December 31 .............. 
?
Factory insurance................................................ 
15,500
Interest expense.................................................. 
12,000
Factory utilities .................................................. 
14,000
Factory maintenance........................................... 
7,500
Raw materials inventory, January 1..................... 
5,000
Raw materials inventory, December 31................ 
4,000
Raw material purchases ...................................... 
125,000
Rent on factory building..................................... 
25,000
Repairs of factory equipment.............................. 
11,500
Sales commissions.............................................. 
37,500
Work in Process inventory, January 1 ................. 
3,500
Work in Process inventory, December 31 ............ 
2,700
 

191. Information for the Deuce Manufacturing Company follows. Compute the cost of goods manufactured for this company. 



Beginning raw materials inventory.................. 
$ 53,200
Beginning work in process, inventory.............. 
78,400
Ending raw materials inventory....................... 
58,100
Ending work in process, inventory................... 
98,000
Direct labor........................................................ 
149,800
Total factory overhead...................................... 
105,000
Raw material purchases ................................... 
   210,000
 

192. Information for Jersey Metalworks as of December 31 follows. Prepare (a) the company’s schedule of cost of goods manufactured for the year ended December 31; (b) prepare the company’s income statement that reports separate categories for selling and general and administrative expenses.

 

193. Martinez Company makes leather cowboy hats. Each hat requires ½ yard of leather to produce. On December 31, 2014, the company had (a) 75 hats in Finished Goods Inventory and (b) 60 yards of leather at a cost of $12 per yard in Raw Materials Inventory.  During 2015, the company purchased 850 more yards of leather at $12 per yard and manufactured 1,600 hats.  Determine the unit and dollar amounts of Raw Materials Inventory in leather at December 31, 2015.

 

194. ___________________ is an activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers. 
 

195. ___________________ is the process of setting goals and making plans to achieve them. 

 

196. ____________________ is the process of monitoring planning decisions and evaluating an organization's activities and employees. 

 

197. The purpose of managerial accounting information is to help ________________ users make decisions while the purpose of financial accounting is to help _____________ users make decisions. 

 

198. A _________________ system means that a company acquires or produces inventory only when needed. 

 

199. The model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is the _____________________. 

 

200. _____________________ rejects the notions of "good enough" or "acceptable" and challenges employees and managers to continuously experiment with new and improved business practices. 

 

201. The ______________ aids continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance along four dimensions: (1) financial, (2) customer, (3) internal business processes, and (4) learning and growth. 

 

202. _______________ is the deliberate misuse of the employer's assets for the employee's personal gain. 

 

203. Policies and procedures used by management to monitor and control business activities are known as ____________________________. 

 

204. _______________ are beliefs that distinguish right from wrong. 

 

205. The process of identifying costs as direct or indirect is referred to as classifying costs by _______________. 

 

206. A _________________ cost changes in total in proportion to changes in the volume of activity. 

 

207. A _________________ cost does not change in total in proportion to changes in the volume of activity within the relevant range. 





Expenditures necessary and integral to the manufacture of finished products are ________________ costs. 

 

208. Expenditures that flow directly to the current income statement and are not reported as assets are ___________________ costs. 

 

209. _____________________ inventory consists of goods a company acquires to use in making products. 

 

210. ____________________ inventory consists of products in the process of being manufactured but not yet complete. 

 

211. ____________________ inventory consists of completed products ready for sale by a manufacturer. 

 

212. A manufacturer's inventory that is not completely finished is called ________________ .

 

213. One of the main differences between the calculation of cost of goods sold for a merchandiser and that of a manufacturer is that the calculation includes cost of goods purchased for the merchandiser, but the manufacturer replaces that with __________________________. 

 

214. ___________________________ reveals how much raw materials inventory is available in terms of the number of days’ sales.   

 

215. ___________________________ reveals how many times a company uses its raw materials inventory in production during a period. 

 

216. Expenditures incurred in the process of converting raw materials to finished goods, that include direct labor and factory overhead are known as _________________________. 

 

217. Expenditures directly associated with the manufacture of finished goods that include direct materials and direct labor, are _____________________ costs. 

 

218. Crane, Inc. reported the following data regarding costs and inventories for the current year: beginning goods-in-process inventory, $4,000; beginning finished goods inventory, $2,000; cost of goods manufactured, $11,500; operating expenses, $3,000; ending finished goods inventory, $1,000; ending goods-in-process inventory, $1,500. Cost of goods sold for Crane, Inc. equals ____________________. 

 

219. Waters, Inc. reported the following data regarding costs and inventories for the current year: beginning finished goods inventory, $5,000; cost of goods manufactured, $21,500; ending finished goods inventory, $4,000. Cost of goods sold for Waters, Inc. equals ____________________. 

 

220. For a manufacturer, the cost of goods sold can be computed by adding the beginning finished goods inventory to ________________________ and then subtracting the ending finished goods inventory. 

 

1. Cost accounting systems accumulate manufacturing costs and then assign them to products and services.

 

2. A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

 

3. Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

 

4. There are two basic types of cost accounting systems: job order costing and periodic costing.

 

5. There are two basic types of cost accounting systems: job order costing and process costing.

 

6. A company that produces a large number of standardized units would normally use a job order costing system.

 

7. A company that produces products individually designed to meet the needs of a specific customer would normally use a job order costing system.

 

8. Job order production systems would be appropriate for companies that produce custom homes, specialized equipment, and special computer systems.

 

9. Job order production systems would be appropriate for companies that produce compact disks or disposable cameras.

 

10. A job order costing system would be appropriate for a manufacturer of automobile tires. 

 

11. Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

 

12. When a job involves producing more than one unit of a custom product, it is often called a job lot.

 

13. A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Finished Goods Inventory account.

 

14. A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Work in Process Inventory account.

 

15. A company's file of job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account.

 

16. A company's file of job cost sheets for jobs that are completed but not yet sold equals the balance in the Work in Process Inventory account.

 

17. The direct materials section of a job cost sheet shows the materials costs assigned to a specific job, but the direct labor section only shows the total hours of labor allocated to the job.

 

18. The collection of cost sheets for unfinished jobs makes up a subsidiary ledger controlled by the Work in Process Inventory account in the general ledger.

 

19. A job cost sheet is useful for developing financial accounting numbers but does not contain information that is useful for managing the production process.

 

20. Job cost sheets are used to track all of the costs assigned to a job, including direct materials, direct labor, overhead, and all selling and administrative costs.

 

21. When a job is finished, its job cost sheet is completed and moved from the file of jobs in process to the file of finished jobs that are yet to be delivered to customers.

 

22. The file of job cost sheets for completed but undelivered jobs equals the balance in the Work in Process Inventory account.

 

23. Both direct and indirect labor costs are recorded on the individual job cost sheets. 

 

24. Job cost sheets include both product and period costs.

 

25. Only product costs are recorded on job cost sheets.

 

26. Service firms, unlike manufacturing firms, should only use actual costs when determining a selling price for their services.

 

27. Job order costing is applicable to manufacturing firms only and not service firms.

 

28. The cost of all direct materials issued to production is debited to Work in Process

 

29. A materials requisition is a source document used by production managers to request materials for production and also used to assign materials costs to specific jobs or to overhead.

 

30. When materials are used as indirect materials, their cost is debited to the Factory Overhead account.

 

31. A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company.

 

32. A receiving report serves as the source document for recording materials received in both a materials ledger card and in the general ledger.

 

33. In nearly all job order cost systems, materials ledger cards are perpetual records that are updated each time materials are purchased or issued for use in production.

 

34. The journal entry to record the usage of Direct Materials includes a debit to Work in Process Inventory.

 

35. The journal entry to record the usage of Indirect Materials includes a debit to Work in Process Inventory.

 

36. The journal entry to record the purchase of materials includes a debit to Work in Process Inventory.

 

37. Materials requisitions and time tickets are cost accounting source documents. 

 

38. A time ticket is a source document used by an employee to record the number of hours worked on a particular job during the work day.

 

39. A time ticket is a source document that an employee uses to report how much direct labor was performed for a job and is used to determine the amount of direct labor to charge to the job.

 

40. A time ticket is a source document that an employee uses to report how much indirect labor was performed for a job and is used to determine the amount of direct labor to charge to the job.

 

41. A time ticket is a source document used by an employee to record the total number of hours worked and serves as a source document for entries to record labor costs.

 

42. When time ticket information is entered into the accounting system, the journal entry is a debit to Factory Wages Payable and a credit to Work in Process Inventory.

 

43. The predetermined overhead rate is used to allocate overhead cost to jobs.

 

44. Factory overhead is often collected and summarized in a subsidiary factory overhead ledger.

 

45. Predetermined overhead rates are calculated at the end of the accounting period once the actual amount of factory overhead is known.

 

46. Predetermined overhead rates are calculated before the start of the accounting period, and are therefore based on estimates.

 

47. Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

 

48. The predetermined overhead rate based on direct labor cost is the ratio of estimated overhead cost to estimated direct labor cost for the period.

 

49. In a job order costing system, indirect labor costs are debited to the Factory Overhead account.

 

50. Since a predetermined overhead rate is established before a period begins, this rate is revised many times during the period to compensate for inaccurate estimates previously made.

 

51. Under a job order costing system, individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

 

52. Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

 

53. Direct materials and direct labor are examples of costs that are debited to the Factory Overhead account in a job costing system.

 

54. There should be a “cause and effect” relation between the overhead allocation base and overhead costs.

 

55. Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

 

56. Underapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

 

57. When actual overhead cost exceeds the overhead applied, overhead is said to be underapplied.

 

58. When actual overhead cost exceeds the overhead applied, overhead is said to be overapplied.

 

59. In a job order costing system, any immaterial underapplied overhead at the end of the period can be charged entirely to Cost of Goods Sold.

 

60. If actual overhead incurred during a period exceeds applied overhead, the difference will be a credit balance in the Factory Overhead account at the end of the period.

 

61. If actual overhead incurred during a period exceeds applied overhead, the difference will be a debit balance in the Factory Overhead account at the end of the period.

 

62. The Factory Overhead account will have a credit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

 

63. The Factory Overhead account will have a debit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

 

64. Material amounts of under- or overapplied factory overhead are always closed entirely to Cost of Goods Sold at the end of an accounting period.

 

65. Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the actual overhead incurred during a period.

 

66. Overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the actual overhead incurred during a period.

 

67. Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

 

68. If overhead is underapplied, it means that individual jobs have not been charged enough during the year and the cost of goods sold reported is too low.

 

69. If overhead is overapplied, it means that individual jobs have not been charged enough overhead during the year and the cost of goods sold reported is too low.

 

70. If overhead is overapplied, it means that individual jobs have been charged too much overhead during the year and the cost of goods sold reported is too high.

 

71. If overhead is underapplied, it means that individual jobs have been charged too much during the year and the cost of goods sold reported is too high.

 

72. The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead.

 

73. Period costs for a manufacturing company, such as selling and administrative expenses, are recorded directly to Work in Process Inventory when they are incurred.

 

74. Manufacturing costs incurred for jobs completed during an accounting period can bypass the inventory accounts on the balance sheet and be recorded directly in expense accounts.

 

75. Cost accounting systems used by manufacturing companies are based on the:

 

76. A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of product is a:

 

77. Job order costing systems normally use:

 

78. In comparison to a general accounting system, a cost accounting system for a manufacturing company places an emphasis on:

 

79. Features of a job costing system include all but which of the following:

 

80. The two basic types of cost accounting systems are:

 

81. The production activities for a customized product represent a(n):

 

82. A job order costing system would best fit the needs of a company that makes:

 

83. Job order production is also known as:

 

84. Omega Contractors manufactures each house to customer specifications. It most likely would use:

 

85. A type of production that yields customized products or services for each customer is called:

 

86. A company that makes which of the following types of products would best be suited for a job costing system?

 

87. The target cost for a job using job costing is calculated as:

 

88. A job order production system would be appropriate for a company that produces which one of the following items?

 

89. Large aircraft producers such as the Boeing Company normally use:

 

90. A document in a job order costing system that is used to record the costs of producing a job is a(n):

 

91. A job cost sheet shows information about each of the following items except:

 

92. The job order cost sheets used by Greene Company revealed the following: Job. No. Bal., May 1 May Production Costs

134 $1,700 $0

135 1,200 300

136 0 900

Job No. 135 was completed during May and Jobs No. 134 and 135 were shipped to customers in May. What was the company's cost of goods sold for May and the Work in Process inventory on May 31?

 

93. Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of the month, but needed an additional $3,000 of direct materials and additional direct labor of $6,500 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at the end of September relative to Job A3B?

 

94. Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of the month, but needed an additional $3,000 of direct materials and additional direct labor of $6,500 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the total cost of the job when it is completed in October?

 

95. Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of the month, but needed an additional $3,000 of direct materials in October and additional direct labor of $6,500 to finish the job. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October?

 

96. A job cost sheet includes:

 

97. The balance in the Work in Process Inventory at any point in time is equal to:

 

98. The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $3,200 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $1,400 and direct labor cost of $800. Therefore, the amount of the applied overhead is:

 

99. The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:

 

100. A perpetual record of a raw materials item that records data on the quantity and cost of units purchased, units issued for use in production, and units that remain in the raw materials inventory, is called a(n):

 

101. A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a:

 

102. A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:

 

103. The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.

 

The cost of units transferred to finished goods is:

 

104. A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.

 

105. A company's overhead rate is 200% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.

 

106. A source document that an employee uses to report how much time was spent working on a job or on overhead activities and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead is called a:

 

107. When factory wages payable costs for labor are allocated in a job cost accounting system:

 

108. Oxford Company uses a job order costing system. In the last month, the system accumulated labor time tickets total $24,600 for direct labor and $4,300 for indirect labor. How are these costs recorded?

 

109. Labor costs in production can be:

 

110. An example of direct labor cost is:

 

111. A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?

 

112. The rate established prior to the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:

 

113. Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The overhead application rate was:

 

114. Lowden Company has an overhead application rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $50,000 and direct materials used cost $80,000. Determine the amount of overhead Lowden Company should record in the current period.

 

115. The overhead cost applied to a job during a period is recorded with a credit to Factory Overhead and a debit to:

 

116. CWN Company uses a job order costing system and last period incurred $80,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $75,000. It also expects to incur $100,000 of direct labor. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:

 

117. Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Cosi expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is Cosi Company's overhead application rate?

 

118. The B&T Company's production costs for May are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production facility, $800; factory heat, lights and power, $1,000; and insurance on plant and equipment, $200. B&T Company's factory overhead incurred for May is:

 

119. Mesa Corp. allocates overhead to production on the basis of direct labor costs. Mesa’s total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead applied to a job which used $20,000 of direct labor.

 

120. Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate?

 

121. Using the following accounts and an overhead rate of 90% of direct labor cost, determine the amount of applied overhead.

 

122. If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale?

 

123. The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units?

 

124. At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Simply should

 

125. If overhead applied is less than actual overhead incurred, it is:

 

126. The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:

 

127. The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

 

128. If a company applies overhead to production with a predetermined overhead rate, a credit balance in the Factory Overhead account at the end of the period means that:

 

129. Marshall Enterprises charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, Marshall Enterprise’s Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should Marshall make at yearend?

 

130. Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. At year-end, the balance in the Factory Overhead account is a:

 

131. Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. At year-end, Factory Overhead is:

 

132. Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, the balance in the Factory Overhead account is a:

 

133. Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, Factory Overhead account is:

 

134. Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:

 

135. If overapplied or underapplied overhead is material, it should be disposed of by allocating it to:

 

136. The Marina Corp. has applied overhead to jobs during the period as follows:

Jobs finished and sold ……………… $ 46,000

Jobs started and in process …………. 54,000

Jobs finished and unsold …………… 100,000

The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account, and this amount is not material. The entry to dispose of this remaining factory overhead balance is:

 

137. Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What is the ending Raw Materials Inventory balance for March?

 

138. Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 direct materials and $13,000 indirect materials. How should Andrews journalize the purchase of raw materials for March? 

 

139. .Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What amount will Andrew debit to Work in Process Inventory for the month of March?

 

140. .Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What journal entry should Andrew use to account for direct materials used in March:

 

141. Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August, of which $212,000 was direct and $73,000 was indirect supervisory costs. The correct journal entry to record the direct labor for the month is:

 

142. Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August, of which $212,000 was direct and $73,000 was indirect supervisory costs. The correct journal entry to record the $73,000 indirect labor for the month is:

 

143. Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the purchase of materials is:

 

144. Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the issuance of materials to production is: 

 

145. Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the factory payroll is:

 

146. Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the payment of the factory payroll is:

 

147. Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the application of factory overhead to production is:

 

148. Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The total manufacturing costs added during the period are:

 

149. Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $167,800 during the month, compute the amount of under- or overapplied overhead:

 

150. Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. Minstrel’s beginning and ending Work in Process Inventory are $15,500 and $27,000 respectively. Compute the cost of product transferred to Finished Goods Inventory:

 

151. Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory?

 

152. Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the overhead application rate.

 

153. Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of overhead applied to jobs during the year.

 

154. Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.

 

155. Using the following accounts and an overhead rate of 130% of direct labor cost, compute the amount of applied overhead.

 

156. Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost.

The journal entry to record the issuance of materials to production is:

 

157. Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the allocation of factory wages to production is:

 

158. Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost.

The journal entry to record the application of factory overhead to production is:

 

159. Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the total cost that should be assigned to the job?

 

160. Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. Jobs are marked up 20% above cost to determine the selling price. If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the selling price of the job?

 

172. The Merker Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during April of the current year. This table summarizes information provided on each sheet:

Number Total Cost Incurred Status of Job

544 $15,050 Finished and delivered

545 $22,400 Finished and delivered

546 $ 7,500 Finished and unsold

547 $ 4,300 Finished and delivered

548 $33,000 Unfinished

549 $62,000 Finished and unsold

550 $14,600 Unfinished

551 $22,200 Finished and delivered

552 $ 3,600 Finished and unsold

553 $ 1,000 Unfinished

(a) What is the cost of goods sold for the month of April?

(b) What is the cost of the Work in Process inventory on April 30?

(c) What is the cost of the finished goods inventory on April 30?

 

173. The Luna Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during September of the current year. This table summarizes information provided on each sheet:

Number Total Cost Incurred Status of Job

951 $ 4,200 Finished and delivered

952 $ 7,700 Unfinished

953 $ 9,300 Finished and unsold

954 $11,100 Finished and delivered

955 $ 3,000 Finished and unsold

956 $ 5,500 Finished and delivered

957 $35,000 Unfinished

958 $ 3,200 Finished and delivered

959 $ 500 Unfinished

960 $22,110 Unfinished

961 $ 7,200 Finished and delivered

962 $ 8,500 Unfinished

963 $11,200 Finished and unsold

(a) What is the cost of the Work in Process inventory on September 30?

(b) What is the cost of the finished goods inventory on September 30?

(c) What is the cost of goods sold for the month of September?

 

174. Chung Corporation uses a job order costing system. Five jobs were worked on during the current year. The predetermined overhead rate is 20% of direct labor costs. The following cost information is available (all materials and time ticket information applies to direct costs):

Job Materials Requisitions Time Tickets

101 $66,000 $32,000

102 $63,000 $74,000

103 $39,000 $50,000

104 $32,000 $36,000

105 $53,000 $68,000

Part 1–Complete the job cost sheets for each job.

Job No. 101 Job No. 102 Job No. 103

Materials Materials Materials

Labor Labor Labor

Overhead Overhead Overhead

Total Cost Total Cost Total Cost

Status In Process Status Sold Status Finished

Job No. 104

Job No. 105

Materials

Materials

Labor

Labor

Overhead

Overhead

Total Cost

Total Cost

Status Sold Status Finished

Part 2–Identify the amounts of each of the following accounts at the end of the period

a. Work in Process____________________

b. Finished Goods____________________

c. Cost of Goods Sold____________________

 

175. The following data relates to the Mass Company's first operating period. Calculate the total cost of goods sold for each product.

Overhead

rate

Cost/unit Units (Percent

Direct Direct Ending of Direct

Product Materials Labor Produced Inventory Labor cost)

A $10 $12 215 115 60%

B 8 15 330 180 40%

C 14 10 250 200 80%

 

176. Southwick Company uses a job order costing system. On November 1, $15,000 of direct materials and $3,500 of indirect materials were requisitioned for production. Prepare the general journal entries to record this requisition.

 

177. A company that uses a job order costing system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

 

178. Time tickets for factory employees during the month of August are summarized as follows:

Job 919………………………………………… $ 9,800

Job 920………………………………………… 14,650

Job 921………………………………………… 12,250

Job 922………………………………………… 16,000

Total direct labor………………………………. $52,700

Indirect labor…………………………………... 16,800

Total labor cost………………………………... $69,500

Make the necessary journal entries to record factory payroll for direct and indirect labor.

 

179. Chumley Advertising Agency contracted with a company to prepare an ad campaign. Chumley uses a job order costing system. Chumley estimates that the job will take 140 designer hours at $90 per hour and 85 staff hours at $45 per hour. Chumley uses two overhead rates in applying overhead to jobs: Designer-related at $100 per designer hour and staffrelated at $50 per staff hour. Determine the total estimated cost for this job.

 

180. KL Company uses a job order costing system. During the month of July, the following events occurred:

(a) Purchased raw materials on credit, $32,000.

(b) Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials.

(c) Assigned the factory payroll totaling $37,700, which includes $8,200 indirect labor, to jobs and overhead.

Make the necessary journal entries to record the above transactions and events.

 

181. EXP, Inc. had the following activities during its most recent period of operations: 

(a) Purchased raw materials on account for $140,000 (both direct and indirect materials are recorded in the Raw Materials Inventory account).

(b) Issued raw materials to production of $130,000 (80% direct and 20% indirect).

(c) Incurred factory labor costs of $250,000; allocated the factory labor costs to production (70% direct and 30% indirect).

(d) Incurred factory utilities costs of $20,000; this amount is still payable.

(e) Applied overhead at 80% of direct labor costs.

(f) Recorded factory depreciation, $22,000.

Prepare journal entries to record the above transactions.

 

182. Lock Production Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000.

(1) If the $28,000 cost of Lock’s Work in Process inventory included $5,200 of direct labor cost, what amount of direct materials cost was included?

(2) If $8,100 of the company's $34,300 finished goods inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

 

183. Prepare journal entries to record the following transactions and events for April using a job order costing system.

(a) Purchased raw materials on credit, $69,000.

(b) Raw materials requisitioned: $26,000 direct and $5,400 indirect.

(c) Factory payroll totaled $46,000, including $9,500 indirect labor.

(d) Paid other actual overhead costs totaling $14,500 cash.

(e) Applied overhead totaling $28,200.

(f) Finished and transferred jobs totaling $77,500.

(g) Jobs costing $58,800 were sold on credit for $103,000.

 

184. A company's ending inventory of finished goods has a cost of $45,000 and consists of 750 units. If the overhead applicable to these goods is $8,400, and overhead is applied at the rate of 60% of direct labor, what is the cost of the direct materials used to produce these units?

 

185. The production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of labor costs. What is the gross profit per unit on its sale?

 

186. A company uses a job order costing system and applies overhead on the basis of direct labor cost. A summary of the company's Work in Process Inventory account for December appears below.

Work in Process

Date Explanation PR Debit Credit Balance

Dec. 1 73,800

Dec. Direct Materials G-20 235,800 309,600

Dec. Direct Labor G-20 117,000 426,600

Dec. Factory Overhead G-20 187,200 613,800

Dec. Job No. 5 completed G-8 90,900 522,900

Dec. Job No. 6 completed G-10 131,400 391,500

Dec. Job No. 7 completed G-12 73,800 317,700

Dec. 31 Job No. 8 completed G-15 168,300 149,400

Fill in the blanks for the following:

(1) The total cost of the direct materials, direct labor, and factory overhead applied in the December 31 Work in Process inventory is $_______________________.

(2) The company's overhead application rate is __________________%

(3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had $________ of direct materials cost.

(4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had $________ of factory overhead cost.

 

187. Heintz Company's job order costing system applies overhead based on direct labor costs. The company's manufacturing costs for the current year were: direct materials, $108,000; direct labor, $144,000; and factory overhead, $36,000. At year-end, the total cost of Work in Process is $38,000, which includes $12,000 of direct labor cost. What amount of direct material cost is included in the ending Work in Process inventory?

 

188. MOB Corp. maintains an internet-based general ledger. Overhead is applied on the basis of direct labor costs. Its bookkeeper accidentally deleted most of the entries that had been recorded for January. A printout of the general ledger (in T-account form) showed the following:

Raw Materials Inventory Work in Process Inventory

DR CR DR CR

Ba1.1/1 10,000 Bal 1/1 4,000 f)

a) b) c)

d)

e)

Bal 17,500 (Bal 1/31) g)

Accounts Payable Finished Goods Inventory

DR CR DR C

R

R

h) Bal. 1/1 5,000 j) l)

i) k)

Bal. 1/31 9,000 Bal. 1/31 15,000

Factory Overhead Cost of Goods Sold

DR CR DR CR

m) n) o)

A review of the prior year's financial statements, the current year's budget, and January's source documents produced the following information:

(1) Accounts Payable is used for raw material purchases only. January purchases were $49,000.

(2) Factory overhead costs for January were $17,000 none of which is indirect materials.

(3) The January 1 balance for finished goods inventory was $10,000.

(4) There was a single job in process at January 31 with a cost of $2,000 for direct materials and $1,500 for direct labor.

(5) Total cost of goods manufactured for January was $90,000.

(6) All direct laborers earn the same rate ($13/hour). During January, 2,500 direct labor hours were worked.

(7) The predetermined overhead rate is based on direct labor costs. Budgeted (expected) overhead for the year is $195,000 and budgeted (expected) direct labor is $390,000.

Fill in the missing amounts a through o above in the T-accounts above.

 

189. Chen Service applied overhead on the basis of direct labor costs during the current year. Overhead applied was $16,500. Actual overhead incurred was $17,200.

(a) Prepare a journal entry to remove this difference assuming that it is not material.

(b) Instead, assume actual overhead incurred was $24,000. Describe (without computations) the alternative procedure that Chen might perform assuming this difference is material.

 

190. Calwell Corp. uses a job order costing system. Four jobs were started during the current year. The following is a record of the costs incurred:

Job #

Material

Used

Direct Labor

Used

Direct Labor

Hours Used

1010 $45,000 $72,000 8,000

1011 59,000 77,000 7,000

1012 35,000 30,000 3,000

1013 26,000 40,000 5,000

Actual overhead costs were $55,800. The predetermined overhead rate is $2.40 per direct labor hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs 1010 and 1013 were sold for $387,000. Assuming that this is Calwell’s first year of operations:

(a) Make the necessary journal entries to charge the costs to the jobs started and to record the completion and sale of finished jobs.

(b) Calculate the balance in the Work in Process Inventory, Finished Goods Inventory, and Factory Overhead accounts. Does the Factory Overhead account balance indicate an over- or underapplied overhead?

 

191. The following information is available for the Annum Corporation for the current year:

Cost of goods sold ………………………….. $292,000

Depreciation of factory equipment …………. 25,200

Direct labor …………………..……………… 64,750

Finished goods inventory, Beginning-year …. 45,000

Factory insurance …………………………… 11,200

Factory utilities ……………………………… 16,800

Goods transferred from Work in Process

Inventory to Finished Goods Inventory …… 285,150

Indirect labor ………………………………… 8,400

Raw materials inventory, Beginning-year….... 4,200

Raw materials purchased ……………………. 116,200

Raw materials used in production

(includes $7,000 of indirect materials) …..... 121,800

Rent on factory building ……………………... 22,400

Annum Company uses a predetermined overhead rate of 150% of direct labor cost. Prepare journal entries for the following transactions and events:

(a) Purchase of raw materials on account.

(b) Assignment of materials costs to Work in Process Inventory and Factory Overhead.

(c) Assignment of Factory Payroll to Work in Process Inventory and Factory Overhead.

(d) Recording of other factory overhead. Assume that all items other than depreciation are paid in cash.

(e) Assignment of Factory Overhead to Work in Process Inventory.

(f) Transfer of goods completed to Finished Goods Inventory.

(g) Recording cost of goods sold.

(h) Assignment of over- or underapplied overhead to Cost of Goods Sold.

 

192. A company's predetermined overhead rate is applied at 130% of direct labor cost. How much overhead would be allocated to Job No. 105 if it required total direct labor costs of $60,000?

 

193. A company's predetermined overhead rate is applied at 150% of direct materials cost. How much overhead would be allocated to Job No. 325 if the total direct materials costs was $40,000?

 

194. Selected information from the budget of the Singh Corp. at the beginning of the year follows:

Estimated factory overhead ...... $132,000

Estimated direct labor hours ..... 55,000 hours

Estimated machine hours……... 41,250 hours

Estimated direct labor cost ....... $825,000

Actual factory overhead

incurred during the year ....... $144,000

Calculate the predetermined overhead rate if the company uses the following as a basis:

(a) Direct labor hours.

(b) Direct labor cost.

(c) Machine hours.

 

195. A manufacturing company uses an overhead rate based on direct labor cost. The company's Work in Process Inventory account has a $15,000 debit balance after all posting is completed, and the cost sheet of the one job still in process shows direct material costs of $6,600 and direct labor costs of $3,000. What is the company's overhead application rate? 

 

196. Nutley Company uses a job order cost system and last period incurred $70,000 of overhead and $100,000 of direct labor. Nutley estimates that its overhead next period will be $65,000. The company also expects to incur $100,000 of direct labor. If Nutley bases its overhead applied on direct labor cost, what should be the overhead rate for the next period?

 

197. A company's job order costing system applies overhead based on direct labor cost. The company's estimated production costs for were: direct labor, $57,600; direct materials, $76,800; and factory overhead, $9,600. Calculate the company's overhead rate.

 

198. The job cost sheet for Job number 83-421 includes the following information:

DIRECT MATERIALS:

7/12 Requisition R88-566: 20 units @ $ 3.50 per unit

7/13 Requisition R88-576: 18 units @ $ 5.00 per unit

7/13 Requisition R88-578: 4 units @ $25.00 per unit

7/14 Requisition R88-591: 40 units @ $ 1.25 per unit

DIRECT LABOR:

7/12 Employee 19: 8 hours @ $ 9.00 per hour

7/13 Employee 19: 6 hours @ $ 9.00 per hour

7/13 Employee 37: 6 hours @ $ 7.00 per hour

7/14 Employee 19: 5 hours @ $ 9.00 per hour

7/14 Employee 92: 5 hours @ $11.00 per hour

FACTORY OVERHEAD: Assigned at 150% of direct labor cost.

What is the total cost of Job number 83-421?

 

199. The following calendar year information about the Tchulahota Corporation is available on December 31:

Advertising expense…………………………… $ 28,800

Depreciation of factory equipment…………… 42,320

Depreciation of office equipment…………….. 10,800

Direct labor…………………………………… 142,600

Factory utilities………………………………... 35,650

Interest expense………………………………... 6,650

Inventories, January 1:

Raw materials…………………………… 3,450

Work in Process………………………… 17,250

Finished goods…………………………... 35,600

Inventories, December 31:

Raw materials…………………………….. 2,300

Work in Process………………………….. 20,700

Finished goods…………………………… 31,050

Raw materials purchases……………………… 132,450

Rent on factory building……………………… 41,400

Indirect labor………………………………….. 51,750

Sales commissions…………………………….. 16,500

The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead.

 

200. The predetermined overhead rate for Foster, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were:

Direct materials…………………………….. $240,000

Direct labor………………………………….. 410,000

Indirect materials…………………………… 55,000

Indirect labor……………………………….. 125,000

Sales commissions…………………………. 55,000

Factory depreciation………………………… 170,000

Property taxes, factory……………………... 15,000

Factory utilities…………………………….. 35,000

Advertising………………………………..... 62,500

Factory equipment rental…………………… 110,000

(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.

(b) Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.

 

201. A company charged the following amounts of overhead to jobs during the current year: $12,000 to jobs still in process, $42,000 to jobs completed but not sold, and $66,000 to jobs finished and sold. At year-end, the company's Factory Overhead account has a credit balance of $9,000, which is not a material amount. What entry (if any) should the company make at year-end related to this overhead balance?

 

202. Oddley Corp. uses a job order costing system. The following is selected information pertaining to costs applied to jobs during the year:

Jobs still in process at the end of the year:

$167,000, which includes $65,000 direct labor costs.

Jobs finished and sold during the year:

$395,000, which includes $172,000 direct labor costs.

Jobs finished but unsold during the year:

$103,000, which includes $38,000 direct labor costs.

Oddley Corp.'s predetermined overhead rate is 60% of direct labor cost. At the end of the year, the company's records show that $189,000 of factory overhead has been incurred.

(a) Determine the amount of overapplied or underapplied overhead.

(b) Prepare the necessary journal entry to close the Factory Overhead account assuming that any remaining balance is not material.

 

203. Taylor Corp. uses a job order costing system and worked only on Job 101 during the current period. Job 101 was sold for $460,000. The following information pertains to costs incurred for Job 101.

Direct Materials $90,000

Indirect Materials $30,000

Direct Labor $130,000

Indirect Labor $75,000

Depreciation of Machinery $10,000

Factory Supplies $8,000

Overhead Application Rate 90% of direct labor

After adjusting for the amount of over or underapplied overhead, determine the amount of gross profit earned on Job 101.

 

204. At the end of June, the job cost sheets for Kennedy Manufacturing show the following total costs accumulated on three custom jobs.

Job 203 Job 204 Job 205

Direct materials $32,000 $47,000 $43,000

Direct labor 18,000 22,000 25,000

Overhead 26,100 31,900 36,250

Job 203 was started in production in May and the following costs were assigned to it in May: direct materials, $12,000; direct labor, $6,000; and overhead $8,700. Jobs 204 and 205 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 203 and 204 are finished in June, and Job 205 will be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions assuming the company’s predetermined overhead rate did not change.

a. What is the cost of the raw materials requisitioned in June for each of the three jobs?

b. How much direct labor cost is incurred during June for each of the three jobs?

c. What predetermined overhead rate is used during June?

d. How much total cost is transferred to finished goods during June?

 

205. Booth Manufacturing uses a job order costing system that charges overhead to jobs on the basis of direct material cost. At year-end, the Work in Process Inventory account shows the following.

Date Explanation Debit Credit Balance

Dec. 31 Direct materials cost 980,000 980,000

31 Direct labor cost 320,000 1,300,000

31 Overhead costs 637,000 1,937,000

31 To finished goods 1,818,000 119,000

a. Determine the overhead rate used (based on direct material cost).

b. Only one job remained in the Work in Process inventory at December 31. Its direct materials cost is $60,000. How much direct labor cost and overhead cost are assigned to it?

 

206. Franklin Manufacturing uses a job order costing system that charges overhead to jobs on the basis of direct labor cost. Franklin used the following cost predictions: overhead costs $1,285,750, and direct labor costs of $695,000. At year-end, the company’s records show that actual overhead costs for the year are $1,278,800, and actual direct labor costs are $692,000.

a. Determine the predetermined overhead rate for the year.

b. Compute the amount of overapplied or underapplied overhead.

c. Prepare the adjusting entry to allocate the over- or underapplied overhead assuming the amount is immaterial.

 

207. Drop Anchor takes special orders to manufacture sail boats for high end customers. Complete the job cost sheets for Drop Anchor for September based on the following information. Prepare journal entries to record the transactions as well as post to the job cost sheets.

a. Purchased raw materials on credit, $145,000.

b. Materials requisitions: Job 240, $48,000; Job 241, $36,000; Job 242, $42,000; indirect materials were $12,000.

c. Time tickets used to charge labor to jobs: Job 240, $40,000; Job 241, $30,000; Job 242,

$35,000, indirect labor is $25,000.

d. The company incurred the following additional overhead costs: depreciation of factory building, $70,000; depreciation of factory equipment, $60,000; expired factory insurance,

$10,000; utilities and maintenance cost of $20,000 were paid in cash.

e. Applied overhead to all three jobs. The predetermined overhead rate is 190% of direct labor cost.

f. Transferred jobs 240 and 242 to Finished Goods Inventory.

g. Sold job 240 for $300,000 for cash.

h. Closed the under- or over-applied overhead account balance.

Job Cost Sheets

240 241 242 Total

For the current month

Direct materials

Direct labor

Applied overhead

Total costs

 

208. The predetermined overhead rate for Shilling Manufacturing is based on estimated direct labor costs of $350,000 and estimated factory overhead of $770,000. Actual costs incurred were:

Direct materials ............................................................ $475,000

Direct labor................................................................... 347,000

Indirect materials .......................................................... 78,000

Indirect labor ................................................................ 143,500

Sales commissions ....................................................... 150,000

Factory depreciation ..................................................... 260,000

Property taxes, factory ................................................. 35,000

Factory utilities ............................................................ 65,000

Advertising ................................................................... 62,500

Factory supervision ...................................................... 185,000

a. Calculate the predetermined overhead rate and calculate the overhead applied during the year.

b. Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.

 

209. A ________ accounting system records production activities using a perpetual inventory system.

 

210. _______________________, or customized production, produces products in response to customer orders.

 

211. A ______________________ is a separate record maintained for each job.

 

212. The collection of job cost sheets for all jobs in process makes up the subsidiary ledger controlled by the _____________________ Inventory.

 

213. In a job order costing system, raw materials requisitioned as direct materials are debited to __________________; indirect materials are debited to ________________.

 

214. When factory payroll is assigned to specific jobs, ______________________ is debited.

 

215. When factory payroll for indirect labor is assigned, __________________ is debited.

 

216. A __________ is calculated by relating total estimated factory overhead to an allocation factor such as total estimated direct labor cost, and is used to allocate factory overhead to specific jobs.

 

217. When the actual overhead incurred during an accounting period is more than the overhead applied to jobs, the overhead is said to be ___________________________.

 

218. Immaterial amounts of overapplied overhead should be _____________ to the _____________________ account when closed.

 

 

2.
The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:
 
 
4.
Apply $400 to factory overhead for every machine hour worked
 
 
5.
A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:
 
 
6.
Cost accounting systems are used to

Accumulate production and period costs and assign them to products or services 
Accumulate production costs and assign them to products or services 
Accumulate period cost and assign them to products or services
Accumulate production costs and assign them to raw materials inventory 
Analyze efficiency and effectiveness of inventory management
 
 
9.
Direct materials and direct labor costs are debited to the factory overhead account in a job costing system
 
 
10.
Direct materials goes to
 
 
11.
An example of direct labor cost

Supervisor salary
Maintenance worker wages
Janitor wages
Product assembler wages
Accountant salary
 
 
13.
If actual overhead incurred during a period exceeds applied overhead, the difference will be a debit balance in the factory overhead account at the end of the period
 
 
14.
If actual overhead is higher that applied overhead (underapplied)
 
 
15.
If overhead is overapplied, it means that individual jobs have been charged too much overhead during the year and the cost of goods sold reported is too high
 
 
18.
The journal entry to record direct materials used includes a debit to work in process inventory
 
 
19.
The journal entry to record indirect materials used includes a debit to work in process inventory
 
 
20.
A materials requisition is a course document used by production managers to request materials for production and also used to assign material costs to specific jobs or to overhead
 
 
21.
Materials requisitions and time tickets are cost accounting source documents
 
 
22.
Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period
 
 
24.
The overhead cost applied to a job during a period is recorded with a credit to factory overhead and a debit to:

Jobs overhead expense
Cost of goods sold
Finished goods inventory
Indirect labor
Wip
 
 
26.
The predetermined overhead rate based on direct labor cost is the ratio of estimated overhead cost to estimated direct labor cost for the period
 
 
27.
The predetermined overhead rate is revised many times during the period to compensate for inaccurate estimates previously made
 
 
28.
The predetermined overhead rate is used to apply estimated overhead cost to jobs
 
 
29.
Predetermined overhead rates are calculated at the end of the accounting period once actual amount of factory overhead is known
 
 
 
 
 
 
 
 
 
 
 
 
 

30.
The rate established at the beginning of the period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:

Predetermined overhead rate
Overhead variance rate
Estimated labor cost rate
Chargeable overhead rate
Miscellaneous overhead rate
 
 
31.
The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead
 
 
32.
subsidiary records store info about
 
 
33.
There should be a cause-and-effect relation between the overhead allocation base and overhead costs
 
 
34.
Time tickets can be used to determine the amount of direct labor to charge to jobs
 
 
37.
To fix/close over or under applied Factory overhead
 
 
40.
Under a job order costing system, individual jobs are charged with actual overhead costs when they are transferred to finished goods
 
 
41.
What does factory overhead include
 
 
42.
When actual overhead cost exceeds the overhead applied, overhead is said to be under applied
 
 
43.
When direct labor costs are recorded in a job costing

Factory wages payable is debited and wip is credited
Wip is debited and factory wages payable is credited
Cogm is debited and dl is credited
Direct labor and indirect labor are debited and factory wages payable is credited
Wip is debited and foh is credited
 
 
44.
When direct labor costs are recorded, the journal entry is a debit to factory wages payable and a credit to work in process inventory
 
 
45.
When do you know the actual overhead
 
 
46.
When overhead is underapplied at the end of the period, the adjusting journal entry includes a credit to cost of goods sold