Exam 1 Materials - uebdjd The work in process inventory under job order costing will debit a transfer PDF

Preview

Summary

uebdjd The work in process inventory under job order costing will debit a transfer out amount towards finished goods. uebdjd The work in process inventory under job order costing will debit a transfer out amount towards finished goods....

Description

Exam 1 Materials 1) Managerial accounting focuses on providing information for internal planning and control.True 2) Knowing the unit cost per item helps managers set appropriate selling prices.True 3) Product costs, such as factory overhead, should be treated as an asset until the product is sold.True 4) Manufacturing overhead includes all manufacturing costs, such as direct labor and direct materials.False 5) The wages of manufacturing plant janitors are considered to be non-manufacturing overhead costs as these costs are not directly related to the manufacturing process.False 6) All costs incurred in the manufacture of final products are product costs.True 7) Managerial accounting can be used to calculate costs for service and merchandising companies.True 8) In a manufacturing company, wages and benefits of assembly line workers are period costs.False 9) Unit cost per service is calculated by dividing total costs by the total number of services provided.True 10) Merchandising companies, like service companies, do not have a Cost of Goods Sold account.False 11) Indirect materials costs are included in manufacturing overhead.True 12) Service companies sell their time, skills, and knowledge.True 13) Unlike merchandising companies, income statements of service companies include cost of goods sold as a line item.False 14) Manufacturing costs flow from Work-in-Process Inventory to Cost of Goods Sold to Finished Goods Inventory.False 15) A budget is a managerial accounting tool used in the planning process.True 16) In a manufacturing company, wages and benefits of factory managers are considered as product costs.True 17) Manufacturing overhead includes indirect manufacturing costs, such as insurance and depreciation on the factory building.True 18) The primary activity of manufacturing companies is to purchase goods from a wholesaler and resell them.False 19) Manufacturing companies produce their own products, but merchandising companies do not. True 20) Factory rent, as well as factory property taxes and insurance, are included in manufacturing overhead.True 21) Direct costs and indirect costs can be easily traced directly to a cost object.False 22) Repair and maintenance costs for manufacturing equipment are included in manufacturing overhead.True 23) Direct materials and direct labor are prime costs.True 24) Selling and administrative expenses are subtracted from gross profit to obtain operating income.True 25) The following format represents the flow of costs for all three manufacturing inventory accounts. True 1) Evanston Manufacturing, Inc. reported the following information for the year:

Number of Units Produced 152,000 Number of Units Sold 62,000 Cost of Goods Manufactured $268,000 Cost of Goods Sold 52,900 Sales Revenue 130,000 Gross Profit 72,940 Operating Expense 727,000 What was the unit product cost? (Round your answer to the nearest cent.) $1.76 2) Which of the following would be considered a product cost for a manufacturing company? depreciation on manufacturing equipment 3) Which of the following is true of Finished Goods Inventory? Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold. 4) Amoeba Manufacturing, Inc. provided the following information for the year: Purchases Raw Materials $91,000 Plant Utilities and Insurance 66,000 Indirect Materials 11,240 Indirect Labor 4,340 Direct Materials Used in Production 99,000 Direct Labor 119,500 Depreciation on Factory Plant & Equipment 5,000 The inventory account balances as of January 1 are given below. Raw Materials Inventory $44,000 Work-in-Progress Inventory 11,000 Finished Goods Inventory 50,000 What is the ending balance in the Raw Materials Inventory account? $24,760 5) A company that uses labor, equipment, supplies, and facilities to convert raw materials into finished products is a ________.manufacturing company 6) Which of the following is a prime cost and a conversion cost? direct labor 7) Which of the following represents the combined sum of direct materials and direct labor?prime costs

8) Which of the following is true of service companies?Service companies carry no inventories of products for sale. 9) Five Seasons is a merchandiser of packed foods. The company provides the following information for the year: Sales Revenue $145,000 Cost of Goods Sold 64,000 Operating Expenses 67,000 Net Income 14,000 Number of Units Sold 29,000 How much was the unit cost per item of product sold? (Round your answer to the nearest cent.) $2.21 10) Which of the following represents the combined sum of direct labor and manufacturing overhead? conversion costs 11) Which of the following is an example of direct labor cost in a factory?wages of assembly line personnel 12) Product costs are expensed ________.when the products are consumed or sold 13) Which of the following would appear as a line item on the income statements of both a merchandiser and a manufacturer?Cost of Goods Sold 14) Barricades Corporation provided the following information for the year: Beginning BalanceWork-in-Process Inventory $27,000 Ending BalanceWork-in-Process Inventory 56,000 Beginning BalanceRaw Materials Inventory 83,000 Ending BalanceRaw Materials Inventory 60,000 PurchasesRaw Materials 360,000 Direct Labor 471,000 Indirect Labor 18,000 Depreciation on Factory Plant and Equipment 25,000 Plant Utilities and Insurance 271,000 What was the amount of direct materials used in production during the year? $383,000 15) Which of the following is most likely a service company? a law firm 16) KRD Supplies Corporation provided the following information for the year: Beginning BalanceWork-in-Process Inventory $24,000 Ending BalanceWork-in-Process Inventory 58,000 Beginning BalanceRaw Materials Inventory 85,000

Ending BalanceRaw Materials Inventory 61,000 PurchasesRaw Materials 359,000 Direct Labor 470,000 Indirect Labor 21,000 Depreciation on Factory Plant and Equipment 24,000 Plant Utilities and Insurance 268,000 What was the amount of the manufacturing overhead costs? $313,000 17) Which of the following would be considered a product cost for a manufacturing company? salary of the production manager 18) Which of the following is a part of manufacturing overhead? factory insurance 19) Which of the following is true of product costs? They are first recorded in an inventory account. 20) Goods that are produced by a manufacturing company and are ready to sell are recorded in the _______ account. Finished Goods Inventory 21) Viva, Inc. has provided the following information for the year: Cost of Goods Manufactured $1,261,000 Beginning BalanceFinished Goods Inventory 99,000 Ending BalanceFinished Goods Inventory 85,000 How much is the cost of goods sold? $1,275,000 22) Which of the following would be included as manufacturing overhead for a manufacturing company?indirect materials cost 23) Goods that have been started in the manufacturing process but are not yet complete are included in the ________.Work-in-Process Inventory account 24) Anything for which managers want a separate measurement of cost is called a ________.cost object 25) One of the primary activities of Rex, Inc. is to purchase hats from Viva, Inc. in Texas and sell them to its customers in Washington for a profit. It is likely that Rex is a ________.merchandising company 1) Work-in-Process Inventory is debited when indirect labor costs are incurred in a job order costing system.False 2) The cost of indirect materials is transferred out of the Manufacturing Overhead account and accumulated in the Raw Materials Inventory account.False 3) When a job is completed, the total cost of the job is recorded with a debit to Finished Goods Inventory and a credit to Work-in-Process Inventory.True 4) For a service company, such as an accounting firm, each client is considered a job.True 5) When raw materials are requisitioned for a job, the Raw Materials Inventory account is debited.False 6) If the debit side of the Manufacturing Overhead account totals more than the credit side of the account, the manufacturing overhead is overallocated. False

7) Job order costing is well suited for the service industry.True 8) Manufacturing Overhead is a temporary account used to accumulate indirect production costs during the accounting period.True 9) Manufacturing overhead costs allocated to a job amounted to $492,000. The actual manufacturing costs incurred during the year were $570,000. Overhead costs have been underallocated.True 10) The total amount of manufacturing overhead costs incurred during the period is recorded on the credit side of the Manufacturing Overhead account.False 11) When direct materials are received on the production floor, they are recorded on the job cost record.True 12) During the year, a company incurred $520,000 of manufacturing overhead costs and allocated $480,000 of manufacturing overhead costs. At year-end, the adjustment entry needed to adjust the Manufacturing Overhead account balance to zero will include a debit to Cost of Goods Sold.True 13) Manufacturing overhead costs are allocated to the Work-in-Process Inventory account by a debit to the Manufacturing Overhead account.False 14) When goods are transferred from the Finished Goods Inventory account to the Cost of Goods Sold account, the product costs move from the balance sheet to the income statement.True 15) A job order costing system is used by companies that manufacture batches of unique products or provide specialized services.True 16) The amount of taxes and insurance incurred and paid for the plant of a manufacturing company should be debited to the Manufacturing Overhead account.True 17) In a manufacturing operation, depreciation of plant equipment should be debited to the Depreciation Expense account.False 18) The cost of goods manufactured is recorded with a debit to the Finished Goods Inventory account and a credit to the Work-in-Process Inventory account.True 19) A process costing system is used when a company produces identical units through a series of production steps.True 20) The actual direct labor costs are assigned to individual jobs, and the actual direct labor cost is recorded with a debit to Work-in-Process Inventory.True 21) Overallocated manufacturing overhead occurs when the manufacturing overhead allocated to Work-in-Process Inventory is less than the amount actually incurred.False 22) Accounting firms, building contractors, and healthcare providers use process costing. False 23) Actual manufacturing overhead costs are credited to the Manufacturing Overhead account.False 24) Manufacturing overhead is allocated by debiting the Work-in-Process Inventory account and crediting the Manufacturing Overhead account.True 25) Overallocated manufacturing overhead is adjusted by debiting the Cost of Goods Sold account.False 1) On June 30, Coral, Inc. finished Job 750 with total job costs of $4,700, and transferred the costs to Finished Goods Inventory. On July 6, it completed the sale of the goods to a customer for $5,000 cash. Which of the following is the correct journal entry to record the cost of goods sold? debit Cost of Goods Sold $4,700 and credit Finished Goods Inventory $4,700 2) Which of the following describes the allocation base for allocating manufacturing overhead costs?the primary cost driver of indirect manufacturing costs

3) Highland, Inc., an engineering firm, uses a job order costing system to accumulate client-related costs. The predetermined overhead allocation rate is 40% of staff labor cost. The work by engineers is charged to jobs at a rate of $32 per staff labor hour. A recent job for a client used 70 staff labor hours. How much was the total job cost?$3,136 4) Which of the following accounts would be debited in the journal entry to record the issuance of direct materials?Work-in-Process Inventory 5) The predetermined overhead allocation rate is the rate used to ________.allocate estimated manufacturing overhead costs to jobs 6) The journal entry to record indirect labor costs incurred involves a debit to the ________.Manufacturing Overhead account 7) The entry to record the purchase of direct materials on account would include a ________.debit to the Raw Materials Inventory account 8) Sybil, Inc. uses a predetermined overhead allocation rate to allocate manufacturing overhead costs to jobs. The company recently completed Job 300X. This job used 11 machine hours and 5 direct labor hours. The predetermined overhead allocation rate is calculated to be $43 per machine hour. What is the amount of manufacturing overhead allocated to Job 300X using machine hours as the allocation base? $473 9) The journal entry to record direct labor costs actually incurred involves a debit to the ________.Work-in-Process Inventory account 10) The predetermined overhead allocation rate is calculated by dividing ________.the estimated overhead costs by total estimated quantity of the overhead allocation base 11) When a job order costing system is used, actual manufacturing overhead costs are debited to ________.the Manufacturing Overhead account 12) Aaron, Inc. estimates direct labor costs and manufacturing overhead costs for the coming year to be $750,000 and $550,000, respectively. Aaron allocates overhead costs based on machine hours. The estimated total labor hours and machine hours for the coming year are 18,000 hours and 7,000 hours, respectively. What is the predetermined overhead allocation rate? (Round your answer to the nearest cent.)$78.57 per machine hour 13) On June 30, Caroline, Inc. finished Job 750 with total job costs of $4,400 and transferred the costs to Finished Goods Inventory. On July 6, Caroline completed the sale of the goods from Job 750 to a customer for $6,000 cash. Which of the following is the correct entry needed to record the revenue earned?debit Cash $6,000 and credit Sales Revenue $6,000 14) The predetermined overhead allocation rate for a given production year is calculated ________.before the accounting period begins 15) The journal entry to issue indirect materials to production should include a debit to the ________.Manufacturing Overhead account 16) At the end of the year, Beta, Inc. has an unadjusted debit balance in the Manufacturing Overhead account of $4,000. The adjusting journal entry needed to adjust the balance to zero will include a ________.debit to Cost of Goods Sold $4,000 and credit to Manufacturing Overhead $4,000 17) Which of the following will be debited to the Manufacturing Overhead account of a watch manufacturer?factory electricity costs 18) At the end of the year, Metro, Inc. has an unadjusted credit balance in the Manufacturing Overhead account of $820. Which of the following is the year-end adjusting entry needed to

19) 20) 1)

2)

3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19)

adjust the account?A debit to Manufacturing Overhead of $820 and a credit to Cost of Goods Sold of $820 Which of the following will be categorized as a manufacturing overhead cost?depreciation on factory plant and equipment Which of the following correctly describes the term cost driver?the primary factor that causes a cost to be incurred Production cost reports prepared using the first-in, first-out (FIFO) method determine the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.True At the end of an accounting period, the costs assigned to a production department can be split into the cost of units fully completed and transferred out, and the cost of units partially completed and remaining in the Work-in-Process Inventory of that department.True When indirect materials are issued to production, the Manufacturing Overhead account is credited.False Under the first-in, first-out (FIFO) method, prior period costs are not merged with current period costs.True A process is one of a series of steps in manufacturing production, usually associated with making large quantities of similar items.True Production cost reports prepared using the first-in, first-out (FIFO) method assume that the first units started in the production process are the first units completed and transferred out.True Under process costing, the unit cost of the completed units is less than the unit cost of the incomplete units.False A process costing system is generally used by companies that produce homogeneous products.True Under process costing, the costs incurred by each department are reported in a separate production cost report for each department.True In a process costing system, each process or department has its own Work-in-Process Inventory account.True Direct labor costs are accumulated in the Manufacturing Overhead account. False The Raw Materials Inventory account is debited when direct materials are issued for production.False The production cost report for Department 2 shows that $454,000 was assigned to the 50,000 units transferred to Finished Goods Inventory. Cost of goods manufactured equals $454,000.True When indirect materials are issued to production, the Raw Materials Inventory account is credited.True Under process costing, direct materials and direct labor are assigned to Work-in-Process Inventory for each process that uses them.True In a process costing system, equivalent units must be calculated separately for materials and conversion costs.True Under a process costing system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting period.True Both job order costing and process costing track the product costs of direct materials, direct labor, and manufacturing overhead through three inventory accounts on the balance sheet.True In a process costing system, costs can be controlled with the aid of a production cost report.True

20) When raw materials are purchased on account, the Accounts Payable account is credited.True 21) The costs that are transferred out from one process to another process become transferred in costs for the receiving process.True 22) Cost amounts that are transferred out of one department become the transferred in cost for the next department.True 23) The task of summarizing the flow of physical units is one of the four steps involved in the preparation of the production cost report.True 24) A cellular phone manufacturer is more likely to use a process costing system rather than job order costing. True 25) The cost per equivalent unit for transferred in units is calculated by dividing total transferred in costs by the equivalent units of production for transferred in units.True 1) A report prepared by a processing department for equivalent units of production, production costs, and the assignment of those costs to the completed and in-process units is called a(n) ________.production cost report 2) Winnie, Inc. has two processesColoring Department and Mixing Department. The company assigned $390,000 to the 6,000 gallons of paint transferred from Mixing Department to Finished Goods Inventory. The journal entry to record completion of processing is ________.debit Finished Goods Inventory, $390,000; credit Work-in-Process Inventory Mixing, $390,000 3) Costs assigned to goods sold are transferred to the Cost of Goods Sold account from the ________. Finished Goods Inventory account 4) Which of the following businesses is most likely to use a process costing system?a soda manufacturer 5) Which of the following is a step in the preparation of a production cost report?assignment of costs to units completed and units in process 6) Under process costing, the total production costs incurred in each process must be split between the units that have been completed in that process and transferred to the next process and the ________.units not completed and remaining in Work-in-Process Inventory for that department 7) Dakota, Inc. purchased raw materials worth $8,000 on account. The journal entry to record the purchase of raw materials on account is ________.debit Raw Materials Inventory, $8,000; credit Accounts Payable, $8,000 8) Babson Sugar, Inc. has six processing departments for refining sugar  Afnation, Carbonation, Decolorization, Boiling, Recovery, and Packaging. Conversion costs are added evenly throughout each process. Data from August for the Decolorization Department ...