Managerial Accounting Ch3

Discipline: Accounting

Type of Paper: Question-Answer

Academic Level: Undergrad. (yrs 3-4)

Paper Format: APA

Pages: 1 Words: 275

Question

Accounting/Managerial Accounting

Any purchased materials that will go into the finished product are first recorded in the _______ ________

inventory account.

Blank 1: Raw

Blank 2: Materials or Material


Work in Process consists of ______.


  • actual direct labor cost
  • actual direct materials cost
  • actual manufacturing overhead
  • applied manufacturing overhead
  • applied direct materials cost
  • applied direct labor cost

actual direct labor cost

actual direct materials cost

applied manufacturing overhead


Completed units that have not yet been sold are found in _______ _________

inventory.

Blank 1: Finished

Blank 2: Goods


The journal entry to record the purchase of materials credits ______.


  • accounts payable
  • manufacturing overhead
  • work in process
  • raw materials

accounts payable

Manufacturing overhead is debited in the journal entry to record the issue of _________.

indirect materials


Work in process is debited in the journal entry to record the issue of _______.

direct materials


Raw materials is debited in the journal entry to record the purchase of ________.

materials

A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction debits ______.


  • Raw materials $70,000 and credit Work in process $70,000
  • Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000

  • Raw materials $70,000, credit Work in process $40,000 and credit Manufacturing overhead $30,000
  • Work in process $70,000 and credit Raw materials $70,000

Work in process $40,000, debit Manufacturing overhead $30,000 and credit Raw materials $70,000

Which of the following statements are true? (Select all that apply)


  • Raw materials inventory only includes the cost of direct materials.
  • When materials are purchased they are recorded in the Raw materials inventory account.

  • Direct labor costs flow through the Raw materials inventory account.
  • Raw materials inventory represents the cost of materials not yet used in production.

When materials are purchased they are recorded in the Raw materials inventory account.

Raw materials inventory represents the cost of materials not yet used in production.


The Manufacturing Overhead account is debited when ______.

goods are completed

actual overhead costs are incurred

  • overhead is applied to Work in Process

actual overhead costs are incurred


Units of product that are only partially complete are contained in ______ _______

process inventory.

Blank 1: work

Blank 2: In


Labor costs charged to Manufacturing Overhead represent ______ labor costs.

direct

both direct and indirect labor

  • indirect

indirect


Finished goods ______.

consists of completed, unsold goods

  • consists of goods that require additional processing before being sold
  • is the same as cost of goods manufactured
  • consists of goods that have been sold to customers during the period

consists of completed, unsold goods

Manufacturing overhead consists of all ______.

indirect costs

  • manufacturing costs other than direct labor and direct materials
  • costs other than direct labor and direct materials
  • manufacturing costs

manufacturing costs other than direct labor and direct materials


A journal entry that debits Raw Materials and credits Accounts Payable is recording the ______.

issuance of materials into production

  • purchase of materials
  • completion of goods
  • sale of goods

purchase of materials


The journal entry to record issuing materials to be used in production credits ______.

Raw materials

  • Accounts payable
  • Work in process
  • Manufacturing overhead

Raw materials

Manufacturing overhead applied to production is always recorded on the _______ side of the manufacturing overhead account and the ________ side is always used to record the actual manufacturing costs incurred.

Blank 1: credit

Blank 2: debit

When labor costs are incurred, _________ labor costs are added directly to the Work in Process account.

only indirect

only direct

  • both direct and indirect

only direct

A journal entry that debits Manufacturing overhead and credits Accounts payable would not be used to record ______.

miscellaneous factory overhead costs

  • factory utilities costs
  • direct labor costs
  • rent on factory equipment

direct labor costs

Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______.

when jobs are completed

  • as the allocation base is used on a job
  • as they are incurred
  • at the end of the period

as they are incurred


The journal entry to record the purchase of materials credits ______.

raw materials

  • manufacturing overhead
  • work in process
  • accounts payable

accounts payable


A journal entry that debits Manufacturing overhead and credits Property taxes payable records the ______.

payment of accrued property taxes

  • recognition of accrued property taxes
  • application of property taxes
  • application of manufacturing overhead

recognition of accrued property taxes

The journal entry to record issuing both direct and indirect materials into production debits ______.

Work in process and Raw materials

  • Work in process and Manufacturing overhead
  • Manufacturing overhead and Raw materials

Work in process and Manufacturing overhead


Which account is credited when manufacturing overhead is applied?

Work in process

  • Accounts payable
  • Cost of goods sold
  • Manufacturing overhead

Manufacturing overhead



The Manufacturing Overhead account is debited when ______.


  • overhead is applied to Work in Process
  • goods are completed
  • actual overhead costs are incurred

actual overhead costs are incurred




Selling and administrative costs first appear on the ______.


  • income statement
  • statement of owners' equity
  • balance sheet
  • statement of cash flows

income statement

Reason: Selling and administrative costs are recorded, as they are incurred, on the income statement as expenses.


A journal entry that debits Manufacturing overhead and credits Accounts payable could be made to record ______ (Select all that apply).

depreciation on factory equipment

  • the purchase of indirect materials
  • rent on the administrative office
  • factory utilities expense
  • rent expense on factory equipment

factory utilities expense

rent expense on factory equipment


Manufacturing overhead costs include ______.

direct materials

  • office equipment depreciation
  • the CEO's salary
  • the factory supervisor's salary
  • factory insurance

the factory supervisor's salary

factory insurance


The journal entry to record selling and administrative salaries debits ______.

a liability account and credits manufacturing overhead

  • an expense account and credits Cash or a liability
  • a liability account and credits an expense account
  • manufacturing overhead and credits cash or a liability

an expense account and credits Cash or a liability


The journal entry to record accrued property taxes for a factory building debits ______.

Manufacturing overhead and credits Property taxes payable

  • Manufacturing overhead and credits Accounts payable
  • Work in process and credits Property taxes payable
  • Work in process and credits Manufacturing overhead

Manufacturing overhead and credits Property taxes payable


When a job is completed, the job costs are transferred OUT OF ______.

cost of goods sold

  • manufacturing overhead
  • work in process
  • finished goods

work in process


Manufacturing overhead is applied with a debit to ______.

Manufacturing overhead

  • Cost of goods sold
  • Work in process
  • Accounts payable

Work in process


Cost of goods manufactured is the ______.

sum of all jobs transferred from Work in process to Finished goods

  • value of all jobs transferred from Finished goods to Cost of goods sold
  • sum of all jobs in Finished goods at the end of a period
  • average value of the Work in process account

sum of all jobs transferred from Work in process to Finished goods


Selling and administrative costs incurred are treated as ______.

liabilities

  • product costs
  • period expenses
  • assets

period expenses


Job #4260 consisted of 1,000 units at a total cost of $200,000. The cost transferred to Cost of Goods Sold for the sale of 600 of the units is ______.


  • $80,000
  • $120,000
  • $600,000
  • $200,000

$120,000

Reason: $200,000 ÷ 1,000 × 600 = $120,000


If a company incurs $2,000 of factory rent, $1,000 of factory utilities, and $5,000 of miscellaneous factory costs, the journal entry to record these transactions would be to debit ______.


  • Work in process $8,000 and credit Accounts payable $8,000
  • Manufacturing overhead $8,000 and credit Accounts payable $8,000
  • Accounts payable $8,000 and credit Manufacturing overhead $8,000
  • Accounts payable $8,000 and credit Work in process $8,000

Manufacturing overhead $8,000 and credit Accounts payable $8,000


The schedule of cost of goods __________ summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.

Blank 1: sold


A journal entry debiting Salaries expense and crediting Salaries and wages payable could record:

assembly workers' wages.

  • factory supervisors' salaries.
  • administrative salaries.
  • maintenance salaries.

administrative salaries.


maintenance salaries are debited to

manufacturing overhead


factory supervisors' salaries are debited to

manufacturing overhead


assembly workers' wages are debited to

work in progress


To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract ______.

only ending raw materials inventory

  • ending raw materials inventory and Indirect materials used
  • only beginning raw materials inventory
  • beginning raw materials inventory and Indirect materials used

ending raw materials inventory and Indirect materials used


When a job is completed, its costs are transferred into ______.

Sales Revenue

  • Cost of Goods Sold
  • Finished Goods
  • Work in Process

Finished goods

Gross margin minus selling and administrative expenses equals ______.

net operating assets

  • cost of goods manufactured
  • cost of goods sold
  • net operating income

net operating income


The cost of goods _______ is the sum of all amounts transferred from Work in process to Finished goods during a period.

Blank 1: manufactured, completed, produced, or finished



Overhead is underapplied if ______.

cost of goods manufactured is less than cost of goods sold

  • adjusted cost of goods sold is less than unadjusted cost of goods sold
  • actual overhead is more than applied overhead
  • actual overhead is less than applied overhead

actual overhead is more than applied overhead


When only a portion of the units involved in a job are sold, the ______.

cost is held in the finished goods account until all units in the job are sold

  • entire cost of the job is transferred from finished goods to cost of goods sold
  • unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold
  • unsold units are transferred to another job

unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold


Actual manufacturing overhead is ______ to the Manufacturing overhead account.

debited


The schedule of cost of goods

sold ______ summarizes costs that remain in Work in process inventory and that have been transferred from Work in process to Finished goods inventory.

Blank 1: manufactured or produced



Raw materials inventory was $5,000 at the beginning of the year and $12,000 at the end of the year. During the year, a total of $27,000 in raw materials were purchased, including $4,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period.

$16,000

Reason: Cost of direct materials = Beginning Inventory + Purchases - Indirect Materials - Ending Inventory ($5,000 + $27,000 - $12,000 - $4,000 = $16,000)


A debit balance in Manufacturing overhead means overhead was ______.

Blank 1: underapplied


Net operating income is calculated by subtracting ______ from ______.


  • selling and administrative expenses; gross margin
  • selling and administrative expenses; sales
  • cost of goods sold; sales
  • cost of goods sold; gross margin

selling and administrative expenses; gross margin

Gross margin - selling & admin expenses = net operating income


Underapplied or overapplied manufacturing overhead can be disposed of by closing it to ______.

Finished goods or allocating it to Work in process, Finished goods, and Raw materials

  • Cost of goods sold only
  • Finished goods only
  • Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold

Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold

Overhead is overapplied if:

actual overhead is more than applied overhead.

  • actual overhead is less than applied overhead.
  • cost of goods manufactured is less than cost of goods sold.
  • adjusted cost of goods sold is more than unadjusted cost of goods sold.

actual overhead is less than applied overhead.


Which of the statements regarding closing out over or underapplied overhead is correct?

Both methods are equally accurate.

  • Closing to Cost of goods sold is simpler, and allocating is more accurate.
  • Allocating is simpler, and closing to Cost of goods sold is more accurate.
  • Both methods are equally simple.

Closing to Cost of goods sold is simpler, and allocating is more accurate.


What side of the Manufacturing overhead account is actual manufacturing overhead entered on?

The credit side, if actual is greater than applied

Always the credit side

  • Always the debit side
  • The debit side, if actual is greater than applied

Always the debit side


A credit balance in the Manufacturing Overhead account means overhead was _________.

Blank 1: overapplied


What methods can be used to dispose of underapplied or overapplied manufacturing overhead? (Select all that apply)

Allocate it to Raw materials, Work in process, and Finished goods.

  • Close it to Cost of goods sold.
  • Allocate it to Work in process, Finished goods, and Cost of goods sold.
  • Close it to Finished goods.
  • Close it to Work in process.


Close it to Cost of goods sold.

Allocate it to Work in process, Finished goods, and Cost of goods sold.


The simpler method of closing out the balance of Manufacturing overhead is ______.

closing it out to Finished goods

  • closing it out to Cost of goods sold
  • closing it out to Work in process
  • allocating it among Work in process, Finished goods, and Cost of goods sold

closing it out to Cost of goods sold

The more accurate method of closing out the balance in Manufacturing overhead is:

closing it out to Finished goods.

  • closing it out to Cost of goods sold.
  • allocating it among Work in process, Finished goods, and Cost of goods sold.
  • allocating it among Raw materials, Work in process, and Finished goods.

allocating it among Work in process, Finished goods, and Cost of goods sold.

Which of the statements regarding closing out over or underapplied overhead is correct?

Allocating is simpler, and closing to Cost of goods sold is more accurate.

  • Both methods are equally simple.
  • Closing to Cost of goods sold is simpler, and allocating is more accurate.
  • Both methods are equally accurate.

Closing to Cost of goods sold is simpler, and allocating is more accurate.