Managerial Accounting Ch3

Accounting/Managerial Accounting

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

inventory account.

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

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

inventory.

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

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

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

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

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

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

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.
• 
  

The Manufacturing Overhead account is debited when ______.

goods are completed

actual overhead costs are incurred

• overhead is applied to Work in Process

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

process inventory.

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

direct

both direct and indirect labor

• 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

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

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

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

Raw materials

• Accounts payable
• Work in process
• Manufacturing overhead

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.

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

only indirect

only direct

• both direct and indirect

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

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

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

raw materials

• manufacturing overhead
• work in process
• 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

Which account is credited when manufacturing overhead is applied?

Work in process

• Accounts payable
• Cost of goods sold
• Manufacturing overhead

• overhead is applied to Work in Process
• goods are completed
• 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

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

Manufacturing overhead costs include ______.

direct materials

• office equipment depreciation
• the CEO's salary
• 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

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

cost of goods sold

• manufacturing overhead
• work in process
• finished goods

Manufacturing overhead

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

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

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

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

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.

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

assembly workers' wages.

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

factory supervisors' salaries are debited to

assembly workers' wages are debited to

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

Sales Revenue

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

Gross margin minus selling and administrative expenses equals ______.

net operating assets

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

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

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

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.

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.

A debit balance in Manufacturing overhead means overhead was ______.

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

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

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.

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.

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

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.

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 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 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.