Chapter 2 Flashcards
The predetermined overhead rate (POR) is used for what?
To apply overhead to jobs. Based on estimated data, POR is found to apply overhead rate to jobs.
What is the predetermined overhead rate equation?
POR = total estimated factory overhead cost/estimated activity base.
After finding the POR, what step needs to happen next to find applied overhead?
POR x actual activity base
Do you debit or credit materials when bought?
Debit –> increase of materials and asset
When raw materials are transferred to into production do you debit or credit it?
Credit –> decrease of materials
When a product is a work in progress, what do you debit and what do you credit?
Debit raw materials, direct labor and applied OH. Credit when transferred to finished goods
When a product is finished, what do you debit and what do you credit?
Debit good received from WIP, credit goods sold.
Cost of goods sold journal entry includes
Debit to good sold and under applied overhead, credit over applied overhead
Journal entries for manufacturing overhead include
Debit to actual overhead and credit applied overhead
T/F A job-order costing sheet includes actual direct labor, actual direct materials and actual overhead.
False
T/F The predetermined overhead rate is computed using budgeted overhead and actual direct labor hours.
False
T/F 3. If manufacturing overhead is under applied there will be a credit balance in the overhead account.
False
T/F Raw Materials, Work-in-Process and Manufacturing Overhead are all asset accounts
False
T/F A credit to finished goods represents goods that have been sold.
True
T/F When overhead is applied, the journal entry would include a debit to work in process and a credit to manufacturing overhead.
True
