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ACC 202 > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

All of the following are product costs except ________.

manufacturing overhead costs
raw materials
sales commissions
direct labor

A

sales commissions

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2
Q

Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?

A

Debit Work in Process, debit Manufacturing Overhead, and credit Raw Materials.

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3
Q

Which of the following best describes the journal entry to record the use of direct and indirect labor in production?

A

Debit Work in Process, debit Manufacturing Overhead, and credit Salaries and Wages Payable.

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4
Q

Which of the following occurs when manufacturing overhead is applied to Work in Process?

A

Credit to Manufacturing Overhead.

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5
Q

When companies incur selling and administrative costs, those costs ________.

A

do not flow through inventories on the balance sheet

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6
Q

Which of the following occurs when a job has been completed and transferred to the finished goods warehouse?

A

Credit to Work in Process.

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7
Q

Which of the following occurs when finished jobs are shipped to customers?

A

Debit to Cost of Goods Sold.

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8
Q

For the month of October, Janus Corporation used $30,000 worth of direct materials in production and incurred direct labor costs of $60,000. Actual manufacturing overhead costs were $40,000, whereas $45,000 was the manufacturing overhead applied to work in process. What is the amount of total manufacturing costs that would appear in the Schedule of Cost of Goods Manufactured for October?

A

$135,000
Three amounts are added together—direct materials used in production of $30,000, direct labor of $60,000, and manufacturing overhead applied to work in process of $45,000—to yield the total manufacturing costs of $135,000.

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9
Q

Zimmer, Inc. started the month of January with beginning finished goods inventory of $20,000. The cost of goods manufactured during the month was $120,000 and the ending finished goods inventory was $50,000. What is the unadjusted cost of goods sold for January?

A

$90,000
Cost of goods available for sale = Beginning finished goods inventory + Cost of goods manufactured

Cost of goods available for sale = $20,000 + $120,000 = $140,000

Unadjusted cost of goods sold = Cost of goods available for sale – Ending finished goods inventory

Unadjusted cost of goods sold = $140,000 – $50,000 = $90,000

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10
Q

Given: Cost of goods manufactured of $234,000; beginning finished goods inventory of $18,000; and ending finished goods inventory of $24,000, unadjusted cost of goods sold is:

A

$228,000

unadjusted cost of goods sold = $18,000+ 234,000 - 24,000 = 228,000.

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11
Q

unadjusted cost of goods sold =

A

beginning finish good inventory + cost of goods manufactured - ending finished goods inventory.

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12
Q

units of product that are only partially complete are contained in the _____ ______ ________ inventory.

A

work in process.

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13
Q

completed units that have not yet been sold are found in ______ ______ inventory.

A

finished goods.

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14
Q

When jobs are sold their costs are transferred out of:

A

finished goods.

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15
Q

cost of goods manufactured:

A

include the manufacturing costs of goods finished during the period.

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16
Q

the journal entry to record the purchase of materials debits:

A

raw materials.

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17
Q

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

A

Work in process and Manufacturing overhead.

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18
Q

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

A

only direct labor costs.

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19
Q

Predetermined overhead rate =

A

estimated manufacturing overhead divided by estimated allocation base.

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20
Q

The journal entry to record accrued property taxes for a factory buildings debits:

A

Manufacturing overhead and credits Property taxes payable.

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21
Q

Frank, Inc. recognized $20,000 in depreciation on factory equipment. The journal entry would debit:

A

Manufacturing overhead $20,000 and credit accumulated depreciation 20,000.

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22
Q

The journal entry to record $10,000 in manufacturing overhead applied to Job #40 debits:

A

Work in process $10,00 and credits manufacturing overhead $10,000.

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23
Q

Which of the following is a clearing account?

A

manufacturing overhead.

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24
Q

The journal entry to record depreciation on office equipment debits:

A

Depreciation expense and credits accumlated depreciation.

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25
Q

The journal entry to record general selling and administrative costs debits:

A

an expense account and credit cash or a liability.

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26
Q

when a job is completed, which account is credited?

A

work in process

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27
Q

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:

A

$120,000
1,000 units = 200,000 cost.
600 units = x
$200,000/1000 x 600 = $120,000.

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28
Q

Milton Corporation sold goods costing $50,000 for $75,000. Journal entries to be made could include entries debiting:

A

cost of goods sold for $50,000 and accounts receivable for $75,000.

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29
Q

True or false: Period costs flow from Finished Goods to Cost of Goods Sold.

A

false.

30
Q

The journal entry to record the purchase of materials credits:

A

Accounts payable.

31
Q

Labor costs charged to Manufacturing Overhead represent:

A

indirect labor costs.

32
Q

A journal entry that debits Manufacturing overhead and credits accumulated depreciation records:

A

depreciation on factory equipment.

33
Q

The difference between the entries to record depreciation of office equipment and decoration of factory equipment is that one:

A

debits depreciation expense, while the other debits manufacturing overhead.

34
Q

When goods are sold on account, what accounts are credited?

A

finished goods and sales.

35
Q

When jobs are sold their costs are transferred out of:

A

finished goods.

36
Q

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

A

purchase of materials.

37
Q

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

A

only direct labor costs.

38
Q

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

A

administrative salary costs.

39
Q

A journal entry debiting costs of goods sold and crediting finished goods is made when:

A

goods are sold

40
Q

What accounts are debited when goods are sold on account?

A

Cost of goods sold and accounts receivable.

41
Q

Which of the following statements are true?

  • raw materials only include the cost of direct materials
  • direct labor costs flow through the raw materials inventory account
  • raw materials traced to specific jobs are transferred to Work in process as direct materials
  • When materials are purchased they are recorded in the Raw materials inventory account.
A
  • raw materials traced to specific jobs are transferred to Work in process as direct materials
  • When materials are purchased they are recorded in the Raw materials inventory account.
42
Q

Any purchased materials that will go into the finished product are first recorded in the _________ __________ inventory account.

A

raw materials.

43
Q

Manufacturing overhead costs include:

A
  • factory insurance

- the factory supervisor’s salary.

44
Q

Which of the following costs are charged directly to the income statement?

A
  • administrative costs

- selling costs.

45
Q

Fillia, Inc. worked on three jobs this period: Job 14C, which cost $15,000; Job 23A, which cost $28,000, and Job 45B, which cost $23,000. At the end of the period, only Job 14C was still in process (unfinished). The cost of goods manufactured this period is $______

A

51,000

The costs of goods manufactured is the cost of jobs completed during the period - Jobs 23A and 45B.

46
Q

total manufacturing costs:

A

direct materials + direct labor + manufacturing overhead applied.

47
Q

To calculate direct materials on the schedule of cost of goods manufactured, add purchased to beginning raw materials inventory and subtract:

A

ending raw materials inventory and indirect materials used.

48
Q

Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is:

A

480,000.

450000 + 30000 = 480,000.

49
Q

adjusted cost of goods sold is=

A

unadjusted cost of goods sold + underapplied overhead .

50
Q

Which of the following costs would be classified as manufacturing overhead?

A
  • Factory utilities
  • Factory rent
  • Factory maintenance wages.
51
Q

When a job is completed, its costs are transferred into:

A

finished goods.

52
Q

underapplied or overapplied overhead is the:

A

difference between overhead applied to work in process and actual overhead.

53
Q

The costs of goods ________ are the sum of all amounts transferred from Work in process to Finished goods during a period.

A

manufactured.

54
Q

The schedule of cost of goods ________ summarizes costs that remain in Work in process inventory and that have been transferred from work in process to finished goods inventory.

A

manufactured

55
Q

The journal entry to record the more accurate allocation of overapplied or underapplied overhead includes entries to:

A
  • costs of goods sold
  • manufacturing overhead
  • work in process
  • finished goods.
56
Q

A journal entry that debits Manufacturing overhead and credits accounts payable could be made to record:

A

rent expense on factory equipment.

factory utilites expense.

57
Q

A debit balance in Manufacturing overhead means overhead was ________.

A

underapplied.

58
Q

overapplied overhead would result in a ________ ________.

A

credit balance

59
Q

actual overhead costs may not be proportional to the actual amount of the allocation base used because:

A
  • many actual overhead costs are fixed

- overhead spending may not be under control.

60
Q

overhead is overapplied if:

A

actual overhead is less than applied overhead.

61
Q

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

A

allocating it among work in process, finished goods, and cost of goods sold.

62
Q

What methods can be used to dispose of underapplied or overapplied manufacturing overhead.

A
  • closing it out to cost of goods sold

- allocating it among work in process, finished goods, and cost of goods sold.

63
Q

cost of goods manufactured =

A

beginning work in process inventory + direct material costs + direct labor costs + applied overhead.

64
Q

Raw materials inventory was $27,000 at the beginning of the year and $25k at the end of the year. During the year, $100k in raw materials were purchased, including $28k of indirect materials that were put into manufacturing overhead during the period. The cost of direct materials used during the period was:

A

cost of direct materials = beginning inventory + purchases - indirect materials - ending inventory (27k + 100k - 28k - 25k =74k

65
Q

cost of direct materials =

A

beginning inventory + purchases - indirect materials - ending inventory

66
Q

when a job is completed, the job costs are transferred out of :

A

work in process.

67
Q

a credit balance in the manufacturing overhead accounts means overhead was _________.

A

overapplied.

68
Q

which of the following are used to calculate Cost of goods available for sale on the schedule of cost of goods sold?

A

cost of goods manufactured

beginning finished goods inventory.

69
Q

accounts included when the allocation method is used to close out the und3erapplied or overapplied balance remaining in manufacturing overhead are:

A
  • cost of goods sold
  • finished goods
  • work in process.
70
Q

the schedule of cost of goods _______ summarizes cost that remain in finished goods inventory and that have been transferred to cost of goods sold.

A

sold

71
Q

The _____ side f the manufacturing overhead account is always used to record manufacturing overhead applied to production and the ____ side is always used to record the actual manufacturing costs incurred.

A

credit; debit.

72
Q

net operating income =

A

gross margin minus selling and administrative expenses

ACC 202 (11 decks)

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