section 12 Flashcards
Keys to competitive management accounting
evolution
competitive edge
proprietary
What does it mean when there is a DEBIT balance in Manufacturing Overhead?
we had more actual overhead costs than were applied to WIP
a DEBIT balance in Manufacturing Overhead at the end of a period is a representation of
an UNDER-application of overhead to WIP
the Journal entry to adjust a debit balance in Manufacturing Overhead is
a CREDIT to Manufacturing Overhead
and
a DEBIT to COGS
a CREDIT balance in Manufacturing Overhead at the end of a period is a representation of
Overestimation of applications to WIP
The journal entry for the end of period adjustment of manufacturing overhead that has a CREDIT balance is
a DEBIT to Manufacturing Overhead
and
a CREDIT to COGS
In a job order cost system, the journal entry to record the incurring of direct labor costs would include a DEBIT? or CREDIT? to
debit to WIP Inventory
indirect material costs are transferred out of…..to….
raw materials inventory
manufacturing overhead
manufacturing overhead is what kind of account?
a holding account until it is determined how those costs are going to be applied to WIP inventory
Manufacturing Overhead consists of what kinds of costs?
indirect material costs
indirect labor costs
other overhead costs
what is indirect labor?
those who facilitate, supervise or compliment the manufacturing process
what is other mfg. overhead
rent, utilities, depreciation, taxes, insurance
when does manufacturing overhead transfer to WIP?
when it is designated job by job based on a predetermined rate
what are the costs in WIP
direct material costs
manufacturing overhead
direct labor
a job cost record also serves as a
WIP and FGI subsidiary ledger
in a job order cost system, how are direct material costs determined for each separate manufacturing job?
materials requisition forms noting the
AMOUNT
and
COST
of raw materials released to each job
in a job order cost system, how are direct labor costs typically determined for each separate job?
employee time cards noting the # of hrs direct laborers worked on each specific job
in a job order cost system, how are overhead costs typically determined for each separate manufacturing job?
overhead costs are applied on an estimated basis using a predetermined overhead rate
(direct labor hrs, material costs, machine hrs)
that is measured for each specific job
In a manufacturing overhead account, projected costs are recorded as
credits
in a manufacturing overhead account, actual costs in excess of projected WIP are closed to
COGS
When Manufacturing Overhead has a debit balance, WIP has been
under applied because the actual overhead exceeded the projected amount previously added to WIP
the general ledger total of WIP inventory should equal
the sum of all the job cost records (subsidiary ledger)
When there’s a debit to WIP, there must also be an update to
the job cost record (subsidiary ledger)
what kind of account is manufacturing overhead?
a holding or clearing account for accumulated overhead costs that will be allocated to WIP
examples of other manufacturing overhead costs
what are the corresponding debits/credits
production supervisor’s salary—credit to salary payable
manufacturing utility costs—credit to cash
depreciation of manufacturing equipment—credit to accumulated depreciation
debit to MOC
how are direct material costs determined for separate manufacturing jobs?
material requisition forms noting the amount and cost of raw materials released to each job
how are direct labor costs determined for separate manufacturing jobs?
time cards noting the # of hours worked on each specific job
how are manufacturing overhead costs determined for separate manufacturing jobs?
overhead is applied on an estimated basis using a predetermined overhead rate on some activity (direct labor hours, material costs, machine hours) that is measured for each specific job
When MOC has a credit balance, applications to WIP have been
overapplied
When applications to WIP are over applied, the adjustment of manufacturing overhead at year end is a debit to…and a credit to….
a debit to Manufacturing Overhead
and
a credit to COGS
When applications to WIP have been under-applied, the adjustment of manufacturing overhead at year end is a debit to….. and a credit to….
a debit to COGS
and
a credit to Manufacturing Overhead
T/F more goes in to the predetermined overhead rate calculation than just budgeted costs
true
how is cost per unit determined in a process cost system?
total direct material, direct labor & MOC (for a period of time)
/
# of units produced during that period
a job cost sheet includes what 3 categories?
Manufacturing Overhead Costs , Direct Labor , Direct Materials
under application of MOC is a credit or debit balance?
debit balance
MOC are closed to
COGS
what are the 2 types of cost systems?
job order
process
application to WIP are a debit or credit to MOC?
credit
All of a company’s job cost records constitute a subsidiary ledger for their
WIP inventory account
What is process costing?
a method that is commonly used by companies that manufacture large numbers of standardized products
a MOC debit balance means that the actual costs
exceeded the applied predetermined MO rate
a MOC credit balance means that actual costs
are less than applications to WIP
T/F the predetermined overhead rate is solely based on budgeted costs
false, budgeted costs are not the only component of predetermined overhead rates
