1) Chen Service applied overhead on the basis of direct labor costs during the current
year. Overhead applied was $16,500. Actual overhead incurred was $17,200.
(a) Prepare a journal entry to remove this difference assuming that it is not material.
(b) Instead, assume actual overhead incurred was $24,000. Describe (without
computations) the alternative procedure that Chen might assuming this difference is
material.
2) The term, obsolescence, as it relates to the useful life of an asset, refers to:
A.The end of an asset’s useful life.
B.A plant asset that is no longer useful in producing goods and services with a
competitive advantage.
C.The insufficient capacity of a company’s plant assets to meet the company’s
productive demands.
D.An asset’s salvage value becoming less than its replacement cost.
E.Intangible assets that have been fully amortized.
3) Fletcher Company collected the following data regarding production of one of its
products. Compute the direct materials price variance.
A.$2,430 unfavorable.
B.$3,570 unfavorable.
C.$2,430 favorable.
D.$6,000 unfavorable.
E.$3,570 favorable.
4) The year-end adjusted trial balance of Gordon Produce for the current year, is shown
below:
Prepare closing entries at December 31 for the current year.
5) The Linens Department of the Krafton Department Store had sales of $282,000, cost
of goods sold of $173,500, indirect expenses of $19,875, and direct expenses of
$41,250 for the current period. What is the Linens Department’s contribution to
overhead as a percent of sales?
6) The Oberon Company purchased a delivery truck for $95,000 on January 2. The
truck was estimated to have a $3,000 salvage value and a 4 year life. The truck was
depreciated using the straight-line method. At the beginning of the third year, it was
obvious that the truck’s total useful life would be 6 years rather than 4, and the salvage
at the end of the 6th year would be $1,500. Determine the depreciation expense for the
truck for the 6 years of its life.
7) Direct materials variances are called price and quantity variances. However, when
referring to direct labor, these variances are usually called _________________ and
_____________ variances.
8) _______________ are long-term resources used to produce or sell products and
services; they generally lack physical form and their benefits are highly uncertain.
9) Conklin plans to leave the CAP Partnership. The recorded balance in her capital
account is $48,000. The remaining partners, Arthurs and Preston, agree to pay Conklin
$58,000 cash and Conklin accepts. The partners share income and loss equally. Prepare
the journal entry to record the transaction.
10) What is a profit center and how is its performance evaluated?
11) Match the following definitions and terms by placing the letter for the terms A
through J in the blank space next to the best definition.
12) A manufacturer’s inventory that is not completely finished is called
________________.