College Accounting, 14e (Slater)
Chapter 25 Manufacturing Accounting
25.1 Learning Objective 25-1
1) Screws, electricity for manufacturing, and production supervisor salary are examples of:
A) raw materials.
B) direct labor.
C) manufacturing overhead.
D) None of the above
2) Metal used in construction of a tank is part of:
A) raw material costs.
B) labor costs.
C) manufacturing overhead.
D) depreciation expense.
3) When manufacturing a product, direct labor includes the wages of:
A) an hourly worker producing the product.
B) the shop foreman.
C) maintenance workers.
D) sales staff.
4) Manufacturing overhead includes all manufacturing costs except which of the following?
A) Raw materials
B) Maintenance supplies
C) Direct labor
D) Both A and C
5) Total manufacturing costs incurred include:
A) direct labor costs.
B) raw materials costs.
C) manufacturing overhead.
D) All of the above
6) Which inventory account consists of manufacturing cost of goods that are complete?
A) Work-in-Process Inventory
B) Raw Materials Inventory
C) Manufacturing Overhead
D) Finished Goods Inventory
7) Which inventory account consists of products currently being processed?
A) Finished Goods Inventory
B) Work-in-Process Inventory
C) Manufacturing Overhead Inventory
D) Supplies expense
8) Under a perpetual inventory system, freight costs to bring the raw materials in should be charged to:
A) Work-in-Process Inventory.
B) Delivery Expense.
C) Raw Materials Inventory.
D) Manufacturing overhead.
9) Ending finished goods inventory is subtracted from cost of goods available for sale to get:
A) cost of goods manufactured.
B) cost of goods sold.
C) gross profit.
D) None of the above
10) The three major manufacturing inventories do NOT include which of the following?
A) Supplies
B) Work-in-process
C) Raw materials
D) Finished goods
11) Calculate the cost of goods sold when beginning finished goods inventory equals $87,000, ending
finished goods inventory $75,000, and cost of goods manufactured $640,000.
A) $652,000
B) $482,000
C) $727,000
D) $628,000
12) What inventories are included in determining the cost of goods sold?
A) Beginning and ending finished goods
B) Beginning and ending raw materials
C) Beginning and ending work–in-process
D) Supplies.
13) What inventories are included in determining total manufacturing costs?
A) Beginning and ending finished goods
B) Beginning and ending raw materials
C) Beginning and ending work–in-process
D) None of the above answers is correct.
14) The formula for cost of goods manufactured is:
A) raw materials plus direct labor minus overhead plus beginning work–in-process inventory plus ending
work-in-process inventory.
B) raw materials minus direct labor plus overhead plus beginning work–in-process inventory plus ending
work-in-process inventory.
C) beginning work–in-process plus total manufacturing cost minus ending work–in-process.
D) raw materials plus direct labor less overhead plus beginning work–in-process inventory less ending
work-in-process inventory.
15) The first step in determining total manufacturing costs is to calculate:
A) the raw material used for the month.
B) the direct labor cost for the month.
C) factory overhead cost for the month.
D) finished inventory — ending balance.
16) The statement of cost of goods manufactured does NOT include:
A) direct labor costs.
B) selling and administrative costs.
C) manufacturing overhead.
D) All of the above are included.
17) Manufacturing costs do NOT include:
A) raw material.
B) delivery expenses.
C) manufacturing overhead.
D) All of these answers are correct.
18) Raw Materials Inventory appears on the:
A) balance sheet.
B) income statement.
C) cost of goods manufactured statement.
D) Both A and C are correct.
19) The three manufacturing inventories are raw materials, work–in-process, and finished goods
inventory.
20) Paint used in painting the final product would be considered work–in-process inventory.
21) A shop foreman’s salary is considered indirect labor.
22) Cost of goods manufactured is determined before the income statement can be completed.
23) Overhead includes labor costs of assembly line supervisors but not the assembly workers.
24) Hourly wages of production line employees are one of the costs included in the manufacturing
overhead.
25) Work in Process inventory includes the total costs of manufacturing a product.
26) A cost of goods manufactured statement should be prepared after the income statement has been
prepared.
27) The balance sheet reports the work in process inventory.
28) The steps of the accounting cycle for a manufacturing company are different from those used for a
merchandise company.
29) The second step in the preparation of the statement of cost of goods manufactured is to add in and
subtract out the two raw material inventory balances.
30) If a company had a beginning balance of $5,000 in Raw Materials, an ending balance of $3,000 and
purchased $27,000 of materials during the month, then the raw material used for the month was $29,000.
31) If a company had a beginning balance of $5,000 in Work–in-Process Inventory, an ending balance of
$7,000 in Work-in-Process Inventory and incurred direct labor costs of $8,000 and overhead costs of
$4,000, then the cost of goods manufactured during the month was $20,000. Raw Materials used were
$10,000.
32) If a company had a beginning balance of $8,000 in Finished Goods Inventory, an ending balance of
$5,000 in Finished Goods Inventory and cost of goods manufactured was $41,000 during the month, then
the cost of goods sold for the month was $44,000.
33) Finished goods inventory is listed on the schedule of cost of goods sold.
34) All expenses are listed on the income statement of a manufacturer.
35) Classify each of the following as raw materials, direct labor, or overhead:
Item Raw Material Direct Labor Overhead
Steel in making of cars
Salary of a manager
Wages of an employee producing desks
Lease payment for the building
Utilities for the building
Lug nuts for the wheels of the car
36) From the following information, calculate (a) cost of raw materials used and (b) total manufacturing
costs.
Raw Materials Inventory, April 1 $20,000
Raw Materials Inventory, April 30 15,000
Overhead 22,000
Finished Goods Inventory 17,000
Direct Labor 35,000
Raw Materials Purchased 62,000
a. ________
b. ________
37) Calculate the (a) cost of raw materials used and (b) total manufacturing costs from the following
information.
Beginning Raw Materials Inventory: $50,000
Ending Raw Materials Inventory: 27,000
Overhead 38,000
Beginning Finished Goods Inventory: 28,000
Ending Finished Goods Inventory: 23,000
Direct Labor 40,000
Raw Materials Purchased 75,000
Beginning Work-in-Process Inventory: 16,000
Ending Work-in-Process Inventory: 19,000
a. ________
b. ________
38) Calculate the cost of goods manufactured from the following information.
Beginning Raw Materials Inventory: $63,000
Ending Raw Materials Inventory: 58,000
Overhead 36,000
Beginning Finished Goods Inventory: 27,000
Ending Finished Goods Inventory: 32,000
Direct Labor 42,000
Raw Materials Purchased 73,000
Beginning Work-in-Process Inventory: 12,000
Ending Work-in-Process Inventory: 15,000
39) Chelsie Interiors produces artist supplies. Listed below are the costs of production and inventory.
Direct Labor $60,000
Raw Materials Inventory, Aug. 1 45,000
Raw Materials Purchases 75,000
Raw Materials Inventory, Aug. 31 25,000
Overhead 50,000
Work-in-Process Inventory Aug. 1 21,000
Work-in-Process Inventory Aug. 31 27,000
Finished Goods Inventory Aug. 31 18,000
Compute:
a. Cost of raw materials used in production
b. Total manufacturing costs
c. Total cost of goods manufactured
40) From the following, calculate the cost of raw materials used and total manufacturing costs:
Raw Materials Inventory, Sep. 1 $8,000
Raw Materials Inventory, Sep. 30 3,000
Work-in-Process Inventory, Sep. 1 6,000
Work-in-Process Inventory, Sep. 30 5,000
Raw Materials Purchased 8,000
Direct Labor 12,000
Depreciation Expense 7,000
Factory Utilities 3,000
41) From the following, calculate the cost of raw materials used, total manufacturing costs and cost of
goods manufactured:
Raw Materials Inventory, Sep. 1 $14,000
Raw Materials Inventory, Sep. 30 6,000
Work-in-Process Inventory, Sep. 1 12,000
Work-in-Process Inventory, Sep. 30 15,000
Raw Materials Purchased 25,000
Direct Labor 25,000
Depreciation Expense 6,000
Factory Utilities 6,000
42) From the following information calculate total manufacturing costs and cost of goods manufactured.
Raw Materials Inventory, Sep. 1 $9,000
Raw Materials Inventory, Sep. 30 3,000
Work-in-Process Inventory, Sep. 1 5,000
Work-in-Process Inventory, Sep. 30 1,000
Raw Materials Purchased 6,000
Direct Labor 10,000
Depreciation Expense 5,000
Factory Utilities 2,000
43) Describe the three elements of manufacturing cost.
25.2 Learning Objective 25-2
1) A material requisition is a:
A) document prepared to show the movement of materials or products between departments.
B) document used to order materials or supplies from the vendor or supplier.
C) document used for charging material to production.
D) document used to record receipt of materials or supplies from the vendor or supplier.
2) A clock card is:
A) the basis for payroll.
B) the basis for charging cost of goods sold.
C) a document to show movement of materials.
D) a document used to order materials.
3) Which is NOT an example of a source document?
A) Clock card
B) Bill of lading
C) Lot ticket
D) All are source documents.
4) A report issued by the payroll department to categorize all the types of labor incurred during the week
is a:
A) labor distribution report.
B) receiving report.
C) payable register.
D) None of these answers is correct.
5) A lot ticket is a:
A) document prepared to show the movement of materials or products between departments.
B) document used to order materials or supplies from the storeroom.
C) document used for charging material to production.
D) document used to identify an inventory location.
6) A document that is prepared to show how items have been shipped to customers is a:
A) receiving report.
B) bill of lading.
C) lot ticket.
D) clock card.
7) The journal entry to record issuing supplies from the storeroom would include a:
A) debit to Manufacturing Overhead-Applied.
B) credit to Raw Materials Inventory.
C) credit to Manufacturing Overhead-Applied.
D) debit to Manufacturing Overhead-Control.
8) The journal entry to record issuing raw materials from the storeroom would include a:
A) credit to Raw Materials Inventory.
B) credit to Supplies.
C) debit to Work-in-Process Inventory.
D) Both A and C
9) The journal entry to record the direct labor summarized on the labor distribution report would include
a:
A) debit to Payroll Expense.
B) debit to Work-in-Process Inventory.
C) credit to Payroll Payable.
D) Both B and C
10) In a manufacturing company, the purchase of raw materials on account should be recorded as
follows:
A)
Raw Materials Inventory
Accounts Payable
B)
Work-in-Process Inventory
Accounts Payable
C)
Finished Goods Inventory
Accounts Payable
D)
Manufacturing Overhead-Control
Raw Materials Inventory
11) Journal entries crediting Payroll Payable and debiting Work–in-Process Inventory are made for:
A) administrative salaries.
B) hourly manufacturing labor.
C) foremen’s salaries.
D) raw materials.
12) The entry for indirect materials (such as glue, etc.) requisitioned for use in production is:
A)
Raw Materials Inventory
Work-in-Process Inventory
B)
Manufacturing Overhead-Control
Supplies Inventory
C)
Work-in-Process Inventory
Raw Materials Inventory
D) None of these answers is correct.
13) During the week ended November 30, total factory payroll incurred was $8,600. Of this total, 60% was
for direct labor. The entry to record the payroll distribution would include:
A) debit Work-in-Process Inventory for $5,160 and Manufacturing Overhead-Control for $3,440.
B) debit Work-in-Process Inventory for $8,600.
C) debit Work-in–Process Inventory for $5,160 and Manufacturing Overhead–Applied for $3,440.
D) debit Work-in-Process Inventory for $5,160 and Indirect Labor Expense for $3,440.
14) The entry to record the requisition of supplies from the storeroom would include a:
A) debit to Raw Materials Inventory.
B) debit to Manufacturing Overhead-Control.
C) debit to Supplies Inventory.
D) debit to Work in Process Inventory.
15) Rockland completed the manufacturing process. The entry to transfer the product to finished goods
is:
A)
Work-in-Process Inventory
Finished Goods Inventory
B)
Finished Goods Inventory
Cost of Goods Sold
C)
Finished Goods Inventory
Work-in-Process Inventory
D)
Finished Goods Inventory
Raw Materials Inventory
16) Chico.com sold 65 jet skis on account for $7,700 which cost $5,500. The entry to record the sale would
include a:
A) credit to Finished Goods Inventory $5,500.
B) credit to Account Receivable for $7,700.
C) debit to Cost of Goods Sold for $7,700.
D) All of the above
17) The Manufacturing Overhead-Control account is used for the:
A) application of overhead to production and it has a debit balance.
B) accumulation of all actual overhead costs and it has a credit balance.
C) application of overhead to production and it has a credit balance.
D) accumulation of all actual overhead costs and it has a debit balance.
18) The Overhead-Applied account is used for the:
A) application of overhead to production and it has a credit balance.
B) accumulation of all actual overhead costs and it has a credit balance.
C) application of overhead to production and it has a debit balance.
D) accumulation of all actual overhead costs and it has a debit balance.
19) The overhead application rate may be based on:
A) machine hours.
B) direct labor hours.
C) direct labor dollars.
D) All of these answers are correct.
20) Which of the following journal entries would be made to apply the cost of indirect labor to
production?
A)
Work-in-Process Inventory
Manufacturing Overhead-Control
B)
Manufacturing Overhead-Control
Payroll Payable
C)
Finished Goods Inventory
Manufacturing Overhead-Control
D)
Work-in-Process Inventory
Manufacturing Overhead-Applied
21) If direct labor for the month is $105,000, and overhead is applied based on 65% of direct labor dollars,
what is the entry to apply overhead?
A) Debit Work-in-Process Inventory $68,250; credit Payroll Payable $68,250
B) Debit Overhead-Applied $68,250; credit Work–in-Process Inventory $68,250
C) Debit Work-in–Process Inventory $68,250; credit Manufacturing Overhead-Applied $68,250
D) Debit Work-in-Process Inventory $105,000; credit Manufacturing Overhead-Applied $105,000
22) Direct labor for the month is $52,000, and overhead is applied based on direct labor cost. Annual
overhead is estimated to be $530,000, and annual direct labor is estimated to be $810,000. What is the
entry to apply overhead to production? (Round intermediary calculations to two decimal places and your
final calculations to the nearest whole dollar.)
A) Debit Work-in-Process Inventory $33,800; credit Payroll Payable $33,800
B) Debit Manufacturing Overhead-Applied $33,800; credit Work–in-Process Inventory $33,800
C) Debit Work-in–Process Inventory $33,800 credit Manufacturing Overhead-Applied $33,800
D) Debit Work-in-Process Inventory $52,000; credit Manufacturing Overhead-Applied $52,000
23) The entry to record rent expense $14,000, supervision expense $24,000 and depreciation expense
$15,000 to overhead is:
A) debit Manufacturing Overhead-Applied $53,000; credit Rent Expense $14,000, Supervision $24,000,
Depreciation Expense $15,000.
B) debit Work in Process Inventory $53,000; credit Rent Expense $14,000, Supervision $24,000,
Depreciation Expense $15,000.
C) debit Manufacturing Overhead-Applied $53,000; credit Manufacturing Overhead-Control $53,000.
D) None of these answers is correct.