Chapter 3 – Product Costing and Cost Accumulation in a Batch Production Environment
46. Templeton Corporation recently used $75,000 of direct materials and $9,000 of indirect
materials in production activities. The journal entries reflecting these transactions would
include:
47. A review of a company’s Work-in-Process Inventory account found a debit for materials
of $67,000. If all procedures were performed in the correct manner, this means that the firm:
48. Travers Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor.
49. The following information relates to October:
Production supervisor’s salary: $3,500
Factory maintenance wages: 250 hours at $10 per hour
50. Electricity costs that were incurred by a company’s production processes should be
debited to:
51. The journal entry needed to record $5,000 of advertising for Oxner Manufacturing would
include:
52. Hsu Company incurred $90,000 of depreciation for the year. Eighty percent relates to the
firm’s production facilities, and 20% relates to sales and administrative offices. If all items are
handled in the proper manner, a review of the company’s accounting records should reveal a:
53. The left side of the Manufacturing Overhead account is used to accumulate:
54. Throughout the accounting period, the credit side of the Manufacturing Overhead account
is used to accumulate:
55. An accountant recently debited Work-in-Process Inventory and credited Manufacturing
Overhead at a company that uses normal costing. The accountant was:
56. Job no. C12 was completed in November at a cost of $28,500, subdivided as follows:
direct material, $13,500; direct labor, $6,000; and manufacturing overhead, $9,000. The
journal entry to record the completion of the job is:
57. A computer manufacturer recently shipped several laptops to a customer (cost: $25,000)
and billed the customer $30,000. Which of the following options correctly expresses the
accounts that are debited and credited to record this transaction?
58. Foxmoor Company applies manufacturing overhead by using a predetermined rate of 50%
of direct labor cost. The data that follow pertain to job no. 764:
If Foxmoor adds a 40% markup on total cost to generate a profit, which of the following
choices depicts a portion of the accounting needed to record the sale of job no. 764?
Account Debited
Cost of Goods Sold
Cost of Goods Sold
Finished-Goods Inventory
Finished-Goods Inventory
Sales Revenue
59. Bennington Company applies manufacturing overhead by using a predetermined rate of
150% of direct labor cost. The data that follow pertain to job no. 831:
Direct material cost
$72,000
Direct labor cost
38,000
If Bennington adds a 30% markup on total cost to generate a profit, which of the following
choices depicts a portion of the accounting needed to record the credit sale of job no. 831?
Account Debited
Accounts Receivable
Accounts Receivable
Finished-Goods Inventory
Finished-Goods Inventory
Sales Revenue
60. Armour, Inc., an advertising agency, applies overhead to jobs on the basis of direct
professional labor hours. Overhead was estimated to be $150,000, direct professional labor
hours were estimated to be 15,000, and direct professional labor cost was projected to be
$225,000. During the year, Armour incurred actual overhead costs of $146,000, actual direct
professional labor hours of 14,500, and actual direct labor cost of $222,000. By year-end, the
firm’s overhead was:
61. Boston, Inc. applies manufacturing overhead at the rate of $40 per machine hour.
Budgeted machine hours for the current period were anticipated to be 120,000; however, a
lengthy strike resulted in actual machine hours being worked of only 90,000. Budgeted and
actual manufacturing overhead figures for the year were $4,800,000 and $4,180,000,
respectively. On the basis of this information, the company’s year-end overhead was:
62. Terrence Industries charges manufacturing overhead to products by using a predetermined
application rate, computed on the basis of labor hours. The following data pertain to the
current year:
Budgeted manufacturing overhead
$1,800,000
Actual manufacturing overhead
1,810,000
Budgeted labor hours
60,000
Actual labor hours
61,500
Which of the following choices is the correct status of manufacturing overhead at year-end?
63. Mountain Man Corporation debited Cost of Goods Sold and credited Manufacturing
Overhead at year-end. On the basis of this information, one can conclude that:
64. Rogers Manufacturing’s overhead at year-end was underapplied by $5,800, a small
amount given the firm’s size. The year-end journal entry to record this amount would include:
65. Flores Company, which uses labor hours to apply overhead to manufacturing, may have
increased amounts of underapplied overhead at month-end if:
66. The estimates used to calculate the predetermined overhead rate will virtually always:
67. Under– or overapplied manufacturing overhead at year-end is most commonly:
68. When underapplied or overapplied manufacturing overhead is prorated, amounts can be
assigned to which of the following accounts?
69. Flagler, Inc. disposes of under- or overapplied overhead at year-end as an adjustment to
cost of goods sold. Prior to disposal, the firm reported cost of goods sold of $590,000 in a
year when manufacturing overhead was underapplied by $15,000. If sales revenue totaled
$1,400,000, determine (1) Flagler’s adjusted cost of goods sold and (2) gross margin
Adjusted Cost of
Goods Sold
Gross Margin
70. The term “normal costing” refers to the use of:
71. The primary difference between normalized and actual costing methods lies in the
determination of a job’s:
73. If the amount of effort and attention to products varies substantially throughout a
company’s various manufacturing operations, the company might consider the use of:
74. Which of the following is not a drawback of actual costing?
75. Throughput time includes the time required for all of these except:
76. When selecting a volume-based cost driver, the goal is to:
77. In the two-stage cost allocation process, costs are assigned:
78. Which of the following is not considered to be a service department?
79. Which of the following entities would not likely be a user of job-costing systems?
80. Which of the following would not likely be used by service providers to accumulate job
costs?
Chapter 3 – Product Costing and Cost Accumulation in a Batch Production Environment
Use the following labor budget data for Roy & Miller Accounting, LLP to answer questions
81-86:
Partner Salaries
$400,000
Partner Benefits (40%)
160,000
Total Partner Compensation
$560,000
Staff Accountant Salaries
$600,000
Staff Benefits (40%)
240,000
Total Staff Compensation
$840,000
The budgeted overhead cost for the year is $1,260,000. The company has estimated that one-
third of the budgeted overhead cost is incurred to support the firm’s two partners, and two–
thirds goes to support the staff accountants. The current audit bid for Monoco Industries
requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant
professional labor, $5,000 in direct material,
81. What is the total budgeted compensation for both partners and staff accountants?
82. What is the overhead rate based on a single cost driver (rounded to the nearest percentage?
83. What is the overhead rate for partners, if separate rates are used for partners and staff
accountants?