Chapter 16—Cost Flows and Business Organizations Key
1. Which of the following would NOT properly be classified as manufacturing overhead?
2. Which of the following costs would NOT be classified as a product cost?
3. Which of the following is NOT a period cost?
4. Which of the following is usually NOT a manufacturing cost?
5. Which of the following is one of the three types of product costs?
6. Which of the following is NOT critical to accurately measure product costs?
7. An estimate of the overhead that will be incurred for each unit is the:
8. The order of cost flow through the accounts in a manufacturing firm is:
9. Which of the following is NOT a part of job order costing?
10. After the completion of a product, the product costs are transferred to:
11. When a product is sold in a job order costing system, the costs associated with that product appear:
12. Raw Materials Inventory is debited:
13. When relatively inexpensive materials are requisitioned by the production department,
14. The actual costs of indirect materials are:
15. When materials are requisitioned from raw materials inventory, the journal entry includes:
16. Work-in-Process Inventory is debited when:
17. Under job order costing, the journal entry made to record indirect labor cost includes a:
18. A plant manager’s salary is debited to:
19. Work-in-Process Inventory is debited when:
20. The journal entry to apply manufacturing overhead to products includes a debit to:
21. Which of the following costs is included in manufacturing overhead?
22. A debit to Work-in-Process Inventory is sometimes accompanied by a credit to:
23. Predetermined overhead rates are used because:
24. Product costs assigned to jobs are:
25. When recording depreciation for manufacturing equipment, the entry should be:
26. Work-in-Process Inventory is credited when:
27. If a company uses job order costing, the amount transferred from Work-in-Process Inventory to Finished
Goods Inventory is equal to the cost of goods:
28. Finished Goods Inventory is debited when:
29. Which entry traces direct materials, direct labor and manufacturing overhead costs onto the income
statement:
30. What type of transaction is represented in the following entry?
Work-in–
process
Inventor
y
25
Raw Materials Inventory
25
31. If direct labor time is charged to the wrong job number, that job will:
32. If ending Work-in-Process Inventory is understated,
33. The Colonial Company produces porcelain collectibles. In August, the molding department had a beginning
work-in-process inventory of $16,800. Costs added during August totaled $79,200 (direct materials $43,200;
conversion costs $36,000). At the end of the month, the ending work-in-process inventory value was $14,400.
Assuming that Colonial Company uses job order costing, the cost of goods completed and transferred to the
next department (glazing) in August was:
34. Exhibit 16-1
Jack Corporation used a job order costing system to account for jobs in its construction division. During April,
the following transactions occurred:
·
Purchased $4,000 of lumber (raw materials) on account.
·
Incurred direct labor costs of $8,000.
·
Depreciation on construction equipment of $1,600 was recorded.
·
A house that was completed in March at a cost of $160,000 was sold for $184,000.
Refer to Exhibit 16-1. Given the information above, the entry to record the purchase of the $4,000 of lumber would include a:
35. Exhibit 16-1
Jack Corporation used a job order costing system to account for jobs in its construction division. During April,
the following transactions occurred:
·
Purchased $4,000 of lumber (raw materials) on account.
·
Incurred direct labor costs of $8,000.
·
Depreciation on construction equipment of $1,600 was recorded.
·
A house that was completed in March at a cost of $160,000 was sold for $184,000.
Refer to Exhibit 16-1. Given the information above, the entry to record the direct labor costs of $8,000 includes a:
36. Exhibit 16-1
Jack Corporation used a job order costing system to account for jobs in its construction division. During April,
the following transactions occurred:
·
Purchased $4,000 of lumber (raw materials) on account.
·
Incurred direct labor costs of $8,000.
·
Depreciation on construction equipment of $1,600 was recorded.
·
A house that was completed in March at a cost of $160,000 was sold for $184,000.
Refer to Exhibit 16-1. Given the information above, the entry to record the depreciation on construction equipment would include a:
37. Exhibit 16-1
Jack Corporation used a job order costing system to account for jobs in its construction division. During April,
the following transactions occurred:
·
Purchased $4,000 of lumber (raw materials) on account.
·
Incurred direct labor costs of $8,000.
·
Depreciation on construction equipment of $1,600 was recorded.
·
A house that was completed in March at a cost of $160,000 was sold for $184,000.
Refer to Exhibit 16-1. Given the information above, the entry to record the sale of the house would include a:
38. Manufacturing overhead is difficult to connect to products for all but which of the following reasons?
39. The amount of manufacturing overhead predicted for the next period is known as:
40. The formula for the predetermined overhead rate is:
41. Which of the following statements is true?
42. The manufacturing overhead account is credited when:
43. If overapplied manufacturing overhead is closed to Cost of Goods Sold, the journal entry would include a
debit to:
44. The most accurate method of eliminating under- or overapplied manufacturing overhead is to:
45. Before any journal entries are made to deal with underapplied overhead, the total cost of jobs is:
46. Rex Company’s manufacturing overhead was overapplied by $10,000 in July. Estimated overhead was
$755,000, and actual overhead was $752,000. The amount of overhead applied for May was:
47. Smorgasbord Inc. estimated the following for 2012:
Finishing
Dept.
Indirect materials
$ 80,000
Indirect labor
40,000
Rent
115,000
Depreciation
60,000
Insurance
25,000
Machine hours
80,000
Labor hours
60,000
The overhead rate for the cutting department is determined on the basis of machine hours. Using the data above, what is the predetermined overhead
rate for the cutting department?
48. Smorgasbord Inc. estimated the following for 2012:
Finishing
Dept.
Indirect materials
$ 80,000
Indirect labor
40,000
Rent
115,000
Depreciation
60,000
Insurance
25,000
Machine hours
80,000
Labor hours
80,000
The overhead rate for the finishing department is determined on the basis of labor hours. Using the data above, what is the predetermined overhead
rate for the finishing department?
49. California Company uses a predetermined overhead rate of $3.50 per machine hour based on an estimate of
50,000 machine hours for the year. The estimated manufacturing overhead cost for the period for The Club is:
50. Work-in-Process Inventory for Wendall Productions has a balance of $2,600 at the end of the accounting
period. The cost summaries for the uncompleted jobs showed direct materials of $1,200 and direct labor of
$800. Wendall applies manufacturing overhead on the basis of direct labor cost. The company’s predetermined
overhead rate is:
51. If manufacturing overhead is applied on the basis of machine hours and actual machine hours are more than
anticipated, which of the following is true?
52. If manufacturing overhead is applied on the basis of direct labor hours and if actual hours worked are less
than anticipated, which of the following is true?
53. Assuming that actual manufacturing overhead costs for Colorado Iron Company are $10,000 for cutting;
$14,000 for shaping; and $6,000 for finishing; and applied manufacturing overhead is $11,400 for cutting;
$11,000 for shaping; and $6,600 for finishing, what is the amount of over- or underapplied overhead?
54. Exhibit 16-2
Dietrich Company has the following data for August:
Direct materials cost
$35,000
Direct labor hours
6,000
Direct labor cost
$30,000
Actual manufacturing overhead
$25,000
Machine hours worked
3,000
Refer to Exhibit 16-2. Given the information above, if manufacturing overhead is applied at the rate of 80% of direct labor cost, overhead for
August is:
55. Exhibit 16-2
Dietrich Company has the following data for August:
Direct materials cost
$35,000
Direct labor hours
6,000
Direct labor cost
$30,000
Actual manufacturing overhead
$25,000
Machine hours worked
3,000
Refer to Exhibit 16-2. Given the information above, if manufacturing overhead is applied at the rate of $4.50 per direct labor hour, overhead for
August is:
56. Exhibit 16-2
Dietrich Company has the following data for August:
Direct materials cost
$35,000
Direct labor hours
6,000
Direct labor cost
$30,000
Actual manufacturing overhead
$25,000
Machine hours worked
3,000
Refer to Exhibit 16-2. Given the information above, if manufacturing overhead is applied at the rate of $7 per machine hour, overhead for August
is:
57. Exhibit 16-2
Dietrich Company has the following data for August:
Direct materials cost
$35,000
Direct labor hours
6,000
Direct labor cost
$30,000
Actual manufacturing overhead
$25,000
Machine hours worked
3,000
Refer to Exhibit 16-2. Given the information above, which manufacturing overhead rate results in the least amount of over– or underapplied
overhead?
58. Costs incurred to manufacture goods during a period can be found in:
59. Which of the following is NOT true about total manufacturing costs?
60. Which of the following is NOT true about cost of goods manufactured?
61. The formula for total manufacturing costs is:
62. Which of the following inventory balances is NOT needed when preparing a cost of goods manufactured
schedule?
63. In the cost of goods sold calculation, overapplied manufacturing overhead is usually:
64. Which of the following would NOT be found on a cost of goods manufactured schedule?
65. The schedule of cost of goods manufactured for the Cutler Company shows the following balances for the
year ended July 31, 2012:
Raw materials used in production
$ 440,000
Direct labor
280,000
Applied manufacturing overhead
375,000
Ending work-in-process inventory
230,000
Cost of goods manufactured
1,125,000
The beginning work-in-process inventory was:
66. Famous Furniture Manufacturing Company reported the following information for 2012:
Beginning work-in-process inventory
$182,000
Beginning raw materials inventory
66,500
Ending work-in-process inventory
157,500
Ending raw materials inventory
84,000
Raw materials purchased
136,500
Direct labor
130,200
Applied manufacturing overhead
84,000
Famous Furniture Manufacturing Company’s cost of goods manufactured for the year is:
67. The following information is taken from the records of Minnesota Company for the year ended January 31,
2012:
Raw materials
$ 64,000
Direct labor
24,000
Applied manufacturing overhead
88,000
Ending work-in-process inventory
40,000
Cost of goods manufactured
152,000
The amount of beginning work-in-process inventory is:
68. For 2012, Fli-Hi Woods’ end-of-year information is as follows:
Beginning raw materials inventory
$ 9,120
Beginning work-in-process inventory
13,440
Direct labor
25,680
Applied manufacturing overhead
18,000
Raw materials purchased
36,000
Ending raw materials inventory
9,960
Ending work-in-process inventory
16,800
Based on this information, the cost of goods manufactured for Fli-Hi Woods is:
69. Waterbed Factory has the following information for 2012:
Beginning raw materials inventory
$16,500
Beginning finished goods inventory
30,600
Ending finished goods inventory
26,700
Beginning work-in-process inventory
17,100
Ending work-in-process inventory
18,900
Ending raw materials inventory
12,000
Direct labor
37,900
Raw materials purchased
22,200
Applied manufacturing overhead
29,400
Based on this information, the cost of goods manufactured is:
70. The manufacturing operations of Sentinel Company had the following inventory balances for 2012:
December 31
Raw materials
$ 60,000
Work-in-process
35,000
Finished goods
110,000
If Sentinel purchased $90,000 of raw materials during the year, the cost of raw materials used during 2012 would be:
71. Delaware Manufacturing had the following information for March 2012:
Beginning raw materials inventory
$ 34,560
Beginning work-in-process inventory
23,040
Beginning finished goods inventory
31,240
General administrative expenses
43,200
Raw materials used
129,600
Indirect labor
24,000
Indirect materials
42,000
Depreciation-factory equipment
22,000
Direct labor
97,920
Applied manufacturing overhead
87,360
Ending work-in-process inventory
28,800
Ending finished goods inventory
66,240
Based on this information, the cost of goods manufactured is:
72. Nester Company recorded the following data for 2012:
December 31
Raw materials
$54,600
Work-in-process
33,800
Finished goods
65,000
Additional data:
Sales revenue
$468,000
Direct labor costs
78,000
Applied manufacturing overhead
182,000
Interest expense
59,800
Advertising expense
44,200
If raw materials costing $65,000 were purchased during the year, the total manufacturing costs for 2012 would be:
73. For June 2012, Mitsumi Exports’ beginning work-in-process inventory is $1,000, ending work-in-process
inventory is $3,000, and cost of goods manufactured is $34,000. What are the total manufacturing costs for
June?
74. Exhibit 16-3
Garret Manufacturing Company’s accounting records reflect the following inventories:
Dec. 31, 2012
Dec. 31, 2011
Raw materials inventory
$78,000
$66,000
Work-in-process inventory
90,000
48,000
Finished goods inventory
57,000
45,000
During 2012, $75,000 of raw materials were purchased, direct labor costs amounted to $90,000, and manufacturing overhead incurred was $120,000.
Refer to Exhibit 16-3. Garret Manufacturing Company’s total manufacturing costs incurred in 2012 amounted to:
75. Exhibit 16-3
Garret Manufacturing Company’s accounting records reflect the following inventories:
Dec. 31, 2012
Dec. 31, 2011
Raw materials inventory
$78,000
$66,000
Work-in-process inventory
90,000
48,000
Finished goods inventory
57,000
45,000
During 2012, $75,000 of raw materials were purchased, direct labor costs amounted to $90,000, and manufacturing overhead incurred was $120,000.
Refer to Exhibit 16-3. Garret Manufacturing Company’s cost of goods sold for the year 2012 is:
76. Michigan Motors has a beginning finished goods inventory of $81,600, cost of raw material purchases of
$106,800, cost of goods manufactured of $176,400, and an ending finished goods inventory of $92,400. The
cost of goods sold for this company is:
77. The manufacturing operations of Beam Company had the following inventory balances for 2012:
December 31
Raw materials
$48,000
Work-in-process
28,000
Finished goods
88,000
If Beam’s cost of goods manufactured for 2012 was $152,000, what was Beam’s cost of goods sold for the year?
78. The management process in a service organization is much like that of a(n):
79. When comparing a service company to a manufacturing company, the service company is less likely to
have:
80. The most significant similarity between service companies and manufacturing companies is that both will
likely have a significant amount of:
81. The amount billed to a customer from a computer consulting firm may include:
82. When supplies, direct labor, and overhead used to produce a service are billed, the costs of these items are
debited to:
83. In a service firm, overhead is generally assigned to services on an activity measure such as:
84. As overhead costs are incurred in a service firm, the costs are debited to a(n):
85. As overhead costs are allocated to services in a service firm, the entry would include a:
86. At year-end, a service company has a credit balance in the overhead account. This means that:
87. Any over- or underapplied overhead that exists at year-end would generally be closed to:
88. Service costs are transferred from Work-in-Process Services to Cost of Services when the:
89. Which of the following typically would NOT have Work in Process inventory: