Achievement Test 7: Chapters 14-15 Name __________________________
Accounting, 5e Instructor _______________________
Section # _______ Date _________
Part
I
II
III
IV
Total
Points
30
20
22
28
100
Score
PART I — MULTIPLE CHOICE (30 points)
Instructions: Designate the best answer for each of the following questions.
____ 1. A debit balance in the Manufacturing Overhead account at the end of an interim month
means that
a. the balance should be reported as an asset in the monthly balance sheet.
b. corrective action by management is necessary.
c. overhead has been underapplied.
d. cost of goods sold should be credited on the monthly income statement.
____ 2. In a job order cost system, which of the following accounts is not a control account?
a. Raw Materials Inventory
b. Factory Labor
c. Finished Goods Inventory
d. Manufacturing Overhead
____ 3. In the current assets section of the balance sheet, in which order are manufacturing
inventories listed?
a. Raw materials, work in process, finished goods
b. Finished goods, work in process, raw materials
c. Work in process, finished goods, raw materials
d. Finished goods, raw materials, work in process
____ 4. Which one of the following costs is a component of both manufacturing overhead and
total manufacturing costs?
a. Direct labor
b. Direct materials
c. Selling and administrative costs
d. Factory utilities
____ 5. Manufacturing costs are typically classified as
a. product costs or period costs.
b. direct materials or direct labor.
c. direct materials, direct labor, or manufacturing overhead.
d. direct materials, direct labor, or selling and administrative.
Test Bank for Accounting, Fifth Edition
AT7- 2
The following data should be used for questions 6–9:
Raw materials inventory, January 1 $ 12,000
Raw materials inventory, December 31 16,000
Work in process, January 1 5,000
Work in process, December 31 8,000
Finished goods, January 1 17,000
Finished goods, December 31 12,000
Raw materials purchases 118,000
Direct labor 165,000
Factory utilities 64,000
Indirect labor 12,000
Factory depreciation 18,000
Selling and administrative expenses 220,000
____ 6. How much is the cost of the direct materials used?
a. $118,000
b. $114,000
c. $122,000
d. $130,000
____ 7. Assume your answer to question 6 above is $130,000. How much are total
manufacturing costs?
a. $389,000
b. $393,000
c. $295,000
d. $609,000
____ 8. Assume your answer to question 7 above is $400,000. How much is cost of goods
manufactured?
a. $400,000
b. $389,000
c. $397,000
d. $403,000
____ 9. Assume your answer to question 8 above is $420,000. How much is cost of goods
sold?
a. $420,000
b. $408,000
c. $295,000
d. $425,000
____ 10. The formula for computing a predetermined overhead rate is
a. estimated annual overhead costs ÷ estimated annual operating activity.
b. estimated annual overhead costs ÷ actual annual operating activity.
c. actual annual overhead costs ÷ actual annual operating activity.
d. actual annual overhead costs ÷ estimated annual operating activity.
____ 11. Which one of the following is an example of a period cost?
a. Maintenance on factory machines
b. Wages of factory workers
c. Salesmen’s commissions
d. Depreciation on the factory building
Achievement Test 7
AT7- 3
____ 12. When production costs are debited to Work in Process Inventory, which accounts will
be credited?
a. Raw Materials Inventory, Factory Labor, and Finished Goods Inventory
b. Manufacturing Overhead, Factory Labor, and Cost of Goods Sold
c. Raw Materials Inventory, Factory Labor, and Manufacturing Overhead
b. Accounts Payable, Factory Wages Payable, and Accumulated Depreciation
____ 13. What are the functions of management in an organization?
a. Planning, controlling, and decision making
b. Planning, directing, and controlling
c. Directing, controlling, and decision making
d. Directing, planning, and decision making
____ 14. Which one of the following is not one of the major activities of managerial accounting?
a. Providing a basis for controlling costs by comparing actual results with planned
objectives
b. Preparing financial statements designed primarily for stockholders and creditors
c. Preparing internal reports for management
d. Determining the behavior of costs as activity levels change
____ 15. Which of the following would most likely use a job order cost system?
a. Cement manufacturer
b. Cat food manufacturer
c. Specialty printing company
d. Automobile manufacturer
Test Bank for Accounting, Fifth Edition
AT7- 4
PART II — CLASSIFICATION OF COSTS AND EXPENSES (20 points)
Instructions: Classify the following manufacturing costs and expenses by using the following
code letters:
A. Direct materials cost
B. Direct labor cost
C. Manufacturing overhead cost
D. Period cost
Wood You Manufacturing Company incurs the following costs and expenses in making furniture:
____ 1. Insurance on delivery equipment
____ 2. Oak and cherry wood used in desks and chairs
____ 3. Lubricants, rosin, and polishing compounds used in manufacturing
____ 4. Advertising in trade magazines
____ 5. Rent on leased factory machinery
____ 6. Wages of assembly line workers
____ 7. Salesperson’s commissions
____ 8. Insurance on factory machines
____ 9. Depreciation on factory machinery
____ 10. Wages of factory janitors
Achievement Test 7
AT7- 5
PART III—DETERMINE WORK IN PROCESS AND FINISHED GOODS BALANCES (22 points)
Hanover Manufacturing begins operations on April 1. Information from job cost sheets shows the
following:
Manufacturing Costs Assigned (non-cumulative)
Job April May June
15 $10,200
16 5,100 $6,400
18 3,600 5,900 $4,000
19 7,300 7,400
20 3,100
Job 15 was completed in April. Job 16 was completed in May. Job 18 was completed in June.
Each job was sold in the month following completion.
Instructions: Determine the following amounts:
1. Work in process inventory, April 30 $_______________
2. Finished goods inventory, April 30 $_______________
3. Work in process inventory, May 31 $_______________
4. Finished goods inventory, May 31 $_______________
5. Work in process inventory, June 30 $_______________
6. Finished goods inventory, June 30 $_______________
Test Bank for Accounting, Fifth Edition
AT7- 6
PART IV — JOB ORDER COST ACCOUNTING ENTRIES (28 points)
The ledger accounts of CynaWood Cabinet Company are presented below, with an identification
number for each.
Instructions: Prepare appropriate job order cost system entries to record the data/events given
below. Place the appropriate identification number(s) in the debit and credit columns provided
and the dollar amount in the adjoining column.
1. Cash 9. Accumulated Depreciation
2. Accounts Receivable 10. Sales
3. Raw Materials Inventory 11. Depreciation Expense
4. Work in Process Inventory 12. Factory Labor
5. Finished Goods Inventory 13. Wages Expense
6. Manufacturing Overhead 14. Cost of Goods Sold
7. Accounts Payable 15. Other Accounts
8. Factory Wages Payable
——————————————————————————————————————————
Account(s) Account(s) Dollar
Entry Information Debited Credited Amount
——————————————————————————————————————————
1. Purchased raw materials on account—$96,000
——————————————————————————————————————————
2. Incurred factory labor—$75,000
——————————————————————————————————————————
3. Charged direct labor to job X43—$68,000
——————————————————————————————————————————
4. Charged direct materials to job X43—$82,000
——————————————————————————————————————————
5. Incurred manufacturing overhead on account—
$38,000
——————————————————————————————————————————
6. Recorded the remaining factory labor as indirect
labor
——————————————————————————————————————————
7. Recognized depreciation on factory equipment—
$11,000
——————————————————————————————————————————
8. Charged overhead to job X43 at 80% of direct labor
cost
——————————————————————————————————————————
9. Recorded completion of job X43
——————————————————————————————————————————
10. Recorded cost of sales for job X43
——————————————————————————————————————————
11. Recorded revenue from sale of job X43 on
account— $330,000
——————————————————————————————————————————
12. Assume total actual overhead was $560,000 and
total applied overhead was $547,000 for the year.
Record the entry to close the manufacturing
overhead account.
Achievement Test 7
AT7- 7
Solutions — Achievement Test 7: Chapters 14–15
PART I — MULTIPLE CHOICE (30 points)
PART II — CLASSIFICATION OF COSTS AND EXPENSES (20 points)
PART III—DETERMINE WORK IN PROCESS AND FINISHED GOODS BALANCES (22 points)
PART IV — JOB ORDER COST ACCOUNTING ENTRIES (28 points)*