NAME: ____________________________________________ DATE: ___________________________ TRUE-FALSE STATEMENTS 1. 2. 3. 4. . !. ". $. +. 1,. 11. 12. 13. 14. 1 . 1!. 1". 1$.

1+. 2,. 21. 22. 23. 24. 2 . 2!. 2". 2$. 2+. 3,. 31. 32. 33. 34. 3 . Cost accounting is primarily concerned with accumulating information about product costs. A job order cost system is most appropriate when a large volume of uniform products are produced. A process cost accounting system is appropriate for similar products that are continuously mass produced. The perpetual inventory method cannot be used in a job order cost system. A job order cost system and a process cost system are two alternative methods for valuing inventories. A job order cost system identifies costs with a particular job rather than with a set time period. A company may use either a job order cost system or a process cost system# but not both. %aw &aterials 'nventory# (actory )abor# and &anufacturing *verhead are all control accounts in the general ledger when a job order cost accounting system is used. Accumulating and assigning manufacturing costs are two important activities in a job order cost system. %ecording the ac-uisition of raw materials is a part of accumulating manufacturing costs. &anufacturing costs are generally incurred in one period and recorded in a subse-uent period. The .urchases account is credited for all raw materials purchase returns and allowances. The stores ledger cards are the subsidiary ledger for %aw &aterials 'nventory control account in the general ledger. /hen raw materials are purchased# the /or0 in .rocess 'nventory account is debited. (actory labor should be assigned to selling and administrative e1penses on a proportionate basis. (ringe benefits and payroll ta1es associated with factory wor0ers should be accumulated as a part of (actory )abor. 2ob order cost sheets constitute the subsidiary ledger of the control account /or0 'n .rocess 'nventory. 'n a job order cost system# each entry to the /or0 'n .rocess 'nventory account should be accompanied by a posting to one or more job cost sheets. 3irect materials re-uisitioned from the storeroom should be charged to the /or0 'n .rocess 'nventory account and the job cost sheets for the individual jobs on which the materials were used. &anufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred. There should be a separate job cost sheet for each job. Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job. The formula for the predetermined overhead rate is estimated annual overhead costs divided by an estimated activity base. Actual manufacturing overhead costs should be charged to the /or0 in .rocess 'nventory account as they are incurred. A good system of internal control re-uires that the job order cost sheet be destroyed as soon as the job is complete. (inished 4oods 'nventory is charged for the cost of jobs completed during a period. /hen goods are sold# the Cost of 4oods 5old account is debited and /or0 in .rocess 'nventory account is credited. Total manufacturing costs for a period consists of the costs of direct materials used# the cost of direct labor incurred# and the manufacturing overhead applied during the period. *verapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs. 'f monthly financial statements are prepared# underapplied overhead is shown as a prepaid e1pense on the balance sheet. A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company. The cost of raw materials purchased is credited to %aw &aterials 'nventory when materials are received. %e-uisitions for direct materials are posted daily to the individual job cost sheets. The predetermined overhead rate is based on the relationship between estimated annual overhead costs and e1pected annual operating activity e1pressed in terms of a common activity base. At the end of the year# underapplied overhead is usually credited to Cost of 4oods 5old.

MULTIPLE CHOICE QUESTIONS: Encircle the correct letter 3!. /hich of the following is one of the components of cost accounting6 a. 't involves measuring product costs. b. 't involves the determination of company profits.

c. 't re-uires 4AA. to be applied. d. 't re-uires cost minimi7ing principles. 3". A major purpose of cost accounting is to a. classify all costs as operating or nonoperating. b. measure# record# and report period costs. c. provide information to stoc0holders for investment decisions. d. measure# record# and report product costs. The two basic types of cost accounting systems are a. job order and job accumulation systems. c. process cost and batch systems. b. job order and process cost systems. d. job order and batch systems.

3$.

3+.

A process cost system would most li0ely be used by a company that ma0es a. motion pictures. b. repairs to automobiles. c. brea0fast cereal. d. college graduation announcements. /hich of the following would be accounted for using a job order cost system6 a. The production of personal computers b. The production of automobiles c. The refining of petroleum d. The construction of a new campus building .rocess costing is used when a. the production process is continuous. b. production is aimed at filling a specific customer order. c. dissimilar products are involved. d. costs are to be assigned to specific jobs. .rocess costing is not used when a. similar goods are being produced. b. large volumes are produced. c. jobs have distinguishing characteristics. d. a series of connected manufacturing processes is necessary. An important feature of a job order cost system is that each job a. must be similar to previous jobs completed. b. has its own distinguishing characteristics. c. must be completed before a new job is accepted. d. consists of one unit of output. As of 3ecember 31# 2,,$# 5tand 5till 'ndustries had .1# ,, of raw materials inventory. At the beginning of 2,,$# there was .1#2,, of materials on hand. 3uring the year# the company purchased .1$3#,,, of materials8 however# it paid for only .1" # ,,. 9ow much inventory was re-uisitioned for use on jobs during 2,,$6 a. .1" #2,, b. .1$2#",, c. .1$3#3,, d. .1" #$,, The flow of costs in a job order cost system a. involves accumulating manufacturing costs incurred and assigning the accumulated costs to wor0 done. b. cannot be measured until all jobs are complete. c. measures product costs for a set time period. d. generally follows a )'(* cost flow assumption. 'n a job order cost accounting system# the %aw &aterials 'nventory account is a. an e1pense. b. a control account. c. not used. d. a period cost. /hen a job is completed and all costs have been accumulated on a job cost sheet# the journal entry that should be made is a. (inished 4oods 'nventory 3irect &aterials 3irect )abor &anufacturing *verhead

4,.

41.

42.

43.

44.

4 .

4!. 4".

b. /or0 'n .rocess 'nventory 3irect &aterials 3irect )abor &anufacturing *verhead c. %aw &aterials 'nventory /or0 'n .rocess 'nventory d. (inished 4oods 'nventory /or0 'n .rocess 'nventory 4$. The two major steps in the flow of costs are a. allocating and assigning. c. accumulating and assigning. b. ac-uiring and accumulating. d. accumulating and amorti7ing.

4+.

The %aw &aterials 'nventory account is a. a subsidiary account. b. debited for invoice costs and freight costs chargeable to the purchaser. c. debited for purchase discounts ta0en. d. debited for purchase returns and allowances. %ecords of individual items of raw materials would not be maintained a. electronically. b. manually. c. on store ledger cards. d. in the %aw &aterials 'nventory account. Cost of raw materials is debited to %aw &aterials 'nventory when the a. materials are ordered. b. materials are received. c. materials are put into production. d. bill for the materials is paid. %aw &aterials 'nventory records are also referred to as a. the %aw &aterials control account. b. the store ledger cards. c. the purchases journal. d. periodic inventory records. After all postings have been completed# the sum of the balances in the raw materials subsidiary ledger should e-ual the a. balance in the %aw &aterials 'nventory control account. b. cost of materials charged to /or0 in .rocess 'nventory. c. cost of materials purchased. d. cost of materials placed into production. (actory labor costs a. are accumulated in a control account. c. include vacation pay. (actory )abor is a;n< a. e1pense account. c. subsidiary account. =line &anufacturing has the following labor costs> (actory?4ross wages (actory?@et wages Amployer .ayroll Ta1es .ayable .1+ #,,, 1!,#,,, 2 #,,, b. do not include pension costs. d. are based on wor0ers: net pay. b. control account. d. manufacturing cost clearing account.

,.

1.

2.

3.

4.

!.

The entry to record the cost of factory labor and the associated payroll ta1 e1pense will include a debit to (actory )abor for a. .22,#,,,. b. .1+ #,,,. c. .1$ #,,,. d. .1",#,,,. ". (actory labor costs a. accumulate in advance of utili7ation. b. accumulate in a control account. c. include sic0 pay earned by factory wor0ers. d. accumulate in the (actory )abor A1pense account.

$.

/hich of the following is not a control account6 a. &anufacturing *verhead c. Accounts %eceivable

b. (actory )abor d. %aw &aterials 'nventory d. raw materials inventory.

+. !,.

&anufacturing *verhead would not have a subsidiary account for a. utilities. b. property ta1es. c. insurance. The entry to record the ac-uisition of raw materials on account is a. /or0 in .rocess 'nventory Accounts .ayable b. &anufacturing *verhead %aw &aterials 'nventory Accounts .ayable c. Accounts .ayable %aw &aterials 'nventory d. %aw &aterials 'nventory Accounts .ayable

!1.

/hich one of the following best describes a job cost sheet6 a. 't is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. b. 't is used to trac0 manufacturing overhead costs to specific jobs. c. 't is used by management to understand how direct costs affect profitability. d. 't is a daily form that management uses for trac0ing wor0er productivity on which employee raises are based. 2ob cost sheets constitute the subsidiary ledger for the a. (inished 4oods 'nventory account. c. /or0 'n .rocess 'nventory account. b. Cost of 4oods 5old account. d. Cost of 4oods &anufactured account.

!2.

!3.

A materials re-uisition slip showed that direct materials re-uested were . 3#,,, and indirect materials re-uested were .+#,,,. The entry to record the transfer of materials from the storeroom is a. /or0 'n .rocess 'nventory............................................................ 3#,,, %aw &aterials 'nventory..................................................... 3#,,, b. 3irect &aterials............................................................................. 3#,,, 'ndirect &aterials.......................................................................... +#,,, /or0 in .rocess 'nventory.................................................. !2#,,, c. &anufacturing *verhead............................................................... !2#,,, %aw &aterials 'nventory..................................................... !2#,,, d. /or0 'n .rocess 'nventory............................................................ 3#,,, &anufacturing *verhead............................................................... +#,,, %aw &aterials 'nventory..................................................... !2#,,, The job cost sheet does not show a. costs chargeable to a specific job. c. the unit cost of a completed job. b. the total costs of a completed job. d. the cost of goods sold.

!4.

! .

Bnder an effective system of internal control# the authori7ation for issuing materials is made a. orally. b. on a prenumbered materials re-uisition slip. c. by the accounting department. d. by anyone on the production line. A copy of the materials re-uisition slip a. is routed to the treasurerCs office for payment. b. becomes the subsidiary ledger for the /or0 in .rocess 'nventory. c. can be used as a subsidiary ledger for %aw &aterials 'nventory. d. is retained by the storeroom# and the original is sent to accounting.

!!.

!".

&aterials re-uisition slips are costed a. by production supervisors. b. by factory personnel who wor0 on the production line. c. after the goods have been sold. d. using any of the inventory costing methods. .osting to control accounts in a costing system are made a. monthly. b. daily. c. annually. d. semiDannually.

!$. !+.

/hich one of the following should be e-ual to the balance of the wor0 in process inventory account at the end of the period6 a. The total of the amounts transferred from raw materials for the current period b. The sum of the costs shown on the job cost sheets of unfinished jobs c. The total of manufacturing overhead applied to wor0 in process for the period d. The total manufacturing costs for the period /hich of the following shows entries only to control accounts6 a. (actory )abor /ages .ayable b. /or0 in .rocess (actory )abor %aw &aterials 'nventory /ages .ayable c. /or0 in .rocess &anufacturing *verhead %aw &aterials 'nventory d. (actory )abor %aw &aterials 'nventory Accounts .ayable /ages .ayable A time tic0et does not indicate the a. employeeCs name. b. account to be charged. c. number of personal e1emptions claimed by the employee. d. job number. /hich one of the following is a source document that impacts the job cost sheet6 a. %aw materials receiving slips b. &aterials purchase orders c. )abor time tic0ets d. (inished goods shipping documents Time tic0ets should be approved by a. the audit committee. c. the employeeCs supervisor. b. coDwor0ers. d. the payroll department.

",.

"1.

"2.

"3.

"4.

'f the entry to assign factory labor showed only a debit to /or0 'n .rocess 'nventory# then all labor costs were a. direct labor. b. indirect labor. c. overtime related. d. regular hours. The principal accounting record used in assigning costs to jobs is a. a job cost sheet. b. the cost of goods manufactured schedule. c. the &anufacturing *verhead control account. d. the store ledger cards. The following information is available for completed 2ob @o. 4,2> 3irect materials# .!,#,,,8 direct labor# .+,#,,,8 manufacturing overhead applied# .4 #,,,8 units produced# #,,, units8 units sold# 4#,,, units. The cost of the finished goods on hand from this job is a. .3,#,,,. b. .1+ #,,,. c. .3+#,,,. d. .1 !#,,,.

" .

"!.

"".

5portly# 'nc. completed 2ob @o. E14 during 2,,$. The job cost sheet listed the following> 3irect materials 3irect labor &anufacturing overhead applied Bnits produced Bnits sold .33#,,, .1$#,,, .12#,,, 3#,,, units 1#$,, units d. .3,#!,,

9ow much is the cost of the finished goods on hand from this job6 a. .!3#,,, b. .3"#$,, c. .2 #2,, "$.

&adison 'nc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2,,$ totaled .12#,,, of materials# .!#,,, of direct labor costs# and .4#,,, of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Eeginning wor0 in process totaled .1,#,,,# and the ending balance is .!#,,,. 3uring the year# the company completed 4, machines. 9ow much is the cost per machine6 a. .4 , b. .! , c. . , d. .$,, As of 3ecember 31# 2,,$# @ilsen 'ndustries had .2#,,, of raw materials inventory. At the beginning of 2,,$# there was .1#!,, of materials on hand. 3uring the year# the company purchased .244#,,, of materials8 however it paid for only .234#,,,. 9ow much inventory was re-uisitioned for use on jobs during 2,,$6 a. .244#4,, b. .234#4,, c. .233#!,, d. .243#!,, Cost of goods manufactured e-uals .44#,,, for 2,,$. (inished goods inventory is .2#,,, at the beginning of the year and F # ,, at the end of the year. Eeginning and ending wor0 in process for 2,,$ are .4#,,, and . #,,,# respectively. 9ow much is cost of goods sold for the year6 a. .4!# ,, b. .42#,,, c. .4,# ,, d. .4"# ,, A company e1pected its annual overhead costs to be .!,,#,,, and direct labor costs to be .1#,,,#,,,. Actual overhead was . $,#,,,# and actual labor costs totaled .1#1,,#,,,. 9ow much is the company:s predetermined overhead rate to the nearest cent6 a. .,. $ b. .,. 3 c. .,.!, d. .,. Ge0te0# 'nc. thin0s machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was .!1 #,,,. The company used 1#,,, hours of processing on 2ob @o. E12 during the period and incurred overhead costs totaling .!3,#,,,. The budgeted machine hours for the year totaled 2,#,,,. 9ow much overhead should be applied to 2ob @o. E126 a. .!3, b. .3,#" , c. .31# ,, d. .!1 9ill &fg. provided the following information from its accounting records for 2,,$> A1pected production Actual production Eudgeted overhead Actual overhead 3,#,,, labor hours 2$#,,, labor hours .+,,#,,, .$",#,,,

"+.

$,.

$1.

$2.

$3.

9ow much is the overhead application rate if 9ill bases the rate on direct labor hours6 a. .31.," per hour b. .3,.,, per hour c. .2+.,, per hour d. .2$.,, per hour $4. =inney Company applies overhead on the basis of 1 ,H of direct labor cost. 2ob @o. 1"! is charged with . ,#,,, of direct materials costs and .!,#,,, of manufacturing overhead. The total manufacturing costs for 2ob @o. 1"! is a. .11,#,,,. b. .2,,#,,,. c. .1 ,#,,,. d. .13 #,,,. %edman Company manufactures customi7ed des0s. The following pertains to 2ob @o. +"$> 3irect materials used 3irect labor hours wor0ed 3irect labor rate per hour &achine hours used Applied factory overhead rate per machine hour .!#3,, 3,, .12.,, 2,, .22.,,

$ .

/hat is the total manufacturing cost for 2ob @o. +"$6 a. .13#1,, b. .14#3,, c. .1 #3,, $!.

d. .1!# ,,

9enson Company applies overhead on the basis of 12,H of direct labor cost. 2ob @o. 1+, is charged with .!,#,,, of direct materials costs and .+,#,,, of manufacturing overhead. The total manufacturing costs for 2ob @o. 1+, is a. .1 ,#,,,. b. .2 $#,,,. c. .1!2#,,,. d. .22 #,,,. @orman Company manufactures customi7ed des0s. The following pertains to 2ob @o. + 3> 3irect materials used 3irect labor hours wor0ed 3irect labor rate per hour &achine hours used Applied factory overhead rate per machine hour /hat is the total manufacturing cost for 2ob @o. + 36 a. .1"#!,, b. .1+#2,, c. .2,#!,, .$#4,, 3,, .1!.,, 2,, .3,.,, d. .22#2,,

$".

$$.

*liver Company provided the following information from its accounting records for 2,,$> A1pected production Actual production Eudgeted overhead Actual overhead !,#,,, labor hours !#,,, labor hours .1# ,,#,,, .1#4 ,#,,,

9ow much is the overhead application rate if *liver Company bases it on direct labor hours6 a. .2 .,, per hour b. .2!."+ per hour c. .2 .$+ per hour d. .24.1" per hour $+. The labor costs that have been identified as indirect labor should be charged to a. manufacturing overhead. b. direct labor. c. the individual jobs wor0ed on. d. salary e1pense. &anufacturing overhead is applied to each job a. at the time when the overhead cost is incurred. b. by means of a predetermined overhead rate. c. at the end of the year when actual costs are 0nown. d. only if the overhead costs can be directly traced to that job. The predetermined overhead rate is based on the relationship between a. estimated annual costs and actual activity. b. estimated annual costs and e1pected annual activity. c. actual monthly costs and actual annual activity. d. estimated monthly costs and actual monthly activity. The predetermined overhead rate is a. determined on a moving average basis throughout the year. b. not calculated until actual overhead costs are incurred. c. determined at the beginning of the year. d. determined at the end of the current year. 'n calculating a predetermined overhead rate# a recent trend in automated manufacturing operations is to choose an activity base related to a. direct labor hours. b. indirect labor pesos. c. machine hours. d. raw materials pesos. 'f annual overhead costs are e1pected to be ." ,#,,, and direct labor costs are e1pected to be .1#,,,#,,,# then a. .1.33 is the predetermined overhead rate. b. for every peso of manufacturing overhead# " centavos of direct labor will be assigned. c. for every peso of direct labor# " centavos of manufacturing overhead will be assigned. d. a predetermined overhead rate cannot be determined.

+,.

+1.

+2.

+3.

+4.

+ .

*verhead application is recorded with a a. credit to /or0 in .rocess 'nventory. c. debit to &anufacturing *verhead.

b. credit to &anufacturing *verhead. d. credit to job cost sheets.

+!.

&anufacturing overhead applied is added to direct labor incurred and to what other item to e-ual total manufacturing costs for the period6 a. 4oods available for sale b. %aw materials purchased c. /or0 in process d. 3irect materials used At the beginning of the year# &onroe Company estimates annual overhead costs to be .1# ,,#,,, and that 3,,#,,, machine hours will be operated. Bsing machine hours as a base# the amount of overhead applied during the year if actual machine hours for the year was 31 #,,, hours is a. .1# ,,#,,,. b. .1#42$# "2. c. .1#, ,#,,,. d. .1# " #,,,. Cost of goods sold is obtained from a. analysis of all the control accounts in the cost system. b. the finished goods inventory records. c. the wor0 in process inventory records. d. the %aw &aterials 'nventory control account. /hen determining costs of jobs# how does a company account for indirect materials6 a. 't is added to wor0 in process as used. b. 't remains part of raw materials inventory. c. 't is transferred out of raw materials into manufacturing overhead when used. d. 't is transferred out of raw materials into wor0 in process as used. 'n a job order cost system# a credit to &anufacturing *verhead will be accompanied by a debit to a. Cost of 4oods &anufactured. b. (inished 4oods 'nventory. c. /or0 in .rocess 'nventory. d. %aw &aterials 'nventory. 3uring 2,,$# )awson &anufacturing e1pected 2ob @o. 2! to cost .!,,#,,, of overhead# .1#,,,#,,, of materials# and .4,,#,,, in labor. )awson applied overhead based on direct labor cost. Actual production re-uired an overhead cost of . !,#,,,# .1#1,,#,,, in materials used# and .44,#,,, in labor. All of the goods were completed. /hat amount was transferred to (inished 4oods6 a. .2#,,,#,,, b. .2#1,,#,,, c. .2#14,#,,, d. .2#2,,#,,, 3ebits to /or0 in .rocess 'nventory are accompanied by a credit to all but which one of the following accounts6 a. %aw &aterials 'nventory b. (actory )abor c. &anufacturing *verhead d. Cost of 4oods 5old /hich of the following is not viewed as part of accumulating manufacturing costs in a job order cost system6 a. Cost of goods sold is recogni7ed b. %aw materials are purchased c. (actory labor is incurred d. &anufacturing overhead is incurred /hich of the following is not viewed as part of assigning manufacturing costs in a job order cost system6 a. &anufacturing overhead is applied b. %aw materials are used c. &anufacturing overhead is incurred d. Completed goods are recogni7ed 'n determining total manufacturing costs on the cost of goods manufactured schedule# a. beginning wor0 in process inventory should have a 7ero balance. b. actual manufacturing overhead costs appear as a deduction. c. manufacturing overhead applied is added to direct materials and direct labor. d. ending wor0 in process inventory is deducted from beginning wor0 in process inventory.

+".

+$.

++.

1,,.

1,1.

1,2.

1,3.

1,4.

1, .

Use the following information for questions 106107. Ea1ter Company developed the following data for the current year> Eeginning wor0 in process inventory 3irect materials used .1 ,#,,, +,#,,,

Actual overhead *verhead applied Cost of goods manufactured Total manufacturing costs 1,!. 1,". 1,$.

1$,#,,, 13 #,,, 1! #,,, 4 ,#,,, d. .1$,#,,,. d. .13 #,,,.

Ea1ter CompanyCs direct labor cost for the year is a. .4 #,,,. b. .22 #,,,. c. .13 #,,,. Ea1ter CompanyCs ending wor0 in process inventory is a. .43 #,,,. b. .3,,#,,,. c. .2$ #,,,. %ussell &anufacturing Company developed the following data> Eeginning wor0 in process inventory 3irect materials used Actual overhead *verhead applied Cost of goods manufactured Anding wor0 in process .1$,#,,, 14,#,,, 22,#,,, 1!,#,,, 24,#,,, 3,,#,,,

%ussell &anufacturing CompanyCs total manufacturing costs for the period is a. .3$,#,,,. b. .3!,#,,,. c. .2!,#,,,. d. cannot be determined 1,+. /hich of the following is not used in assigning manufacturing costs to wor0 in process inventory6 a. Actual manufacturing overhead b. Time tic0ets c. &aterials re-uisitions d. .redetermined overhead rate *n the cost of goods manufactured schedule# the cost of goods manufactured agrees with the a. balance of (inished 4oods 'nventory at the end of the period. b. total debits to /or0 in .rocess 'nventory during the period. c. amount transferred from /or0 in .rocess 'nventory to (inished 4oods during the period. d. debits to Cost of 4oods 5old during the period. 4annon Company had the following information at 3ecember 31> (inished goods inventory# 2anuary 1 (inished goods inventory# 3ecember 31 . ,#,,, 1 ,#,,,

11,.

111.

'f the cost of goods manufactured during the year amounted to .2#1,,#,,, and annual sales were .2#" ,#,,,# the amount of gross profit for the year is a. .! ,#,,,. b. .2#,,,#,,,. c. ." ,#,,,. d. . ,#,,,. 112. Gernon Company incurred direct materials costs of . ,,#,,, during the year. &anufacturing overhead applied was .+,#,,, and is applied at the rate of !,H of direct labor costs. Gernon Company:s total manufacturing costs for the year was a. ."4,#,,,. b. .!44#,,,. c. . +,#,,,. d. .+44#,,,.

Use the following information for questions 113114. .ayne Company developed the following data for the current year> Eeginning wor0 in process inventory 3irect materials used Actual overhead *verhead applied Cost of goods manufactured Total manufacturing costs 113. 114. . 34#,,, 2#,,, 44#,,, 4!#,,, 22 #,,, 214#,,, d. .$2#,,,

9ow much is .ayne CompanyCs direct labor cost for the year6 a. .12"#,,, b. .1 ,#,,, c. .11!#,,,

9ow much is .ayne CompanyCs ending wor0 in process inventory for the year6 a. .23#,,, b. .121#,,, c. .21#,,, d. .+3#,,,

11 .

Chmelar &anufacturing Company developed the following data> Eeginning wor0 in process inventory 3irect materials used Actual overhead *verhead applied Cost of goods manufactured Anding wor0 in process . 2,#,,, 12,#,,, 14,#,,, 13 #,,, 32,#,,, 1 #,,, d. .3, #,,,

9ow much are total manufacturing costs for the period6 a. .3+ #,,, b. .31 #,,, c. .2" #,,, 11!. Earger Company had the following information at 3ecember 31> (inished goods inventory# 2anuary 1 (inished goods inventory# 3ecember 31 .3,#,,, 42#,,,

'f the cost of goods manufactured during the year amounted to .!! #,,, and annual sales were .++$#,,,# how much is the amount of gross profit for the year6 a. .333#,,, b. .3,3#,,, c. .! 3#,,, d. .34 #,,, 11". Chin Company incurred direct materials costs of .3,,#,,, during the year. &anufacturing overhead applied was .2$,#,,, and is applied based on direct labor costs. The predetermined overhead rate is ",H. 9ow much are Chin Company:s total manufacturing costs for the year6 a. .""!#,,, b. .",,#,,, c. . $,#,,, d. .+$,#,,, 3uring 2,,$# 3enson &anufacturing e1pected 2ob @o. 1 to cost .4 ,#,,, of overhead# ." ,#,,, of materials# and .3,,#,,, in labor. 3enson applied overhead based on direct labor cost. Actual production re-uired an overhead cost of .42,#,,,# .$2 #,,, in materials used# and .33,#,,, in labor. All of the goods were completed. /hat amount was transferred to (inished 4oods6 a. .1#!, #,,, b. .1#! ,#,,, c. .1# ,,#,,, d. .1# " #,,, 3uring 2,,$# 5pec0 &anufacturing e1pected 2ob @o. + to cost .4 ,#,,, of overhead# ." ,#,,, of materials# and .3,,#,,, in labor. 5pec0 applied overhead based on direct labor cost. Actual production re-uired an overhead cost of .42,#,,,# .$2 #,,, in materials used# and .33,#,,, in labor. All of the goods were completed. 9ow much is the amount of overD or underapplied overhead6 a. .3,#,,, underapplied b. .3,#,,, overapplied c. ." #,,, underapplied d. ." #,,, overapplied =imble Company applies overhead on the basis of machine hours. 4iven the following data# compute overhead applied and the underD or overapplication of overhead for the period> Astimated annual overhead cost .1#2,,#,,, Actual annual overhead cost .1#14 #,,, Astimated machine hours 3,,#,,, Actual machine hours 2$,#,,, a. b. c. d. 121. .1#12,#,,, applied and .2 #,,, overapplied .1#2,,#,,, applied and .2 #,,, overapplied .1#12,#,,, applied and .2 #,,, underapplied .1#14 #,,, applied and neither underD nor overapplied

11$.

11+.

12,.

Earnes Company applies overhead on the basis of machine hours. 4iven the following data# compute overhead applied and the underD or overapplication of overhead for the period> Astimated annual overhead cost Actual annual overhead cost Astimated machine hours Actual machine hours a. b. c. d. .1#4,,#,,, applied and .3,#,,, overapplied .1# ,,#,,, applied and .3,#,,, overapplied .1#4,,#,,, applied and .3,#,,, underapplied .1#43,#,,, applied and neither underD nor overapplied .1# ,,#,,, .1#43,#,,, 3" #,,, 3 ,#,,,

122.

A company assigned overhead to wor0 in process. At year end# what does the amount of overapplied overhead mean6 a. The overhead assigned to wor0 in process is greater than the estimated overhead costs. b. The overhead assigned to wor0 in process is less than the estimated overhead costs. c. The overhead assigned to wor0 in process is less than the actual overhead. d. The overhead assigned to wor0 in process is greater than the overhead incurred. 'f the &anufacturing *verhead account has a debit balance at the end of a period# it means that a. actual overhead costs were less than overhead costs applied to jobs. b. actual overhead costs were greater than overhead costs applied to jobs. c. actual overhead costs were e-ual to overhead costs applied to jobs. d. no jobs have been completed. 'f the manufacturing overhead costs applied to jobs wor0ed on were greater than the actual manufacturing costs incurred during a period# overhead is said to be a. underapplied. b. overapplied. c. in error. d. prepaid. At the end of the year# any balance in the &anufacturing *verhead account is generally eliminated by adjusting a. /or0 'n .rocess 'nventory. b. (inished 4oods 'nventory. c. Cost of 4oods 5old. d. %aw &aterials 'nventory. 'f &anufacturing *verhead has a credit balance at the end of the period# then a. overhead has been underapplied. b. the overhead assigned to /or0 in .rocess 'nventory is less than the overhead incurred. c. overhead has been overapplied. d. management must ta0e corrective action. The &anufacturing *verhead account shows debits of .3,#,,,# .24#,,,# and .2$#,,, and one credit for .$!#,,,. Eased on this information# manufacturing overhead a. has been overapplied. b. has been underapplied. c. has not been applied. d. shows a 7ero balance. /hen monthly financial statements are prepared# a difference between actual overhead and overhead applied will appear on a. the balance sheet. b. the income statement. c. the statement of stoc0holdersC e-uity. d. none of the financial statements. /hen monthly financial statements are prepared# overapplied overhead will appear as a. unearned revenue. b. a current asset. c. a loss on the income statement under I*ther A1penses and )osses.I d. miscellaneous e1pense. /hen monthly financial statements are prepared# underapplied overhead will appear as a. unearned revenue. b. a current asset. c. I*ther %evenues and 4ains#I on the income statement. d. a reduction to cost of goods sold. 'f manufacturing overhead has been underapplied during the year# the adjusting entry at the end of the year will show a a. debit to &anufacturing *verhead. b. credit to Cost of 4oods 5old. c. debit to /or0 in .rocess 'nventory. d. debit to Cost of 4oods 5old. 'f manufacturing overhead has been overapplied during the year# the adjusting entry at the end of the year will show a a. debit to &anufacturing *verhead. b. credit to (inished 4oods 'nventory c. debit to Cost of 4oods 5old. d. credit to /or0 in .rocess 'nventory.

123.

124.

12 .

12!.

12".

12$.

12+.

13,.

131.

132.

133.

The e1istence of underD or overapplied overhead at the end of the month a. is e1pected to be offset in future months. b. indicates that an error has been made. c. re-uires a retroactive adjustment to the cost of all jobs completed. d. is written off as a bad estimate e1pense. Conceptually# any underD or overapplied overhead at the end of the year should be allocated among all of the following e1cept a. cost of goods sold. b. ending wor0 in process inventory. c. ending raw materials inventory. d. ending finished goods inventory. 'f# at the end of the year# &anufacturing *verhead has been overapplied# it means that a. actual overhead costs were greater than the overhead assigned to jobs. b. actual overhead costs were less than the overhead assigned to jobs. c. overhead has not been applied to jobs still in process. d. cost of goods will have to be increased by the amount of the overapplied overhead. A process cost system would be used for all of the following except the a. manufacture of cereal. b. refining of petroleum. c. printing of wedding invitations. d. production of automobiles. 'n a job order cost system# it would be correct in recording the purchase of raw materials to debit a. /or0 in .rocess 'nventory. b. /or0 in .rocess and &anufacturing *verhead. c. %aw &aterials 'nventory. d. (inished 4oods 'nventory. 'n a manufacturing company# the cost of factory labor consists of all of the following except a. employer payroll ta1es. b. fringe benefits incurred by the employer. c. net earnings of factory wor0ers. d. gross earnings of factory wor0ers. /hich of the following is not a control account6 a. %aw &aterials 'nventory c. &anufacturing *verhead b. (actory )abor d. All of these are control accounts.

134.

13 .

13!.

13".

13$.

13+.

14,.

/hen the company assigns factory labor costs to jobs# the direct labor cost is debited to a. 3irect )abor. b. (actory )abor. c. &anufacturing *verhead. d. /or0 in .rocess 'nventory. 2innah Company applies overhead on the basis of 2,,H of direct labor cost. 2ob @o. ,1 is charged with .!,#,,, of direct materials costs and .$,#,,, of manufacturing overhead. The total manufacturing costs for 2ob @o. ,1 is a. .14,#,,,. b. .22,#,,,. c. .1$,#,,,. d. .2,,#,,,. Companies assign &anufacturing overhead to wor0 in process on an estimated basis through the use of a;n< a. actual overhead rate. b. estimated overhead rate. c. assigned overhead rate. d. predetermined overhead rate. *verapplied manufacturing overhead e1ists when overhead assigned to wor0 in process is a. more than overhead incurred and there is a debit balance in &anufacturing *verhead at the end of a period. b. less than overhead incurred and there is a debit balance in &anufacturing *verhead at the end of a period. c. more than overhead incurred and there is a credit balance in &anufacturing *verhead at the end of a period. d. less than overhead incurred and there is a credit balance in &anufacturing *verhead at the end of a period. "En o! Te"t"

141.

142.

143.