Question 1

Process costing is not used when

Accepted Answer

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. 
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.

Question 2

Gannon Company had the following information at December 31:   If the cost of goods manufactured during the year amounted to $1,260,000 and annual sales were $1,650,000, the amount of gross profit for the year is

Accepted Answer

A)  $390,000. 
B)  $1,200,000. 
C)  $450,000. 
D)  $330,000. 
A)  $390,000. 
B)  $1,200,000. 
C)  $450,000. 
D)  $330,000.

Question 3

Fort Corporation had the following transactions during its first month of operations:
1. Purchased raw materials on account, $85,000.
2. Raw Materials of $30,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,000 was classified as indirect materials.
3. Factory labor costs incurred were $100,000 of which $80,000 pertained to factory wages payable and $20,000 pertained to employer payroll taxes payable.
4. Time tickets indicated that $84,000 was direct labor and $16,000 was indirect labor.
5. Overhead costs incurred on account were $112,000.
6. Manufacturing overhead was applied at the rate of 150% of direct labor cost.
7. Goods costing $115,000 are still incomplete at the end of the month; the other goods were completed and transferred to finished goods.
8. Finished goods costing $100,000 to manufacture were sold on account for $130,000.
Instructions
Journalize the above transactions for Fort Corporation.

Accepted Answer

The answer of Fort Corporation had the following transactions during...

Question 4

A company assigned overhead to work in process. At year end, what does the amount of overapplied overhead mean?

Accepted Answer

A)  The overhead assigned to work in process is greater than the estimated overhead costs. 
B)  The overhead assigned to work in process is less than the estimated overhead costs. 
C)  The overhead assigned to work in process is less than the actual overhead. 
D)  The overhead assigned to work in process is greater than the overhead incurred. 
A)  The overhead assigned to work in process is greater than the estimated overhead costs. 
B)  The overhead assigned to work in process is less than the estimated overhead costs. 
C)  The overhead assigned to work in process is less than the actual overhead. 
D)  The overhead assigned to work in process is greater than the overhead incurred.

Question 5

During 2010, Cotte Manufacturing expected Job No. 59 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Cotte applied overhead based on direct labor cost. Actual production required an overhead cost of $280,000, $550,000 in materials used, and $220,000 in labor. All of the goods were completed. How much is the amount of over- or underapplied overhead?

Accepted Answer

A)  $20,000 underapplied 
B)  $20,000 overapplied 
C)  $50,000 underapplied 
D)  $50,000 overapplied 
A)  $20,000 underapplied 
B)  $20,000 overapplied 
C)  $50,000 underapplied 
D)  $50,000 overapplied

Question 6

Graham Manufacturing is a small manufacturer that uses machine-hours as its activity base for assigned overhead costs to jobs. The company estimated the following amounts for 2010 for the company and for Job 62:   
During 2010, the actual machine-hours totaled 94,000, and actual overhead costs were $71,000.
Instructions
(a) Compute the predetermined overhead rate.
(b) Compute the total manufacturing costs for Job 62.
(c) How much overhead is over or underapplied for the year for the company? State amount and whether it is over- or underapplied.
(d) If Graham Manufacturing sells Job 62 for $14,000, compute the gross profit.

Accepted Answer

(a) $72,000 / 90,000 = $0.80 per machine

Question 7

A ______________ cost system is appropriate when similar products are continuously produced, whereas a ______________ cost system would be more appropriate if the product is custom-made.

Accepted Answer

The answer of A ______________ cost system is appropriate when...

Question 8

The following information is available for Marks Company at December 31, 2010:   
Instructions
(a) Prepare a condensed cost of goods manufactured schedule.
(b) Prepare an income statement for the year through gross profit.

Accepted Answer

The answer of The following information is available for Marks...

Question 9

Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

Accepted Answer

A) True 
 B)False

Question 10

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

Accepted Answer

A) True 
 B)False

Question 11

Greer Company developed the following data for the current year:   How much is Greer Company's ending work in process inventory for the year?

Accepted Answer

A)  $46,000 
B)  $242,000 
C)  $42,000 
D)  $186,000 
A)  $46,000 
B)  $242,000 
C)  $42,000 
D)  $186,000

Question 12

There are two basic types of cost accounting systems: (1)__________________ system, and (2)__________________ system.

Accepted Answer

job order

Question 13

In a job order cost system, it would be correct in recording the purchase of raw materials to debit

Accepted Answer

A)  Work in Process Inventory. 
B)  Work in Process and Manufacturing Overhead. 
C)  Raw Materials Inventory. 
D)  Finished Goods Inventory. 
A)  Work in Process Inventory. 
B)  Work in Process and Manufacturing Overhead. 
C)  Raw Materials Inventory. 
D)  Finished Goods Inventory.

Question 14

Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows:   
Instructions
Compute the predetermined overhead rate.

Accepted Answer

$130,000 ÷

Question 15

In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit to

Accepted Answer

A)  Cost of Goods Manufactured. 
B)  Finished Goods Inventory. 
C)  Work in Process Inventory. 
D)  Raw Materials Inventory. 
A)  Cost of Goods Manufactured. 
B)  Finished Goods Inventory. 
C)  Work in Process Inventory. 
D)  Raw Materials Inventory.

Question 16

Cost accounting is primarily concerned with accumulating information about product costs.

Accepted Answer

A) True 
 B)False

Question 17

A job order cost system is most appropriate when a large volume of uniform products are produced.

Accepted Answer

A) True 
 B)False

Question 18

Chmelar Manufacturing Company developed the following data:   How much are total manufacturing costs for the period?

Accepted Answer

A)  $1,185,000 
B)  $945,000 
C)  $825,000 
D)  $915,000 
A)  $1,185,000 
B)  $945,000 
C)  $825,000 
D)  $915,000

Question 19

The accounting records of Roland Manufacturing Company include the following information:   
Manufacturing overhead is applied at a rate of 150% of direct labor cost.
Instructions
Answer the following questions:
1. What is the total of the debits to Work in Process Inventory during the year?
2. What is the amount transferred to Finished Goods Inventory during the year?
3. What is the cost of goods sold?

Accepted Answer

The answer of The accounting records of Roland Manufacturing Company...

Question 20

If the manufacturing overhead costs applied to jobs worked on were greater than the actual manufacturing costs incurred during a period, overhead is said to be

Accepted Answer

A)  underapplied. 
B)  overapplied. 
C)  in error. 
D)  prepaid. 
A)  underapplied. 
B)  overapplied. 
C)  in error. 
D)  prepaid.

Exam 20: Job Order Costing

Process costing is not used when

Gannon Company had the following information at December 31: If the cost of goods manufactured during the year amounted to $1,260,000 and annual sales were $1,650,000, the amount of gross profit for the year is

A company assigned overhead to work in process. At year end, what does the amount of overapplied overhead mean?

A ______________ cost system is appropriate when similar products are continuously produced, whereas a ______________ cost system would be more appropriate if the product is custom-made.

The following information is available for Marks Company at December 31, 2010: Instructions (a) Prepare a condensed cost of goods manufactured schedule. (b) Prepare an income statement for the year through gross profit.

Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

Greer Company developed the following data for the current year: How much is Greer Company's ending work in process inventory for the year?

There are two basic types of cost accounting systems: (1)__________________ system, and (2)__________________ system.

In a job order cost system, it would be correct in recording the purchase of raw materials to debit

Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows: Instructions Compute the predetermined overhead rate.

In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit to

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.

Chmelar Manufacturing Company developed the following data: How much are total manufacturing costs for the period?

If the manufacturing overhead costs applied to jobs worked on were greater than the actual manufacturing costs incurred during a period, overhead is said to be

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

A cost system is appropriate when similar products are continuously produced, whereas a cost system would be more appropriate if the product is custom-made.

There are two basic types of cost accounting systems: (1) system, and (2) system.