Question 1

Actual overhead costs are charged (debited)to the work in process account as they occur.

Accepted Answer

A) True 
 B)False

Question 2

The accounting records for Eisner Manufacturing Company included the following cost information relating to its first year of operations: $\begin{array}{|l|lr|}
\hline  \text {Direct materials} &\$ & 60,000 \
\hline  \text {Direct labor} &\$ & 80,000 \
\hline  \text {Fixed manufacturing overhead } &\$ & 100,000 \
\hline  \text {Variable manufacturing overhead} &\$ & 20,000 \
\hline
\end{array}$ Assume the company produced 10,000 units of inventory and sold 6,000 of these units during the year for $192,000.The cost per unit under variable and absorption costing would be,respectively:

Accepted Answer

A)  $5.00 and $11.00. 
B)  $16.00 and $26.00. 
C)  $14.00 and $10.00. 
D)  $19.00 and $30.00. 
A)  $5.00 and $11.00. 
B)  $16.00 and $26.00. 
C)  $14.00 and $10.00. 
D)  $19.00 and $30.00.

Question 3

If more overhead was applied than had been incurred,the balance in the manufacturing overhead account represents the amount of overapplied overhead.

Accepted Answer

A) True 
 B)False

Question 4

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 5

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

Accepted Answer

A) True 
 B)False

Question 6

What characteristic or feature of a service company distinguishes such a business from a manufacturing company?

Accepted Answer

Answers will vary
A service co

Question 7

By the end of the year,Shirley Company's manufacturing overhead account had a $1,500 credit balance.This means that overhead was underapplied during the year.

Accepted Answer

A) True 
 B)False

Question 8

Johnson Company estimates that its production workers will work 88,000 direct labor hours to produce 8,800 units during the upcoming period and that overhead costs will amount to $880,000.During the year,its manufacturing employees actually worked 100,000 direct labor hours to produce 10,000 units and incurred $1,100,000 of overhead costs.Because the goods made by Johnson are homogeneous (that is,they are identical),the company has decided it makes sense to use number of units as the allocation base for overhead.Based on this information the predetermined overhead rate is:

Accepted Answer

A)  $110.00 per unit. 
B)  $10.00 per direct labor hour. 
C)  $100.00 per unit. 
D)  $11.00 per direct labor hour. 
A)  $110.00 per unit. 
B)  $10.00 per direct labor hour. 
C)  $100.00 per unit. 
D)  $11.00 per direct labor hour.

Question 9

Haas Company paid $48,000 cash to purchase raw materials.The recognition of this event will:

Accepted Answer

A)  not affect total assets,decrease net income,and decrease cash flow. 
B)  decrease total assets,total equity,and net income. 
C)  not affect total assets,total equity,or net income. 
D)  decrease total assets,net income,and net cash flow from investing activities. 
A)  not affect total assets,decrease net income,and decrease cash flow. 
B)  decrease total assets,total equity,and net income. 
C)  not affect total assets,total equity,or net income. 
D)  decrease total assets,net income,and net cash flow from investing activities.

Question 10

For a manufacturer,direct costs include direct materials,direct labor,and manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 11

Recognizing estimated manufacturing overhead costs at the end of a month is a(n):

Accepted Answer

A)  asset source transaction. 
B)  asset use transaction. 
C)  asset exchange transaction. 
D)  claims exchange transaction. 
A)  asset source transaction. 
B)  asset use transaction. 
C)  asset exchange transaction. 
D)  claims exchange transaction.

Question 12

Debits in the Work in Process account consist of actual direct material costs,actual direct labor costs,and estimated manufacturing overhead costs.

Accepted Answer

A) True 
 B)False

Question 13

Selected T-accounts from the books of Street Manufacturing Company are provided below:   Required:
1)Assuming overhead was allocated on the basis of direct labor cost,compute the predetermined overhead rate.
2)Compute the amount by which overhead was over- or underapplied.(Be sure to indicate whether over- or underapplied. )
3)Compute the cost of goods sold assuming that the company writes off any over- or underapplied overhead directly against cost of goods sold.
4)Compute net income for the period.
5)Compute the total amount of inventory that will be reported on the end-of-year balance sheet,including the balances from all of the company's inventory accounts.

Accepted Answer

Answers will vary
1)Predetermined overhe

Question 14

Recording depreciation on manufacturing equipment will:

Accepted Answer

A)  decrease total assets,total equity,and net income. 
B)  not affect total assets or net income. 
C)  decrease total assets,decrease net income,and increase total equity. 
D)  not affect total assets,and decrease net income. 
A)  decrease total assets,total equity,and net income. 
B)  not affect total assets or net income. 
C)  decrease total assets,decrease net income,and increase total equity. 
D)  not affect total assets,and decrease net income.

Question 15

Companies need service and product cost information for both financial reporting and managerial accounting.

Accepted Answer

A) True 
 B)False

Question 16

Tisdale Company started the year with the following beginning account balances: Raw Materials Inventory,$42,000;Work in Process Inventory,$90,000;and Finished Goods Inventory,$20,000.During the year,the company purchased $60,000 of raw materials and ended the year with $16,000 of raw materials.Direct labor costs for the year were $120,000 and a total of $36,000 of manufacturing overhead costs was allocated to work in process.There was no over- or underapplied overhead.Ending work in process was $82,000 and ending finished goods was $35,000.Goods were sold to customers during the year for $360,000.How much gross margin would be reported for the year?

Accepted Answer

A)  $110,000 
B)  $145,000 
C)  $125,000 
D)  $171,000 
A)  $110,000 
B)  $145,000 
C)  $125,000 
D)  $171,000

Question 17

Ferguson Company sold goods that had cost $950 to manufacture.How does this transaction affect the financial statements? $\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline {\text { Assets }} & = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline
\end{array}$

Accepted Answer

A) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline (950)&=&NA&+&95)&NA&-&950&=&950\
\hline
\end{array}$ 
B) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline (950)&=&NA&+&(950)&NA&-&950&=&(950)\
\hline
\end{array}$ 
C) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline 950&=&NA&+&(950) &  NA &-&950&=&(950)\
\hline
\end{array}$ 
D) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline (950) &=&(950) &+&NA&  NA &-&NA&=&NA\
\hline
\end{array}$ 
A) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline (950)&=&NA&+&95)&NA&-&950&=&950\
\hline
\end{array}$ 
B) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline (950)&=&NA&+&(950)&NA&-&950&=&(950)\
\hline
\end{array}$ 
C) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline 950&=&NA&+&(950) &  NA &-&950&=&(950)\
\hline
\end{array}$ 
D) 
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline (950) &=&(950) &+&NA&  NA &-&NA&=&NA\
\hline
\end{array}$

Question 18

Hughes Company paid production workers $25,550 cash.These wages will be classified as:

Accepted Answer

A)  manufacturing overhead. 
B)  work in process. 
C)  cost of goods sold. 
D)  salary expense. 
A)  manufacturing overhead. 
B)  work in process. 
C)  cost of goods sold. 
D)  salary expense.

Question 19

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data.How do companies resolve this conflict?

Accepted Answer

Answers will vary
There are two kinds of

Question 20

Argus Company experienced an accounting event that affected its financial statements as indicated below: $\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline {\text { Assets }} & = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline  \begin{array}{l|l} + & -\end{array}&  &NA&&NA&NA&&NA&&NA \
\hline
\end{array}$ Which of the following accounting events could have caused the indicated effects on the company's accounting equation?

Accepted Answer

A)  Applied manufacturing overhead to work in process 
B)  Purchased raw materials for cash 
C)  Paid cash wages of production workers 
D)  All of these. 
A)  Applied manufacturing overhead to work in process 
B)  Purchased raw materials for cash 
C)  Paid cash wages of production workers 
D)  All of these.

Actual overhead costs are charged (debited)to the work in process account as they occur.

If more overhead was applied than had been incurred,the balance in the manufacturing overhead account represents the amount of overapplied overhead.

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

What characteristic or feature of a service company distinguishes such a business from a manufacturing company?

By the end of the year,Shirley Company's manufacturing overhead account had a $1,500 credit balance.This means that overhead was underapplied during the year.

Haas Company paid $48,000 cash to purchase raw materials.The recognition of this event will:

For a manufacturer,direct costs include direct materials,direct labor,and manufacturing overhead.

Recognizing estimated manufacturing overhead costs at the end of a month is a(n):

Debits in the Work in Process account consist of actual direct material costs,actual direct labor costs,and estimated manufacturing overhead costs.

Recording depreciation on manufacturing equipment will:

Companies need service and product cost information for both financial reporting and managerial accounting.

Ferguson Company sold goods that had cost $950 to manufacture.How does this transaction affect the financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc.

Hughes Company paid production workers $25,550 cash.These wages will be classified as:

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data.How do companies resolve this conflict?

Argus Company experienced an accounting event that affected its financial statements as indicated below: Assets = Liab. + Equity Rev. - Exp. = Net Inc. + - NA NA NA NA NA Which of the following accounting events could have caused the indicated effects on the company's accounting equation?

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 11: Product Costing in Service and Manufacturing Entities

Actual overhead costs are charged (debited)to the work in process account as they occur.

If more overhead was applied than had been incurred,the balance in the manufacturing overhead account represents the amount of overapplied overhead.

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

What characteristic or feature of a service company distinguishes such a business from a manufacturing company?

By the end of the year,Shirley Company's manufacturing overhead account had a $1,500 credit balance.This means that overhead was underapplied during the year.

Haas Company paid $48,000 cash to purchase raw materials.The recognition of this event will:

For a manufacturer,direct costs include direct materials,direct labor,and manufacturing overhead.

Recognizing estimated manufacturing overhead costs at the end of a month is a(n):

Debits in the Work in Process account consist of actual direct material costs,actual direct labor costs,and estimated manufacturing overhead costs.

Recording depreciation on manufacturing equipment will:

Companies need service and product cost information for both financial reporting and managerial accounting.

Ferguson Company sold goods that had cost $950 to manufacture.How does this transaction affect the financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc.

Hughes Company paid production workers $25,550 cash.These wages will be classified as:

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data.How do companies resolve this conflict?

Argus Company experienced an accounting event that affected its financial statements as indicated below: Assets = Liab. + Equity Rev. - Exp. = Net Inc. + - NA NA NA NA NA Which of the following accounting events could have caused the indicated effects on the company's accounting equation?

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters