Exam 11: Product Costing in Service and Manufacturing Entities

Furst Company pays production workers' salaries on account.The cost will be recognized as an expense when:

Grimes Company sold 2,500 units that had cost $12,000 to produce.The recording of the sale would include an increase to:

Fortune Company had beginning raw materials inventory of $16,000.During the period,the company purchased $92,000 of raw materials on account.If the ending balance in raw materials was $10,000,the amount of raw materials transferred to work in process is:

A product costing system is needed to determine the amount of product costs that should be reported on the income statement as selling and administrative expenses.

All of the following are reasons to assign estimated overhead to inventory except:

If manufacturing overhead is underapplied,the entry to close the overhead account at the end of the accounting period will:

Why does a service company need cost information about the services it provides?

In calculating product costs,actual direct materials and actual direct labor are charged to the work in process account;however,an estimated amount of overhead is charged to the account.Why is overhead accounted for differently than the other costs of production?

A credit to the Raw Materials Inventory account represents:

Which of the following is not an inventory account maintained by a manufacturing company?

Oakland Company paid $200 cash for various manufacturing overhead costs,not before recorded.How does this transaction affect the financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash + Mfg. OH

Orlando Company placed $142 of raw materials into production.How would this transaction affect the company's financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Raw + WIP Inv Matls. Inv.

Burgess Company incurred product costs of $50,000 during the period when no units were sold.No product costs will be reported on the company's income statement for the period.

Describe how firms use service and product cost information.

The cost of direct materials flow through all of the following accounts except:

Newton Corporation entered into the following transactions during its first year of operations.(Assume all transactions involve cash. ) 1)Acquired $2,000 of capital from the owners. 2)Purchased $600 of direct raw materials. 3)Used $400 of these direct raw materials in the production process. 4)Paid production workers $800 cash. 5)Paid $400 for manufacturing overhead (applied and actual overhead are the same). 6)Started and completed 200 units of inventory. 7)Sold 50 units at a price of $12 each. 8)Paid $80 for selling and administrative expenses. The amount of net income for the year was:

The absorption costing approach uses the contribution margin income statement format.

Cost of goods sold is equal to the cost of goods:

Select the response that best illustrates the point that product cost flows are cyclical and occur in a specific sequence.

The accounting records for Poole Manufacturing Company included the following cost information relating to its first year of operations: Direct materials \ 60,000 Direct labor \ 80,000 Fixed manufacturing overhead \ 100,000 Variable manufacturing overhead \ 20,000 Assume the company produced 10,000 units of inventory and sold 6,000 of these units for $192,000.What amount of finished goods will be reported on the balance sheet at the end of the year under absorption costing?