Question 1

In a manufacturing operation, depreciation of plant equipment should be debited to the Depreciation Expense account.

Accepted Answer

A) True 
 B)False

Question 2

Accounting firms, building contractors, and healthcare providers use process costing.

Accepted Answer

A) True 
 B)False

Question 3

Iglesias Company completed Job 12 on November 30. The details of Job 12 are given below:   What is the total cost of Job 12?

Accepted Answer

A) $2,570 
B) $1,940 
C) $1,947 
D) $3,920 
A) $2,570 
B) $1,940 
C) $1,947 
D) $3,920

Question 4

Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. Bilkins has 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the professional staff runs about $576,000 per year, and they normally have about 8,000 billable hours per year. Professional staff keep detailed time sheets organized by the client number. Office and administrative costs total $754,000 a year. Bilkins allocates professional time and office and administrative costs to clients monthly, using allocation rates based on billable hours. What is the cost allocation rate that Bilkins will use for office and administrative costs?

Accepted Answer

A) $94.25 per hour 
B) $36.00 per hour 
C) $72.00 per hour 
D) $74.13 per hour 
A) $94.25 per hour 
B) $36.00 per hour 
C) $72.00 per hour 
D) $74.13 per hour

Question 5

Lakeside Company estimated manufacturing overhead costs for 2014 at $378,000, based on 180,000 estimated direct labor hours. Actual direct labor hours for 2014 totaled 195,000. The manufacturing overhead account contains debit entries totaling $391,500. The manufacturing overhead for 2014 was: (Round your intermediate calculations to one decimal place)

Accepted Answer

A) $31,500 underallocated. 
B) $31,500 overallocated. 
C) $18,000 underallocated. 
D) $18,000 overallocated. 
A) $31,500 underallocated. 
B) $31,500 overallocated. 
C) $18,000 underallocated. 
D) $18,000 overallocated.

Question 6

Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. Bilkins has 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the professional staff runs about $754,000 per year, and they normally have about 8,000 billable hours per year. Professional staff keeps detailed time sheets organized by client number. Office and administrative costs total $576,000 a year. Bilkins allocates professional time and office and administrative costs to clients monthly, using allocation rates based on billable hours. During July, Bilkins' professionals spent 36 hours on their client, Soupy Sales. Bilkins adds a 25% markup on their costs to calculate the amount billed to the customer. How much should the company charge Soupy Sales for the month of July? (Round your intermediate calculations to two decimal places)

Accepted Answer

A) $6,633.00 
B) $6,833.25 
C) $7,481.25 
D) $5,985.00 
A) $6,633.00 
B) $6,833.25 
C) $7,481.25 
D) $5,985.00

Question 7

Underallocated overhead occurs when:

Accepted Answer

A) allocated overhead costs are less than actual overhead costs. 
B) actual overhead costs are less than allocated overhead costs. 
C) estimated overhead costs are greater than budgeted overhead costs. 
D) estimated overhead costs are greater than actual overhead costs. 
A) allocated overhead costs are less than actual overhead costs. 
B) actual overhead costs are less than allocated overhead costs. 
C) estimated overhead costs are greater than budgeted overhead costs. 
D) estimated overhead costs are greater than actual overhead costs.

Question 8

The journal entry to record allocation of manufacturing overhead to a particular job includes a:

Accepted Answer

A) debit to the Finished Goods Inventory account and credit to the Manufacturing Overhead account. 
B) debit to the Work-in-Process Inventory account and credit to the Cash account. 
C) debit to the Manufacturing Overhead account and credit to the Finished Goods Inventory account. 
D) debit to the Work-in-Process Inventory account and credit to the Manufacturing Overhead account. 
A) debit to the Finished Goods Inventory account and credit to the Manufacturing Overhead account. 
B) debit to the Work-in-Process Inventory account and credit to the Cash account. 
C) debit to the Manufacturing Overhead account and credit to the Finished Goods Inventory account. 
D) debit to the Work-in-Process Inventory account and credit to the Manufacturing Overhead account.

Question 9

The predetermined overhead allocation rate for a given production year is calculated:

Accepted Answer

A) at the end of the production year. 
B) before the production year begins. 
C) after completion of each job. 
D) after the preparation of financial statements for the year. 
A) at the end of the production year. 
B) before the production year begins. 
C) after completion of each job. 
D) after the preparation of financial statements for the year.

Question 10

On June 30, Caroline Company finished Job 750 with total job costs of $4,600 and transferred the costs to Finished Goods Inventory. On July 6, Caroline completed sale of the goods from Job 750 to a customer for $5,100 cash. In order to record the sale, two entries are necessary, one to record revenue, and one to record cost of goods sold. Which of the following is the correct entry needed to record the revenues?

Accepted Answer

A) debit Finished Goods Inventory $4,600, credit Sales Revenue $4,600 
B) debit Cash $5,100, credit Sales Revenue $5,100 
C) debit Sales Revenue $5,100, credit Cash $5,100 
D) debit Cost of Goods Sold $4,600, credit Sales Revenue $4,600 
A) debit Finished Goods Inventory $4,600, credit Sales Revenue $4,600 
B) debit Cash $5,100, credit Sales Revenue $5,100 
C) debit Sales Revenue $5,100, credit Cash $5,100 
D) debit Cost of Goods Sold $4,600, credit Sales Revenue $4,600

Question 11

Jorst Manufacturing began business on January 1, 2014. During its first year of operation, Jorst worked on 5 industrial jobs, and reported the following information at year-end:   Jorst's allocation of overhead costs left a debit balance of $1,200 in the Manufacturing Overhead account which was adjusted to zero at year-end. What was the final balance in Cost of goods sold?

Accepted Answer

A) $48,000 
B) $49,200 
C) $46,800 
D) $91,700 
A) $48,000 
B) $49,200 
C) $46,800 
D) $91,700

Question 12

The journal entry to issue indirect materials to production should include a debit to the:

Accepted Answer

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

Question 13

Process costing is more appropriate for service companies than job order costing.

Accepted Answer

A) True 
 B)False

Question 14

At the end of the year, Metro Company has an unadjusted credit balance in the Manufacturing Overhead account of $950. Which of the following is the year-end adjusting entry needed to clear the balance to zero?

Accepted Answer

A) debit Cost of Goods Sold $950, credit Finished Goods Inventory $950 
B) debit Manufacturing Overhead $950, credit Finished Goods Inventory $950 
C) debit Manufacturing Overhead $950, credit Cost of Goods Sold $950 
D) debit Cost of Goods Sold $950, credit Manufacturing Overhead $950 
A) debit Cost of Goods Sold $950, credit Finished Goods Inventory $950 
B) debit Manufacturing Overhead $950, credit Finished Goods Inventory $950 
C) debit Manufacturing Overhead $950, credit Cost of Goods Sold $950 
D) debit Cost of Goods Sold $950, credit Manufacturing Overhead $950

Question 15

Dora Travel Services provided the following information:
Cost allocation rate for direct labor: $40 per hour
Cost allocation rate for indirect costs: $22 per hour
If Dora receives $350 for a job requiring 5 hours of direct labor, then Dora will make a profit of $40.

Accepted Answer

A) True 
 B)False

Question 16

At the end of the year, Beta Company has an unadjusted debit balance in the Manufacturing Overhead account of $3,950. The adjusting journal entry needed to clear the balance to zero will include a:

Accepted Answer

A) debit to Cost of Goods Sold $3,950 and credit to Manufacturing Overhead $3,950. 
B) debit to Manufacturing Overhead $3,950 and credit to Cost of Goods Sold. 
C) debit to Work-in-Process Inventory $3,950 and credit to Manufacturing Overhead $3,950. 
D) debit to Gross Profit $3,950 and credit to Cost of Goods Sold $3,950. 
A) debit to Cost of Goods Sold $3,950 and credit to Manufacturing Overhead $3,950. 
B) debit to Manufacturing Overhead $3,950 and credit to Cost of Goods Sold. 
C) debit to Work-in-Process Inventory $3,950 and credit to Manufacturing Overhead $3,950. 
D) debit to Gross Profit $3,950 and credit to Cost of Goods Sold $3,950.

Question 17

Manufacturing overhead costs allocated to a job amounted to $492,000. The actual manufacturing costs incurred during the year was $500,000. Overhead costs have been underallocated.

Accepted Answer

A) True 
 B)False

Question 18

Kalliste Company completed Job C50. C50 required $3,000 of direct materials cost, $2,000 of direct labor cost, and $600 of allocated overhead. Provide the journal entry needed to record completion and transfer of job.

Accepted Answer

The answer of Kalliste Company completed Job C50. C50 required...

Question 19

Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours. It has provided the following information for the year 2014:   Based on the above information, calculate Q-dot's predetermined overhead allocation rate.

Accepted Answer

A) $5.43 per machine hour 
B) 76% of direct labor cost 
C) 34% of direct materials cost 
D) $20 per direct labor hour 
A) $5.43 per machine hour 
B) 76% of direct labor cost 
C) 34% of direct materials cost 
D) $20 per direct labor hour

Question 20

The predetermined overhead allocation rate is calculated by dividing:

Accepted Answer

A) the total estimated overhead costs by total number of days in a year. 
B) the estimated amount of cost driver by actual total overhead costs. 
C) the actual overhead costs by actual amount of the cost driver or allocation base. 
D) the estimated overhead costs by total estimated quantity of the overhead allocation base 
A) the total estimated overhead costs by total number of days in a year. 
B) the estimated amount of cost driver by actual total overhead costs. 
C) the actual overhead costs by actual amount of the cost driver or allocation base. 
D) the estimated overhead costs by total estimated quantity of the overhead allocation base

Exam 19: Job Order Costing

In a manufacturing operation, depreciation of plant equipment should be debited to the Depreciation Expense account.

Accounting firms, building contractors, and healthcare providers use process costing.

Iglesias Company completed Job 12 on November 30. The details of Job 12 are given below: What is the total cost of Job 12?

Underallocated overhead occurs when:

The journal entry to record allocation of manufacturing overhead to a particular job includes a:

The predetermined overhead allocation rate for a given production year is calculated:

The journal entry to issue indirect materials to production should include a debit to the:

Process costing is more appropriate for service companies than job order costing.

At the end of the year, Metro Company has an unadjusted credit balance in the Manufacturing Overhead account of $950. Which of the following is the year-end adjusting entry needed to clear the balance to zero?

Dora Travel Services provided the following information: Cost allocation rate for direct labor: $40 per hour Cost allocation rate for indirect costs: $22 per hour If Dora receives $350 for a job requiring 5 hours of direct labor, then Dora will make a profit of $40.

At the end of the year, Beta Company has an unadjusted debit balance in the Manufacturing Overhead account of $3,950. The adjusting journal entry needed to clear the balance to zero will include a:

Manufacturing overhead costs allocated to a job amounted to $492,000. The actual manufacturing costs incurred during the year was $500,000. Overhead costs have been underallocated.

Kalliste Company completed Job C50. C50 required $3,000 of direct materials cost, $2,000 of direct labor cost, and $600 of allocated overhead. Provide the journal entry needed to record completion and transfer of job.

Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours. It has provided the following information for the year 2014: Based on the above information, calculate Q-dot's predetermined overhead allocation rate.

The predetermined overhead allocation rate is calculated by dividing:

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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