Question 1

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 2

Summit Financial Advisors provides accounting and finance assistance to customers in the retail business.Summit has four professionals on staff and an office with six clerical staff.Total compensation,including benefits,for the professional staff run about $731,000 per year,and it normally has about 8500 billable hours per year.The professional staff keep detailed time sheets organized by client number.The total office and administrative costs for the year are $561,000. Summit allocates office and administrative costs to clients monthly,using a predetermined overhead allocation rate based on billable hours.During July,Summit's professionals spent 41 hours on their client.What is the total amount of cost that Summit will record for the client for the month? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Accepted Answer

A)  $3526 
B)  $2706 
C)  $1,292,000 
D)  $6232 
A)  $3526 
B)  $2706 
C)  $1,292,000 
D)  $6232

Question 3

Altec Designs makes fashion clothing and reports the following data for the month of September: $$\begin{array} { | l | r | } 
\hline \text { Salaries paid to seamstresses } & \$ 140,000 \
\hline \text { Wages paid to fabric cutters } & 20,000 \
\hline \text { Indirect wages } & 5000 \
\hline
\end{array}$$ What is the journal entry to record the total labor charges incurred during September,which will be paid at a later date?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Work-in-Process Inventory } & 160,000 & \
\hline \text { Manufacturing Overhead } & 5000 & \
\hline \text { Wages Payable } & & 165,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Work-in-Process Inventory } & 165,000 & \
\hline \text { Wages Payable } & & 165,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Wages Payable } & 165,000 & \
\hline \text { Finished Goods Inventory } & & 145,000 \
\hline \text { Work-in-Process Inventory } & & 20,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Manufacturing Overhead } & 165,000 & \
\hline \text { Wages Payable } & & 165,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Work-in-Process Inventory } & 160,000 & \
\hline \text { Manufacturing Overhead } & 5000 & \
\hline \text { Wages Payable } & & 165,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Work-in-Process Inventory } & 165,000 & \
\hline \text { Wages Payable } & & 165,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Wages Payable } & 165,000 & \
\hline \text { Finished Goods Inventory } & & 145,000 \
\hline \text { Work-in-Process Inventory } & & 20,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Manufacturing Overhead } & 165,000 & \
\hline \text { Wages Payable } & & 165,000 \
\hline
\end{array}$$

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following businesses is most likely to use a process costing system?

Accepted Answer

A)  a baker producing cakes to order 
B)  a legal service provider 
C)  an audit service provider 
D)  a candy manufacturer 
A)  a baker producing cakes to order 
B)  a legal service provider 
C)  an audit service provider 
D)  a candy manufacturer

Question 6

Divit has been given the task of calculating the predetermined overhead rate for Eden Enterprises.In order to calculate the rate,Divit must know ________.

Accepted Answer

A)  the estimated overhead costs for the period and the actual quantity of the overhead allocation base 
B)  the estimated overhead costs for the period and the estimated quantity of the overhead allocation base 
C)  the actual overhead costs for the period and the actual quantity of the overhead allocation base 
D)  the actual overhead costs for the period and the estimated quantity of the overhead allocation base 
A)  the estimated overhead costs for the period and the actual quantity of the overhead allocation base 
B)  the estimated overhead costs for the period and the estimated quantity of the overhead allocation base 
C)  the actual overhead costs for the period and the actual quantity of the overhead allocation base 
D)  the actual overhead costs for the period and the estimated quantity of the overhead allocation base

Question 7

The cost of goods manufactured is recorded with a debit to the Work-in-Process Inventory account and a credit to the Cost of Goods Manufactured account.

Accepted Answer

A) True 
 B)False

Question 8

Define a job order costing system and list two types of businesses that would use a job order costing system.

Accepted Answer

A job order costing system is an account

Question 9

Adelphia Manufacturing issued $70,000 of direct materials and $10,000 of indirect materials for production.Which of the following journal entries would correctly record the transaction?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Raw Materials Inventory } & 80,000 & \
\hline \text { Finished Goods Inventory } & & 70,000 \
\hline \text { Work-in-Process Inventory } & & 10,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Work-in-Process Inventory } & 80,000 & \
\hline \text { Raw Materials Inventory } & & 80,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Work-in-Process Inventory } & 70,000 & \
\hline \text { Manufacturing Overhead } & 10,000 & \
\hline \text { Raw Materials Inventory } & & 80,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Manufacturing Overhead } & 80,000 & \
\hline \text { Raw Materials Inventory } & & 80,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Raw Materials Inventory } & 80,000 & \
\hline \text { Finished Goods Inventory } & & 70,000 \
\hline \text { Work-in-Process Inventory } & & 10,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Work-in-Process Inventory } & 80,000 & \
\hline \text { Raw Materials Inventory } & & 80,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Work-in-Process Inventory } & 70,000 & \
\hline \text { Manufacturing Overhead } & 10,000 & \
\hline \text { Raw Materials Inventory } & & 80,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Manufacturing Overhead } & 80,000 & \
\hline \text { Raw Materials Inventory } & & 80,000 \
\hline
\end{array}$$

Question 10

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

Question 11

Manufacturing overhead is allocated by debiting the Work-in-Process Inventory account and crediting the Manufacturing Overhead account.

Accepted Answer

A) True 
 B)False

Question 12

The journal entry to record direct labor costs actually incurred involves a debit to the ________.

Accepted Answer

A)  Work-in-Process Inventory account 
B)  Wages Payable account 
C)  Manufacturing Overhead account 
D)  Raw Materials Inventory account 
A)  Work-in-Process Inventory account 
B)  Wages Payable account 
C)  Manufacturing Overhead account 
D)  Raw Materials Inventory account

Question 13

Bass Accounting Services expects its accountants to work a total of 27,000 direct labor hours per year.The company's estimated total indirect costs are $270,000.The company uses direct labor hours as the allocation base for indirect costs.What is the indirect cost allocation rate?

Accepted Answer

A)  $10.00 per hour 
B)  $20.00 per hour 
C)  $100.00 per hour 
D)  $12.00 per hour 
A)  $10.00 per hour 
B)  $20.00 per hour 
C)  $100.00 per hour 
D)  $12.00 per hour

Question 14

Arabica Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours.At the beginning of the year,it estimated total manufacturing overhead costs to be $1,050,000,total number of direct labor hours to be 4000,and total number of machine hours to be 20,000 hours.What was the predetermined overhead allocation rate? (Round your answer to the nearest cent.)

Accepted Answer

A)  $262.50 per machine hour 
B)  $43.75 per direct labor hour 
C)  $52.50 per machine hour 
D)  $65.63 per direct labor hour 
A)  $262.50 per machine hour 
B)  $43.75 per direct labor hour 
C)  $52.50 per machine hour 
D)  $65.63 per direct labor hour

Question 15

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 accounting period 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 accounting period begins 
C)  after completion of each job 
D)  after the preparation of financial statements for the year

Question 16

At the beginning of the year,Berkshire Manufacturing had the following account balances:           The following additional details are provided for the year:
$$\begin{array} { | l | l | } 
\hline \text { Direct materials placed in production } & \$ 80,000 \
\hline \text { Direct labor incurred } & 192,000 \
\hline \text { Manufacturing overhead incurred } & 301,000 \
\hline \text { Manufacturing overhead allocated to production } & 294,000 \
\hline \text { Cost of jobs completed and transferred } & 502,000 \
\hline \text { Total revenue } & 752,000 \
\hline \text { Cost of goods sold (before adjustment) } & 448,000 \
\hline
\end{array}$$ Calculate the gross profit Berkshire will report for the year.

Accepted Answer

A)  $250,000 
B)  $297,000 
C)  $304,000 
D)  $455,000 
A)  $250,000 
B)  $297,000 
C)  $304,000 
D)  $455,000

Question 17

Which of the following will be debited to the Manufacturing Overhead account of a watch manufacturer?

Accepted Answer

A)  office telephone costs 
B)  salaries paid to accountants 
C)  factory electricity costs 
D)  cost of printing brochures 
A)  office telephone costs 
B)  salaries paid to accountants 
C)  factory electricity costs 
D)  cost of printing brochures

Question 18

Unlike manufacturing companies,service companies use an allocation base for allocating both direct and indirect costs.

Accepted Answer

A) True 
 B)False

Question 19

Doric Agricultural Corporation uses a predetermined overhead allocation rate based on the direct labor cost.The manufacturing overhead cost allocated during the year is $270,000.The details of production and costs incurred during the year are as follows: $$\begin{array} { | l | l | } 
\hline \text { Actual direct materials cost } & \$ 811,500 \
\hline \text { Actual direct labor cost } & \$ 170,000 \
\hline \text { Actual overhead costs incurred } & \$ 260,000 \
\hline \text { Total direct labor hours } & \$ 580 \text { hours } \
\hline
\end{array}$$ What is the predetermined overhead allocation rate applied by the corporation? (Round your answer to two decimal places.)

Accepted Answer

A)  96.30% 
B)  65.38% 
C)  158.82% 
D)  33.27% 
A)  96.30% 
B)  65.38% 
C)  158.82% 
D)  33.27%

Question 20

For each of the following types of business,indicate why the manager needs to know the unit cost information.
 $$\begin{array} { | l | l | } 
\hline \text { Managers of a } & \text { Need to know the cost to } \
\hline \text { Bakery } & \
\hline \text { Computer } & \
\text { manufacturer } & \
\hline \text { Bank } & \
\hline \text { Seamstress } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Exam 19: Job Order Costing

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

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

Which of the following businesses is most likely to use a process costing system?

Divit has been given the task of calculating the predetermined overhead rate for Eden Enterprises.In order to calculate the rate,Divit must know ________.

The cost of goods manufactured is recorded with a debit to the Work-in-Process Inventory account and a credit to the Cost of Goods Manufactured account.

Define a job order costing system and list two types of businesses that would use a job order costing system.

Adelphia Manufacturing issued $70,000 of direct materials and $10,000 of indirect materials for production.Which of the following journal entries would correctly record the transaction?

The predetermined overhead allocation rate is calculated by dividing ________.

Manufacturing overhead is allocated by debiting the Work-in-Process Inventory account and crediting the Manufacturing Overhead account.

The journal entry to record direct labor costs actually incurred involves a debit to the ________.

Bass Accounting Services expects its accountants to work a total of 27,000 direct labor hours per year.The company's estimated total indirect costs are $270,000.The company uses direct labor hours as the allocation base for indirect costs.What is the indirect cost allocation rate?

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

Which of the following will be debited to the Manufacturing Overhead account of a watch manufacturer?

Unlike manufacturing companies,service companies use an allocation base for allocating both direct and indirect costs.

For each of the following types of business,indicate why the manager needs to know the unit cost information. Managers of a Need to know the cost to Bakery Computer manufacturer Bank Seamstress

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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