Question 1

A credit balance in the Manufacturing Overhead account at the end of the year means that overhead was underapplied.

Accepted Answer

A) True 
 B)False

Question 2

During October, Kreitner Inc. transferred $73,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $76,000. The journal entries to record these transactions would include a:

Accepted Answer

A)  credit to Work in Process of $73,000 
B)  credit to Cost of Goods Sold of $76,000 
C)  debit to Finished Goods of $76,000 
D)  credit to Finished Goods of $73,000 
A)  credit to Work in Process of $73,000 
B)  credit to Cost of Goods Sold of $76,000 
C)  debit to Finished Goods of $76,000 
D)  credit to Finished Goods of $73,000

Question 3

On July 1, Woolard Corporation had $20,000 of raw materials on hand. During the month, the company purchased an additional $53,000 of raw materials. During July, $49,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000.
Prepare journal entries to record these events. Use those journal entries to answer the following questions:
-The debits to the Manufacturing Overhead account as a consequence of the raw materials transactions in July total:

Accepted Answer

A)  $44,000 
B)  $5,000 
C)  $0 
D)  $49,000 
A)  $44,000 
B)  $5,000 
C)  $0 
D)  $49,000

Question 4

A number of companies in different industries are listed below:
Natural gas production company
Food caterer that supplies food for weddings and other special events
Elevator production and installation company
Coal mining company
Contract printer that produces posters, books, and pamphlets to order
Dairy farm
Required:
For each company, indicate whether the company is most likely to use job-order costing or process costing.

Accepted Answer

The answer of A number of companies in different industries...

Question 5

Roswick Inc. has provided the following data for the month of August. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.  
Manufacturing overhead for the month was underapplied by $3,000.
The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The journal entry to record the allocation of any underapplied or overapplied overhead for August would include the following:

Accepted Answer

A)  debit to Cost of Goods Sold of $142,300 
B)  credit to Cost of Goods Sold of $2,220 
C)  credit to Cost of Goods Sold of $142,300 
D)  debit to Cost of Goods Sold of $2,220 
A)  debit to Cost of Goods Sold of $142,300 
B)  credit to Cost of Goods Sold of $2,220 
C)  credit to Cost of Goods Sold of $142,300 
D)  debit to Cost of Goods Sold of $2,220

Question 6

On July 1, Woolard Corporation had $20,000 of raw materials on hand. During the month, the company purchased an additional $53,000 of raw materials. During July, $49,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000.
Prepare journal entries to record these events. Use those journal entries to answer the following questions:
-The credits to the Manufacturing Overhead account as a consequence of the raw materials transactions in July total:

Accepted Answer

A)  $0 
B)  $5,000 
C)  $49,000 
D)  $44,000 
A)  $0 
B)  $5,000 
C)  $49,000 
D)  $44,000

Question 7

Madtack Company's beginning and ending inventories for the month of November were as follows:   Madtack applies manufacturing overhead cost to jobs at the rate of 70% of direct labor cost incurred. The company does not close underapplied or overapplied manufacturing overhead to Cost of Goods Sold until the end of the year.
-Madtack Company's total manufacturing cost for November was:

Accepted Answer

A)  $502,000 
B)  $510,000 
C)  $363,000 
D)  $495,000 
A)  $502,000 
B)  $510,000 
C)  $363,000 
D)  $495,000

Question 8

Inks Corporation incurred $69,000 of actual Manufacturing Overhead costs during June. During the same period, the Manufacturing Overhead applied to Work in Process was $70,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:

Accepted Answer

A)  debit to Manufacturing Overhead of $69,000 
B)  debit to Work in Process of $70,000 
C)  credit to Manufacturing Overhead of $69,000 
D)  credit to Work in Process of $70,000 
A)  debit to Manufacturing Overhead of $69,000 
B)  debit to Work in Process of $70,000 
C)  credit to Manufacturing Overhead of $69,000 
D)  credit to Work in Process of $70,000

Question 9

Loraine Company applies manufacturing overhead to jobs using a predetermined overhead rate of 70% of direct labor cost. Any underapplied or overapplied overhead cost is closed to Cost of Goods Sold at the end of the month. During August, the following transactions were recorded by the company:  
-The balance on August 1 in the Raw Materials inventory account was:

Accepted Answer

A)  $4,500 
B)  $7,000 
C)  $9,000 
D)  $11,500 
A)  $4,500 
B)  $7,000 
C)  $9,000 
D)  $11,500

Question 10

The Garnet Company uses a job-order costing system. The following data were recorded for February:   Overhead is charged to jobs at the rate of 140% of direct labor cost.
Jobs 1, 2, and 3 were completed during February and transferred to
finished goods. Job 3 has been delivered to the customer.
-The cost of goods sold during February was:

Accepted Answer

A)  $5,100 
B)  $3,000 
C)  $12,120 
D)  $8,120 
A)  $5,100 
B)  $3,000 
C)  $12,120 
D)  $8,120

Question 11

On July 1, Woolard Corporation had $20,000 of raw materials on hand. During the month, the company purchased an additional $53,000 of raw materials. During July, $49,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000.
Prepare journal entries to record these events. Use those journal entries to answer the following questions:
-The credits to the Work in Process account as a consequence of the raw materials transactions in July total:

Accepted Answer

A)  $49,000 
B)  $53,000 
C)  $0 
D)  $44,000 
A)  $49,000 
B)  $53,000 
C)  $0 
D)  $44,000

Question 12

In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include:

Accepted Answer

A)  a credit to the Manufacturing Overhead account. 
B)  a credit to the Work in Process inventory account. 
C)  a debit to Cost of Goods Sold. 
D)  a debit to the Manufacturing Overhead account. 
A)  a credit to the Manufacturing Overhead account. 
B)  a credit to the Work in Process inventory account. 
C)  a debit to Cost of Goods Sold. 
D)  a debit to the Manufacturing Overhead account.

Question 13

The Garnet Company uses a job-order costing system. The following data were recorded for February:   Overhead is charged to jobs at the rate of 140% of direct labor cost.
Jobs 1, 2, and 3 were completed during February and transferred to
finished goods. Job 3 has been delivered to the customer.
-The work in process inventory on February 28 was:

Accepted Answer

A)  $7,310 
B)  $9,500 
C)  $3,950 
D)  $7,060 
A)  $7,310 
B)  $9,500 
C)  $3,950 
D)  $7,060

Question 14

During August, Sherill Corporation incurred $78,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $81,000.
-The journal entry to record the application of Manufacturing Overhead to Work in Process would include a:

Accepted Answer

A)  credit to Work in Process of $78,000 
B)  debit to Manufacturing Overhead of $81,000 
C)  credit to Manufacturing Overhead of $81,000 
D)  debit to Work in Process of $78,000 
A)  credit to Work in Process of $78,000 
B)  debit to Manufacturing Overhead of $81,000 
C)  credit to Manufacturing Overhead of $81,000 
D)  debit to Work in Process of $78,000

Question 15

In a job-order costing system, costs are traced to departments and then allocated to units of product using an average process.

Accepted Answer

A) True 
 B)False

Question 16

In job-order costing, all of the following statements are correct with respect to labor time and cost except:

Accepted Answer

A)  time tickets are kept by employees showing the amount of work on specific jobs. 
B)  the job cost sheet for a job will contain all direct labor charges to that particular job. 
C)  labor cost that can be traced to a job only with a great deal of effort is treated as part of manufacturing overhead. 
D)  a machine operator performing routine annual maintenance work on a piece of equipment would charge the maintenance time to a specific job. 
A)  time tickets are kept by employees showing the amount of work on specific jobs. 
B)  the job cost sheet for a job will contain all direct labor charges to that particular job. 
C)  labor cost that can be traced to a job only with a great deal of effort is treated as part of manufacturing overhead. 
D)  a machine operator performing routine annual maintenance work on a piece of equipment would charge the maintenance time to a specific job.

Question 17

When the predetermined overhead rate is based on direct labor-hours, the amount of overhead applied to a job is proportional to the amount of actual direct labor-hours incurred on the job.

Accepted Answer

A) True 
 B)False

Question 18

Madtack Company's beginning and ending inventories for the month of November were as follows:   Madtack applies manufacturing overhead cost to jobs at the rate of 70% of direct labor cost incurred. The company does not close underapplied or overapplied manufacturing overhead to Cost of Goods Sold until the end of the year.
-Madtack Company's manufacturing overhead for November was:

Accepted Answer

A)  overapplied by $8,000 
B)  underapplied by $8,000 
C)  overapplied by $132,000 
D)  underapplied by $132,000 
A)  overapplied by $8,000 
B)  underapplied by $8,000 
C)  overapplied by $132,000 
D)  underapplied by $132,000

Question 19

Melillo Corporation has provided data concerning the company's Manufacturing Overhead account for the month of October. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $67,000 and the total of the credits to the account was $57,000. Which of the following statements is true?

Accepted Answer

A)  Manufacturing overhead for the month was overapplied by $10,000. 
B)  Actual manufacturing overhead for the month was $67,000. 
C)  Manufacturing overhead applied to Work in Process for the month was $67,000. 
D)  Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $57,000. 
A)  Manufacturing overhead for the month was overapplied by $10,000. 
B)  Actual manufacturing overhead for the month was $67,000. 
C)  Manufacturing overhead applied to Work in Process for the month was $67,000. 
D)  Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $57,000.

Question 20

Choice of allocation base should be made based on:

Accepted Answer

A)  the relative size of the base. 
B)  the base's relation to direct labor. 
C)  the base's activity. 
D)  whether the base actually drives the cost being allocated. 
A)  the relative size of the base. 
B)  the base's relation to direct labor. 
C)  the base's activity. 
D)  whether the base actually drives the cost being allocated.

Exam 3: Systems Design: Job-Order Costing

A credit balance in the Manufacturing Overhead account at the end of the year means that overhead was underapplied.

During October, Kreitner Inc. transferred $73,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $76,000. The journal entries to record these transactions would include a:

Inks Corporation incurred $69,000 of actual Manufacturing Overhead costs during June. During the same period, the Manufacturing Overhead applied to Work in Process was $70,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:

In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include:

During August, Sherill Corporation incurred $78,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $81,000. -The journal entry to record the application of Manufacturing Overhead to Work in Process would include a:

In a job-order costing system, costs are traced to departments and then allocated to units of product using an average process.

In job-order costing, all of the following statements are correct with respect to labor time and cost except:

When the predetermined overhead rate is based on direct labor-hours, the amount of overhead applied to a job is proportional to the amount of actual direct labor-hours incurred on the job.

Choice of allocation base should be made based on:

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Process Costing

Cost Behavior Analysis and Use

Cost-Volume-Profit Relationship

Variable Costing: a Tool for Management

Activity Based Costing: a Tool to Aid Decision-Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting, Decentralization, and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Predetermined Overhead Rates and Overhead Analysis

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by

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