Question 1

The general journal entry to record the issuance of materials represented by the following materials requisitions for the month includes:
 
A) A credit to Manufacturing Overhead, $2,900
B) A debit to Raw-Materials Inventory, $62,904
C) A debit to Work-in-Process inventory, $65,804
D) A credit to Work-in-Process inventory, $ 62,904

Accepted Answer

The answer of The general journal entry to record the...

Question 2

The Work- in- Process Inventory account of Charles River Corporation has a balance of $4,800 at the end of an accounting period. The job cost sheets of two incomplete jobs show charges of $800 and $400 for materials used and charges of $600 and $1,000 for direct labor used. From this information, it appears that Charles River is using a predetermined rate, as a percentage of direct labor costs of:
A) 80%
B) 125%
C) 41.7 %
D) 240%

Accepted Answer

The total charges for materials used are $800 + $400 = $1,200, and the total charges for direct labor used are $600 + $1,000 = $1,600. The Work-in-Process Inventory balance is $4,800, which includes both materials and labor costs. Subtracting the materials and labor costs from the total gives $4,800 - $1,200 - $1,600 = $2,000, which represents the overhead applied. The predetermined overhead rate, based on direct labor costs, is calculated as ($2,000 / $1,600) * 100% = 125%.

Question 3

Manufacturing Overhead applied was $60,000, while actual overhead incurred was $62,000. Which of the following is always true of this situation?
A) Overhead was overapplied by $2,000
B) Overhead was underapplied by $2,000
C) Direct labor activity was overestimated
D) This difference must be reported as a loss for the period

Accepted Answer

Manufacturing overhead was underapplied because the actual overhead costs ($62,000) were higher than the overhead costs applied to products ($60,000), resulting in a $2,000 shortfall.

Question 4

Use the following to answer questions:
Before prorating overhead, the current period overhead component of Cost of Goods Sold for Wilmington Company was $230,000, while the current period overhead component of the ending inventory was $80,000. Manufacturing overhead of $310,000 was applied during the period, whereas $296,000 was actually incurred. Wilmington has no Work-in-Process inventory at the end of the period.
-If the manufacturing overhead-variance is prorated between inventory and cost of goods sold, how much will be allocated to the ending inventory? (round to the nearest whole dollar)
A) $14,000
B) $ 0
C) $3,613
D) $2,868

Accepted Answer

The manufacturing overhead variance is the difference between the applied overhead ($310,000) and the actual overhead ($296,000), which is $14,000. This variance needs to be prorated between the ending inventory and the cost of goods sold. The total before prorating is $230,000 (COGS) + $80,000 (Ending Inventory) = $310,000. The ending inventory's share of the total is $80,000 / $310,000 = 25.81%. Therefore, the ending inventory's share of the $14,000 variance is 25.81% * $14,000 = $3,613 (rounded to the nearest whole dollar).

Question 5

Use the following to answer questions:
Before prorating overhead, the current period overhead component of Cost of Goods Sold for Wilmington Company was $230,000, while the current period overhead component of the ending inventory was $80,000. Manufacturing overhead of $310,000 was applied during the period, whereas $296,000 was actually incurred. Wilmington has no Work-in-Process inventory at the end of the period.
-By how much will Wilmington Company's operating income differ if the manufacturing-overhead variance is closed to Cost of Goods Sold instead of prorated between inventory and cost of goods sold?
A) $14,000 higher
B) $3,613 lower
C) $3,613 higher
D) $11,188 lower

Accepted Answer

The manufacturing overhead variance is $14,000 ($310,000 applied - $296,000 actually incurred), indicating overhead was overapplied. If this variance is closed to Cost of Goods Sold, the Cost of Goods Sold will decrease by $14,000, making operating income $14,000 higher. However, if prorated based on the overhead component (totaling $310,000) in Cost of Goods Sold ($230,000) and ending inventory ($80,000), the share of the variance allocated to Cost of Goods Sold is ($230,000 / $310,000) * $14,000 = $10,387, and to ending inventory is ($80,000 / $310,000) * $14,000 = $3,613. Closing to Cost of Goods Sold directly increases operating income by $14,000, but prorating and then closing the portion related to Cost of Goods Sold increases it by only $10,387, making the difference $3,613 lower than if the entire variance were closed to Cost of Goods Sold directly.

Question 6

A Gantt chart:
A) Shows which jobs are over budget and which jobs are under budget during the period
B) Is a pie chart showing total cost for each area of activity
C) Shows the timing, sequencing and overlapping of major project activities
D) Charts each activity in a separate chart so that management can concentrate on activities in sequential order

Accepted Answer

A Gantt chart is primarily used for project management, specifically to show the timing, sequencing, and overlapping of major project activities. It visually represents the start and finish dates of the terminal elements and summary elements of a project.

Question 7

Stoughton applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job 80, the only job still in process at the end of July, has been charged with direct labor of $20,000. The amount of direct materials charged to job 80 was:
Stoughton Furniture uses a job-order cost system. The following debits (credits) appeared in the Work-in-Process inventory account for July 2007:
 
A) $60,000
B) $44,000
C) $16,000
D) $ 8,000

Accepted Answer

The answer of Stoughton applies overhead to production at a...

Question 8

What is the cost of goods sold for 2007?
The following information pertains to Natick Wood Shop:
 
A) $544,000
B) $496,000
C) $546,000
D) $539,000

Accepted Answer

The answer of What is the cost of goods sold...

Question 9

Hudson Company incurred $50,000 of depreciation expense on factory equipment and $20,000 for a copy machine located in the sales manager's office. The journal entry to record this should be:
A) Debit Depreciation expense $70,000 and credit accumulated depreciation $70,000
B) Debit depreciation expense $20,000; debit manufacturing overhead $50,000 and credit accumulated depreciation $70,000
C) Debit manufacturing overhead $70,000, credit depreciation expense $20,000 and credit overhead allocated $50,000
D) Debit Manufacturing Overhead $70,000 and credit accumulated depreciation $70,000

Accepted Answer

The correct answer is B because it accurately reflects the allocation of depreciation expense between the manufacturing equipment ($50,000) and the office equipment ($20,000). The manufacturing equipment depreciation is charged to manufacturing overhead, while the office equipment depreciation is directly expensed. Both are then credited to accumulated depreciation for a total of $70,000.

Question 10

Oak Bluff Company incorrectly assigns a $50,000 overhead item to selling expense. Borden has more inventory at the end of the year than at the beginning of the year. The result of this error will be to:
A) Understate inventory and profit for the year
B) Have no effect on inventory and profit for the year
C) Overstate inventory and profit for the year
D) Understate inventory but have no effect on profit for the year

Accepted Answer

Assigning overhead to selling expense instead of inventory will cause the inventory value to be understated. Since inventory is understated, the cost of goods sold will be lower, leading to an overstatement of profit for the year.

Question 11

The journal entry to record the above should be:
Belmont Corporation incurred the following labor costs during the month of July, 2007:
 
A) Debit Manufacturing Overhead $460,000 and credit Salaries and Wages Payable $460,000
B) Debit Salary expense $460,000 and credit salaries and wages payable $460,000
C) Debit Work-in-Process $200,000, debit salary expense $100,000, debit Manufacturing Overhead . $160,000 and credit Salaries and Wages Payable $460,000
D) Debit Salaries and Wages Payable $460,000, credit Work-in-Process $200,000, credit Salary Expense $260,000

Accepted Answer

The answer of The journal entry to record the above...

Question 12

Chatam Company wrote a check to cover the rent for May. The total of the check was $20,000; the controller estimates that 80% of the square footage of the company was taken up by the factory and 20% by the accounting and administrative offices. The journal entry to record this check should be:
A) Debit Rent Expense $20,000 and credit Cash $20,000
B) Debit Rent Expense $4,000, debit Manufacturing Overhead $16,000 and credit Cash $20,000
C) Debit Manufacturing Overhead $20,000 and credit Rent Expense $20,000
D) Debit Rent Expense $4,000, debit Manufacturing Overhead $16,000 and credit Accumulated Depreciation
E) $20,000

Accepted Answer

The correct journal entry allocates the rent expense based on the usage of the space: 80% for manufacturing overhead (factory space) and 20% for rent expense (accounting and administrative offices), totaling the $20,000 payment.

Question 13

The journal entry to record cost of goods sold would include a:
A) Debit to Finished Goods Inventory
B) Credit to Work-in -Process Inventory
C) Credit to Cost of Goods Sold
D) Credit to Finished Goods Inventory

Accepted Answer

The journal entry to record cost of goods sold includes a debit to Cost of Goods Sold and a credit to Finished Goods Inventory, as it reflects the transfer of costs from inventory to expense.

Question 14

If actual manufacturing overhead is greater than applied manufacturing overhead, most companies will:
A) Increase Work-in-process, Finished Goods Inventory, and Cost of Goods Sold
B) Decrease Cost of Goods Sold
C) Increase Finished Goods Inventory
D) Increase Cost of Goods Sold

Accepted Answer

When actual manufacturing overhead is greater than applied manufacturing overhead, it indicates that not enough overhead was applied to products. To correct this, companies typically increase the Cost of Goods Sold to account for the underapplied overhead.

Question 15

Fill in the missing items for the following inventories

Accepted Answer

The answer of Fill in the missing items for the...

Question 16

Fill in the missing items for the following inventories

Accepted Answer

The answer of Fill in the missing items for the...

Question 17

(1) Denotes materials purchased
Assume that the following T accounts represent data from the Bertelson Corporation's accounting records.
Required:
(a) Find the missing amounts represented by the letters a, b, c, d and e.
(b) Determine the company's predetermined overhead rate, based on labor cost.
(c) Compute the Manufacturing Overhead variance.
BB = Beginning Balance; EB = Ending Balance TO = Transferred Out

Accepted Answer

The answer of (1) Denotes materials purchased
Assume that the following...

Question 18

McGorry applies overhead to production at a predetermined rate of 75%, based on direct labor cost. Job 1000, the only job still in process at the end of June, has been charged with direct labor of $30,000. McGory's Manufacturing Overhead account showed a credit balance of $10,000 at the end of February 2007.
Required:
(a) Calculate the amount of direct materials charged to Job 1000.
(b) Compute the actual overhead for February 2007.
(c) Assume that McGory closes its Manufacturing Overhead account each month. McGory does not prorate the manufacturing overhead variance. Prepare the entry to close the overhead account at the end of February, 2007.
McGorry Furniture Company uses a job-order cost system. The following debits (credits) appeared in the Work-in-Process account for February 2007:

Accepted Answer

The answer of McGorry applies overhead to production at a...

Question 19

Butte Boat Company, experienced the following events during 2007: Purchased $1,800,000 of lumber and other materials for building boats. Incurred $200,000 for advertising.
Paid $60,000 to have lumber transported to its factory. Had sales revenue of $6,000,000 during the year. Incurred $400,000 of general and administrative expenses.
Took a periodic inventory at year-end and determined that material costing $ 400,000 was on hand. The inventory at the beginning of the year was $200,000.
All costs incurred were added to the appropriate accounts. All sales were on credit. Required:
Give the amounts for the following items in Butte Boat Company's Raw-Material inventory account:
a) Transfers in (TI).
b) Beginning balance (BB).
c) Transfers out (TO).
d) Ending balance (EB).

Accepted Answer

The answer of Butte Boat Company, experienced the following events...

Question 20

Job 100 incurred 700 machine hours in Department 1 and 75 in department 2 and 200 manufacturing labor hours in department 1 and 250 in department 2. The company uses a budgeted departmental overhead rate for applying overhead to production. Job 100 consisted of 3,000 lamps.
Required:
Calculate the total cost and per unit cost of Job 100.
Osterville Manufacturing produces lamps for large department stores. For 2007, the two production departments had budgeted allocation bases of 100,000 machine hours in Dept 1 and 50,000 direct manufacturing labor hours in Department 2. The budgeted manufacturing overheads for 2007 were $1,200,000 for Dept. 1 and $1,000,000 for Dept. 2. For Job 100, the actual costs incurred in the two departments were as follows:

Accepted Answer

The answer of Job 100 incurred 700 machine hours in...

Quiz 3: Cost Accumulation for Job-Shop and Batch Production Operations

The general journal entry to record the issuance of materials represented by the following materials requisitions for the month includes:

Manufacturing Overhead applied was $60,000, while actual overhead incurred was $62,000. Which of the following is always true of this situation?

A Gantt chart:

What is the cost of goods sold for 2007? The following information pertains to Natick Wood Shop:

Hudson Company incurred $50,000 of depreciation expense on factory equipment and $20,000 for a copy machine located in the sales manager's office. The journal entry to record this should be:

Oak Bluff Company incorrectly assigns a $50,000 overhead item to selling expense. Borden has more inventory at the end of the year than at the beginning of the year. The result of this error will be to:

The journal entry to record the above should be: Belmont Corporation incurred the following labor costs during the month of July, 2007:

Chatam Company wrote a check to cover the rent for May. The total of the check was $20,000; the controller estimates that 80% of the square footage of the company was taken up by the factory and 20% by the accounting and administrative offices. The journal entry to record this check should be:

The journal entry to record cost of goods sold would include a:

If actual manufacturing overhead is greater than applied manufacturing overhead, most companies will:

Fill in the missing items for the following inventories

Fill in the missing items for the following inventories