Question 1

Reynardo Company incurred $90,000 of depreciation for the year.Eighty percent relates to the firm's production facilities,and 20% relates to sales and administrative offices.If all items are handled in the proper manner,a review of the company's accounting records should reveal a:

Accepted Answer

Since 80% of the depreciation relates to production facilities, it should be allocated to Manufacturing Overhead. Thus, the debit to Manufacturing Overhead should be $72,000 (80% of $90,000). The remaining 20% relates to sales and administrative offices, which should be allocated to Selling, General, and Administrative expenses. Therefore, the answer is debit to Manufacturing Overhead for $72,000.

Question 2

The left side of the Manufacturing Overhead account is used to accumulate:

Accepted Answer

The left (debit) side of the Manufacturing Overhead account is used to accumulate actual manufacturing overhead costs incurred throughout the accounting period. These costs may include indirect materials, indirect labor, rent, utilities, and other expenses related to the manufacturing process.

Question 3

Which of the following statements about materials is false?

Accepted Answer

The answer of Which of the following statements about materials...

Question 4

Summers Corporation recently used $75,000 of direct materials and $9,000 of indirect materials in production activities.The journal entries reflecting these transactions would include:

Accepted Answer

The answer of Summers Corporation recently used $75,000 of direct...

Question 5

Electricity costs that were incurred by a company's production processes should be debited to:

Accepted Answer

Electricity costs incurred during production processes are considered indirect costs and should be debited to the Manufacturing Overhead account. This account is used to accumulate all indirect costs that are necessary for the production process, which will later be allocated to the cost of the products manufactured.

Question 6

Dixie Company,which applies overhead at the rate of 190% of direct material cost,began work on job no.101 during June.The job was completed in July and sold during August,having accumulated direct material and labor charges of $27,000 and $15,000,respectively.On the basis of this information,the total overhead applied to job no.101 amounted to:

Accepted Answer

- The overhead rate of 190% of direct material cost means that for every $1 of direct material cost, $1.90 of overhead is applied. 
- Therefore, the overhead applied to job no.101 can be calculated as follows: 
Overhead applied = 190% x Direct material cost 
Overhead applied = 190% x $27,000 
Overhead applied = $51,300. 
- Therefore, choice C is the correct answer.

Question 7

A review of a company's Work-in-Process Inventory account found a debit for materials of $67,000.If all procedures were performed in the correct manner,this means that the firm:

Accepted Answer

If the company debited the Work-in-Process Inventory account for $67,000, it means that direct materials were added to the work-in-process during the period, which implies that they were deducted from Raw-Material Inventory. Therefore, option A is correct. Also, if all procedures were performed correctly, this means that the company was accounting for the usage of direct materials, so option C is correct. Therefore, both A and C options are correct, and the best choice is E. Option B is incorrect because there is no mention of Manufacturing Supplies Inventory in the question. Option D is incorrect because if indirect materials were used, the company would likely include them in the overhead costs instead of the work-in-process account.

Question 8

Huxtable charges manufacturing overhead to products by using a predetermined application rate,computed on the basis of machine hours.The following data pertain to the current year:
Budgeted manufacturing overhead: $480,000
Actual manufacturing overhead: $440,000
Budgeted machine hours: 20,000
Actual machine hours: 16,000
Overhead applied to production totaled:

Accepted Answer

Predetermined application rate = Budgeted manufacturing overhead / Budgeted machine hours = $480,000 / 20,000 hours = $24/hour
Overhead applied to production = Predetermined application rate x Actual machine hours = $24/hour x 16,000 hours = $384,000. Therefore, the best choice is B.

Question 9

Trenton worked on four jobs during its first year of operation: nos.401,402,403,and 404.A review of job no.403's cost record revealed direct material charges of $40,000 and total manufacturing costs of $50,000.If Trenton applies overhead at 150% of direct labor cost,the overhead applied to job no.403 must have been:

Accepted Answer

The answer of Trenton worked on four jobs during its...

Question 10

Simone uses a predetermined overhead application rate of $8 per direct labor hour.A review of the company's accounting records for the year just ended discovered the following:
Underapplied manufacturing overhead: $7,200
Actual manufacturing overhead: $392,000
Budgeted labor hours: 50,000
Simone's actual labor hours worked totaled:

Accepted Answer

The answer of Simone uses a predetermined overhead application rate...

Question 11

The journal entry needed to record $5,000 of advertising for Westwood Manufacturing would include:

Accepted Answer

Advertising expenses are recorded as an expense, so the correct entry would be a debit to Advertising Expense to increase the expense account.

Question 12

Othello Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor.The proper journal entry to record these events would include a debit to Work in Process for:

Accepted Answer

Direct labor is recorded by debiting Work in Process, so a debit of $106,000 is made to Work in Process. Indirect labor is typically recorded as part of Manufacturing Overhead and not directly to Work in Process. Therefore, there is no journal entry made for indirect labor in this case.

Question 13

The following information relates to October:
Production supervisor's salary: $3,500
Factory maintenance wages: 250 hours at $10 per hour
The journal entry to record the preceding information is:

Accepted Answer

The answer of The following information relates to October:
Production supervisor's...

Question 14

Metro Corporation uses a predetermined overhead rate of $20 per machine hour.In deriving this figure,the company's accountant used:

Accepted Answer

The accountant used a predetermined overhead rate, which means it was determined before the actual overhead costs were incurred. Therefore, the denominator should be based on budgeted machine hours for the current accounting period, not actual machine hours for either the current or previous period. The numerator is not relevant to the question.

Question 15

Strong Company applies overhead based on machine hours.At the beginning of 20x1,the company estimated that manufacturing overhead would be $500,000,and machine hours would total 20,000.By 20x1 year-end,actual overhead totaled $525,000,and actual machine hours were 25,000.On the basis of this information,the 20x1 predetermined overhead rate was:

Accepted Answer

The answer of Strong Company applies overhead based on machine...

Question 16

Throughout the accounting period,the credit side of the Manufacturing Overhead account is used to accumulate:

Accepted Answer

The credit side of the Manufacturing Overhead account is used to accumulate the overhead applied to Work-in-Process Inventory, which is based on a predetermined overhead rate.

Question 17

Which of the following is the correct method to calculate a predetermined overhead rate?

Accepted Answer

The predetermined overhead rate is calculated by dividing the budgeted overhead costs by the budgeted amount of the cost driver. Option B is the correct method of calculating a predetermined overhead rate.

Question 18

An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead at a company that uses normal costing.The accountant was:

Accepted Answer

The accountant is applying a predetermined overhead amount to production, which is a common practice in normal costing. This calculation is based on estimates made at the beginning of the year, and the overhead cost is allocated to products based on the estimated amount of direct labor or machine hours.

Question 19

The process of assigning overhead costs to the jobs that are worked on is commonly called:

Accepted Answer

Overhead application is the process of assigning overhead costs to the jobs that are worked on. The other options may refer to other aspects of cost accounting, but do not accurately describe the specific process in question.

Question 20

The final step in recognizing the completion of production requires a company to:

Accepted Answer

The final step in recognizing the completion of production involves transferring the cost of the completed goods from Work-in-Process Inventory to Finished-Goods Inventory. This is done by debiting Finished-Goods Inventory (to increase it) and crediting Work-in-Process Inventory (to decrease it), reflecting the movement of goods from being in process to being finished.

Quiz 3: Product Costing and Cost Accumulation in a Batch Production Environment