Question 1

Entry (16)in the below T-account represents the cost of goods manufactured transferred to Finished Goods from Work in Process.

Accepted Answer

False

Question 2

Entry (11)in the below T-account could represent overhead cost applied to Work in Process.

Accepted Answer

False

Question 3

In the Schedule of Cost of Goods Sold,Unadjusted cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured − Ending finished goods inventory.

Accepted Answer

This is the correct formula for calculating unadjusted cost of goods sold.

Question 4

The following entry would be used to record the transfer of $40,000 of direct material and $10,000 of indirect material from the storeroom to production:

Accepted Answer

The answer of The following entry would be used to...

Question 5

Entry (1)in the below T-account represents the purchase rather than use of raw materials.

Accepted Answer

The T-account would represent the purchase of raw materials on the debit side and the use of raw materials on the credit side. As the question specifically states that entry (1) represents the purchase of raw materials, the answer would be A.

Question 6

Entry (4)in the T-account below represents raw materials requisitioned for use in production.

Accepted Answer

The T-account is a record-keeping tool used by accountants to track the increases and decreases in specific accounts. Entry (4) represents a transaction that involves raw materials being taken out of the inventory and used in the production process, which is commonly referred to as raw materials requisitioned. Therefore, the statement is true.

Question 7

Advertising costs should NOT be charged to the Manufacturing Overhead account.

Accepted Answer

Advertising costs are considered selling expenses and are not part of the manufacturing overhead, which includes costs directly related to the production of goods, such as raw materials, labor, and factory overhead.

Question 8

Entry (4)in the below T-account could represent the cost of overhead applied to Work in Process.

Accepted Answer

The answer of Entry (4)in the below T-account could represent...

Question 9

When raw materials are purchased,they are recorded as an asset.

Accepted Answer

Raw materials are considered assets because they have value and can be used in the production process to create goods or services.

Question 10

The absorption cost approach provides for the absorption of all manufacturing costs,fixed and variable,into units of product.

Accepted Answer

The absorption cost approach includes all manufacturing costs, both fixed and variable, in the cost of producing the unit of product.

Question 11

Entry (4)in the below T-account could represent the cost of property taxes and insurance incurred on the factory.

Accepted Answer

The T-account represents the transactions related to the factory. Property taxes and insurance are expenses incurred by the factory and they would be recorded as a debit entry, which matches with the given T-account entry. Therefore, entry (4) can represent the cost of property taxes and insurance on the factory.

Question 12

The $10,000 balance in the T-account below represents overapplied manufacturing overhead for the period.

Accepted Answer

The answer of The $10,000 balance in the T-account below...

Question 13

Assume that a company closes out any manufacturing overhead overapplied or underapplied to cost of goods sold.Then in the Schedule of Cost of Goods Sold,Adjusted cost of goods sold = Unadjusted cost of goods sold + Overapplied overhead - Underapplied overhead.

Accepted Answer

The answer of Assume that a company closes out any...

Question 14

If a company uses a predetermined overhead rate,actual manufacturing overhead costs of a period will be recorded in the Manufacturing Overhead account and will be recorded on the job cost sheets.

Accepted Answer

A predetermined overhead rate is used to apply estimated overhead costs to jobs, not actual overhead costs. Actual overhead costs are recorded in the Manufacturing Overhead account, but they are not recorded on the job cost sheets; instead, applied overhead based on the predetermined rate is recorded on the job cost sheets.

Question 15

On a manufacturing company's income statement,direct labor is separately listed as an expense.

Accepted Answer

The answer of On a manufacturing company's income statement,direct labor...

Question 16

In the Schedule of Cost of Goods Sold,Cost of goods available for sale = Ending finished goods inventory + Cost of goods manufactured.

Accepted Answer

Cost of goods available for sale is calculated as the beginning finished goods inventory plus the cost of goods manufactured minus the ending finished goods inventory.

Question 17

In the Schedule of Cost of Goods Manufactured,Total raw materials available = Ending raw materials inventory + Purchases of raw materials.

Accepted Answer

In the Schedule of Cost of Goods Manufactured, Total raw materials available for use is calculated as Beginning raw materials inventory + Purchases of raw materials. Ending raw materials inventory is subtracted from this total to find the raw materials used in production.

Question 18

In the Schedule of Cost of Goods Manufactured,Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory.

Accepted Answer

The formula for cost of goods manufactured is indeed Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory.

Question 19

The following entry would be used to record depreciation on manufacturing equipment:

Accepted Answer

Depreciation on manufacturing equipment is an example of a fixed asset and is accounted for using depreciation expense. Therefore, an entry would need to be recorded to reflect this expense.

Question 20

The journal entry for cost of goods manufactured includes the costs of units that are partially completed.

Accepted Answer

The cost of goods manufactured includes only the costs of units that have been completed during the period, not those that are partially completed. Partially completed units are reported as work in progress in the balance sheet.

Quiz 3: Job-Order Costing: Cost Flows and External Reporting