Question 1

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 the unadjusted cost of goods sold.

Question 2

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

Accepted Answer

False

Question 3

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

Accepted Answer

Raw materials are considered an asset because they have future economic value and can be used to generate revenue or produce goods.

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

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 those goods that have been completed during the period, not the costs of partially completed units.

Question 6

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

The predetermined overhead rate is used to apply overhead to jobs, not to record actual overhead costs. Actual manufacturing 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 7

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 8

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

Accepted Answer

In the Schedule of Cost of Goods Sold, Cost of goods available for sale is calculated as the Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory.

Question 9

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

Accepted Answer

The answer of Entry (16)in the below T-account represents the...

Question 10

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 11

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

This is the correct formula for calculating the cost of goods manufactured in the Schedule of Cost of Goods Manufactured.

Question 12

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 is also known as the full cost approach, which includes all manufacturing costs (both fixed and variable) into the cost of a product. This method is required by generally accepted accounting principles (GAAP) and is commonly used for external financial reporting purposes.

Question 13

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...

Question 14

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

Accepted Answer

Raw materials requisitioned for use in production would be a debit entry in the T-account, which would represent an increase in the inventory of raw materials on hand.

Question 15

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.

Question 16

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

Accepted Answer

The answer of Entry (11)in the below T-account could represent...

Question 17

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 factory's expenses and Entry (4) could represent property taxes and insurance costs incurred on the factory.

Question 18

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

Accepted Answer

The T-account is used to track the transactions of an account, and the first entry represents an increase in the inventory of raw materials, indicating a purchase rather than use.

Question 19

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

Accepted Answer

The entry provided is a valid code for recording depreciation on manufacturing equipment.

Question 20

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.

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