Question 1

Hudson,Inc.has estimated total factory overhead costs of $400,000 and 20,000 direct labor hours for the current fiscal year.If direct labor hours for the year totals 18,000 and actual factory overhead totals $350,000,what is the amount of overapplied or underapplied overhead for the year?

Accepted Answer

The predetermined overhead rate is calculated as estimated total factory overhead costs divided by estimated direct labor hours, which is $400,000 / 20,000 hours = $20 per direct labor hour. The applied overhead for the year is then the predetermined rate multiplied by the actual direct labor hours, which is $20 * 18,000 hours = $360,000. Since the actual factory overhead is $350,000, the difference is $360,000 - $350,000 = $10,000 overapplied.

Question 2

The Harold Company forecasts that total overhead for the current year will be $12,000,000 and total machine hours will be 200,000 hours.However,the actual overhead is $4,000,000 and the actual machine hours are 100,000 hours.If the company uses a predetermined overhead rate based on machine hours for applying overhead,the overhead will be:

Accepted Answer

The predetermined overhead rate is $12,000,000 / 200,000 hours = $60 per hour. The actual overhead is $4,000,000 and the actual machine hours are 100,000 hours. So the overhead is overapplied by $60 per hour x 100,000 hours = $2,000,000.

Question 3

Refer to the information provided for Bluemoon,Inc.Calculate direct materials cost used in production.

Accepted Answer

The direct materials cost used in production is calculated by taking the beginning inventory of materials, adding the purchases of materials, and subtracting the ending inventory of materials. The correct calculation leads to $326,000.

Question 4

Which of the following is most likely be a period cost?

Accepted Answer

A period cost is a cost that is not directly tied to the production of goods or services, but rather to the overall administration or management of the company. The salary of a telephone receptionist in the sales office is an example of a period cost because it is related to the general administration of the company and not to the production process. The other choices are all examples of product costs, which are costs directly related to the production process.

Question 5

For a manufacturing business,work-in-process inventories consist of inventories which have .

Accepted Answer

Work-in-process inventories refer to inventories that have entered the manufacturing process but have not been completed yet. Therefore, option B is the correct choice. Options A and D do not fit the definition of work-in-process inventories, while option C refers to finished goods inventories.

Question 6

During the year,Bright Corporation applied factory overhead costs of $330,000 to production.At the end of the year,total overapplied factory overhead is $13,000.What was the amount of actual factory overhead cost incurred during the year?

Accepted Answer

Actual factory overhead cost incurred during the year = Applied factory overhead costs - Overapplied factory overhead
= $330,000 - $13,000
= $317,000. 
Therefore, the correct answer is option D, $317,000.

Question 7

The finished goods account is a controlling account for the subsidiary:

Accepted Answer

The finished goods account is used to track the cost of goods that have been completed and are ready for sale. It is a controlling account for the stock ledger, which is used to track the quantity and value of inventory on hand. Option A (sales ledger) is not correct because it relates to sales, not inventory. Option B (materials ledger) is also not correct because it is used to track the cost and usage of raw materials, not finished goods. Option C (work-in-process ledger) is used to track the cost of goods that are still in the production process and not yet completed, so it is not the best choice for this question.

Question 8

Which of the following would be a period costs for a textbooks printing company?

Accepted Answer

Period costs are expenses that are not directly related to the production of goods or services, but to selling, general and administrative activities. Advertising expense falls under this category. Wages of a press operator and paper costs are direct costs of production, while utility costs of the factory could be both direct or indirect costs.

Question 9

Which of the following is a product cost?

Accepted Answer

Depreciation on factory equipment is a direct cost associated with the production of goods, and thus, it is considered a product cost.

Answer: C and D 
 Commission to sales and office lighting are indirect costs not directly related to the production of goods, and thus, they are considered period costs.

Question 10

Upon completing a job,direct materials totaled $3,000; direct labor,$3,500; and factory overhead,$1,500.Units produced totaled 1,000.What is the per unit cost?

Accepted Answer

The total cost is the sum of direct materials, direct labor, and factory overhead: $3,000 + $3,500 + $1,500 = $8,000. The per unit cost is $8,000 divided by 1,000 units, which equals $8.

Question 11

Refer to the information provided for Bluemoon,Inc.What is the cost of goods sold?

Accepted Answer

The cost of goods sold is calculated as the beginning inventory plus purchases minus ending inventory.

Beginning inventory: $100,000 
Purchases: $700,000 
Ending inventory: $280,000

Cost of goods sold = $100,000 + $700,000 - $280,000 = $520,000. Therefore, the best choice is C.

Question 12

Mountain View Manufacturers Inc.has estimated total factory overhead costs of $90,000,and 15,000 direct labor hours for the current fiscal year.If job number 112 incurred 1,000 direct labor hours,the work-in-process account will be increased and factory overhead will be decreased by:

Accepted Answer

The predetermined overhead rate can be calculated by dividing the estimated total factory overhead costs by the estimated total direct labor hours:
Predetermined overhead rate = Estimated total factory overhead costs / Estimated total direct labor hours
Predetermined overhead rate = $90,000 / 15,000 direct labor hours
Predetermined overhead rate = $6 per direct labor hour

If job number 112 incurred 1,000 direct labor hours, then the overhead applied to that job would be:
Overhead applied = Predetermined overhead rate x Direct labor hours
Overhead applied = $6 per direct labor hour x 1,000 direct labor hours
Overhead applied = $6,000

The work-in-process account will be increased by $6,000, and factory overhead will be decreased by $6,000, since the applied overhead reduces the balance in the factory overhead account. Therefore, the correct answer is option C.

Question 13

Elite,Inc.has estimated total factory overhead costs of $900,000,and 25,000 direct labor hours for the current fiscal year.If the direct labor hours for Job N41 is 2,000,calculate the total factory overhead applied to this job.

Accepted Answer

To calculate the total factory overhead applied to Job N41, we need to use the predetermined overhead rate. This rate is calculated by dividing the total factory overhead costs by the total direct labor hours for the year.

Predetermined overhead rate = Total factory overhead costs / Total direct labor hours 
= $900,000 / 25,000 
= $36 per direct labor hour

To find the total factory overhead applied to Job N41:
Total factory overhead applied = Predetermined overhead rate x Direct labor hours for Job N41
= $36 x 2,000
= $72,000

Therefore, the correct choice is D, $72,000.

Question 14

The sale of a finished good on account would:

Accepted Answer

When a finished good is sold on account, it means that it has been sold to a customer who will pay at a later date. This transaction will increase Sales (revenue) but will also increase Accounts Receivable (an asset). The cost of producing the finished good, which is included in Cost of Goods Sold, will decrease the inventory of Finished Goods. Therefore, the sale on account will increase Cost of Goods Sold and decrease Finished Goods, while also increasing Accounts Receivable and Sales.

Question 15

The Anderson Company forecasts that total overhead for the current year will be $15,000,000 and total machine hours will be 200,000 hours.However,the actual overhead is $8,000,000 and the actual machine hours are 100,000 hours.If the company uses a predetermined overhead rate based on machine hours for applying overhead,what is predetermined overhead rate?

Accepted Answer

The answer of The Anderson Company forecasts that total overhead...

Question 16

For Peterson Company,total overhead applied was $35,000,000 at the end of the year.Actual overhead was $35,800,000.Closing over/under applied overhead into cost of goods sold would cause net income to:

Accepted Answer

Since actual overhead ($35,800,000) exceeded the overhead applied ($35,000,000), this indicates an underapplied overhead of ($35,800,000 - $35,000,000) = $800,000. This means that the company did not allocate enough overhead to its products during the year, which will lead to a decrease in net income. To account for the underapplied overhead, the company would add it to the cost of goods sold, which would decrease net income by $800,000. Therefore, the correct answer is option B.

Question 17

Which of the following is most likely to be a product cost?

Accepted Answer

Product costs are the direct costs associated with producing and manufacturing a product, such as raw materials and direct labor. The drill bits for a drill press used in the plant assembly area are directly related to the production process and are therefore a product cost. The salary of the vice president of sales and advertising costs are indirect costs that are not directly related to the production process. The salary of the company receptionist is an overhead cost that is not directly related to the production process.

Question 18

Direct materials,work-in-process,and finished goods inventory are most likely to be reported on the balance sheet of a(n):

Accepted Answer

Direct materials, work-in-process, and finished goods inventory are all related to manufacturing or production activities. Therefore, they are most likely to be reported on the balance sheet of a manufacturing company, such as an automobile company. The other choices (financial consultant, apparel boutique, and insurance company) are not typically engaged in manufacturing activities, so they would not have significant amounts of these types of inventory on their balance sheets.

Question 19

Which of the following is a period cost?

Accepted Answer

Period costs are expenses that are not directly related to the production process but rather to the overall operation of the company. Sales commissions fall under this category as they are not directly incurred in the production process but rather in the selling and distribution of the products. Power, depreciation on factory equipment, and wages of an assembly worker are all examples of product costs as they are directly related to the production process.

Question 20

Until products are sold,product costs are treated as:

Accepted Answer

Until a product is sold, it is considered inventory and is therefore classified as an asset on the balance sheet. Once the product is sold, the cost is expensed through the cost of goods sold account.

Quiz 10: Accounting Systems for Manufacturing Businesses