Deck 26: Accounting for Manufacturing Activities

Question 1

A statement of cost of goods manufactured supports the income statement.

Answer 1

True

Question 2

Raw materials and work in process are costs incurred while manufacturing a product and are considered period expenses and thus appear on the income statement.

Answer 2

False

Question 3

Total manufacturing cost is the sum of beginning work in process, direct materials used, direct labor incurred and manufacturing overhead.

Answer 3

False

Question 4

Amounts paid to factory repair and maintenance employees are considered direct labor.

Question 5

The Cost of Goods Manufactured represents the cost of completed units that are transferred into Finished Goods and made available for sale.

Question 6

The raw materials inventory, the work in process inventory, and the finished goods inventory are all shown in the Current Assets section of the balance sheet.

Question 7

Total manufacturing cost is the sum of direct materials used, direct labor incurred and manufacturing overhead applied.

Question 8

Raw Materials Used is not a component of manufacturing overhead.

Question 9

Manufacturing-related costs that cannot be cost-effectively traced to a product are considered manufacturing overhead.

Question 10

The beginning inventory of raw materials is shown in the Income Statement Credit column and the Balance Sheet Debit column of a worksheet for a manufacturing business.

Question 11

The adjusting entry to close out the beginning work in process inventory includes a debit to Income Summary and a credit to Work in Process Inventory.

Question 12

Raw materials purchased during the month were $66,000. During that same period, $95,000 was used and ending inventory was $35,000. The beginning raw material inventory balance must have been $60,000.

Question 13

The beginning and ending balances of the finished goods inventory are not used in the computation of cost of goods manufactured.

Question 14

Cleaning materials and lubricants used in factory operations and maintenance are considered manufacturing overhead.

Question 15

Gross profit for a manufacturing business is calculated by deducting cost of goods manufactured from net sales.

Question 16

The Cost of Goods Sold section of the income statement for a manufacturing business shows the balance of the work in process inventory.

Question 17

If the ending finished goods inventory is greater than the beginning finished goods inventory, the cost of goods sold will be higher than the cost of goods manufactured.

Question 18

The total cost of a manufactured item includes direct materials, direct labor and manufacturing overhead.

Question 19

Products that are partially completed are considered work in process.

Question 20

The balance sheet of a manufacturing firm will include Raw Materials, Work in Process, Manufacturing Overhead and Finished Goods inventory accounts.

Question 21

As part of the adjusting entries, the beginning inventory of work in process is closed into the
account.

Question 22

All manufacturing costs, except those for direct labor and direct materials, are included in
.

Question 23

Information about depreciation, insurance, and property taxes for the factory building of a manufacturing business would be shown in the Operating Expenses section of the income statement.

Question 24

If there are no errors, the amount needed to balance the Cost of Goods Manufactured columns of a worksheet will also be the amount required to balance the Balance Sheet columns.

Question 25

The cost of goods sold will often differ from the cost of goods manufactured because of changes in the quantity of finished goods.

Question 26

The balance of the Manufacturing Summary account is closed into the Income Summary account.

Question 27

All of the items that are purchased for manufacturing operations that go into a product and become part of the finished product are called .

Question 28

Six adjusting entries are made at the end of the fiscal year for inventory accounts in a manufacturing operation.

Question 29

The amounts of the raw materials used, direct labor incurred, and manufacturing overhead applied during a fiscal period are reported on the statement of cost of goods manufactured.

Question 30

The salary paid to a factory supervisor is classified as .

Question 31

Immediately before it is closed, the balance of the Manufacturing Summary account represents the cost of goods manufactured.

Question 32

To compute the , it is necessary to subtract the ending work in process inventory from the sum of the beginning work in process inventory and the total manufacturing cost.

Question 33

For a manufacturing business, net sales minus equals gross profit on sales.

Question 34

The cost of indirect materials and supplies used in manufacturing operations are part of
and are included in the calculation of total manufacturing costs.

Question 35

The balance of the manufacturing summary account is closed to Income Summary.

Question 36

Beginning and ending finished goods inventory are used in the calculation of cost of goods
.

Question 37

Reversing entries help save time and prevent errors in the period being closed.

Question 38

The manufacturing summary account is a temporary account used to close out manufacturing costs before transferring the balance to Finished Goods.

Question 39

An adjusting entry to accrue salaries and wage expenses incurred, but not yet recorded is required prior to closing out a reporting period.

Question 40

In a manufacturing company, it is not necessary to take a physical inventory of the finished goods.

Question 41

The beginning and ending inventories appear in the Cost of Goods Sold section of the income statement of a manufacturing business.

Question 42

The entry to close the Manufacturing Summary account includes a(n)to Manufacturing Summary.

Question 43

Which of the following is NOT an adjusting entry?

A)
B)
C)
D)

Question 44

As part of the adjusting entries, the beginning inventory of finished goods is closed into the
account.

Question 45

The ending inventory of raw materials is shown on the worksheet of a manufacturing business in the Cost of Goods Manufactured column.

Question 46

Under the perpetual inventory method, additions and deletions of inventory items are recorded as they occur to which of the following?

A)Finished Goods
B)Work in Process
C)Materials
D)All of these

Question 47

The manufacturing costs incurred during the year are:

A)shown as expense accounts, such as Wages Expense and Utilities Expense, that are listed in the Operating Expenses section of the income statement.
B)shown as Direct Labor, Raw Materials, and Manufacturing Overhead in the Operating Expenses section of the income statement.
C)shown in the Cost of Goods Sold section of the income statement.
D)used in the calculation of cost of goods manufactured.

Question 48

The Balance Sheet of a manufacturing firm includes which account that will not be included in the Balance Sheet of a merchandising or service firm?

A)Prepaid Insurance
B)Work in Process Inventory
C)Prepaid Wages
D)Accounts Payable

Question 49

The cost of goods manufactured is calculated by:

A)adding raw materials used and direct labor to manufacturing overhead.
B)deducting the ending work in process inventory from the sum of the total manufacturing cost and the beginning work in process inventory.
C)deducting the ending finished goods inventory from the beginning finished goods inventory.
D)adding operating expenses to direct labor costs.

Question 50

Benefits of maintaining inventory records on a perpetual basis include all of the following except:

A)provides improved cost control.
B)avoid annual physical counts.
C)easier to identify potential shortages.
D)improved customer experiences.

Question 51

The Manufacturing Summary account is closed into the account.

Question 52

Indirect labor for a manufacturing business includes the wages of:

A)employees who sell the product.
B)employees who assemble the product.
C)factory repair and maintenance employees.
D)office employees.

Question 53

Wages paid to the factory maintenance and repair personnel of a manufacturing business are shown:

A)as part of Manufacturing Overhead on the statement cost of goods manufactured.
B)as Direct Labor on the statement of cost goods manufactured.
C)in the Operating Expenses section of the income statement.
D)as a part of the Cost of Goods Sold section of the income statement.

Question 54

Gross profit for a manufacturing business is calculated by:

A)deducting cost of goods manufactured from net sales.
B)deducting cost of goods sold from net sales.
C)deducting the ending finished goods inventory from the total goods available for sale.
D)deducting operating expenses from the costs of goods sold.

Question 55

Organizations that utilize the perpetual inventory method record additions and deletions of inventory items:

A)yearly.
B)quarterly.
C)monthly.
D)daily.

Question 56

On a worksheet for a manufacturing business, the beginning inventory of finished goods is extended to the Debit column.

Question 57

Once the financial statements have been prepared, the steps in the accounting cycle are complete. Which of the following is NOT one of the steps in the accounting cycle?

A)Adjusting entries
B)Post Closing Trial Balance
C)Closing Trial Balance
D)Closing entries

Question 58

The end-of-period adjusting entries are:

A)recorded in the journal and posted in the ledger.
B)recorded and posted in the ledger.
C)recorded in the ledger and posted in the journal.
D)recorded and posted in the journal.

Question 59

The raw materials inventory is shown in the section of the balance sheet of a manufacturing business.

Question 60

Closing entries for a manufacturing firm include all of the following except:

A)transferring all manufacturing cost accounts to Manufacturing Summary.
B)closing Income Summary to Net Income.
C)closing Manufacturing Summary to Income Summary.
D)transferring all Revenue and Expense account balances to Income Summary.

Question 61

The balance sheet of a manufacturing business shows:

A)the finished goods inventory and the cost of goods manufactured.
B)the cost of goods manufactured rather than inventory figures.
C)a single inventory figure-the amount of the finished goods inventory.
D)the raw materials inventory, the work in process inventory, and the finished goods inventory.

Question 62

Reversing entries for a manufacturing business are:

A)made prior to preparing the post-closing trial balance.
B)made for the inventory accounts only.
C)closed into the Manufacturing Summary account.
D)made for accrual adjustments.

Question 63

All manufacturing costs that are NOT classified as direct materials or direct labor are:
A)indirect materials.

A)semidirect costs.
B)indirect labor.
D)manufacturing overhead.

Question 64

The cost of goods manufactured for a fiscal period is reported on:

A)both the income statement and the balance sheet.
B)both the statement of the cost of goods manufactured and the balance sheet.
C)both the statement of cost of goods manufactured and the income statement.
D)the statement of cost of goods manufactured only.

Question 65

The statement of cost of goods manufactured:

A)supports the balance sheet.
B)supports the income statement.
C)replaces the income statement.
D)is not related to the income statement.

Question 66

The ending balance of the work in process inventory is recorded by debiting Work in Process Inventory and crediting:

A)Income Summary.
B)Manufacturing Summary.
C)Cost of Goods Sold.
D)Merchandise Inventory.

Question 67

On the completed worksheet of a manufacturing business, the accounts related to materials purchases, direct labor, and factory overhead:

A)appear in the Income Statement section.
B)do not appear.
C)appear in the Cost of Goods Manufactured section.
D)appear in the Balance Sheet section.

Question 68

On a worksheet for a manufacturing firm, the beginning balance of the Finished Goods Inventory account is:

A)extended to the Cost of Goods Manufactured Debit column.
B)extended to the Balance Sheet Debit column.
C)extended to the Income Statement Debit column.
D)not listed.

Question 69

The Indirect Labor account is closed by crediting Indirect Labor and debiting:

A)Wages Payable.
B)Income Summary.
C)Wages Expense.
D)Manufacturing Summary.

Question 70

Calculate the total manufacturing cost from the information given:

A)$37,500.
B)$30,300.
C)$23,100.
D)$57,150.

Question 71

The following information appears on the Statement of Cost of Goods Manufactured for the Coleman Company at the end of the year.

The cost for Direct Labor is:

A)$49,000.
B)$15,000.
C)$34,000.
D)$59,000.

Question 72

Calculate the cost of goods manufactured from the information given:

A)$21,200.
B)$19,800.
C)$13,800.
D)$15,200.

Question 73

The following information appears on the income statement of the Davis Company at the end of the year.
$\begin{array}{lr}\text { Sales } & \$ 512,000 \\\text { Cost of Goods Manufactured } & 357,000 \\\text { Gross Profit on Sales } & 168,000 \\\text { Beginning finished goods inventory } & 118,000\end{array}$
Ending finished goods inventory is:

A)$239,000.
B)$105,000.
C)$307,000.
D)$131,000.

Question 74

In adjusting entries for a manufacturing business, the beginning balance of the work in process inventory is eliminated by crediting Work in Process Inventory and debiting:

A)Finished Goods Inventory.
B)Income Summary.
C)Manufacturing Summary.
D)Merchandise Inventory.

Question 75

The balance of the Manufacturing Summary account is closed into:

A)Retained Earnings.
B)Cost of Goods Manufactured.
C)Income Summary.
D)Manufacturing Overhead.

Question 76

The following information appears on the income statement of the Richer Company at the end of th year:
$\begin{array}{lr}\text { Beginning finished goods inventory } & \$ 152,000 \\\text { Ending finished goods inventory } & 137,000 \\\text { Sales } & 475,000 \\\text { Gross Profit on Sales } & 142,000\end{array}$

A)$318,000.
B)$127,000.
C)$157,000.
D)$348,000.

Question 77

The following information appears on the income statement of the Richer Company at the end of th year.
$\begin{array}{lr}\text { Beginning finished goods inventory } & \$ 197,000 \\\text { Ending finished goods inventory } & 204,000 \\\text { Sales } & 360,100 \\\text { Cost of Goods Manufactured } & 136,000\end{array}$
Gross Profit on Sales is:

A)$217,000.
B)$231,000.
C)$143,000.
D)$129,000.

Question 78

Calculate the cost of goods manufactured from the information given:
$\begin{array}{lr}\text { Ending Work in Process } & \$ 1,200 \\\text { Manufacturing overhead } & 14,000 \\\text { Selling expense } & 7,000 \\\text { Beginning Work in process } & 10,400 \\\text { Raw materials used (direct) } & 5,700 \\\text { Administrative expense } & 10,000 \\\text { Direct labor } & 7,600\end{array}$

A)$24,500.
B)$27,300.
C)$30,100.
D)$47,100.

Question 79

The three components of total manufacturing cost are:

A)cost of goods manufactured, cost of goods sold, and work in process.
B)raw materials, direct labor, and cost of goods sold.
C)selling expenses, administrative expenses, and manufacturing overhead.
D)raw materials, direct labor, and manufacturing overhead.

Question 80

Reversing entries are required by:

A)the Internal Revenue Service.
B)Generally Accepted Accounting Principles.
C)the International Accounting Standards Board.
D)none of these.