Question 1

The following data are available for Skyway:
$$\begin{array} { | l | l | } 
\hline \text { Estimated machine hours } & 40,000 \text { hours } \
\hline \text { Estimated overhead costs } & \$ 80,000 \
\hline
\end{array}$$
If overhead is applied based on machine hours,the predetermined overhead rate is:

Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated overhead costs by the estimated machine hours: $80,000 / 40,000 = $2.00 per machine hour.

Question 2

XYZ Company has direct labor for the month of $40,000.XYZ's annual overhead is $600,000 and annual direct labor cost is $1,000,000.Overhead is applied based on direct labor.What is the entry to charge direct labor to production?

Accepted Answer

The answer of XYZ Company has direct labor for the...

Question 3

If direct labor for the month is $100,000,and overhead is applied based on 75% of direct labor dollars,what is the entry to apply overhead?

Accepted Answer

Overhead is applied at 75% of direct labor, which is $75,000. The correct entry is to debit Work-in-Process Inventory and credit Manufacturing Overhead-Applied for this amount.

Question 4

Which of the following journal entries would be made to apply the cost of indirect labor to production?

Accepted Answer

The cost of indirect labor is initially recorded as a debit to Manufacturing Overhead-Control and a credit to Payroll Payable.

Question 5

The overhead application rate may be based on:

Accepted Answer

The overhead application rate can be based on any activity that has a strong correlation with the use of overhead resources. Machine hours, direct labor hours, and direct labor dollars are all commonly used as a basis for calculating the overhead application rate. Some companies may even use other measures such as units produced or square footage. Therefore, choice D is the best option as it includes all of the correct options.

Question 6

Sylvan Manufacturing applies overhead based on direct labor hours.At the beginning of the year,it estimated that overhead costs would be $150,000 and direct labor hours would be 15,000.The applied overhead rate per direct labor hour is:

Accepted Answer

To calculate the applied overhead rate per direct labor hour, divide the estimated overhead costs by the estimated direct labor hours: 
$150,000 ÷ 15,000 = $10.00. Therefore, the correct answer is C.

Question 7

Madison Manufacturing is using a manufacturing overhead application rate of 130% of direct labor dollars.A job uses 10 direct labor hours at $20 per hour.How much overhead should be applied to the job?

Accepted Answer

The direct labor cost for the job is:
10 direct labor hours x $20 per direct labor hour = $200

The manufacturing overhead cost to be applied to the job is:
130% x $200 = $260

Therefore, the answer is C) $260.

Question 8

Molly Manufacturing is using a manufacturing overhead application rate of 125% of machine cost.A job uses 35 machine hours at $9/hour.How much overhead should be applied to the job?

Accepted Answer

First, we need to calculate the machine cost for the job:
35 machine hours x $9/hour = $315

Then, we apply the manufacturing overhead application rate of 125%:

125% x $315 = $393.75

Therefore, the overhead that should be applied to the job is $393.75. The answer is Choice B.

Question 9

Work-in-Process Inventory is credited when goods are transferred to finished goods.

Accepted Answer

Work-in-Process Inventory is a temporary account that is debited when materials are added to production and credited when goods are transferred to finished goods.

Question 10

If the overhead applied rate based on direct labor hours is $7.00 and the actual labor hours are 500,what is the amount credited to Manufacturing Overhead-Applied?

Accepted Answer

The overhead applied is calculated by multiplying the overhead rate by the actual labor hours: $7.00 * 500 hours = $3,500.

Question 11

The bill of lading is a formal document issued to the carrier for shipping the finished product to a customer.

Accepted Answer

The bill of lading is indeed a formal document issued to the carrier for shipping the finished product to a customer. It serves as a receipt of goods, a contract of carriage, and a document of title to the goods.

Question 12

The estimated manufacturing overhead cost was $25,000 and estimated machine hours were 10,000.Actual manufacturing overhead cost was $24,000 and actual machine hours were 12,000.The overhead application rate per hour based on machine hours is:

Accepted Answer

The answer of The estimated manufacturing overhead cost was $25,000...

Question 13

The following data are available for Starbrite Corporation:
$$\begin{array} { | l | l | } 
\hline \text { Estimated direct labor hours } & 1000 \
\hline \text { Estimated overhead costs } & \$ 36,000 \
\hline
\end{array}$$
If overhead is applied based on direct labor hours,the predetermined overhead rate is:

Accepted Answer

The answer of The following data are available for Starbrite...

Question 14

The entry to record selling a product that cost $14,000 would be a credit to Finished Goods Inventory $14,000,and a debit to Cost of Goods Sold $14,000.

Accepted Answer

This entry reflects the cost of the product being removed from inventory and expense being recognized. Therefore, it is a credit to Finished Goods Inventory and a debit to Cost of Goods Sold.

Question 15

In entries to record the movement of material,labor,and overhead through the operation of a company,the credit is the destination and the debit is the source.

Accepted Answer

In entries to record the movement of material, labor, and overhead, the debit is the destination and the credit is the source.

Question 16

The Overhead-Applied account is used for the:

Accepted Answer

The answer of The Overhead-Applied account is used for the:
...

Question 17

Estimated manufacturing overhead costs were $60,000 and the number of estimated machine hours was 20,000.Actual overhead costs were $61,000 and the actual number of machine hours used was 20,500.Based on machine hours,the overhead application rate per hour is:

Accepted Answer

The overhead application rate is calculated by dividing the estimated manufacturing overhead costs by the estimated machine hours: $60,000 / 20,000 hours = $3.00 per hour.

Question 18

The entry to record rent expense $9,000,supervision expense $19,000,and depreciation expense $7,000 to overhead is:

Accepted Answer

The correct entry would be to debit Manufacturing Overhead-Control for $35,000 and credit Rent Expense, Supervision Expense, and Depreciation Expense for their respective amounts. None of the provided options correctly reflect this entry.

Question 19

Adams Manufacturing has estimated manufacturing overhead at $125,000 and has estimated direct labor of 10,000 direct labor hours at $10.00 per hour.The overhead rate per direct labor dollar would be:

Accepted Answer

To calculate the overhead rate per direct labor dollar, we need to divide the estimated overhead by the estimated direct labor cost.

Estimated direct labor cost = 10,000 direct labor hours * $10.00 per hour = $100,000

Overhead rate per direct labor dollar = $125,000 / $100,000 = $1.25

Therefore, the answer is (C) $1.25.

Question 20

Direct labor for the month is $50,000,and overhead is applied based on direct labor cost.Annual overhead is estimated to be $450,000,and annual direct labor is estimated to be $800,000.What is the entry to apply overhead to production?

Accepted Answer

The answer of Direct labor for the month is $50,000,and...

Quiz 25: Manufacturing Accounting

The following data are available for Skyway: $\begin{array} { | l | l | } \hline \text { Estimated machine hours } & 40,000 \text { hours } \\\hline \text { Estimated overhead costs } & \$ 80,000 \\\hline\end{array}$ If overhead is applied based on machine hours,the predetermined overhead rate is: