Question 1

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

The predetermined overhead rate can be calculated as follows:

Predetermined Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Total Direct Labor Hours 
Predetermined Overhead Rate = $900,000 / 25,000 = $36 per direct labor hour

To calculate the total factory overhead applied to Job N41, we need to multiply the predetermined overhead rate by the actual direct labor hours for that job:

Total Factory Overhead Applied = Predetermined Overhead Rate x Actual Direct Labor Hours 
Total Factory Overhead Applied = $36 x 2,000 = $72,000

Therefore, the answer is D, $72,000.

Question 2

The recording of the jobs shipped and customers billed would increase:

Accepted Answer

The recording of jobs shipped and customers billed would increase Cost of Goods Sold because it reflects the cost associated with the goods that have been sold and are now being billed to the customer. Finished goods are moved out of inventory and the associated costs are recognized as an expense (Cost of Goods Sold) at the time of sale.

Question 3

Which of the following is the subsidiary ledger for work-in-process?

Accepted Answer

Job cost sheets provide detailed information on the cost of each individual job or project in progress, making it the subsidiary ledger for work-in-process. The finished goods ledger tracks completed products, the materials requisitions provide information on the movement of materials in and out of inventory, and the materials ledger tracks the balances and transactions related to raw materials inventory.

Question 4

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 5

The following information is available for the first month of operations for Bluemoon, Inc.: $\begin{array}{|l|r|}
\hline \text { Sales } & \$ 850,000 \
\hline \text { Gross profit } & 330,000 \
\hline \text { Indirect labor } & 35,000 \
\hline \text { Indirect materials } & 14,000 \
\hline \text { Other factory overhead } & 9,000 \
\hline \text { Materials purchased } & 360,000 \
\hline \text { Total manufacturing costs } & 670,000 \
\hline \text { Materials inventory, end of period } & 20,000 \
\hline
\end{array}$ ? Based on the information provided for Bluemoon, Inc., calculate the cost of goods sold.

Accepted Answer

Cost of Goods Sold (COGS) is calculated as: Total Manufacturing Costs + Opening Inventory of Materials - Ending Inventory of Materials + Purchases of Materials. Given Total Manufacturing Costs = $670,000, no Opening Inventory is mentioned, Ending Inventory of Materials = $20,000, and Purchases of Materials = $360,000. Thus, COGS = $670,000 + $0 - $20,000 + $360,000 = $1,010,000. However, this calculation seems incorrect based on the options provided, indicating a misunderstanding in the calculation process. The correct approach to find COGS is to start with Sales ($850,000), subtract Gross Profit ($330,000) to get COGS, which equals $520,000. This is because COGS = Sales - Gross Profit.

Question 6

The recording of the jobs completed would increase:

Accepted Answer

When jobs are completed, they are transferred from Work-in-Process to Finished Goods, increasing the Finished Goods inventory.

Question 7

Loise Inc., a manufacturing company, forecasts that total overhead for the current year will be $19,250,000, and total machine hours will be 350,000 hours.However, the actual overhead is $6,095,000, and the actual machine hours are 142,000 hours.If the company uses a predetermined overhead rate based on machine hours for applying overhead, what is the predetermined overhead rate?

Accepted Answer

Predetermined overhead rate = Estimated overhead / Estimated machine hours

Using the given values:

Predetermined overhead rate = $19,250,000 / 350,000 hours

Predetermined overhead rate = $55 per machine hour

The actual overhead and machine hours are not used in calculating the predetermined overhead rate, only the estimated values. Therefore, the actual numbers given are not relevant to finding the predetermined overhead rate.

Question 8

The following information is available for the first month of operations for Bluemoon, Inc.: $\begin{array}{|l|r|}
\hline \text { Sales } & \$ 850,000 \
\hline \text { Gross profit } & 330,000 \
\hline \text { Indirect labor } & 35,000 \
\hline \text { Indirect materials } & 14,000 \
\hline \text { Other factory overhead } & 9,000 \
\hline \text { Materials purchased } & 360,000 \
\hline \text { Total manufacturing costs } & 670,000 \
\hline \text { Materials inventory, end of period } & 20,000 \
\hline
\end{array}$ ? Based on the information provided for Bluemoon, Inc., calculate direct materials cost used in production.

Accepted Answer

Direct materials cost used in production can be calculated by starting with the materials purchased ($360,000) and adjusting for the change in materials inventory. Since there's an ending inventory of $20,000 and no beginning inventory information is provided, we assume it to be zero. Thus, the calculation is $360,000 (materials purchased) - $20,000 (ending inventory) = $340,000. However, the correct calculation should consider any beginning inventory, which is not provided, leading to a direct calculation error in the explanation. The correct approach to find the direct materials used involves other given data, but with the provided information and typical calculation methods, an error was made in the explanation process. The correct answer is derived from the total manufacturing costs minus indirect labor, indirect materials, and other factory overhead to find the direct materials used, which is not directly calculable with the provided explanation method.

Question 9

The recording of the jobs completed would decrease:

Accepted Answer

Work-in-Process would decrease because recording completed jobs means that they have left the work-in-process stage and have become finished goods, thus reducing the amount of work-in-process inventory.

Question 10

Robbson Manufacturers has estimated total factory overhead costs of $184,000 and 25,000 direct labor hours for the current fiscal year.If job number 115 incurred 1,200 direct labor hours, the work-in-process account will be increased and factory overhead will be decreased by:

Accepted Answer

To determine the overhead rate, we need to divide the estimated total factory overhead costs by the estimated total direct labor hours:

Overhead rate = $184,000 / 25,000 = $7.36 per direct labor hour

To calculate the overhead cost for job 115, we can multiply the direct labor hours by the overhead rate:

Overhead cost = 1,200 x $7.36 = $8,832

Since job 115 is in process, its cost will be added to the work-in-process account. At the same time, the factory overhead will be decreased by the amount of overhead cost allocated to job 115.

Therefore, the work-in-process account will be increased by $8,832 and the factory overhead will be decreased by $8,832, resulting in a net impact of $0 on the total overhead costs for the year.

Option A is not correct because $25,000 is the estimated total overhead cost, not the overhead cost for job 115.

Option C is not correct because it does not take into account the overhead rate per direct labor hour.

Option D is not correct because $153 is too small to be a realistic amount of overhead cost for a job with 1,200 direct labor hours.

Question 11

At the end of the fiscal year, if the balance in Factory Overhead is small, it would normally be:

Accepted Answer

If the balance in Factory Overhead is small at the end of the fiscal year, it indicates that all or most of the overhead costs have been allocated to either Work-in-Process or Finished Goods. Therefore, the remaining balance in Factory Overhead should be transferred to Cost of Goods Sold as it represents the overhead costs that have not been assigned to any specific product.

Question 12

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

Accepted Answer

Work-in-process inventories consist of inventories that have entered the manufacturing process but have not been completed. Option A is incorrect because it refers to raw materials which have not yet entered the manufacturing process. Option C is incorrect because it refers to finished goods inventory that has not yet been sold. Option D is incorrect because it refers to cost of goods sold which is not a part of work-in-process inventory.

Question 13

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 = Applied Factory Overhead Cost - Overapplied Factory Overhead
Actual Factory Overhead Cost = $330,000 - $13,000
Actual Factory Overhead Cost = $317,000

Question 14

In which of the following cost accounting systems are perpetual inventory records maintained for materials, work-in-process, and finished goods inventories?

Accepted Answer

In job order costing, perpetual inventory records are maintained for each individual job, including materials, work-in-process, and finished goods inventories. Process costing, batch costing, and activity based costing may maintain perpetual inventory records for materials and finished goods inventories, but not necessarily for work-in-process inventories.

Question 15

The recording of the factory labor costs incurred for general factory use would include a debit to:

Accepted Answer

The factory labor costs incurred for general factory use are considered indirect labor and are included in the manufacturing overhead account. Therefore, the debit would be to Factory Overhead.

Question 16

For an automobile company, the total overhead applied was $48,000,000 at the end of the year.Actual overhead was $52,850,000.Closing over/under applied overhead into cost of goods sold would cause net income to:

Accepted Answer

The over/under applied overhead is the difference between the total overhead applied and the actual overhead. Therefore, the over/under applied overhead for this automobile company is $4,850,000 ($52,850,000 - $48,000,000). Since the actual overhead is higher than the total overhead applied, it means that the overhead is under-applied, which will result in a decrease in net income. This is because the cost of goods sold will be increased by the amount of under-applied overhead.

Question 17

Contia Inc.forecasts that total overhead for the current year will be $12,600,000, and total machine hours will be 300,000 hours.However, the actual overhead is $3,250,000, and the actual machine hours are 98,500 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 $12,600,000 / 300,000 hours = $42 per hour. The actual overhead is $3,250,000, and the actual machine hours are 98,500 hours. So the overhead is overapplied by $42 * (98,500 - 300,000) = $887,000.

Question 18

The sale of a finished good on account would:

Accepted Answer

Selling a finished good on account means increasing Accounts Receivable and Sales. This transaction also decreases the amount of finished goods available, resulting in a decrease in Finished Goods. However, since the sale hasn't been paid for yet, there is no change to Cash. Since the finished good has already been completed, there is no impact on the Work-in-Process account. Finally, this transaction has no impact on the Sales Expense account. Therefore, the correct option is B.

Question 19

Upon completing a job, direct materials totaled $4,500; direct labor, $2,500; and factory overhead, $3,500.Units produced totaled 2,100.What is the per unit cost?

Accepted Answer

The total cost is the sum of direct materials, direct labor, and factory overhead, which equals $4,500 + $2,500 + $3,500 = $10,500. Dividing this total cost by the units produced (2,100) gives a per unit cost of $10,500 / 2,100 = $5.

Question 20

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

Accepted Answer

The finished goods account is a controlling account for the subsidiary stock ledger, as it tracks the value of inventory that has been completed and is ready for sale.

Quiz 10: Accounting for Manufacturing Operations