Question 1

During June, Buttrey Corporation incurred $78,000 of direct labor costs and $18,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

Accepted Answer

Direct labor costs are debited to Work in Process as they are directly attributable to the production of goods. Indirect labor costs are not debited to Work in Process but to Manufacturing Overhead.

Question 2

Gallon Corporation had $24,000 of raw materials on hand on April 1. During the month, the Corporation purchased an additional $52,000 of raw materials. During April, $62,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $2,000. The debits to the Work in Process account as a consequence of the raw materials transactions in April total:

Accepted Answer

The debits to the Work in Process account include only the direct materials requisitioned for use in production. Since the total raw materials requisitioned were $62,000 and the indirect materials (which are not debited to Work in Process) totaled $2,000, the direct materials debited to Work in Process would be $62,000 - $2,000 = $60,000.

Question 3

When closing overapplied manufacturing overhead to Cost of Goods Sold, which of the following would be true?

Accepted Answer

When overapplied manufacturing overhead is closed to Cost of Goods Sold, it decreases the Cost of Goods Sold, which in turn increases the gross margin.

Question 4

Firebaugh Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year:  What is the journal entry to record raw materials used in production?

Accepted Answer

The answer of Firebaugh Corporation is a manufacturer that uses...

Question 5

Firlit Corporation incurred $69,000 of actual Manufacturing Overhead costs during October. During the same period, the Manufacturing Overhead applied to Work in Process was $70,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:

Accepted Answer

The actual Manufacturing Overhead costs are recorded with a debit to Manufacturing Overhead.

Question 6

Leelanau Corporation uses a job-order costing system. The following data are for last year:  Leelanau applies overhead using a predetermined rate. What amount of overhead was applied to work in process last year?

Accepted Answer

The answer of Leelanau Corporation uses a job-order costing system....

Question 7

Lister Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year:  Results of operations:
 The total amount of manufacturing overhead applied to production is:

Accepted Answer

The answer of Lister Corporation is a manufacturer that uses...

Question 8

During June, Buttrey Corporation incurred $67,000 of direct labor costs and $7,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

Accepted Answer

Direct labor costs are debited to Work in Process as they are directly attributable to the production of goods. Indirect labor costs are not debited to Work in Process; instead, they are typically debited to Manufacturing Overhead.

Question 9

Overapplied manufacturing overhead would result if:

Accepted Answer

Overapplied manufacturing overhead occurs when the manufacturing overhead costs incurred are less than manufacturing overhead costs charged to production. This means that too much overhead was allocated to the products produced, resulting in an overapplication of overhead.

Question 10

Gullett Corporation had $32,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $81,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

Accepted Answer

When raw materials are purchased, they are debited to the Raw Materials account. Therefore, the journal entry to record the purchase of raw materials would include a debit to Raw Materials of $81,000. The credit side of the entry would be to either Accounts Payable or Cash, depending on if the purchase was made on credit or paid for immediately. However, neither of the other choices correctly represent the debit/credit required for the journal entry.

Question 11

During July at Loeb Corporation, $83,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,000. The journal entry to record the requisition from the storeroom would include a:

Accepted Answer

The direct materials used in production are debited to Work in Process, which is $83,000 - $4,000 = $79,000. Indirect materials are recorded separately in Manufacturing Overhead.

Question 12

Brendal Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year:  Results of operations:
 How much is the total manufacturing cost added to Work in Process during the year?

Accepted Answer

The answer of Brendal Corporation is a manufacturer that uses...

Question 13

Gullett Corporation had $26,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $75,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

Accepted Answer

The journal entry to record the purchase of raw materials would include a debit to Raw Materials for the amount of the purchase, which is $75,000 in this case. The credit side would be to Accounts Payable or Cash, depending on whether the company paid for the materials immediately or on credit. The total debit balance for Raw Materials would include the beginning balance of $26,000 plus the additional purchase of $75,000, for a total of $101,000, but this is not included in the journal entry for the purchase itself.

Question 14

Farrel Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year:  What is the journal entry to record the direct and indirect labor costs incurred during the year?

Accepted Answer

The journal entry to record direct and indirect labor costs is to debit the Work in Process account for the amount of direct labor and indirect labor costs incurred, and credit the Wages Payable account for the same amount. Choice B correctly reflects this journal entry by debiting Work in Process for $150,000 and crediting Wages Payable for the same amount.

Question 15

During March, Zea Incorporated transferred $55,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $61,000. The journal entries to record these transactions would include a:

Accepted Answer

The transfer from Work in Process to Finished Goods is recorded by crediting Work in Process for $55,000.

Question 16

Piekos Corporation incurred $90,000 of actual Manufacturing Overhead costs during June. During the same period, the Manufacturing Overhead applied to Work in Process was $92,000. The journal entry to record the application of Manufacturing Overhead to Work in Process would include a:

Accepted Answer

The journal entry to apply manufacturing overhead to Work in Process involves debiting Work in Process and crediting Manufacturing Overhead for the applied amount, which is $92,000 in this scenario.

Question 17

If manufacturing overhead is underapplied, then:

Accepted Answer

Underapplied manufacturing overhead means that the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred. This is because the predetermined overhead rate is based on estimated manufacturing overhead costs, which may differ from the actual manufacturing overhead costs incurred. As a result, the Manufacturing Overhead account will have a debit balance at the end of the year.

Question 18

During March, Zea Incorporated transferred $50,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $56,000. The journal entries to record these transactions would include a:

Accepted Answer

The transfer from Work in Process to Finished Goods is recorded by crediting Work in Process for $50,000.

Question 19

On December 1, Mogro Corporation had $26,000 of raw materials on hand. During the month, the Corporation purchased an additional $60,000 of raw materials. During December, $62,000 of raw materials were requisitioned from the storeroom for use in production. The debits entered in the Raw Materials account during the month of December total:

Accepted Answer

The debits to the Raw Materials account include only the purchases of raw materials, which total $60,000. The beginning balance and the amount requisitioned for production are not debited to the Raw Materials account during the month.

Question 20

In October, Raddatz Incorporated incurred $73,000 of direct labor costs and $6,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

Accepted Answer

Direct labor costs are debited to Work in Process, and indirect labor costs are debited to Manufacturing Overhead. Therefore, the correct entry includes a debit to Manufacturing Overhead for the indirect labor costs of $6,000.

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