Question 1

The Overhead-Control account is used for the:

Accepted Answer

The Overhead-Control account is used for the accumulation of all actual overhead costs incurred by a company, and since these costs represent expenses, the account typically has a debit balance.

Question 2

If the overhead applied rate based on direct labor hours is $7.00 and the actual labor hours are 5,000,what is the amount credited to Overhead-Applied?

Accepted Answer

Overhead-Applied = Actual Labor Hours x Overhead Applied Rate
Overhead-Applied = 5,000 x $7.00
Overhead-Applied = $35,000

Question 3

If direct labor for the month is $80,000,and overhead is applied based on 75% of direct labor dollars,what is the entry to apply overhead?

Accepted Answer

Overhead is applied based on 75% of direct labor dollars, which means the overhead rate is 75%. Therefore, to apply overhead, we need to multiply the direct labor cost by the overhead rate. 75% of $80,000 is $60,000. So, the entry to apply overhead would be to debit Work-in-Process Inventory $60,000 and credit Overhead-Applied $60,000.

Question 4

The overhead application rate may be based on:

Accepted Answer

The overhead application rate can be based on any of these factors depending on the industry and the specific costs that need to be allocated. Some companies may use machine hours if their production process heavily relies on the use of machines, while others may use direct labor hours or direct labor dollars if labor is a significant cost driver. Using multiple allocation bases may increase accuracy in assigning overhead costs.

Question 5

If direct labor for the month is $40,000,overhead is applied based on direct labor,annual overhead is $600,000,and annual direct labor is $1,000,000,what is the entry to charge direct labor to production?

Accepted Answer

To charge direct labor to production, the entry is to debit Work-in-Process Inventory for the direct labor cost and credit Payroll for the same amount. This reflects the movement of direct labor costs into the production process.

Question 6

The Overhead-Applied account is used for the:

Accepted Answer

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

Question 7

Adams Manufacturing has estimated manufacturing overhead at $72,000 and has estimated direct labor of 10,000 direct labor hours at $9.00 per hour.The overhead rate per direct labor dollar would be:

Accepted Answer

Overhead rate per direct labor dollar = Manufacturing overhead / (Direct labor hours * Direct labor rate per hour)= $72,000 / (10,000 * $9.00)= $72,000 / $90,000= $0.80

Question 8

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

Accepted Answer

Rent expense, supervision expense, and depreciation expense are all considered part of the overhead cost, so they should all be credited to the Overhead-Control account. The Overhead-Control account is then debited for the total amount of overhead expenses incurred during the period, which in this case is $35,000. Therefore, the correct entry would be to debit Overhead-Control $35,000 and credit Rent Expense $9,000, Supervision Expense $19,000, and Depreciation Expense $7,000.

Question 9

Omega.com sold 25 jet skis for $7,000 which cost $5,000.The entry to record the sale would include:

Accepted Answer

The entry to record the sale of jet skis would include a credit to Sales for the selling price ($7,000), a debit to Cost of Goods Sold for the cost ($5,000), and a corresponding credit to Finished Goods Inventory to remove the cost of the sold goods from inventory, thus all of the options are correct.

Question 10

Sylvan Manufacturing applies overhead based on direct labor hours.At the beginning of the year,it estimated that overhead costs would be $75,000 and direct labor hours would be 10,000.The applied overhead rate per direct labor hour is:

Accepted Answer

The applied overhead rate per direct labor hour is calculated by dividing the estimated overhead costs by the estimated direct labor hours. Therefore, $75,000 / 10,000 hours = $7.50 per direct labor hour.

Question 11

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 12

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

Accepted Answer

The answer of Which of the following journal entries would...

Question 13

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

Accepted Answer

Machine hours cost: $9/hour x 35 hours = $315
Overhead application: 125% x $315 = $393.75
Therefore, the overhead amount that should be applied to the job is $393.75. The correct answer is B.

Question 14

Candyland completed the manufacturing process.The entry to transfer the product to finished goods is:

Accepted Answer

When products are completed, the cost is transferred from Work-in-Process Inventory to Finished Goods Inventory, reflecting the move from being in production to being ready for sale.

Question 15

If direct labor for the month is $30,000,overhead is applied based on direct labor,annual overhead is estimated to be $500,000,and annual direct labor is estimated to be $800,000,what is the entry to apply overhead to production?

Accepted Answer

The overhead application rate is calculated as $500,000 / $800,000 = 0.625 or 62.5% of direct labor. Applying this rate to the $30,000 direct labor gives $30,000 * 0.625 = $18,750. The entry to apply overhead is to debit Work-in-Process Inventory and credit Overhead-Applied for $18,750.

Question 16

The following data are available for Starbrite Corporation: $$\begin{array} { | l | l | } 
\hline \text { Estimated direct labor hours } & 800 \
\hline \text { Estimated overhead } & \$ 36,000 \
\hline
\end{array}$$ If overhead is applied based on direct labor hours,the predetermined overhead rate is:

Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated overhead by the estimated direct labor hours: $36,000 / 800 = $45.

Question 17

Madison Manufacturing is using a manufacturing overhead application rate of 110% of direct labor dollars.If direct labor was 10 hours at $15 per hour,how much overhead should be applied to the job?

Accepted Answer

Direct labor cost = 10 hours x $15 per hour = $150
Overhead applied = 110% x $150 = $165

Question 18

Estimated manufacturing overhead costs were $40,000 and the number of estimated machine hours was 10,000.Actual overhead costs were $40,500 and the actual number of machine hours used was 10,200.Based on machine hours,the overhead application rate per hour is:

Accepted Answer

Overhead application rate per hour = Estimated overhead costs / Estimated machine hours
= $40,000 / 10,000 = $4.00 per hour
Actual overhead costs and actual machine hours are not used in calculating the overhead application rate.

Question 19

The following data are available for Skyway: $$\begin{array} { | l | l | } 
\hline \text { Estimated machine hours } & 45,000 \text { hours } \
\hline \text { Estimated overhead costs } & \$ 90,000 \
\hline
\end{array}$$ If overhead is applied based on machine hours,the predetermined overhead rate is:

Accepted Answer

The answer of The following data are available for Skyway:...

Question 20

The estimated manufacturing overhead cost was $20,000 and estimated machine hours were 10,000.Actual manufacturing overhead cost was $22,000 and actual machine hours were 12,000.The overhead application rate per hour based on machine hours is:

Accepted Answer

Overhead Application Rate per Hour= Estimated Manufacturing Overhead Cost/Estimated Machine Hours
= $20,000/10,000 hours
= $2/hour
Actual Overhead Applied = Overhead Application Rate per Hour x Actual Machine Hours
= $2/hour x 12,000 hours
= $24,000
However, the actual overhead cost incurred is $22,000, which means there is an over-application of overhead. To calculate the overhead application rate per hour based on machine hours, we need to divide the estimated manufacturing overhead cost by the estimated machine hours, not the actual machine hours. Therefore, the correct calculation would be:
Overhead Application Rate per Hour= Estimated Manufacturing Overhead Cost/Estimated Machine Hours
= $20,000/10,000 hours
= $2/hour
Therefore, the overhead application rate per hour based on machine hours is $2.00.

Quiz 25: Manufacturing Accounting