Question 1

Reynardo Company incurred $90,000 of depreciation for the year.Eighty percent relates to the firm's production facilities,and 20% relates to sales and administrative offices.If all items are handled in the proper manner,a review of the company's accounting records should reveal a:
A)debit to Depreciation Expense for $90,000.
B)debit to Manufacturing Overhead for $90,000.
C)debit to Manufacturing Overhead for $72,000.
D)debit to Work-in-Process Inventory for $18,000.
E)credit to Cash for $90,000.

Accepted Answer

Since 80% of the depreciation relates to production facilities, it should be allocated to Manufacturing Overhead. Thus, the debit to Manufacturing Overhead should be $72,000 (80% of $90,000). The remaining 20% relates to sales and administrative offices, which should be allocated to Selling, General, and Administrative expenses. Therefore, the answer is debit to Manufacturing Overhead for $72,000.

Question 2

The left side of the Manufacturing Overhead account is used to accumulate:
A)actual manufacturing overhead costs incurred throughout the accounting period.
B)overhead applied to Work-in-Process Inventory.
C)underapplied overhead.
D)predetermined overheaD.
E)overapplied overhead.

Accepted Answer

The left (debit) side of the Manufacturing Overhead account is used to accumulate actual manufacturing overhead costs incurred throughout the accounting period. These costs may include indirect materials, indirect labor, rent, utilities, and other expenses related to the manufacturing process.

Question 3

Which of the following statements about materials is false?
A)Acquisitions of materials are normally charged to the Purchases account.
B)The use of direct materials gives rise to a debit to Work-in-Process Inventory.
C)The use of indirect materials gives rise to a debit to Manufacturing Overhead.
D)The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory.
E)Direct materials are accounted for in a different manner than indirect materials.

Accepted Answer

The answer of Which of the following statements about materials...

Question 4

Summers Corporation recently used $75,000 of direct materials and $9,000 of indirect materials in production activities.The journal entries reflecting these transactions would include:
A)a debit to Manufacturing Overhead for $9,000.
B)a debit to Manufacturing Overhead for $84,000.
C)a debit to Raw-Material Inventory for $75,000.
D)a debit to Work-in-Process Inventory for $84,000.
E)a credit to Manufacturing Overhead for $9,000.

Accepted Answer

The answer of Summers Corporation recently used $75,000 of direct...

Question 5

Electricity costs that were incurred by a company's production processes should be debited to:
A)Utilities Expense.
B)Accounts Payable.
C)Cash.
D)Manufacturing OverheaD.
E)Work-in-Process Inventory.

Accepted Answer

Electricity costs incurred during production processes are considered indirect costs and should be debited to the Manufacturing Overhead account. This account is used to accumulate all indirect costs that are necessary for the production process, which will later be allocated to the cost of the products manufactured.

Question 6

Dixie Company,which applies overhead at the rate of 190% of direct material cost,began work on job no.101 during June.The job was completed in July and sold during August,having accumulated direct material and labor charges of $27,000 and $15,000,respectively.On the basis of this information,the total overhead applied to job no.101 amounted to:
A)$0.
B)$28,500.
C)$51,300.
D)$70,500.
E)$79,800.

Accepted Answer

- The overhead rate of 190% of direct material cost means that for every $1 of direct material cost, $1.90 of overhead is applied. 
- Therefore, the overhead applied to job no.101 can be calculated as follows: 
Overhead applied = 190% x Direct material cost 
Overhead applied = 190% x $27,000 
Overhead applied = $51,300. 
- Therefore, choice C is the correct answer.

Question 7

A review of a company's Work-in-Process Inventory account found a debit for materials of $67,000.If all procedures were performed in the correct manner,this means that the firm:
A)also recorded a credit to Raw-Material Inventory.
B)also recorded a credit to Manufacturing Supplies Inventory.
C)was accounting for the usage of direct materials.
D)was accounting for the usage of indirect materials.
E)Both A and C are correct

Accepted Answer

If the company debited the Work-in-Process Inventory account for $67,000, it means that direct materials were added to the work-in-process during the period, which implies that they were deducted from Raw-Material Inventory. Therefore, option A is correct. Also, if all procedures were performed correctly, this means that the company was accounting for the usage of direct materials, so option C is correct. Therefore, both A and C options are correct, and the best choice is E. Option B is incorrect because there is no mention of Manufacturing Supplies Inventory in the question. Option D is incorrect because if indirect materials were used, the company would likely include them in the overhead costs instead of the work-in-process account.

Question 8

Huxtable charges manufacturing overhead to products by using a predetermined application rate,computed on the basis of machine hours.The following data pertain to the current year:
Budgeted manufacturing overhead: $480,000
Actual manufacturing overhead: $440,000
Budgeted machine hours: 20,000
Actual machine hours: 16,000
Overhead applied to production totaled:
A)$352,000.
B)$384,000.
C)$550,000.
D)$600,000.
E)some other amount.

Accepted Answer

Predetermined application rate = Budgeted manufacturing overhead / Budgeted machine hours = $480,000 / 20,000 hours = $24/hour
Overhead applied to production = Predetermined application rate x Actual machine hours = $24/hour x 16,000 hours = $384,000. Therefore, the best choice is B.

Question 9

Trenton worked on four jobs during its first year of operation: nos.401,402,403,and 404.A review of job no.403's cost record revealed direct material charges of $40,000 and total manufacturing costs of $50,000.If Trenton applies overhead at 150% of direct labor cost,the overhead applied to job no.403 must have been:
A)$0.
B)$6,000.
C)$4,000.
D)$3,333.
E)$5,000.

Accepted Answer

The answer of Trenton worked on four jobs during its...

Question 10

Simone uses a predetermined overhead application rate of $8 per direct labor hour.A review of the company's accounting records for the year just ended discovered the following:
Underapplied manufacturing overhead: $7,200
Actual manufacturing overhead: $392,000
Budgeted labor hours: 50,000
Simone's actual labor hours worked totaled:
A)48,100.
B)49,100.
C)49,900.
D)50,900.
E)cannot be determined based on the information presented.

Accepted Answer

The answer of Simone uses a predetermined overhead application rate...

Question 11

The journal entry needed to record $5,000 of advertising for Westwood Manufacturing would include:
A)a debit to Advertising Expense.
B)a credit to Advertising Expense.
C)a debit to Manufacturing Overhead.
D)a credit to Manufacturing OverheaD.
E)a debit to Projects-in-Process.

Accepted Answer

Advertising expenses are recorded as an expense, so the correct entry would be a debit to Advertising Expense to increase the expense account.

Question 12

Othello Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor.The proper journal entry to record these events would include a debit to Work in Process for:
A)$0 because Work in Process should be credited.
B)$0 because Work in Process is not affected.
C)$11,000.
D)$106,000.
E)$117,000.

Accepted Answer

Direct labor is recorded by debiting Work in Process, so a debit of $106,000 is made to Work in Process. Indirect labor is typically recorded as part of Manufacturing Overhead and not directly to Work in Process. Therefore, there is no journal entry made for indirect labor in this case.

Question 13

The following information relates to October:
Production supervisor's salary: $3,500
Factory maintenance wages: 250 hours at $10 per hour
The journal entry to record the preceding information is:
A)

B)

C)

D)

E)

Accepted Answer

The answer of The following information relates to October:
Production supervisor's...

Question 14

Metro Corporation uses a predetermined overhead rate of $20 per machine hour.In deriving this figure,the company's accountant used:
A)a denominator of budgeted machine hours for the current accounting period.
B)a denominator of actual machine hours for the current accounting period.
C)a denominator of actual machine hours for the previous accounting period.
D)a numerator of budgeted machine hours for the current accounting perioD.
E)a numerator of actual machine hours for the current accounting period.

Accepted Answer

The accountant used a predetermined overhead rate, which means it was determined before the actual overhead costs were incurred. Therefore, the denominator should be based on budgeted machine hours for the current accounting period, not actual machine hours for either the current or previous period. The numerator is not relevant to the question.

Question 15

Strong Company applies overhead based on machine hours.At the beginning of 20x1,the company estimated that manufacturing overhead would be $500,000,and machine hours would total 20,000.By 20x1 year-end,actual overhead totaled $525,000,and actual machine hours were 25,000.On the basis of this information,the 20x1 predetermined overhead rate was:
A)$0.04 per machine hour.
B)$0.05 per machine hour.
C)$20 per machine hour.
D)$21 per machine hour.
E)$25 per machine hour.

Accepted Answer

The answer of Strong Company applies overhead based on machine...

Question 16

Throughout the accounting period,the credit side of the Manufacturing Overhead account is used to accumulate:
A)actual manufacturing overhead costs.
B)overhead applied to Work-in-Process Inventory.
C)overapplied overhead.
D)underapplied overheaD.
E)predetermined overhead.

Accepted Answer

The credit side of the Manufacturing Overhead account is used to accumulate the overhead applied to Work-in-Process Inventory, which is based on a predetermined overhead rate.

Question 17

Which of the following is the correct method to calculate a predetermined overhead rate?
A)Budgeted total manufacturing cost / budgeted amount of cost driver.
B)Budgeted overhead cost / budgeted amount of cost driver.
C)Budgeted amount of cost driver / budgeted overhead cost.
D)Actual overhead cost /budgeted amount of cost driver.
E)Actual overhead cost / actual amount of cost driver.

Accepted Answer

The predetermined overhead rate is calculated by dividing the budgeted overhead costs by the budgeted amount of the cost driver. Option B is the correct method of calculating a predetermined overhead rate.

Question 18

An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead at a company that uses normal costing.The accountant was:
A)applying a predetermined overhead amount to production.
B)recognizing receipt of the factory utilities bill.
C)recording a year-end adjustment for an insignificant amount of underapplied overhead.
D)recognizing actual overhead incurred during the perioD.
E)recognizing the completion of production.

Accepted Answer

The accountant is applying a predetermined overhead amount to production, which is a common practice in normal costing. This calculation is based on estimates made at the beginning of the year, and the overhead cost is allocated to products based on the estimated amount of direct labor or machine hours.

Question 19

The process of assigning overhead costs to the jobs that are worked on is commonly called:
A)service department cost allocation.
B)overhead cost distribution.
C)overhead application.
D)transfer costing.
E)overhead cost apportionment.

Accepted Answer

Overhead application is the process of assigning overhead costs to the jobs that are worked on. The other options may refer to other aspects of cost accounting, but do not accurately describe the specific process in question.

Question 20

The final step in recognizing the completion of production requires a company to:
A)debit Finished-Goods Inventory and credit Work-in-Process Inventory.
B)debit Work-in-Process Inventory and credit Finished-Goods Inventory.
C)add direct labor to Work-in-Process Inventory.
D)add direct materials,direct labor,and manufacturing overhead to Work-in-Process Inventory.
E)add direct materials to Finished-Goods Inventory.

Accepted Answer

The final step in recognizing the completion of production involves transferring the cost of the completed goods from Work-in-Process Inventory to Finished-Goods Inventory. This is done by debiting Finished-Goods Inventory (to increase it) and crediting Work-in-Process Inventory (to decrease it), reflecting the movement of goods from being in process to being finished.

Quiz 3: Product Costing and Cost Accumulation in a Batch Production Environment

Reynardo Company incurred $90,000 of depreciation for the year.Eighty percent relates to the firm's production facilities,and 20% relates to sales and administrative offices.If all items are handled in the proper manner,a review of the company's accounting records should reveal a:

The left side of the Manufacturing Overhead account is used to accumulate:

Which of the following statements about materials is false?

Summers Corporation recently used $75,000 of direct materials and $9,000 of indirect materials in production activities.The journal entries reflecting these transactions would include:

Electricity costs that were incurred by a company's production processes should be debited to:

A review of a company's Work-in-Process Inventory account found a debit for materials of $67,000.If all procedures were performed in the correct manner,this means that the firm:

The journal entry needed to record $5,000 of advertising for Westwood Manufacturing would include:

Othello Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor.The proper journal entry to record these events would include a debit to Work in Process for:

The following information relates to October: Production supervisor's salary: $3,500 Factory maintenance wages: 250 hours at $10 per hour The journal entry to record the preceding information is:

Metro Corporation uses a predetermined overhead rate of $20 per machine hour.In deriving this figure,the company's accountant used:

Throughout the accounting period,the credit side of the Manufacturing Overhead account is used to accumulate:

Which of the following is the correct method to calculate a predetermined overhead rate?

An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead at a company that uses normal costing.The accountant was:

The process of assigning overhead costs to the jobs that are worked on is commonly called:

The final step in recognizing the completion of production requires a company to: