Test Bank For Managerial Accounting 5th Edition By Stacey Whitecotton, Robert Libby, Fred Phillips ( by digitaldownload87

Chapter 1

Student name:__________ TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Financial accounting information is generally used exclusively by internal parties such as managers. ⊚ true ⊚ false 2) Financial accounting information is reported for the company as a whole. ⊚ true ⊚ false 3) Managers must direct, lead, and motivate during the implementation function. ⊚ true ⊚ false 4) Managers of small, private corporations use managerial accounting information, whereas

managers of large, public corporations use financial accounting information. ⊚ true ⊚ false 5) The Sarbanes-Oxley Act of 2002 places full responsibility on the board of directors for the

accuracy of the reporting system. ⊚ true ⊚ false 6) The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting reporting

environment: ethics, fraud, and management. ⊚ true ⊚ false 7) A sustainable business is one with the ability to meet the needs of today without sacrificing

the ability of future generations to meet their own needs. ⊚ true ⊚ false 8) The term "big data" refers to the volume, velocity, and veracity of data. ⊚ true ⊚ false

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Chapter 1 9) Predictive analytics is the process of recommending a course of action based upon

meaningful patterns and insights from collected data. ⊚ true ⊚ false 10) Descriptive analytics uses patterns and insights from collected data to show what has

happened. ⊚ true ⊚ false 11) An opportunity cost is the cost of not doing something. ⊚ true ⊚ false 12) Whether a cost is treated as direct or indirect depends on whether tracing the cost is both

possible and practical. ⊚ true ⊚ false 13) Variable costs are always direct costs. ⊚ true ⊚ false 14) Fixed costs stay the same, on a per-unit basis, as activity level changes. ⊚ true ⊚ false 15) Prime costs include direct materials, direct labor, and manufacturing overhead. ⊚ true ⊚ false 16) All manufacturing costs are treated as product costs. ⊚ true ⊚ false 17) All manufacturing costs are inventoriable costs. ⊚ true ⊚ false

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Chapter 1 18) A cost that will occur in the future and differs between various alternatives under

consideration is a relevant cost. ⊚ true ⊚ false 19) Managerial accounting information is mandated by the SEC and other regulatory agencies. ⊚ true ⊚ false 20) Managerial accounting information is considered proprietary in nature. ⊚ true ⊚ false 21) Opportunity costs occur in business when resources are constrained. ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 22) What is the primary goal of accounting? A) To set long-term goals and objectives B) To arrange for the necessary resources to achieve a plan C) To provide information for decision-making D) To motivate others to work towards a plan's success 23) Of the following groups, which is the primary user of managerial accounting information? A) Investors B) Creditors C) Regulators D) Managers 24) Managerial accounting, as compared to financial accounting, is primarily intended to

facilitate: A) understanding the GAAP. B) making decisions with timely, relevant information. C) conducting ethics investigations under SOX. D) reporting results to shareholders.

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Chapter 1 25) Managerial accounting information includes all of the following except: A) budgets. B) performance evaluations, for example, budget-to-actual reports. C) cost reports. D) financial statements prepared in accordance with generally accepted accounting

principles. 26) Which of the following is not a characteristic of financial accounting? A) Financial reports are prepared according to GAAP. B) Information is used by external parties. C) Information is subjective, relevant, and future-oriented. D) Reports are prepared periodically. 27) Which of the following is not a characteristic of financial accounting? A) Information is reported at the decision-making level. B) Information is used by external parties. C) Information is objective, reliable, and historical. D) Reports are prepared periodically. 28) Which of the following is not a characteristic of financial accounting? A) Financial reports are prepared according to GAAP. B) Information is used primarily by internal parties. C) Information is objective, reliable, and historical. D) Reports are prepared periodically. 29) Which of the following is not a characteristic of managerial accounting? A) Information is used by internal parties. B) Information is subjective, relevant, and future-oriented. C) Reports are prepared as needed. D) Reports are prepared according to GAAP. 30) Which of the following is not a characteristic of managerial accounting? A) Information is used by external parties. B) Information is subjective, relevant, and future-oriented. C) Reports are prepared as needed. D) Information is reported at the decision-making level.

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Chapter 1 31) Which of the following is not a characteristic of managerial accounting? A) Information is used by internal parties. B) Information is subjective, relevant, and future-oriented. C) Reports are prepared as needed. D) Information is reported for the company as a whole. 32) Which of the following types of reports is more characteristic of managerial accounting than

financial accounting? A) An internal report used by management B) An external report used by investors C) A report prepared according to GAAP D) A report prepared periodically (monthly, quarterly, annually) 33) The controlling function is: A) comparing actual with budgeted results and taking corrective action when needed. B) arranging of the necessary resources to carry out the plan. C) directing, leading, and motivating those necessary to carry out the plan. D) drafting the goals and strategies to achieve long-term results. 34) During the last fiscal year, XYZ Organization implemented managerial accounting to

allocate program costs to its soup kitchen. The kitchen's manager is reviewing actual results from the prior month to compare the outcomes with the organization's objectives. Which function of the Plan-Implement-Control cycle is she conducting? A) Plan B) Implement C) Control D) Strategize 35) Which of the following types of organizations purchases raw materials from suppliers and

uses them to create a finished product? A) Manufacturing firms B) Merchandising companies C) Service companies D) Retailers 36) Hair salons and law firms are examples of which of the following types of organizations? A) Retailers B) Service companies C) Manufacturing firms D) Merchandising companies

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Chapter 1 37) Which of the following types of organizations sell goods to the general public? A) Service companies B) Manufacturing firms C) Wholesalers D) Retailers 38) Which of the following statements about the use of managerial accounting information in

nonprofit organizations is true? A) Universities do not exist strictly to earn profit for shareholders, so managerial accounting information is not vital to their operations. B) Unlike other nonprofits, hospitals (which exist with a focus on financial results in addition to health metrics) make use of managerial accounting. C) Because managers of nonprofit organizations need timely and relevant information to make decisions, managerial accounting is vital to these organizations. D) Because nonprofit organizations—hospitals, educational institutions, charities—do not exist with a profit motive, they do not use managerial accounting principles. 39) Which of the following functions of management involves comparing actual results with

budgeted results? A) Planning B) Implementing C) Reviewing D) Controlling 40) Which of the following functions of management involves setting goals or objectives and

establishing the tactics to achieve them? A) Planning B) Implementing C) Reviewing D) Controlling 41) Which of the following functions of management involves arranging for the necessary

resources to carry out the plan? A) Planning B) Implementing C) Reviewing D) Controlling

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Chapter 1 42) Which of the following functions of management involves providing motivation to achieve

results? A) Planning B) Implementing C) Reviewing D) Controlling 43) Which of the following functions of management involves taking corrective action if needed? A) Planning B) Implementing C) Reviewing D) Controlling 44) Which of the following is the future-oriented part of the management cycle? A) Planning B) Implementing C) Reviewing D) Controlling 45) Which of the following is the correct sequencing of the functions within the management

cycle? A) Plan - Control - Implement B) Review - Plan - Implement C) Plan - Implement - Control D) Review - Control - Plan 46) Which of the following describes the Planning function within the management cycle? A) Setting long-term objectives and the short-term tactics necessary to achieve them B) Comparing actual to budgeted results and taking corrective action C) Taking action to implement the plan D) Arranging the necessary resources to carry out the plan 47) Which of the following describes the controlling function within the management cycle? A) Setting long-term objectives and the short-term tactics necessary to achieve them B) Comparing actual to budgeted results and taking corrective action C) Taking actions to implement the plan D) Arranging the necessary resources to carry out the plan

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Chapter 1 48) Which of the following does not describe the implementing function within the management

cycle? A) Leading, directing, and motivating others to achieve the plan's goals B) Arranging the necessary resources to carry out the plan C) Taking action to implement the plan D) Setting long-term objectives and the short-term tactics necessary to achieve them 49) "Ethics" refers to all of the following except: A) the standards of conduct for judging fair from unfair. B) the standards of conduct for judging right from wrong. C) the standards of conduct for judging opportunity from incentives. D) the standards of conduct for judging honest from dishonest. 50) Which of the following is not one of the factors affecting the accounting reporting

environment focused on in the Sarbanes-Oxley Act? A) Industry B) Opportunity C) Character D) Incentives 51) Which of the following is a requirement under the Sarbanes-Oxley Act? A) Financial statements must be audited by a Big Four accounting firm. B) Management must issue a report that indicates whether the financial statements are

free of error. C) Management must conduct a review of the company's internal control system. D) Background checks must be performed on all employees. 52) Which of the following is not a provision of the Sarbanes-Oxley Act? A) Executives can avoid penalties for fraud by declaring personal bankruptcy. B) Stiffer penalties for fraud in terms of monetary fines and jail time decrease the

incentive to commit fraud. C) Public companies must adopt a code of ethics for senior financial officers. D) Management must issue a report that indicates whether internal controls are effective at preventing errors and fraud.

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Chapter 1 53) Which of the following is not true about how the Sarbanes-Oxley Act counteracts incentives

for committing fraud? A) It provides for stiffer monetary penalties. B) It increases the maximum jail sentence for fraudulent reporting. C) It removes legal protection from whistleblowers. D) It provides that violators must repay any money obtained via fraud and pay fines. 54) The requirement of the Sarbanes-Oxley Act that requires management to issue a report on

internal controls places responsibility for the accuracy of the reporting system on: A) accounting managers. B) marketing managers. C) production managers. D) all managers. 55) Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to

reduce opportunities for error and fraud? A) Internal control report from management B) Code of ethics C) Stronger oversight by directors D) Internal control audit by external auditors 56) Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to

encourage good character? A) Anonymous tip lines B) Whistleblower protection C) Code of ethics D) Stiffer fines and prison terms 57) Which of the following changes introduced by the Sarbanes-Oxley Act is intended to

counteract incentives for fraud? A) Stronger oversight by directors B) Code of ethics C) Stiffer fines and prison terms D) Anonymous tip lines

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Chapter 1 58) Which of the following is not true about how the Sarbanes-Oxley Act emphasizes the

importance of the character of managers and employees? A) It requires that ethics be embedded in the organizational culture. B) It requires that audit committees establish anonymous tip lines. C) It provides protection for whistleblowers. D) It requires that public companies adopt a code of ethics for senior financial officers. 59) Which of the following statements is correct about sustainability accounting? A) Sustainability accounting has been in existence since 1592. B) Sustainability accounting tracks a company's "green" score. C) Sustainability accounting aims to provide managers a broad set of information to

meet the needs of multiple stakeholders. D) Sustainability accounting is a subset of GAAP applicable only to socially responsible companies. 60) Which of the following statements is correct about the triple bottom line? A) The triple bottom line measures a company's social impact, without regard for profit. B) The triple bottom line captures three factors: People, Profit, and Planet. C) The triple bottom line has replaced net income as the most crucial measure of a

company's success. D) The triple bottom line reports profit at the expense of social factors. 61) Many organizations are building sustainable business practices into their strategies by

issuing: A) corporate social responsibility reports. B) reports on internal controls. C) profit and loss statements that reflect people and planet costs. D) reports from their board of directors on sustainability. 62) All of the following terms are used interchangeably to refer to the extraction of insights from

large amounts of data except: A) big data. B) business intelligence. C) business analytics. D) business acumen.

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Chapter 1 63) The term “big data” refers to the: A) accuracy, completeness, and source of the data. B) accuracy, volume, and source of the data. C) variety, volume, and velocity of the data. D) velocity, veracity, and volume of the data. 64) Recommending a course of action based upon patterns and insights from data is referred to

as: A) predictive analytics. B) prescriptive analytics. C) descriptive analytics. D) diagnostic analytics. 65) Using data to estimate what is likely to occur in the future is an example of: A) predictive analytics. B) prescriptive analytics. C) descriptive analytics. D) diagnostic analytics. 66) Data that is received as events are occurring is an example of: A) volume. B) velocity. C) variety. D) veracity. 67) Data received from social media is an example of: A) volume. B) velocity. C) variety. D) veracity. 68) Analytics provides meaningful patterns and insights from data useful for all of the following

except: A) managing resources. B) enhancing customer service. C) pursuing other business opportunities. D) preparing financial statements in accordance with GAAP.

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Chapter 1 69) Which of the following is an example of the variety of big data? A) Data collected from YouTube videos B) The collection of petabytes of data per hour C) Data that is created in real-time D) Delivering data as quickly as possible 70) An out-of-pocket cost is: A) an actual outlay of cash. B) the cost of not doing something. C) a deferred cost. D) a budgeted estimate. 71) Which of the following is not one of the categories used to sort costs in managerial

accounting? A) Relevant or irrelevant B) Variable or fixed C) Out-of-pocket or opportunity D) Direct or indirect 72) Which of the following statements concerning costs is not correct? A) Costs are treated differently depending on how the information will be used. B) Out-of-pocket costs include the costs associated with not taking a particular course of

action. C) Any single cost can be classified in more than one way. D) Costs can be categorized on the basis of relevant or irrelevant costs. 73) The cost of not doing something is a(n): A) out-of-pocket cost. B) opportunity cost. C) direct cost. D) cost object. 74) An actual outlay of cash is a(n): A) out-of-pocket cost. B) opportunity cost. C) direct cost. D) cost object.

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Chapter 1 75) An opportunity cost is: A) the foregone benefit of the path not taken. B) an actual outlay of cash. C) the initial investment required to pursue an opportunity. D) a cost that cannot be traced to a specific cost object. 76) An out-of-pocket cost involves which of the following? A) Choosing to do one thing instead of another. B) Tracing the cost directly to a cost object. C) Outlaying an actual amount of cash. D) Determining how the cost changes with a change in activity level. 77) To earn summer money, Joe could mow lawns in his neighborhood, or he could work at a

local grocery store. Which of the following is an opportunity cost of mowing lawns? A) Cash paid for gas to run the lawnmower. B) The time spent mowing the lawns. C) The wages he could have earned working at the grocery store. D) Depreciation on the lawnmower. 78) To earn summer money, Joe could mow lawns in his neighborhood, or he could work at a

local grocery store. Which of the following is an out-of-pocket cost of mowing lawns? A) The use of his father's truck to get to job sites. B) The wages he could have earned working at the grocery store. C) The time spent mowing the lawns. D) The cash paid for gas to run the lawnmower. 79) Which of the following cannot be an out-of-pocket cost? A) A direct cost B) An opportunity cost C) A variable cost D) A period cost 80) Costs that can be traced to a specific cost object are: A) opportunity costs. B) direct costs. C) indirect costs. D) irrelevant costs.

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Chapter 1 81) Costs that are not worth the effort to trace to a specific cost object are: A) opportunity costs. B) direct costs. C) indirect costs. D) irrelevant costs. 82) Which of the following statements is correct? A) A direct cost can be readily traced to a cost object while an indirect cost is traced only

to manufacturing costs. B) An indirect cost can be readily traced to a cost object while a direct cost is traced only to manufacturing costs. C) A direct cost can be traced to a specific cost object, while an indirect cost cannot. D) An indirect cost can be traced to a specific cost object, while a direct cost cannot. 83) A direct cost is one that: A) involves an actual outlay of cash for a specific cost object. B) can be traced to a specific cost object. C) cannot be traced to a specific cost object. D) is not worth the effort of tracing to a specific cost object. 84) What determines the difference between a direct and an indirect cost? A) Whether it changes when activity levels change. B) Whether it is relevant to a particular decision. C) Whether it can be conveniently traced to a specific cost object. D) Whether it is related to manufacturing or nonmanufacturing activities. 85) Which of the following is an indirect cost of manufacturing a table made of wood and glass

for a firm that manufactures furniture? A) The cost of the wood in the table. B) The cost of the labor used to assemble the table. C) The cost of the glass in the table. D) The cost of rent on the factory where the table is manufactured. 86) Which of the following is a direct cost of manufacturing a table made of wood and glass for a

firm that manufactures furniture? A) The cost of the wood in the table. B) The cost of rent on the factory where the table is manufactured. C) The salary of the supervisor who oversees all production for the firm. D) Depreciation on the tools used to manufacture the table.

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Chapter 1 87) A cost object is: A) an item for which managers are trying to determine the cost. B) an item to which managers must directly trace costs. C) an item to which it is not worth the effort of tracing costs. D) an item for sale by a business. 88) Indirect costs are: A) costs that are not worth the effort to trace to a specific cost object. B) costs that change, in total, in direct proportion to changes in activity levels. C) always irrelevant. D) costs that remain constant no matter the activity level. 89) Variable costs are: A) costs that are not worth the effort to trace to a specific cost object. B) costs that change, in total, in direct proportion to changes in activity levels. C) always irrelevant. D) costs that remain constant no matter the activity level. 90) A cost is $50,000 when 25,000 units are produced, and $100,000 when 50,000 units are

produced. This is an example of a(n): A) fixed cost. B) direct cost. C) variable cost. D) indirect cost. 91) A cost is $50,000 when 25,000 units are produced, and $50,000 when 50,000 units are

produced. This is an example of a(n): A) fixed cost. B) direct cost. C) variable cost. D) indirect cost. 92) What determines the difference between a variable and a fixed cost? A) Whether the total cost changes when activity levels change. B) Whether the total cost is relevant to a particular decision. C) Whether the total cost can be traced to a specific cost object. D) Whether the total cost is related to manufacturing or nonmanufacturing activities.

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Chapter 1 93) Which of the following is an example of a variable cost for a manufacturing firm? A) The cost of rent on the factory. B) The cost of factory supervision. C) The cost of raw materials. D) The cost of depreciation on equipment. 94) Fixed costs are: A) costs that are not worth the effort to trace to a specific cost object. B) costs that change, in total, in direct proportion to changes in activity levels. C) always irrelevant. D) costs that remain constant, in total, no matter the activity level. 95) A fixed cost: A) goes up in total when activity increases. B) goes up per unit when activity increases. C) goes down in total when activity increases. D) goes down per unit when activity increases. 96) A relevant cost is a cost that: A) has the potential to influence a decision. B) changes in direct proportion to changes in activity level. C) can be traced to a specific cost object. D) is used for control purposes. 97) An irrelevant cost: A) is also called a differential cost. B) must differ between decision alternatives. C) must be incurred in the future rather than in the past. D) will not influence a decision. 98) For a cost to be relevant, it must: A) differ between decision alternatives. B) have already been incurred. C) not influence a decision. D) not be a differential cost.

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Chapter 1 99) A cost that has already been incurred is called a(n) _________ cost. A) indirect B) sunk C) relevant D) opportunity 100)

You are to receive five gold coins from your great uncle as an incentive to study hard. The coins were originally purchased in 1982. Your great uncle will deliver the coins the week after finals (assuming your grades are "acceptable"). The amount your great uncle paid for the coins is a(n): A) opportunity cost. B) indirect cost. C) sunk cost. D) overhead cost.

101)

For a cost to be relevant, it must meet which of the following criteria? A) It must not differ between the decision alternatives and it must be incurred in the future rather than in the past. B) It must differ between the decision alternatives and it must be incurred in the future rather than in the past. C) It must not differ between the decision alternatives and it must have occurred in the past rather than in the future. D) It must differ between the decision alternatives and it must have occurred in the past rather than in the future.

102)

For a cost to be relevant, it must be: A) a differential cost and a sunk cost. B) a differential cost, but not a sunk cost. C) a sunk cost, but not a differential cost. D) neither a differential cost nor a sunk cost.

103)

Which of the following costs is not relevant to the decision whether to replace an old computer with a new one? A) The cost of the new computer. B) The cost of the old computer. C) The cost of a service plan on the new computer. D) The cost to repair the old computer if a new computer is not purchased.

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Chapter 1 104)

Manufacturing costs are generally classified into which of the following categories? A) Relevant costs and irrelevant costs B) Direct materials, direct labor, and manufacturing overhead C) Product or period costs D) Conversion costs, marketing costs, and administrative costs

105)

Prime costs are defined as: A) manufacturing costs plus nonmanufacturing costs. B) direct labor plus direct materials. C) variable costs plus fixed costs. D) manufacturing overhead plus direct labor.

106)

Which of the following is not a manufacturing cost? A) Raw materials cost B) Marketing cost C) Direct labor cost D) Manufacturing overhead cost

107)

Nonmanufacturing costs are generally classified into what two groups? A) Conversion costs and prime costs B) Direct materials and direct labor C) Marketing/selling expenses and general/administrative expenses D) Direct labor and manufacturing overhead

108) Robin Company reported the following costs for the current month: Direct materials used $ 8,500 Direct labor 20,900 Sales salaries 10,500 Indirect labor 1,870 Production manager's salary 6,070 Marketing costs 9,230 Factory lease 4,650

What are Robin's prime costs? A) $37,470 B) $31,400 C) $42,500 D) $29,400

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Chapter 1 109) Robin Company reported the following costs for the current month: Direct materials used $ 24,000 Direct labor 36,800 Sales salaries 19,200 Indirect labor 4,800 Production manager's salary 9,600 Marketing costs 14,400 Factory lease 6,400

What are Robin's prime costs? A) $60,800 B) $56,000 C) $75,200 D) $65,600 110)

Conversion costs can be defined as: A) manufacturing costs plus nonmanufacturing costs. B) direct labor plus direct materials. C) variable costs plus fixed costs. D) manufacturing costs minus direct materials.

111)

Manufacturing costs are: A) always relevant. B) always fixed. C) the costs incurred to produce a final product. D) split into prime costs and period costs.

112)

Prime costs are the same as: A) manufacturing costs minus nonmanufacturing costs. B) manufacturing costs minus manufacturing overhead. C) manufacturing costs minus fixed costs. D) manufacturing costs minus direct materials.

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Chapter 1 113) Robin Company reported the following costs for the current month: Direct materials used $ 11,000 Direct labor 16,200 Sales salaries 11,890 Indirect labor 3,190 Production manager's salary 5,500 Marketing costs 8,240 Factory lease 4,390

What is Robin's total manufacturing cost? A) $16,500 B) $40,280 C) $60,410 D) $27,200 114) Robin Company reported the following costs for the current month: Direct materials used $ 24,000 Direct labor 36,800 Sales salaries 19,200 Indirect labor 4,800 Production manager's salary 9,600 Marketing costs 14,400 Factory lease 6,400

What is Robin's total manufacturing cost? A) $115,200 B) $81,600 C) $33,600 D) $60,800

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Chapter 1 115) Robin Company reported the following costs for the current month: Direct materials used $ 9,000 Direct labor 19,800 Sales salaries 17,600 Indirect labor 3,250 Production manager's salary 6,200 Marketing costs 9,500 Factory lease 3,500

What is Robin's total manufacturing overhead? A) $18,950 B) $28,800 C) $12,950 D) $9,500 116) Robin Company reported the following costs for the current month: Direct materials used $ 24,000 Direct labor 36,800 Sales salaries 19,200 Indirect labor 4,800 Production manager's salary 9,600 Marketing costs 14,400 Factory lease 6,400

What is Robin's total manufacturing overhead? A) $14,400 B) $28,800 C) $20,800 D) $33,600

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Chapter 1 117) Robin Company reported the following costs for the current month: Direct materials used Direct labor Sales salaries Indirect labor Production manager's salary Marketing costs Factory lease

$ 8,500 20,900 10,500 1,870 6,070 9,230 4,650

What are Robin's conversion costs? A) $49,350 B) $35,470 C) $33,490 D) $29,400 118) Robin Company reported the following costs for the current month: Direct materials used $ 24,000 Direct labor 36,800 Sales salaries 19,200 Indirect labor 4,800 Production manager's salary 9,600 Marketing costs 14,400 Factory lease 6,400

What are Robin's conversion costs? A) $70,400 B) $60,800 C) $91,200 D) $57,600 119)

GAAP reporting rules require that all manufacturing costs be treated as: A) period costs. B) product costs. C) value-added costs. D) relevant costs.

120)

Product costs are sometimes called: A) relevant costs. B) sunk costs. C) differential costs. D) inventoriable costs.

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Chapter 1 121)

Which of the following is true about product and period costs? A) Product costs are usually manufacturing costs, and period costs are usually nonmanufacturing costs. B) Product costs are usually nonmanufacturing costs, and period costs are usually manufacturing costs. C) Both product and period costs are usually manufacturing costs. D) Both product and period costs are usually nonmanufacturing costs.

122)

Product costs are: A) expensed on the income statement when incurred. B) treated as an asset and depreciated. C) inventoried until the units are sold. D) considered current liabilities until paid.

123)

When are period costs counted as inventory? A) Before products are sold B) After products are sold C) After products are completed, but before they are sold D) Never

124)

What determines the difference between a product cost and a period cost? A) Whether the cost changes when activity levels change. B) Whether the cost is relevant to a particular decision. C) Whether the cost can be traced to a specific cost object. D) When the cost will be matched against revenue on the income statement.

125)

Product costs are reported: A) only on the balance sheet. B) only on the income statement. C) on the balance sheet before goods are sold, and on the income statement after goods are sold. D) on the income statement before goods are sold, and on the balance sheet after goods are sold.

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Chapter 1 126)

Which of the following might you find in a job description for a managerial accountant at a manufacturing company? A) The Managerial Accountant will conduct internal analysis on the health of the company, suggest variances to emphasize in evaluations, and review unusual results. B) The Managerial Accountant will be the primary contact in dealing with the external audit team. C) The Managerial Accountant will be responsible for preparing and presenting quarterly financial statements to management. D) The ideal candidate for this position will have a strong knowledge of financial accounting to provide advice on generally accepted accounting principles to the CFO.

127)

Pretend you are the president of the Managerial Accounting Club and you are responsible for executing the club's most important event: A recruiting event for members and local firms. How might you use the Plan-Implement-Control cycle? A) To plan, I would prepare a preliminary list of goals and plans and then hold a kick-off meeting with the club's membership to present and revise the plan. B) To control, I would identify two additional individuals within the club to help lead the event. C) To control, I would create a timeline and schedule of key tasks leading up to the event and assign responsibility for each task to key members of the club. D) To implement, I would hold regular check-in meetings to monitor progress.

128)

Pretend you are a junior managerial accountant. Your supervisor has no knowledge of sustainability accounting. All of the following statements would be convincing arguments to advocate for the importance of sustainability accounting, except one. Which one? A) Sustainability accounting reflects the changing nature of accountability. B) Companies are only accountable to shareholders and shareholders care about sustainability. C) Companies are accountable to the world at large, not simply to shareholders. D) Sustainability accounting does not replace the emphasis on financial results; rather it complements financial strength in building a strong company for the future.

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Chapter 1 129)

Imagine purchasing a cup of coffee. Which of the following statements correctly classifies the direct, indirect, variable, and fixed costs associated with that purchase, assuming the cost object is the cup of coffee? A) The cost of the cup and the lid is an indirect cost because it can be readily traced to the cost object. B) direct labor plus direct materials. C) The volume of coffee beans purchased by the café is a variable cost because it changes in total with the changing volume of cups of coffee sold. D) The cafe's monthly water bill is a fixed cost, because it changes along with the changing volume of sales. Amazon’s experimentation with “anticipatory shipping” is an example of which use of “big data”? A) Predictive analytics B) Prescriptive analytics C) Descriptive analytics D) Diagnostic analytics

130)

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 131) Describe the three-step process you should apply when faced with an ethical dilemma.

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Chapter 1

Answer Key Test name: Chapter 1 1) FALSE

Financial accounting information is used by external parties; managerial accounting information is used by internal business owners and managers. 2) TRUE

Financial accounting information is provided at the company-wide level. 3) TRUE

During the implementation phase, managers must lead, direct, and motivate others to achieve the objectives set in the planning stage. 4) FALSE

Managerial accounting information is used by managers in all types of organizations: large and small, public and private, and profit and nonprofit. 5) FALSE

SOX places more responsibility on all managers (not just accountants) for the accuracy of the reporting system. SOX also places additional responsibilities on boards of directors and external auditors to reduce opportunities for errors and fraud. 6) FALSE

The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting reporting environment: opportunity, incentive, and character. 7) TRUE

In the context of business, "sustainability" means the ability to meet the needs of today without sacrificing the ability of future generations to meet their own needs. 8) FALSE

Veracity is a synonym for accuracy, which is not one of the characteristics of big data. The three characteristics of "big data" are volume, velocity, and variety. 9) FALSE

Prescriptive analytics, not predictive analytics, recommends courses of action based upon meaningful patterns and insights from collected data. 10) TRUE

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Chapter 1

Descriptive analytics describes what has happened. 11) TRUE

An opportunity cost is the foregone benefit of the path not taken, that is, the cost of not doing something. 12) TRUE

Direct costs can be traced directly to a specific cost object, while indirect costs cannot be traced to a specific cost object or are not worth the effort of tracing. 13) FALSE

Variable costs change, in total, in direct proportion to changes in activity levels. They are not always direct costs, which can be traced to a specific cost object. 14) FALSE

Fixed costs stay the same, in total, as activity level changes. 15) FALSE

Taken together, direct materials and direct labor are referred to as prime costs. 16) TRUE

GAAP requires that all manufacturing costs be treated as product costs, or costs that are assigned to the product as it is being manufactured. 17) TRUE

Manufacturing costs are product costs that are assigned to the product as it is being manufactured. Product costs are also called inventoriable costs because they are counted as inventory until the product is finally sold. 18) TRUE

For a cost to be relevant, it must occur in the future and differ between the various alternatives the manager is considering. 19) FALSE

Unlike financial accounting, managerial accounting information is not mandated by the SEC or other regulatory agencies. 20) TRUE

Internally-oriented information is not publicly available and is considered proprietary in nature. 21) TRUE

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Opportunity costs occur in business any time resources are constrained and managers must choose to do one thing at the expense of another. 22) C

The primary goal of accounting is to capture, summarize, and report useful information for decision-making. 23) D

Managerial accounting information is used by internal business owners and managers. 24) B

Managers need information that is timely and relevant to the specific decisions at hand, and they use managerial accounting to facilitate that. 25) D

Managerial accounting is used internally by business owners and managers who need information such as budgets, performance evaluations, and cost reports. 26) C

Managerial, not financial, accounting information is subjective, relevant, and future-oriented. 27) A

Managerial, not financial, accounting information is reported at the decision-making level. Financial accounting information is reported at the company level. 28) B

The primary users of managerial, not financial, accounting information are internal parties. 29) D

Financial, not managerial, accounting information is prepared according to GAAP. 30) A

Financial, not managerial, accounting information is used by external parties such as investors, creditors, and regulators. 31) D

Financial, not managerial, accounting information is reported for the company as a whole. 32) A

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Managerial accounting information is used internally by business owners and managers, so an internal report used by management is more characteristic of managerial accounting than financial accounting. 33) A

During the controlling function, managers keep track of how they are doing, including comparing actual results with the budget, and determine what corrective actions must be taken. 34) C

The manager is keeping track of how she and her department are doing and whether actions must be taken to adjust the plan as part of the controlling function. 35) A

Manufacturing firms purchase raw materials from suppliers and convert them into finished products. 36) B

Service companies provide a service to customers or clients—they include hair salons and law firms. 37) D

Retailers are merchandising companies that sell finished goods to the general public. 38) C

Managerial accounting information is vital to nonprofit organizations, including hospitals, universities, and charitable organizations. Although these organizations do not exist strictly to earn profit for shareholders, their managers still need timely and relevant information to prepare budgets, manage resources, and make strategic and operational decisions. 39) D

Controlling involves comparing actual results to planned results to see whether the objectives set in the planning stage are being met. 40) A

Planning involves setting goals or objectives, along with establishing the tactics that will be used to achieve them. 41) B

Implementing involves doing whatever is necessary to put the plan into action. 42) B

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During the implementation phase, managers must lead, direct, and motivate others to achieve the objectives set in the planning stage. 43) D

Controlling involves comparing actual results to planned results and taking corrective action if needed. 44) A

The first step in planning is to establish goals or objectives for the future. 45) C

Planning leads to implementing and then controlling. Then, the loop begins again. 46) A

Planning involves setting long-term objectives and the short-term tactics necessary to achieve those objectives. 47) B

Controlling involves comparing actual results to planned results to see whether the objectives set in the planning stage are being met, and taking corrective action if needed. 48) D

Implementing means putting the plan into action, including leading, directing, and motivating others and arranging necessary resources. 49) C

Ethics refers to the standards of conduct for judging right from wrong, honest from dishonest, and fair from unfair. 50) A

The Sarbanes-Oxley Act focuses on reducing the opportunity for error and fraud, counteracting the incentive to commit fraud, and emphasizing the importance of the character of managers and employees. 51) C

The Sarbanes-Oxley Act requires that management conduct a review of the company's internal control system. 52) A

Executives cannot avoid monetary penalties by declaring personal bankruptcy.

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Chapter 1 53) C

The Sarbanes-Oxley Act gives whistleblowers legal protection from retaliation from those charged with fraud; it does not remove such protection from them. 54) D

The requirement that management must conduct a review of the company's internal control system and issue a report on its effectiveness places more responsibility on all managers (not just accountants) for the accuracy of the reporting system. 55) B

The Sarbanes-Oxley Act requires adoption of a code of ethics as part of its attempt to encourage good character, not to reduce opportunities for error and fraud. 56) D

The act provides stiffer penalties in terms of monetary fines and jail time as part of the its attempt to counteract incentives for committing error and fraud (not to encourage good character). 57) C

The Sarbanes-Oxley Act attempts to counteract the incentive to commit fraud by providing much stiffer penalties in terms of monetary fines and jail time. 58) A

The Sarbanes-Oxley Act does not require that ethics be embedded in the organizational culture. 59) C

Sustainability accounting is an emerging area of accounting that is aimed at providing managers with a broader set of information to meet the needs of multiple stakeholders, with a goal of ensuring a company's long-term survival in an uncertain and resource-constrained world. 60) B

The triple bottom line is often represented by the three P's: People, Profit, and Planet. 61) A

Most public companies now issue corporate social responsibility (CSR) reports that provide sustainability-related information, including measures of social and environmental impacts. 62) D

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Although differences exist at a technical level, the terms “big data”, “business analytics”, and “business intelligence” are often used interchangeably to refer to the extraction of meaningful and actionable insights from large amounts of data so that managers can make more intelligent business decisions. 63) C

“BIG data” relates to the volume, velocity, and variety of data. 64) B

Prescriptive analytics recommends a course of action. 65) A

Predictive analytics forecasts what is likely to happen. 66) B

Big data arrives with great velocity or speed, including not just data on past events but also that which is created in real time, as events are occurring. 67) C

Data comes in a variety of formats (e.g. text, numerics, images, audio, and video), and is generated from a variety of sources, devices, and sensors including geographic, financial, and social media data. 68) D

Analytics is the process of discovering and communicating meaningful patterns and insights from the data to find more intelligent ways of operating a business, managing resources, enhancing customer service, reducing operating costs, or pursuing other business opportunities. 69) A

Out-of-pocket costs are amounts paid for items purchased, and they involve an actual outlay of cash, unlike opportunity costs. 71) C

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In managerial accounting, costs are sorted into different categories including direct or indirect, variable or fixed, and relevant or irrelevant. An out-of-pocket cost involves an actual cash outlay, whereas an opportunity cost is the cost of not doing something—a foregone benefit. 72) B

An opportunity cost, not an out-of-pocket cost, is the cost associated with not taking a particular course of action; it's the forgone benefit of a particular course of action. 73) B

The cost of not doing something is its opportunity cost. 74) A

An out-of-pocket cost is an actual outlay of cash. 75) A

An opportunity cost is the foregone benefit (or lost opportunity) of the path not taken. 76) C

An out-of-pocket cost is an actual outlay of cash. 77) C

An opportunity cost is the foregone benefit of the path not taken; in this case, the wages Joe could have earned working at the grocery store. 78) D

An out-of-pocket cost involves an actual outlay of cash. Thus, the cash Joe pays for gas to run the lawnmower is an out-of-pocket cost. 79) B

Unlike an out-of-pocket cost, which involves an outlay of cash, an opportunity cost is a foregone benefit. 80) B

Costs that can be traced directly to a specific cost object, and are worth the effort of tracing, are called direct costs. 81) C

Costs that cannot be traced to a specific cost object, or that are not worth the effort of tracing, are indirect costs. 82) C

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An indirect cost cannot be readily traced to a cost object. A direct cost can be traced to a specific cost object. It does not necessarily involve manufacturing costs. 83) B

Costs that can be traced directly to a specific cost object are direct costs. 84) C

Costs that can be directly and easily traced to a specific cost object are direct costs. Costs that cannot be traced to a specific cost object, or that are not worth the effort of tracing, are indirect costs. 85) D

Costs that cannot be traced to a specific cost object, or that are not worth the effort of tracing, are indirect costs, such as the cost of rent on the factory. 86) A

Costs that can be traced directly to a specific cost object are direct costs, such as the cost of the wood in the table. 87) A

The item for which managers are trying to determine cost is the cost object. 88) A

Costs that cannot be traced to a specific cost object, or that are not worth the effort of tracing, are indirect costs. 89) B

Variable costs are those that change, in total, in direct proportion to changes in activity levels. Examples include the cost of direct materials and direct labor. 90) C

Variable costs are those that change, in total, in direct proportion to changes in activity levels. This cost increases in total as production increases at a rate of $2 for every unit produced. 91) A

Fixed costs are those that stay the same, in total, regardless of activity level. This cost remains at $50,000 even when production increases. 92) A

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Variable costs are those that change, in total, in direct proportion to changes in activity level. Fixed costs are those that stay the same, in total, regardless of activity level. 93) C

Variable costs are those that change, in total, in direct proportion to changes in activity levels, such as raw materials. 94) D

Fixed costs are those that stay the same, in total, regardless of activity level, at least within some range of activity. 95) D

Unit fixed costs will vary inversely with the number of units produced. 96) A

A relevant cost is one that has the potential to influence a decision. 97) D

A relevant cost is one that has the potential to influence a decision; an irrelevant cost is one that will not influence a decision. 98) A

A relevant cost must differ between the decision alternatives, and it must be incurred in the future. 99) B

A sunk cost is one that has already been incurred. 100)

C A sunk cost is one that has already been incurred; in this case, a cost that was incurred in 1982. 101)

B A relevant cost must differ between the decision alternatives, and it must be incurred in the future. 102)

B A relevant cost must differ between the decision alternatives (a differential cost), and it must be incurred in the future rather than in the past. Sunk costs have already occurred in the past. 103)

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The cost of the old computer is a sunk cost; therefore it is not relevant to the decision. 104)

B Manufacturing costs are generally classified into one of three categories: direct materials, direct labor, or manufacturing overhead. 105)

B Taken together, direct materials and direct labor are referred to as prime costs because they represent the primary costs that can be traced to the end product. 106)

B A marketing cost is a cost associated with selling the product, and is therefore a nonmanufacturing cost. 107)

C Nonmanufacturing costs are the costs associated with running the business and selling the product. 108)

D $29,400 = $8,500 + $20,900. Direct materials and direct labor are prime costs. The total of these two costs is $29,400. 109)

A $60,800 = $24,000 + $36,800. Direct materials and direct labor are prime costs. The total of these two costs is $60,800. 110)

D Manufacturing costs consist of direct materials, direct labor, and manufacturing overhead. Manufacturing costs minus direct materials leaves direct labor and manufacturing overhead, which are the conversion costs. 111)

C Manufacturing costs include all costs incurred to produce the physical product. 112)

B Manufacturing costs consist of direct materials, direct labor, and manufacturing overhead. Manufacturing costs minus manufacturing overhead leaves direct materials and direct labor: the prime costs. 113)

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$40,280 = $11,000 + $16,200 + $3,190 + $5,500 + $4,390. Manufacturing costs include the cost of direct materials, direct labor, indirect labor, the production manager's salary, and the factory lease, which total $40,280. Sales salaries and marketing costs are excluded. 114)

B $81,600 = $24,000 + $36,800 + $4,800 + $9,600 + $6,400. Manufacturing costs include the cost of direct materials, direct labor, indirect labor, the production manager's salary, and the factory lease, which total $81,600. Sales salaries and marketing costs are excluded. 115)

C $12,950 = $3,250 + $6,200 + $3,500. Manufacturing overhead includes the costs of indirect labor, the production manager's salary, and the factory lease, which total $12,950. 116)

C $20,800 = $4,800 + $9,600 + $6,400. Manufacturing overhead includes the costs of indirect labor, the production manager's salary, and the factory lease, which total $20,800. 117)

C $33,490 = $20,900 + $1,870 + $6,070 + $4,650. Direct labor and manufacturing overhead are conversion costs. Manufacturing overhead includes the indirect labor, the production manager's salary, and the factory lease. 118)

D $57,600 = $36,800 + $4,800 + $9,600 + $6,400. Direct labor and manufacturing overhead are conversion costs. Manufacturing overhead includes the indirect labor, the production manager's salary, and the factory lease. 119)

B For external reporting, GAAP requires that all manufacturing costs be treated as product costs, or costs that are attached to the product as it is being produced. 120)

D Product costs are sometimes called inventoriable costs because they are counted as part of the cost of inventory until the product is sold. 121)

A Manufacturing costs are attached to the product as it is being produced. Nonmanufacturing costs are expensed during the period in which they are incurred. 122)

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Product costs are counted as part of the inventory until the product is sold. 123)

D Period costs are never counted as inventory. Rather, they are expensed during the period they are incurred. 124)

D Product costs are counted as inventory until the product is sold, while period costs are expensed during the period they are incurred. 125)

C Product costs are counted as inventory (an asset) until the product is sold, at which point they are reported as Cost of Goods Sold on the income statement. 126)

A Key differences between financial and managerial accounting include the users of the information (including how those users receive information), the types of reports generated, the nature of the information, the timing of reports, and the level of detail the information communicates. Managerial accountants generally conduct internal analysis on the health of the company, suggest key variances to track, and review unusual results. 127)

A Planning is the future-oriented part of the management cycle, including setting goals and incorporating the means of accomplishing them. Implementing is putting the plan into action, including leading, directing, and motivating others. Control is the final step in which managers (or, in this case, club presidents) track progress and make adjustments to the plan. 128)

B Sustainability accounting reflects the changing nature of accountability: companies are not simply accountable to shareholders, but rather they are accountable to the world at large. Sustainability accounting can help ensure the longevity of an organization, which is excellent for the company long-term. Sustainability accounting will likely play a large role in evaluating companies in the future, and early adopters may be rewarded for their forward thinking. Sustainability accounting does not replace the emphasis on financial results; rather it complements financial strength in building a strong company for the future. 129)

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Direct costs are those that can be directly and reasonably traced to the cost object. Indirect costs are those that cannot be traced, or that are not worth the effort of tracing. Variable costs are those that change, in total, in direct proportion to chages in activity levels. Fixed costs are those that do not change, in total, based on changes in activity levels. 130)

A By predicting the general location of a future purchase and having inventory ready in that region, Amazon hopes to be able to reduce both shipping time and shipping costs. 131) Essay 1. Identify who will be affected by the situation—both those who will appear to benefit

(often the manager or employee) and those who will be harmed (other employees, the company’s reputation, owners, creditors, and the public in general). 2. Identify and evaluate the alternative courses of action. 3. Choose the alternative that is the most ethical—and that you would be proud to see reported in the news.

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Student name:__________ TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) A marketing consulting firm would most likely use process costing. ⊚ true ⊚ false 2)

When job order costing is used, costs are accumulated on a job cost sheet. ⊚ true ⊚ false

3) Process costing averages the total cost of the process over the number of units produced. ⊚ true ⊚ false 4) Source documents are used to assign all manufacturing costs to jobs. ⊚ true ⊚ false 5) A materials requisition form is used to authorize the purchase of direct materials. ⊚ true ⊚ false 6) A job cost sheet will record the direct materials and direct labor used by the job, but not the

manufacturing overhead applied. ⊚ true ⊚ false 7) A predetermined overhead rate is calculated by dividing the estimated total manufacturing

overhead cost by the estimated total cost driver. ⊚ true ⊚ false 8) Indirect materials are recorded directly on the job cost sheet. ⊚ true ⊚ false 9) When manufacturing overhead is applied to a job, a credit is made to the Work in Process

account. ⊚ true ⊚ false

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Chapter 2 10) The total manufacturing cost for a job includes the amount of applied overhead using the

predetermined overhead rate. ⊚ true ⊚ false 11) If there is a debit balance in the Manufacturing Overhead account at the end of the period,

overhead was underapplied. ⊚ true ⊚ false 12) The most common method for disposing of the balance in Manufacturing Overhead is to

make a direct adjustment to Cost of Goods Sold. ⊚ true ⊚ false 13) To eliminate underapplied overhead at the end of the year, Manufacturing Overhead would

be debited and Cost of Goods Sold would be credited. ⊚ true ⊚ false 14) The total amount of cost assigned to jobs that were completed during the year is the cost of

goods sold. ⊚ true ⊚ false 15) In a service firm, the cost associated with time that employees spend on training, paperwork,

and supervision is considered part of manufacturing overhead. ⊚ true ⊚ false 16) An allocation base should be a cost driver. ⊚ true ⊚ false 17) Manufacturing overhead is said to have been overapplied when actual overhead costs exceed

applied overhead costs. ⊚ true ⊚ false

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Chapter 2 18) Unlike manufacturing costs, which are recorded in inventory until the product is sold,

nonmanufacturing costs are expensed during the period in which they are incurred. ⊚ true ⊚ false MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 19) Which of the following types of firms would most likely use process costing? A) Superior Auto Body & Repair B) Crammond Custom Cabinets C) Sunshine Soft Drinks D) Jackson & Taylor Tax Service 20) Which of the following types of firms would most likely use job order costing? A) Happy-Oh Cereal Company B) Huey, Lewey, & Dewey, Attorneys C) SoooSweet Beverage D) C-5 Cement Company 21) Which of the following is a characteristic of a manufacturing environment that would use job

order costing? A) Standardized production process B) Continuous manufacturing C) Homogenous products D) Differentiated products 22) Which of the following statements is correct? A) Companies must choose to use either job order costing or process costing; there is no

overlap between the two systems. B) Companies always use job order costing unless it is prohibitively expensive. C) Companies always use process costing unless it is prohibitively expensive. D) Companies often provide products and services that have both common and unique characteristics, so they may use a blend of job order and process costing. 23) The cost of materials used on a specific job is first captured on which source document? A) Cost driver sheet B) Materials requisition form C) Labor time ticket D) Process cost sheet

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Chapter 2 24) The source document that captures how much time a worker has spent on various jobs during

the period is a: A) cost driver sheet. B) materials requisition form. C) labor time ticket. D) job cost sheet. 25) All the costs assigned to an individual job are summarized on a: A) cost driver sheet. B) job cost sheet. C) materials requisition form. D) labor time ticket. 26) A predetermined overhead rate is calculated by dividing: A) actual manufacturing overhead cost by estimated total cost driver. B) estimated total cost driver by estimated manufacturing overhead cost. C) estimated manufacturing overhead cost by actual total cost driver. D) estimated manufacturing overhead cost by estimated total cost driver. 27) Manufacturing overhead is applied to each job using which formula? A) Predetermined overhead rate × actual value of the cost driver for the job

Predetermined overhead rate × estimated value of the cost driver for the job C) Actual overhead rate × estimated value of the cost driver for the job D) Predetermined overhead rate ÷ actual value of the cost driver for the job B)

28) Manufacturing overhead was estimated to be $489,600 for the year along with an estimated

20,400 direct labor hours. Actual manufacturing overhead was $470,220, and actual labor hours were 21,800. The predetermined manufacturing overhead rate per direct labor hour would be: A) $0.07. B) $23.05. C) $24.00. D) $22.75.

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Chapter 2 29) Manufacturing overhead was estimated to be $400,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual labor hours were 21,000. The predetermined manufacturing overhead rate per direct labor hour would be: A) $20.00. B) $0.05. C) $20.75. D) $19.05. 30) Manufacturing overhead was estimated to be $492,000 for the year along with an estimated

20,500 direct labor hours. Actual manufacturing overhead was $472,525, and actual labor hours were 21,500. The amount of manufacturing overhead applied to production would be: A) $472,525. B) $492,000. C) $532,125. D) $516,000. 31) Manufacturing overhead was estimated to be $400,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual labor hours were 21,000. The amount of manufacturing overhead applied to production would be: A) $415,000. B) $420,000. C) $435,750. D) $400,000. 32) Manufacturing overhead was estimated to be $356,400 for the year along with an estimated

29,700 direct labor hours. Actual manufacturing overhead was $556,875, and actual labor hours were 30,600. The predetermined overhead rate per direct labor hour would be: A) $1.03. B) $11.24. C) $18.75. D) $12.00. 33) Manufacturing overhead was estimated to be $200,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual labor hours were 21,000. The predetermined overhead rate per direct labor hour would be: A) $10.00. B) $1.05. C) $10.75. D) $10.24.

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Chapter 2 34) Manufacturing overhead was estimated to be $360,000 for the year along with an estimated

24,000 direct labor hours. Actual manufacturing overhead was $282,000 and actual labor hours were 25,700. The amount of manufacturing overhead applied to production would be: A) $385,500. B) $360,000. C) $282,000. D) $301,975. 35) Manufacturing overhead was estimated to be $200,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual labor hours were 21,000. The amount of manufacturing overhead applied to production would be: A) $200,000. B) $215,000. C) $210,000. D) $225,750. 36) Manufacturing overhead was estimated to be $313,500 for the year along with an estimated

28,500 direct labor hours. Actual manufacturing overhead was $562,875 and actual direct labor hours were 30,600. The predetermined overhead rate per direct labor hour would be: A) $18.39. B) $12.35. C) $10.25. D) $11.00. 37) Manufacturing overhead was estimated to be $500,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $450,000, and actual direct labor hours were 19,000. The predetermined overhead rate per direct labor hour would be: A) $22.50. B) $25.00. C) $23.68. D) $26.32. 38) Manufacturing overhead was estimated to be $300,000 for the year along with an estimated

25,000 direct labor hours. Actual manufacturing overhead was $393,750 and actual direct labor hours were 28,900. The amount of manufacturing overhead applied to production would be: A) $346,800. B) $393,750. C) $214,900. D) $300,000.

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Chapter 2 39) Manufacturing overhead was estimated to be $500,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $450,000, and actual direct labor hours were 19,000. The amount of manufacturing overhead applied to production would be: A) $500,000. B) $450,000. C) $427,500. D) $475,000. 40) Kilt Company had the following information for the year: Direct materials used Direct labor incurred (5,750 hours) Actual manufacturing overhead incurred

$ 119,300 159,700 167,500

Kilt Company used a predetermined overhead rate of $41 per direct labor hour for the year and estimated that direct labor hours would total 6,325 hours. Assume the only inventory balance is an ending Work in Process balance of $17,500. How much overhead was applied during the year? A) $235,750 B) $167,500 C) $159,700 D) $119,300 41) Kilt Company had the following information for the year: Direct materials used Direct labor incurred (5,000 hours) Actual manufacturing overhead incurred

$ 110,000 150,000 166,000

Kilt Company used a predetermined overhead rate of $42.00 per direct labor hour for the year and estimated that direct labor hours would total 5,500 hours. Assume the only inventory balance is an ending Work in Process balance of $17,000. How much overhead was applied during the year? A) $231,000 B) $150,000 C) $166,000 D) $210,000

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Chapter 2 42) Sawyer Company had the following information for the year: Direct materials used Direct labor incurred (7,300 hours) Actual manufacturing overhead incurred

$ 193,800 252,300 280,600

Sawyer Company used a predetermined overhead rate using estimated overhead of $360,800 and 8,800 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods balance of $9,400. How much overhead was applied during the year? A) $252,300 B) $280,600 C) $299,300 D) $360,800 43) Sawyer Company had the following information for the year: Direct materials used Direct labor incurred (7,000 hours) Actual manufacturing overhead incurred

$ 190,000 245,000 273,000

Sawyer Company used a predetermined overhead rate using estimated overhead of $320,000 and 8,000 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods balance of $9,000. How much overhead was applied during the year? A) $245,000 B) $273,000 C) $280,000 D) $320,000 44) Jackson Company had the following information for the year: Direct materials used Direct labor incurred (9,500 hours) Actual manufacturing overhead incurred

$ 302,600 250,400 346,500

Jackson Company used a predetermined overhead rate using estimated overhead of $382,500 and 8,500 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods balance of $19,700. How much overhead was applied during the year? A) $346,500 B) $427,500 C) $382,500 D) $250,400

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Chapter 2 45) Jackson Company had the following information for the year: Direct materials used Direct labor incurred (9,000 hours) Actual manufacturing overhead incurred

$ 295,000 245,000 343,000

Jackson Company used a predetermined overhead rate using estimated overhead of $320,000 and 8,000 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods balance of $19,000. How much overhead was applied during the year? A) $245,000 B) $343,000 C) $360,000 D) $320,000 46) Which of the following accounts represents the cost of materials purchased but not yet issued

to production? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 47) Which of the following accounts represents the accumulated costs of incomplete jobs? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 48) Which of the following accounts represents the cost of jobs completed but not yet sold? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 49) Which of the following accounts represents the cost of jobs sold during the period? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold

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Chapter 2 50) When manufacturing overhead is applied to production, which of the following accounts is

credited? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Manufacturing Overhead 51) When materials are purchased, which of the following accounts is debited? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 52) When direct materials are used in production, which of the following accounts is debited? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 53) When direct materials are used in production (as noted by a materials requisition form),

which of the following accounts is credited? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 54) When units are completed, the cost associated with the job is credited to which account? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 55) When units are sold, the cost associated with the units is credited to which account? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold

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Chapter 2 56) When units are completed, the cost associated with the job is debited to which account? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 57) When units are sold, the cost associated with the units is debited to which account? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 58) When materials are placed into production: A) Raw Materials Inventory is debited if the materials are traced directly to the job. B) Work in Process Inventory is debited if the materials are traced directly to the job. C) Manufacturing Overhead is debited if the materials are traced directly to the job. D) Raw Materials Inventory is credited only if the materials are traced directly to the job,

otherwise Manufacturing Overhead is credited. 59) If materials being placed into production are not traced to a specific job, debit: A) Raw Materials Inventory. B) Work in Process Inventory. C) Manufacturing Overhead. D) Cost of Goods Sold. 60) In recording the purchase of materials that are not traced to any specific job, which of the

following is correct? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be credited. D) Manufacturing Overhead would be debited. 61) Which of the following would be used to record the labor cost that is traceable to a specific

job? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be debited. D) Manufacturing Overhead would be credited.

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Chapter 2 62) Which of the following would be used to record the labor cost that is not traceable to a

specific job? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be debited. D) Manufacturing Overhead would be credited. 63) Which of the following would be used to record the usage of indirect manufacturing

resources? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be debited. D) Manufacturing Overhead would be credited. 64) Which of the following would be used to record the depreciation of manufacturing

equipment? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be debited. D) Manufacturing Overhead would be credited. 65) Which of the following would be used to record the property taxes on a factory building? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be debited. D) Manufacturing Overhead would be credited. 66) Which of the following would be used to record the factory supervisor's salary? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be debited. D) Manufacturing Overhead would be credited. 67) Which of the following would be used to apply manufacturing overhead to production for the

period? A) Raw Materials Inventory would be debited. B) Work in Process Inventory would be debited. C) Manufacturing Overhead would be debited. D) Work in Process Inventory would be credited.

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Chapter 2 68) Which of the following would be used to apply manufacturing overhead to production for the

period? A) Credit to Raw Materials Inventory. B) Credit to Work in Process Inventory. C) Debit to Manufacturing Overhead. D) Credit to Manufacturing Overhead. 69) Which of the following would be used to transfer the cost of completed goods during the

period to the Finished Goods account? A) Credit to Raw Materials Inventory. B) Credit to Work in Process Inventory. C) Debit to Manufacturing Overhead. D) Credit to Manufacturing Overhead. 70) If a company uses a predetermined overhead rate, which of the following statements is

correct? A) Manufacturing Overhead will be debited for estimated overhead. B) Work in Process Inventory will be credited for estimated overhead. C) Manufacturing Overhead will be debited for actual overhead. D) Manufacturing Overhead will be credited for actual overhead. 71) Which of the following accounts is not affected by applied manufacturing overhead? A) Raw Materials Inventory B) Work in Process Inventory C) Finished Goods Inventory D) Cost of Goods Sold 72) Manufacturing overhead was estimated to be $487,200 for the year along with an estimated

20,300 direct labor hours. Actual manufacturing overhead was $421,200, and actual labor hours were 21,200. The amount debited to the Manufacturing Overhead account would be: A) $487,200. B) $508,800. C) $438,200. D) $421,200.

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Chapter 2 73) Manufacturing overhead was estimated to be $400,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual labor hours were 21,000. The amount debited to the Manufacturing Overhead account would be: A) $400,000. B) $415,000. C) $420,000. D) $435,750. 74) Manufacturing overhead was estimated to be $426,300 for the year along with an estimated

20,300 direct labor hours. Actual manufacturing overhead was $424,400, and actual labor hours were 21,500. The amount credited to the Manufacturing Overhead account would be: A) $426,300. B) $424,400. C) $451,500. D) $438,500. 75) Manufacturing overhead was estimated to be $400,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual labor hours were 21,000. The amount credited to the Manufacturing Overhead account would be: A) $415,000. B) $420,000. C) $435,750. D) $400,000. 76) Manufacturing overhead was estimated to be $204,000 for the year along with an estimated

20,400 direct labor hours. Actual manufacturing overhead was $219,400, and actual labor hours were 21,400. The amount debited to the Manufacturing Overhead account would be: A) $219,400. B) $214,000. C) $226,800. D) $204,000. 77) Manufacturing overhead was estimated to be $200,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual labor hours were 21,000. The amount debited to the Manufacturing Overhead account would be: A) $200,000. B) $215,000. C) $210,000. D) $225,750.

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Chapter 2 78) Manufacturing overhead was estimated to be $204,000 for the year along with an estimated

20,400 direct labor hours. Actual manufacturing overhead was $219,400, and actual labor hours were 21,400. The amount credited to the Manufacturing Overhead account would be: A) $214,000. B) $204,000. C) $219,400. D) $226,800. 79) Manufacturing overhead was estimated to be $200,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual labor hours were 21,000. The amount credited to the Manufacturing Overhead account would be: A) $200,000. B) $215,000. C) $210,000. D) $225,750. 80) Overhead was estimated to be $261,300 for the year along with an estimated 20,100 direct

labor hours. Actual overhead was $225,200, and actual direct labor hours were 19,600. The amount debited to the Manufacturing Overhead account would be: A) $214,200. B) $225,200. C) $254,800. D) $261,300. 81) Overhead was estimated to be $250,000 for the year along with an estimated 20,000 direct

labor hours. Actual overhead was $225,000, and actual direct labor hours were 19,000. The amount debited to the Manufacturing Overhead account would be: A) $250,000. B) $225,000. C) $213,750. D) $237,500. 82) Manufacturing overhead was estimated to be $171,700 for the year along with an estimated

20,200 direct labor hours. Actual manufacturing overhead was $233,200, and actual direct labor hours were 19,700. The amount credited to the Manufacturing Overhead account would be: A) $171,700. B) $233,200. C) $214,400. D) $167,450.

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Chapter 2 83) Manufacturing overhead was estimated to be $250,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $225,000, and actual direct labor hours were 19,000. The amount credited to the Manufacturing Overhead account would be: A) $250,000. B) $225,000. C) $213,750. D) $237,500. 84) Overhead costs are overapplied if the amount of overhead debited to Work in Process is: A) greater than estimated overhead. B) less than estimated overhead. C) greater than actual overhead incurred. D) less than actual overhead incurred. 85) Overhead costs are underapplied if the amount of overhead debited to Work in Process is: A) greater than estimated overhead. B) less than estimated overhead. C) greater than actual overhead incurred. D) less than actual overhead incurred. 86) Manufacturing overhead was estimated to be $397,100 for the year along with an estimated

20,900 direct labor hours. Actual manufacturing overhead was $418,600, and actual direct labor hours were 23,000. Which of the following would be correct? A) Overhead is underapplied by $18,400. B) Overhead is underapplied by $21,500. C) Overhead is overapplied by $21,500. D) Overhead is overapplied by $18,400. 87) Manufacturing overhead was estimated to be $400,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual direct labor hours were 21,000. Which of the following would be correct? A) Overhead is underapplied by $15,000. B) Overhead is underapplied by $5,000. C) Overhead is overapplied by $5,000. D) Overhead is overapplied by $15,000.

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Chapter 2 88) Manufacturing overhead was estimated to be $221,100 for the year along with an estimated

20,100 direct labor hours. Actual manufacturing overhead was $245,000, and actual direct labor hours were 21,700. Which of the following would be correct? A) Overhead is underapplied by $32,800. B) Overhead is underapplied by $6,300. C) Overhead is overapplied by $27,200. D) Overhead is overapplied by $32,800. 89) Manufacturing overhead was estimated to be $200,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual direct labor hours were 21,000. Which of the following would be correct? A) Overhead is underapplied by $15,000. B) Overhead is underapplied by $5,000. C) Overhead is overapplied by $5,000. D) Overhead is overapplied by $15,000. 90) Manufacturing overhead was estimated to be $261,300 for the year along with an estimated

20,100 direct labor hours. Actual manufacturing overhead was $242,100, and actual direct labor hours were 19,600. Which of the following would be correct? A) Overhead is underapplied by $17,400. B) Overhead is underapplied by $12,700. C) Overhead is overapplied by $12,700. D) Overhead is overapplied by $17,400. 91) Manufacturing overhead was estimated to be $250,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $225,000, and actual direct labor hours were 19,000. Which of the following would be correct? A) Overhead is underapplied by $25,000. B) Overhead is underapplied by $12,500. C) Overhead is overapplied by $12,500. D) Overhead is overapplied by $25,000. 92) The most common method for disposing of over- or underapplied overhead is to: A) recalculate the overhead rate for the period. B) recalculate the overhead rate for the next period. C) make a direct adjustment to Work in Process Inventory. D) make a direct adjustment to Cost of Goods Sold.

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Chapter 2 93) When disposed of, overapplied manufacturing overhead will: A) increase Cost of Goods Sold. B) increase Finished Goods. C) decrease Cost of Goods Sold. D) decrease Finished Goods. 94) When disposed of, underapplied manufacturing overhead will: A) increase Cost of Goods Sold. B) increase Finished Goods. C) decrease Cost of Goods Sold. D) decrease Finished Goods. 95) Underapplied overhead means: A) too little overhead was applied to raw materials. B) actual overhead is less than estimated overhead. C) Finished Goods Inventory will need to be credited. D) there is a debit balance remaining in the Manufacturing Overhead account. 96) Manufacturing overhead was estimated to be $345,100 for the year along with an estimated

20,300 direct labor hours. Actual manufacturing overhead was $385,000, and actual direct labor hours were 23,500. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Cost of Goods Sold would be credited for $39,900. B) Cost of Goods Sold would be credited for $14,500. C) Cost of Goods Sold would be debited for $39,900. D) Cost of Goods Sold would be debited for $14,500. 97) Manufacturing overhead was estimated to be $400,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual direct labor hours were 21,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Cost of Goods Sold would be credited for $15,000. B) Cost of Goods Sold would be credited for $5,000. C) Cost of Goods Sold would be debited for $5,000. D) Cost of Goods Sold would be debited for $15,000.

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Chapter 2 98) Manufacturing overhead was estimated to be $408,000 for the year along with an estimated

20,400 direct labor hours. Actual manufacturing overhead was $419,600, and actual direct labor hours were 21,400. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Manufacturing Overhead would be credited for $11,600. B) Manufacturing Overhead would be credited for $8,400. C) Manufacturing Overhead would be debited for $11,600. D) Manufacturing Overhead would be debited for $8,400. 99) Manufacturing overhead was estimated to be $400,000 for the year along with an estimated

20,000 direct labor hours. Actual manufacturing overhead was $415,000, and actual direct labor hours were 21,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Manufacturing Overhead would be credited for $5,000. B) Manufacturing Overhead would be credited for $20,000. C) Manufacturing Overhead would be debited for $5,000. D) Manufacturing Overhead would be debited for $20,000. 100)

Manufacturing overhead was estimated to be $200,700 for the year along with an estimated 20,070 direct labor hours. Actual manufacturing overhead was $217,100, and actual direct labor hours were 21,070. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Cost of Goods Sold would be credited for $6,400. B) Cost of Goods Sold would be credited for $16,400. C) Cost of Goods Sold would be debited for $6,400. D) Cost of Goods Sold would be debited for $16,400.

101)

Manufacturing overhead was estimated to be $200,000 for the year along with an estimated 20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual direct labor hours were 21,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Cost of Goods Sold would be credited for $15,000. B) Cost of Goods Sold would be credited for $5,000. C) Cost of Goods Sold would be debited for $5,000. D) Cost of Goods Sold would be debited for $15,000.

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Chapter 2 102)

Manufacturing overhead was estimated to be $231,000 for the year along with an estimated 21,000 direct labor hours. Actual manufacturing overhead was $248,000, and actual direct labor hours were 22,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Manufacturing Overhead would be credited for $6,000. B) Manufacturing Overhead would be credited for $16,000. C) Manufacturing Overhead would be debited for $9,500. D) Manufacturing Overhead would be debited for $16,000.

103)

Manufacturing overhead was estimated to be $200,000 for the year along with an estimated 20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual direct labor hours were 21,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Manufacturing Overhead would be credited for $5,000. B) Manufacturing Overhead would be credited for $15,000. C) Manufacturing Overhead would be debited for $5,000. D) Manufacturing Overhead would be debited for $15,000.

104)

Manufacturing overhead was estimated to be $241,200 for the year along with an estimated 20,100 direct labor hours. Actual manufacturing overhead was $226,900, and actual direct labor hours were 19,900. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Cost of Goods Sold would be credited for $13,700. B) Cost of Goods Sold would be credited for $11,900. C) Cost of Goods Sold would be debited for $11,900. D) Cost of Goods Sold would be debited for $13,700.

105)

Manufacturing overhead was estimated to be $250,000 for the year along with an estimated 20,000 direct labor hours. Actual manufacturing overhead was $225,000, and actual direct labor hours were 19,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Cost of Goods Sold would be credited for $25,000. B) Cost of Goods Sold would be credited for $12,500. C) Cost of Goods Sold would be debited for $12,500. D) Cost of Goods Sold would be debited for $25,000.

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Chapter 2 106)

Manufacturing overhead was estimated to be $265,200 for the year along with an estimated 20,400 direct labor hours. Actual manufacturing overhead was $244,500, and actual direct labor hours were 19,800. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Manufacturing Overhead would be credited for $12,900. B) Manufacturing Overhead would be credited for $27,600. C) Manufacturing Overhead would be debited for $12,900. D) Manufacturing Overhead would be debited for $27,600.

107)

Manufacturing overhead was estimated to be $250,000 for the year along with an estimated 20,000 direct labor hours. Actual manufacturing overhead was $225,000, and actual direct labor hours were 19,000. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? A) Manufacturing Overhead would be credited for $12,500. B) Manufacturing Overhead would be credited for $25,000. C) Manufacturing Overhead would be debited for $12,500. D) Manufacturing Overhead would be debited for $25,000.

108)

Cost of goods manufactured is the amount of cost transferred: A) out of Finished Goods Inventory and into Cost of Goods Sold. B) out of Finished Goods Inventory and into Work in Process Inventory. C) out of Work in Process Inventory and into Manufacturing Overhead. D) out of Work in Process Inventory and into Finished Goods Inventory.

109)

Cost of goods completed is the same as: A) cost of goods sold. B) work in process inventory. C) cost of goods manufactured. D) finished goods inventory.

110)

The cost of goods manufactured report includes all of the following except: A) direct materials used. B) direct labor. C) actual manufacturing overhead. D) applied manufacturing overhead.

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Chapter 2 111)

The current manufacturing costs appearing in the cost of goods manufactured report include _________ direct labor, _________ direct materials, and _________ manufacturing overhead. A) actual; actual; applied B) actual; actual; actual C) estimated; actual; applied D) estimated; estimated; applied

112)

Cost of goods sold is the amount of cost transferred: A) out of Finished Goods Inventory and into Cost of Goods Sold. B) out of Work in Process Inventory and into Cost of Goods Sold. C) out of Work in Process Inventory and into Manufacturing Overhead. D) out of Work in Process Inventory and into Finished Goods Inventory.

113) Ragtime Company had the following information for the year: Direct materials used Direct labor incurred (5,200 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 112,000 152,000 168,000 0 17,500 0 0

Ragtime Company used a predetermined overhead rate of $34 per direct labor hour for the year. What was the cost of goods manufactured? A) $262,000 B) $437,000 C) $423,300 D) $428,000

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Chapter 2 114) Ragtime Company had the following information for the year: Direct materials used Direct labor incurred (5,000 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 110,000 150,000 166,000 0 17,000 0 0

Ragtime Company used a predetermined overhead rate of $35 per direct labor hour for the year. What was the cost of goods manufactured? A) $260,000 B) $426,000 C) $435,000 D) $418,000 115) Ragtime Company had the following information for the year: Direct materials used Direct labor incurred (6,050 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 116,400 152,000 214,760 0 17,100 0 0

Ragtime Company used a predetermined overhead rate of $37 per direct labor hour for the year. What was the adjusted cost of goods sold? A) $492,260 B) $483,160 C) $466,060 D) $475,150

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Chapter 2 116) Ragtime Company had the following information for the year: Direct materials used Direct labor incurred (5,000 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 110,000 150,000 166,000 0 17,000 0 0

Ragtime Company used a predetermined overhead rate of $35 per direct labor hour for the year. What was the adjusted cost of goods sold? A) $435,000 B) $426,000 C) $418,000 D) $409,000 117) Sawyer Company had the following information for the year: Direct materials used Direct labor incurred (7,200 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 198,100 250,000 280,200 0 0 0 9,100

Sawyer Company used a predetermined overhead rate based on estimated overhead of $348,300 and 8,100 estimated direct labor hours. What was the cost of goods manufactured? A) $796,400 B) $757,700 C) $748,600 D) $728,300

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Chapter 2 118) Sawyer Company had the following information for the year: Direct materials used Direct labor incurred (7,000 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 190,000 245,000 273,000 0 0 0 9,000

Sawyer Company used a predetermined overhead rate based on estimated overhead of $320,000 and 8,000 estimated direct labor hours. What was the cost of goods manufactured? A) $715,000 B) $708,000 C) $755,000 D) $706,000 119) Sawyer Company had the following information for the year: Direct materials used Direct labor incurred (7,100 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 196,300 251,600 330,000 0 0 0 9,700

Sawyer Company used a predetermined overhead rate based on estimated overhead of $413,600 and 8,800 estimated direct labor hours. What was the adjusted cost of goods sold? A) $777,900 B) $768,200 C) $771,900 D) $781,600

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Chapter 2 120) Sawyer Company had the following information for the year: Direct materials used Direct labor incurred (7,000 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 190,000 245,000 273,000 0 0 0 9,000

Sawyer Company used a predetermined overhead rate based on estimated overhead of $320,000 and 8,000 estimated direct labor hours. What was the adjusted cost of goods sold? A) $715,000 B) $708,000 C) $706,000 D) $699,000 121) Jenkins Company had the following information for the year: Direct materials used Direct labor incurred (9,800 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 301,300 246,500 343,300 0 0 0 19,700

Jenkins Company used a predetermined overhead rate based on estimated overhead of $382,800 and 8,700 estimated direct labor hours. What was the cost of goods manufactured? A) $910,900 B) $930,600 C) $891,100 D) $979,000

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Chapter 2 122) Jenkins Company had the following information for the year: Direct materials used Direct labor incurred (9,000 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 295,000 245,000 343,000 0 0 0 19,000

Jenkins Company used a predetermined overhead rate based on estimated overhead of $320,000 and 8,000 estimated direct labor hours. What was the cost of goods manufactured? A) $841,000 B) $860,000 C) $883,000 D) $900,000 123) Jenkins Company had the following information for the year: Direct materials used Direct labor incurred (9,500 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 300,200 247,300 400,000 0 0 0 19,400

Jenkins Company used a predetermined overhead rate based on estimated overhead of $348,300 and 8,100 estimated direct labor hours. What was adjusted cost of goods sold? A) $956,000 B) $928,100 C) $947,500 D) $936,600

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Chapter 2 124) Jenkins Company had the following information for the year: Direct materials used Direct labor incurred (9,000 hours) Actual manufacturing overhead incurred Beginning Work in Process Inventory Ending Work in Process Inventory Beginning Finished Goods Inventory Ending Finished Goods Inventory

$ 295,000 245,000 343,000 0 0 0 19,000

Jenkins Company used a predetermined overhead rate based on estimated overhead of $320,000 and 8,000 estimated direct labor hours. What was adjusted cost of goods sold? A) $900,000 B) $883,000 C) $881,000 D) $864,000 125)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 27,000 23,800 34,300

Ending Inventory (12/31) $ 36,600 20,000 28,300

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 104,700 84,100 87,300 0

Compute the direct materials used in production. A) $27,000 B) $114,300 C) $95,100 D) $36,600

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Chapter 2 126)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 20,000 15,000 30,000

Ending Inventory (12/31) $ 30,000 18,000 20,000

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 100,000 75,000 80,000 0

Compute the direct materials used in production. A) $20,000 B) $30,000 C) $110,000 D) $90,000 127)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 22,500 22,700 34,600

Ending Inventory (12/31) $ 32,800 23,000 26,200

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 108,600 80,200 84,800 0

Compute the total current manufacturing costs. A) $78,000 B) $273,600 C) $83,800 D) $263,300

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Chapter 2 128)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 20,000 15,000 30,000

Ending Inventory (12/31) $ 30,000 18,000 20,000

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 100,000 75,000 80,000 0

Compute the total current manufacturing costs. A) $245,000 B) $255,000 C) $65,000 D) $68,000 129)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 23,500 18,400 36,000

Ending Inventory (12/31) $ 37,300 27,400 27,200

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 105,600 81,100 86,400 0

Compute the cost of goods manufactured. A) $286,500 B) $250,300 C) $250,500 D) $268,300

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Chapter 2 130)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 20,000 15,000 30,000

Ending Inventory (12/31) $ 30,000 18,000 20,000

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 100,000 75,000 80,000 0

Compute the cost of goods manufactured. A) $248,000 B) $242,000 C) $265,000 D) $235,000 131)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 21,900 19,400 38,900

Ending Inventory (12/31) $ 34,300 21,000 21,100

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 108,300 84,300 81,800 0

Compute the unadjusted cost of goods sold. A) $278,200 B) $260,400 C) $279,800 D) $148,700

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Chapter 2 132)

McGown Corporation has the following information:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 20,000 15,000 30,000

Ending Inventory (12/31) $ 30,000 18,000 20,000

Additional information for the year is as follows: Raw materials purchases Direct labor Manufacturing overhead applied Indirect materials

$ 100,000 75,000 80,000 0

Compute the unadjusted cost of goods sold. A) $133,000 B) $242,000 C) $252,000 D) $255,000 133)

Santos Incorporated had the following information for the preceding year:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 48,800 43,200 39,500

Ending Inventory (12/31) $ 39,200 ?? ??

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Cost of goods sold

$ 208,700 152,500 160,000 531,100 545,200

What was the ending Work in Process Inventory balance on 12/31? A) $57,300 B) $16,000 C) $59,200 D) $33,300

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Chapter 2 134)

Santos Incorporated had the following information for the preceding year:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 40,000 35,000 30,000

Ending Inventory (12/31) $ 30,000 ?? ??

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Cost of goods sold

$ 200,000 150,000 160,000 525,000 544,000

What was the ending Work in Process Inventory balance on 12/31? A) $20,000 B) $11,000 C) $50,000 D) $54,000 135)

Santos Incorporated had the following information for the preceding year:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 43,600 36,800 37,500

Ending Inventory (12/31) $ 38,000 ?? ??

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Unadjusted cost of goods sold

$ 206,100 157,000 160,000 527,600 545,300

What was the ending Finished Goods Inventory balance on 12/31? A) $32,300 B) $60,300 C) $54,500 D) $19,800

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Chapter 2 136)

Santos Incorporated had the following information for the preceding year:

Raw Materials Inventory Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ 40,000 35,000 30,000

Ending Inventory (12/31) $ 30,000 ?? ??

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Unadjusted cost of goods sold

$ 200,000 150,000 160,000 525,000 544,000

What was the ending Finished Goods Inventory balance on 12/31? A) $20,000 B) $11,000 C) $50,000 D) $54,000 137)

Mendez Incorporated had the following information for the preceding year:

Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ ?? ??

Ending Inventory (12/31) $ 39,900 $ 34,500

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Cost of goods sold

$ 209,300 154,200 168,900 529,500 548,900

What was the beginning Work in Process Inventory balance on 1/1? A) $53,900 B) $37,000 C) $74,400 D) $69,500

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Chapter 2 138)

Mendez Incorporated had the following information for the preceding year:

Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ ?? ??

Ending Inventory (12/31) $ 35,000 $ 30,000

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Cost of goods sold

$ 200,000 150,000 160,000 525,000 544,000

What was the beginning Work in Process Inventory balance on 1/1? A) $49,000 B) $65,000 C) $50,000 D) $69,000 139)

Mendez Incorporated had the following information for the preceding year:

Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ ?? ??

Ending Inventory (12/31) $ 42,000 $ 37,000

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Unadjusted cost of goods sold

$ 235,000 185,000 195,000 560,000 579,000

What was the beginning Finished Goods Inventory balance on 1/1? A) $56,000 B) $72,000 C) $57,000 D) $76,000

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Chapter 2 140)

Mendez Incorporated had the following information for the preceding year:

Work in Process Inventory Finished Goods Inventory

Beginning Inventory (1/1) $ ?? ??

Ending Inventory (12/31) $ 35,000 $ 30,000

Additional information for the year is as follows: Direct materials used Direct labor Manufacturing overhead applied Cost of goods manufactured Unadjusted cost of goods sold

$ 200,000 150,000 160,000 525,000 544,000

What was the beginning Finished Goods Inventory balance on 1/1? A) $49,000 B) $65,000 C) $50,000 D) $69,000 141)

Job order cost systems for companies that compete in, for example, the green building arena should reflect: A) only costs in dollars. B) only sustainability-related metrics. C) both costs of materials in dollars and sustainability-related metrics. D) neither costs of materials in dollars nor sustainability-related metrics.

142)

To incorporate sustainability into the cost of goods manufactured report, include information on all of the following except: A) the cost of direct materials used compared to standard (unsustainable) materials. B) indirect labor rates. C) source information for direct materials used. D) sustainability benchmarking information for peer companies.

143)

Which of the following is not correct regarding service firms? A) Each client or account is equivalent to a process in a process costing firm. B) The accounting system will track the time and resources spent serving a specific client or account. C) Managers of service firms need cost information to price their services, to budget and control costs, and to determine the profitability of different types of clients. D) The primary driver used to assign costs is billable hours.

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Chapter 2 144)

Service firms: A) tend to use a lot of direct materials in addition to billable hours. B) tend to incur few indirect costs that cannot be traced to specific clients or accounts. C) assign indirect costs to individual clients or accounts based on an allocation base such as billable hours. D) use process costing to assign costs to individual clients or accounts.

145)

Optimum Finance Incorporated provides budget, savings, and investment services to clients who want a stress-free financial lifestyle. The company customizes a program for each client based on their individual goals that includes budget recommendations, investment counseling, and savings techniques. The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client. Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultant’s labor cost. During the most recent year, the firm estimated that it would pay $675,000 to its consultants and incur indirect operating costs of $1,417,500. Actual consultant labor costs were $725,600 and actual indirect operating costs were $1,392,500. What is the predetermined overhead rate that Optimum will use for the current year? A) $2.10 per dollar of consultant labor cost. B) $1.92 per dollar of consultant labor cost. C) $.48 per dollar of consultant labor cost. D) $2.06 per dollar of consultant labor cost.

146)

Optimum Finance Incorporated provides budget, savings, and investment services to clients who want a stress-free financial lifestyle. The company customizes a program for each client based on their individual goals that includes budget recommendations, investment counseling, and savings techniques. The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client. Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultant's labor cost. During the most recent year, the firm estimated that it would pay $500,000 to its consultants and incur indirect operating costs of $750,000. Actual consultant labor costs were $537,500 and actual indirect operating costs were $725,000. What is the predetermined overhead rate that Optimum will use for the current year? A) $1.50 per dollar of consultant labor cost B) $1.35 per dollar of consultant labor cost C) $0.67 per dollar of consultant labor cost D) $1.45 per dollar of consultant labor cost

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Chapter 2 147)

Optimum Finance Incorporated provides budget, savings, and investment services to clients who want a stress-free financial lifestyle. The company customizes a program for each client based on their individual goals that includes budget recommendations, investment counseling, and savings techniques. The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client. Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultant’s labor cost. During the most recent year, the firm estimated that it would pay $250,000 to its consultants and incur indirect operating costs of $300,000. Actual consultant labor costs were $268,750 and actual indirect operating costs were $275,000. During the year, Optimum provided 36 hours of consulting services to Robert Howard for which Optimum pays an average of $18 per hour. What is the total cost of providing services to Robert? A) $1,426. B) $1,311. C) $1,188. D) $1,361.

148)

Optimum Finance Incorporated provides budget, savings, and investment services to clients who want a stress-free financial lifestyle. The company customizes a program for each client based on their individual goals that includes budget recommendations, investment counseling, and savings techniques. The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client. Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultant's labor cost. During the most recent year, the firm estimated that it would pay $500,000 to its consultants and incur indirect operating costs of $750,000. Actual consultant labor costs were $537,500 and actual indirect operating costs were $725,000. During the year, Optimum provided 64 hours of consulting services to Robert Howard for which Optimum pays an average of $18 per hour. What is the total cost of providing services to Robert? A) $2,707 B) $2,822 C) $1,924 D) $2,880

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Chapter 2 149)

Optimum Finance Incorporated provides budget, savings, and investment services to clients who want a stress-free financial lifestyle. The company customizes a program for each client based on their individual goals that includes budget recommendations, investment counseling, and savings techniques. The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client. Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultant’s labor cost. During the most recent year, the firm estimated that it would pay $500,000 to its consultants and incur indirect operating costs of $875,000. Actual consultant labor costs were $537,500 and actual indirect operating costs were $850,000. During the year, Optimum provided 40 hours of consulting services to Joan Clair for which Optimum pays an average of $22 per hour. What is the total cost of providing services to Joan? A) $2,272. B) $1,383. C) $2,420. D) $2,376.

150)

Optimum Finance Incorporated provides budget, savings, and investment services to clients who want a stress-free financial lifestyle. The company customizes a program for each client based on their individual goals that includes budget recommendations, investment counseling, and savings techniques. The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client. Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultant's labor cost. During the most recent year, the firm estimated that it would pay $500,000 to its consultants and incur indirect operating costs of $750,000. Actual consultant labor costs were $537,500 and actual indirect operating costs were $725,000. During the year, Optimum provided 42 hours of consulting services to Joan Clair for which Optimum pays an average of $20 per hour. What is the total cost of providing services to Joan? A) $2,100 B) $1,974 C) $2,058 D) $1,403

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Chapter 2 151)

Manufacturers that make products that have some similarities and some differences among models would most likely use which type of cost system? A) Job order costing B) Process costing C) Operations costing D) Model costing

152)

All of the following could be a source document for a company that uses an electronic cost system except: A) emails. B) bar codes. C) radio-frequency identification (RFID). D) quick response (QR) codes.

153)

A measure that causes or influences the amount of manufacturing overhead cost incurred is called: A) operations costing. B) an allocation setter. C) a cost driver. D) a source document.

154)

Materials that cannot be directly or conveniently traced to a specific unit or job are called: A) direct materials. B) indirect materials. C) underapplied overhead. D) raw materials.

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Answer Key Test name: Chapter 2 1) FALSE

A marketing consulting firm is more likely to use job order costing, which is used by companies that offer customized or unique products or services. 2) TRUE

A job cost sheet is used for each unique job, project, or customer under a job order cost system. 3) TRUE

Process costing breaks the production process down into its basic steps, or processes, and then averages the total cost of the process over the number of units produced. 4) FALSE

Direct materials and direct labor are assigned to jobs using source documents such as a materials requisition form and a labor time ticket. However, manufacturing overhead is applied using a predetermined overhead rate. 5) FALSE

A materials requisition form is used to control the physical flow of materials out of inventory and into production and to record the cost of raw materials in the accounting system. 6) FALSE

A job cost sheet summarizes all of the costs incurred on a specific job, not just direct materials and direct labor. 7) TRUE

A predetermined overhead rate is calculated by dividing the estimated total manufacturing overhead cost by the estimated total cost driver. 8) FALSE

Indirect materials are not recorded directly to the job cost sheet or Work in Process Inventory. Rather, these indirect costs are accumulated in the Manufacturing Overhead account and will be assigned to the product using the predetermined overhead rate. 9) FALSE

Applied manufacturing overhead is debited (not credited) to Work in Process Inventory. The credit is to the Manufacturing Overhead account.

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Chapter 2 10) TRUE

The total manufacturing cost is based on direct materials, direct labor, and the amount of overhead applied using the predetermined overhead rate. 11) TRUE

If there is a debit balance in the Manufacturing Overhead account at the end of the period, the actual overhead is greater than applied overhead; therefore, overhead was underapplied. 12) TRUE

The most common method for disposing of the balance in Manufacturing Overhead is to make a direct adjustment to Cost of Goods Sold. Doing so makes sense as long as most of the jobs worked on during the period were completed and sold. 13) FALSE

If manufacturing overhead is underapplied during the year, Manufacturing Overhead will need to be credited to bring the account balance to zero, while Cost of Goods Sold will be debited. 14) FALSE

The total amount of cost assigned to jobs that were completed during the year is the cost of goods manufactured, not the cost of goods sold. 15) TRUE

Service firms incur many indirect costs that cannot be traced to specific clients or accounts. Examples include the nonbillable time that employees spend on training, paperwork, and supervision. These indirect costs are treated just like manufacturing overhead in a factory. 16) TRUE

Ideally, the allocation base should be a cost driver, or a measure that causes or influences the amount of manufacturing overhead cost incurred. 17) FALSE

If manufacturing overhead is overapplied during the year, actual overhead costs end up being less than applied overhead costs. 18) TRUE

Nonmanufacturing costs are not accumulated in inventory accounts. 19) C

Process costing is used by companies that make or complete standardized or homogeneous products or services, such as a soft drink company.

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Chapter 2 20) B

Job order costing is used in companies that offer customized or unique products or services, such as a law firm. 21) D

Job order costing is used in companies that offer customized or unique products or services. 22) D

Some companies use a hybrid approach called "operations costing," which is a blend of process costing (for the common processes) and job order costing (for the unique components). 23) B

The materials requisition form lists the quantity and cost of the direct materials used on a specific job. 24) C

A direct labor time ticket shows how much time a worker has spent on various jobs each week, as well as the cost of that time. 25) B

The job cost sheet is a document that summarizes all of the costs incurred on a specific job. 26) D

The formula to calculate the predetermined overhead rate is the estimated total manufacturing overhead cost divided by the estimated total cost driver. 27) A

Apply manufacturing overhead to each job by multiplying the predetermined overhead rate by the actual value of the cost driver for the job. 28) C

$489,600 ÷ 20,400 = $24.00. Divide total estimated manufacturing overhead by the estimated total cost driver for the year to calculate the predetermined manufacturing overhead rate. 29) A

$400,000 ÷ 20,000 = $20.00. Divide total estimated manufacturing overhead by the estimated total cost driver for the year to calculate the predetermined manufacturing overhead rate. 30) D

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Calculate the predetermined overhead rate of $24.00 per direct labor hour by dividing total estimated manufacturing overhead by the estimated total cost driver for the year ($492,000 ÷ 20,500 = $24.00). Apply manufacturing overhead at the predetermined rate, multiplied by the actual direct labor hours ($24.00 × 21,500 = $516,000). 31) B

Calculate the predetermined overhead rate of $20.00 per direct labor hour by dividing total estimated manufacturing overhead by the estimated total cost driver for the year ($400,000 ÷ 20,000 = $20.00). Apply manufacturing overhead at the predetermined rate, multiplied by the actual direct labor hours ($20.00 × 21,000 = $420,000). 32) D

Divide total estimated manufacturing overhead by the estimated total cost driver for the year to calculate the predetermined manufacturing overhead rate ($356,400 ÷ 29,700 = $12.00). 33) A

Divide total estimated manufacturing overhead by the estimated total cost driver for the year to calculate the predetermined manufacturing overhead rate ($200,000 ÷ 20,000 = $10.00). 34) A

Calculate the predetermined overhead rate of $15.00 by dividing total estimated manufacturing overhead by the estimated total cost driver for the year ($360,000 ÷ 24,000 = $15.00). Multiply the predetermined manufacturing overhead rate ($15.00) by the actual number of direct labor hours (25,700) to calculate applied manufacturing overhead ($15.00 × 25,700 = $385,500). 35) C

Calculate the predetermined overhead rate of $10.00 by dividing total estimated manufacturing overhead by the estimated total cost driver for the year ($200,000 ÷ 20,000 = $10.00). Multiply the predetermined manufacturing overhead rate ($10.00) by the actual number of direct labor hours (21,000) to calculate applied manufacturing overhead ($10.00 × 21,000 = $210,000). 36) D

Divide total estimated manufacturing overhead by the estimated total cost driver for the year to calculate the predetermined manufacturing overhead rate ($313,500 ÷ 28,500 = $11.00). 37) B

Divide total estimated manufacturing overhead by the estimated total cost driver for the year to calculate the predetermined manufacturing overhead rate ($500,000 ÷ 20,000 = $25.00). 38) A

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Calculate the predetermined overhead rate of $12.00 by dividing total estimated manufacturing overhead by the estimated total cost driver for the year. ($300,000 ÷ 25,000 = $12.00) Multiply the predetermined manufacturing overhead rate ($12.00) by the actual number of direct labor hours (28,900) to calculate applied manufacturing overhead ($12.00 × 28,900 = $346,800). 39) D

Calculate the predetermined overhead rate of $25.00 by dividing total estimated manufacturing overhead by the estimated total cost driver for the year ($500,000 ÷ 20,000 = $25.00). Multiply the predetermined manufacturing overhead rate ($25.00) by the actual number of direct labor hours (19,000) to calculate applied manufacturing overhead ($25.00 × 19,000 = $475,000). 40) A

Multiply the predetermined overhead rate by the actual number of direct labor hours incurred to calculate the applied manufacturing overhead ($41.00 × 5,750 = $235,750). 41) D

Multiply the predetermined overhead rate by the actual number of direct labor hours incurred to calculate the applied manufacturing overhead ($42.00 × 5,000 = $210,000). 42) C

Calculate predetermined overhead rate of $41.00 by dividing total estimated overhead by total estimated direct labor hours ($360,800 ÷ 8,800 = $41.00). Multiply the predetermined manufacturing overhead rate by the actual number of direct labor hours incurred to calculate applied overhead ($41.00 × 7,300 = $299,300). 43) C

Calculate predetermined overhead rate of $40.00 by dividing total estimated overhead by total estimated direct labor hours ($320,000 ÷ 8,000 = $40.00). Multiply the predetermined manufacturing overhead rate by the actual number of direct labor hours incurred to calculate applied overhead ($40.00 × 7,000 = $280,000). 44) B

Calculate the predetermined overhead rate of $45.00 by dividing estimated total manufacturing overhead by the estimated total cost driver ($382,500 ÷ 8,500 = $45.00). Multiply the predetermined manufacturing overhead rate of $45.00 by the actual number of direct labor hours (9,500) to calculate applied overhead ($45.00 × 9,500 = $427,500). 45) C

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Calculate the predetermined overhead rate of $40.00 by dividing estimated total manufacturing overhead by the estimated total cost driver ($320,000 ÷ 8,000 = $40.00). Multiply the predetermined manufacturing overhead rate of $40.00 by the actual number of direct labor hours (9,000) to calculate applied overhead ($40.00 × 9,000 = $360,000). 46) A

Raw Materials Inventory represents the cost of materials purchased from suppliers but not yet used in production. 47) B

Work in Process Inventory represents the total cost of jobs that are still in process at any point in time. 48) C

Once goods are finished, their costs are transferred out of Work in Process Inventory and into Finished Goods Inventory where they remain until they are sold. 49) D

Once a job is sold, its total cost is transferred out of Finished Goods Inventory and into Cost of Goods Sold. 50) D

When manufacturing overhead is applied to production, Work in Process Inventory is debited and Manufacturing Overhead is credited. 51) A

When materials are purchased, they are initially recorded in Raw Materials Inventory with a debit to the account. 52) B

When direct materials are used in production, the cost is transferred from Raw Materials Inventory (with a credit) to Work in Process Inventory (with a debit). 53) A

When direct materials are used in production, the cost is transferred from Raw Materials Inventory (with a credit) to Work in Process Inventory (with a debit). 54) B

When a job is completed, its cost is transferred from Work in Process Inventory (with a credit) to Finished Goods Inventory (with a debit).

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Chapter 2 55) C

When units are sold, their cost is transferred from Finished Goods Inventory (with a credit) to Cost of Goods Sold (with a debit). 56) C

When a job is completed, its cost is transferred from Work in Process Inventory (with a credit) to Finished Goods Inventory (with a debit). 57) D

When units are sold, their cost is transferred from Finished Goods Inventory (with a credit) to Cost of Goods Sold (with a debit). 58) B

When direct materials are placed into production, the cost is transferred from Raw Materials Inventory (with a credit) to Work in Process Inventory (with a debit). In addition to the direct materials, Raw Materials Inventory will also be credited (decreased) for indirect materials and Manufacturing Overhead will be debited (increased) for indirect materials. 59) C

When indirect materials are placed into production, the cost is transferred from Raw Materials Inventory (with a credit) to Manufacturing Overhead (with a debit). 60) A

When materials are purchased, the cost is recorded with a debit to Raw Materials Inventory regardless of whether the materials are considered direct or indirect. 61) B

As direct labor costs are incurred, they are recorded with a debit to Work in Process Inventory. 62) C

Actual indirect labor costs are accumulated on the debit side of the Manufacturing Overhead account. 63) C

All actual indirect manufacturing costs are accumulated in the Manufacturing Overhead account on the debit side of the account. The Raw Materials Inventory account would be credited. 64) C

Actual indirect manufacturing costs, including depreciation of manufacturing equipment, are accumulated in the Manufacturing Overhead account on the debit side of the account.

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Chapter 2 65) C

Actual indirect manufacturing costs, including property taxes on a factory, are accumulated in the Manufacturing Overhead account on the debit side of the account. 66) C

Actual indirect manufacturing costs, including the factory supervisor's salary, are accumulated in the Manufacturing Overhead account on the debit side of the account. 67) B

When manufacturing overhead is applied to production, Work in Process Inventory is debited and the Manufacturing Overhead account is credited. 68) D

When manufacturing overhead is applied to production, Work in Process Inventory is debited and Manufacturing Overhead is credited. 69) B

When a job is completed, its total manufacturing cost is transferred out of Work in Process Inventory with a credit and into Finished Goods Inventory with a debit. 70) C

Actual manufacturing overhead costs are accumulated on the debit side of the Manufacturing Overhead account. 71) A

Manufacturing overhead is applied to Work in Process Inventory; the cost moves to Finished Goods Inventory when goods are completed and to Cost of Goods Sold when they are sold. The Raw Materials Inventory account is not affected. 72) D

Actual manufacturing overhead costs are debited to the Manufacturing Overhead account. 73) B

Actual manufacturing overhead costs are debited to the Manufacturing Overhead account. 74) C

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The applied overhead would be credited to the Manufacturing Overhead account. First, calculate the predetermined overhead rate by dividing estimated total manufacturing overhead by estimated total direct labor hours ($426,300 ÷ 20,300 = $21.00). Then calculate the applied manufacturing overhead by multiplying the predetermined overhead rate by the actual number of direct labor hours ($21.00 × 21,500 = $451,500). Credit the amount to Manufacturing Overhead. 75) B

The applied overhead would be credited to the Manufacturing Overhead account. First, calculate the predetermined overhead rate by dividing estimated total manufacturing overhead by estimated total direct labor hours ($400,000 ÷ 20,000 = $20.00). Then calculate the applied manufacturing overhead by multiplying the predetermined overhead rate by the actual number of direct labor hours ($20.00 × 21,000 = $420,000). Credit the amount to Manufacturing Overhead. 76) A

Actual manufacturing overhead costs of $219,400 are accumulated on the debit side of the Manufacturing Overhead account. 77) B

Actual manufacturing overhead costs of $215,000 are accumulated on the debit side of the Manufacturing Overhead account. 78) A

The applied overhead would be credited to the Manufacturing Overhead account. First, calculate the predetermined overhead rate by dividing estimated total manufacturing overhead by estimated total direct labor hours ($204,000 ÷ 20,400 = $10.00). Then apply manufacturing overhead by multiplying the predetermined overhead rate by the actual number of direct labor hours ( $10.00 × 21,400 = $214,000). Credit the amount to Manufacturing Overhead. 79) C

The applied overhead would be credited to the Manufacturing Overhead account. First, calculate the predetermined overhead rate by dividing estimated total manufacturing overhead by estimated total direct labor hours ($200,000 ÷ 20,000 = $10.00). Then apply manufacturing overhead by multiplying the predetermined overhead rate by the actual number of direct labor hours ($10.00 × 21,000 = $210,000). Credit the amount to Manufacturing Overhead. 80) B

Actual manufacturing overhead costs of $225,200 are debited to the Manufacturing Overhead account. 81) B

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