Q&A Hero

Q: Job order manufacturing is also known as: A. Mass production manufacturing. B. Process manufacturing. C. Unit manufacturing. D. Customized production. E. Standard costing.

Q: A type of manufacturing that produces customized products or services for each customer is called: A. Customer orientation manufacturing. B. Job order manufacturing. C. Just-in-time manufacturing. D. Job lot manufacturing. E. Process manufacturing.

Q: A job order cost accounting system would best fit the needs of a company that makes: A. Shoes and apparel. B. Paint. C. Cement. D. Custom machinery. E. Pencils and erasers.

Q: The production activities for a customized product represent a(n): A. Operation. B. Job. C. Unit. D. Pool. E. Process.

Q: In comparison to a general accounting system for a manufacturing company, a cost accounting system places an emphasis on: A. Periodic inventory counts. B. Total costs. C. Unit costs and cost control. D. Products and average costs. E. Large volume operations involving standardized products.

Q: Job order costing systems normally use: A. Periodic inventory systems. B. Perpetual inventory systems. C. Real inventory systems. D. General inventory systems. E. All of the above.

Q: A system of accounting for manufacturing operations that produces timely information about inventories and manufacturing costs per unit of product is a: A. Finished goods accounting system. B. General accounting system. C. Manufacturing accounting system. D. Cost accounting system. E. Production accounting system.

Q: Cost accounting systems used by manufacturing companies are based on the: A. Periodic inventory system. B. Perpetual inventory system. C. Finished goods inventories. D. Weighted average inventories. E. LIFO inventory system

Q: Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

Q: Overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead allocation rate exceeds the overhead incurred during a period.

Q: Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead allocation rate exceeds the overhead incurred during a period.

Q: Any material amount of under- or overapplied factory overhead must always be closed to Cost of Goods Sold at the end of an accounting period.

Q: The Factory Overhead account will have a credit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

Q: If actual overhead incurred during a period exceeds applied overhead, the difference will be a credit balance in the Factory Overhead account at the end of the period.

Q: In a job order cost accounting system, any immaterial underapplied overhead at the end of the period can be charged entirely to Cost of Goods Sold.

Q: Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

Q: Under a job order cost accounting system, individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

Q: Since a predetermined overhead allocation rate is established before a period begins, this rate is revised many times during the period to compensate for inaccurate estimates previously made.

Q: In a job order cost accounting system, indirect labor costs are debited to the Factory Overhead account.

Q: The balance of the Factory Overhead account appears on the income statement.

Q: The predetermined overhead allocation rate based on direct labor cost is the ratio of estimated overhead cost for the period to estimated direct labor cost for the period.

Q: Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

Q: The predetermined overhead allocation rate is used to apply overhead cost to products.

Q: Factory overhead is often collected and summarized in a factory overhead ledger.

Q: When time ticket information is entered into the accounting system, the journal entry is a debit to Factory Payroll and a credit to Goods in Process Inventory.

Q: A clock card is a source document used by an employee to record the total number of hours worked during the pay period.

Q: A time ticket is a source document an employee uses to record the number of hours at work and that is used each pay period to determine the total labor cost.

Q: A time ticket is a source document used by an employee to record the number of hours worked on a particular job during the work day.

Q: A clock card is a source document that an employee uses to report how much time was spent working on a job or on overhead and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead.

Q: A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company.

Q: A materials requisition is a source document used by production managers to request materials for manufacturing and also used to assign materials costs to specific jobs or to overhead.

Q: When materials are used as indirect materials, their cost is debited to the Factory Overhead account.

Q: As direct materials are used on a job, their cost is debited to the Finished Goods Inventory account.

Q: Expenditures directly associated with the manufacture of finished goods that include direct materials and direct labor are _____________________ costs.

Q: Expenditures incurred in the process of converting raw materials to finished goods, that include direct labor and factory overhead are known as _________________________.

Q: Ending raw materials inventory divided by raw materials used multiplied by 365 is the _________________________.

Q: Raw materials used divided by average raw materials inventory is the ____________________.

Q: One of the main differences between the calculation of cost of goods sold for a merchandiser and that of a manufacturer is that the calculation includes cost of goods purchased for the merchandiser, but the manufacturer replaces that with _____________________________.

Q: ____________________ inventory consists of completed products ready for sale by a manufacturer.

Q: ____________________ inventory consists of products in the process of being manufactured but not yet complete.

Q: _____________________ inventory consists of goods a company acquires to use in making products.

Q: Expenditures that flow directly to the current income statement and are not reported as assets are ___________________ costs.

Q: An _____________________ cost requires the future outlay of cash and is relevant for decision making.

Q: A ___________________ cost has already been incurred and cannot be avoided or changed, so it irrelevant to decision making.

Q: A _________________ cost contains a combination of fixed and variable costs.

Q: A _________________ cost does not change in proportion to changes in the volume of activity within the relevant range.

Q: A _________________ cost changes in proportion to changes in the volume of activity.

Q: The potential benefit lost by taking a specific action from two or more choices is an _____________________________.

Q: The process of identifying costs as direct or indirect is referred to as classifying costs by _______________.

Q: For a manufacturer, the cost of goods sold can be computed by adding the beginning finished goods inventory to ________________________ and then subtracting the ending finished goods inventory.

Q: _____________________ are beliefs that distinguish right from wrong.

Q: _____________________ involves the use of ones job for personal gain through the deliberate misuse of employers assets.

Q: The ________________________ aids continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance along four dimensions: (1) financial, (2) customer, (3) internal business processes, and (4) learning and growth.

Q: _____________________ rejects the notions of "good enough" or "acceptable" and challenges employees and managers to continuously experiment with new and improved business practices.

Q: The model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is the _____________________.

Q: A ______________________ system means that a company acquires or produces inventory only when needed.

Q: The focus of managerial accounting is on providing ________________ reports while the focus of financial accounting is on providing _____________reports.

Q: ___________________ is the process of setting goals and making plans to achieve them.

Q: ________________________ is an activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers.

Q: Information for the Ace Manufacturing Company follows: Beginning raw materials inventory $ 53,200 Beginning goods in process, inventory 78,400 Ending raw materials inventory 58,100 Ending goods in process, inventory 98,000 Direct labor 149,800 Total factory overhead 105,000 Raw material purchases 210,000 Calculate the cost of goods manufactured for this company.

Q: Information for Gifford, Inc., as of December 31 follows: Administrative salaries $ 35,000 Depreciation of factory equipment 25,000 Depreciation of delivery vehicles 6,000 Direct labor 68,000 Factory supplies used 9,000 Finished goods inventory, January 1 57,000 Finished goods inventory, December 31 ? Factory insurance 15,500 Interest expense 12,000 Factory utilities 14,000 Factory maintenance 7,500 Raw materials inventory, January 1 5,000 Raw materials inventory, December 31 4,000 Raw material purchases 125,000 Rent on factory building 25,000 Repairs of factory equipment 11,500 Sales commissions 37,500 Goods in process inventory, January 1 3,500 Goods in process inventory, December 31 2,700 Prepare a manufacturing statement for the year ended December 31.

Q: Use the following information to prepare the manufacturing statement for Forsythe Company for the month ended June 30: Goods in process inventory, May 31 $12,600 Goods in process inventory, June 30 16,500 Direct materials used during June 21,000 Direct labor used during June 31,000 Factory overhead: Indirect material 6,400 Indirect labor 9,200 Factory rent 12,000 Factory depreciation 15,000 Factory utilities 18,400

Q: Information for Reedy Manufacturing follows: Beginning raw materials inventory $46,800 Beginning goods in process inventory 21,200 Direct labor 81,000 Beginning finished goods inventory 64,000 Total factory overhead 106,000 Raw materials purchased 21,500 Ending raw materials inventory 40,000 Ending goods in process inventory 20,000 Ending finished goods inventory 46,000 Calculate both the cost of goods manufactured and the cost of goods sold for Reedy Manufacturing.

Q: The following list indicates costs as they flow through the business as a product is manufactured. Some items are missing. Compute the missing amounts. Materials Inventory: Beginning materials inventory $ 37,500 Raw materials purchased 567,400 Ending materials inventory 31,570 Direct materials used in production ____A____ Goods in process: Beginning GIP balance 93,250 direct labor _____B___ Factory overhead 742,500 (Note: 2 times the amount of direct labor cost) Cost of goods manufactured ____C____ Ending GIP balance 87,600 Finished goods inventory: Beginning FG balance 49,000 Ending FG balance _____D____ Cost of goods sold 1,625,000

Q: The following list indicates costs as they flow through the business as a product is manufactured. Some items are missing. Compute the missing amounts. Materials Inventory: Beginning materials inventory $ 295,000 Raw materials purchased 1,065,400 Ending materials inventory 315,750 Direct materials used in production ____A____ Goods in process: Beginning GIP balance ____B____ Direct labor 700,000 Factory overhead 1,475,000 Cost of goods manufactured 3,150,700 Ending GIP balance 265,000 Finished goods inventory: Beginning FG balance 284,000 Ending FG balance 268,500 Cost of goods sold ____C____

Q: The following information for Baldwin Company, as of December 31, is provided. Administrative salaries $ 24,000 Depreciation of factory equipment 18,750 Depreciation of delivery vehicles 6,000 Direct labor 51,000 Factory supplies used 9,000 Finished goods inventory, January 1 42,750 Finished goods inventory, December 31 52,000 Factory insurance 11,625 Interest expense 10,000 Factory utilities 10,500 Factory maintenance 5,625 Raw materials inventory, January 1 7,000 Raw materials inventory, December 31 3,500 Raw material purchases 94,000 Rent on factory equipment 18,750 Repairs of factory equipment 8,600 Sales commissions 28,150 Goods in process inventory, January 1 4,000 Goods in process inventory, December 31 2,500 A. Calculate the direct material used during the period. B. Calculate the total manufacturing costs incurred during the period. C. Calculate the Cost of Goods Manufactured during the period. D. Calculate the Cost of Goods Sold during the period.

Q: The Ticky Company manufactures tacks. Costs for September were direct labor, $84,000; indirect labor, $36,700; direct materials, $55,900; factory maintenance, $4,800; factory utilities, $3,200; and insurance on plant and equipment, $700. What is Ticky Company's factory overhead for September?

Q: Calculate cost of goods sold for the following two companies: CARVER LTD. PEMBROKE, INC. Beginning inventory: Merchandise $250,000 Finished goods $550,000 Cost of goods purchased 460,000 Cost of goods manufactured 688,000 Ending inventory: Merchandise 128,000 Finished goods 350,000

Q: A manufacturing company's finished goods inventory on January 1 was $68,000; cost of goods manufactured was $147,000; and the December 31 finished goods inventory was $77,000. What is the cost of goods sold for that year?

Q: Horton Foods bakes and sells 1,000 dozen bagels each week to food service operations. Among the costs are bakers' salaries, $24,000; production management salaries, $16,000; production equipment operating costs, $32,000; and flour and ingredient costs, $15,000. Required: (a) Calculate prime costs (b) Calculate conversion costs.

Q: M-Bot, Incorporated produces automatic car starters. The company used $700,000 of raw materials in their most recent accounting year. They started the year with $25,000 of raw materials and ended with $40,000. (a) Compute the companys raw materials inventory turnover. (b) Compute the companys days sales in raw materials inventory.

Q: Assume Back to the Roots used 1 million pounds of raw materials in their most recent accounting year. They started the year with 20,000 pounds of raw materials and ended with 40,000 pounds. (a) Compute Back to the Roots raw materials inventory turnover. (b) Compute Back to the Roots days sales in raw materials inventory. (c) Interpret these results. What can the company do to improve these measures?

Q: The following costs are incurred by a manufacturing company. Classify each cost item as either a period cost or a product cost. If the cost is a product cost, identify it as a prime and/or conversion cost. Period Cost Product Cost Prime Cost Conversion Cost Factory property taxes Payroll taxes for assembly labor Depreciation of factory equipment Insurance on delivery vehicles Indirect materials used Wages of production workers Production supervisors salary Advertising Direct materials used Sales salaries

Q: HiFi Sound Systems produces speakers for movie theaters that sell for $1,200 each. Listed below are selected cost items for the production of 600 units. Cost by Behavior Cost by Function Variable Fixed Product Period Plastic for speaker casings $150,000 Assembly labor 200,000 Factory property taxes 22,000 Accounting staff salaries 75,000 Sales office rent 10,000 Sales managers salary 60,000 Depreciation on factory equipment 23,000 Sales commissions 36,000 Classify each cost as either fixed or variable, and either a product or a period cost.

Q: Ringle Company is a manufacturer of compact disks (CDs). Place each of the following costs in the appropriate column. Product Cost Cost Item Period Cost Direct Materials Direct Labor Factory Overhead a. Factory maintenance salary, $40,000 b. Salary of factory supervisor, $70,000 c. Salary of production worker, $42,000 d. Salary of the companys president, $100,000 e. Television advertising, $25,000 f. Property tax on factory, $15,000 g. Sales commissions, $65,000 h. Depreciation on factory equipment, $17,000 i. Plastic used in the manufacture of the CDs, $14,000

Q: For each item shown below, indicate whether it is a product cost or a period cost, by placing an X in the appropriate column. For each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product. Product or Period Cost? Direct or Indirect Cost? Cost Item Product Period Direct Indirect Administrative salaries Direct labor Advertising Property tax on the factory Factory maintenance Direct materials Depreciation on factory equipment Interest expense Factory supplies

Q: Classify each of the following cost items as a variable cost, a fixed cost, or a mixed cost by placing an X in the appropriate column. Each cost should be evaluated in terms of the volume of units of finished products produced. Also indicate with an X for each item if it is a product cost or a period cost. Variable, Fixed, or Mixed Cost Product or Period Cost Cost Item Variable Fixed Mixed Product Period Executive salary Direct labor Direct materials Depreciation of manufacturing equipment Indirect labor Factory utilities Delivery expense Television advertising Indirect materials

Q: What are the components of the manufacturing statement? Describe each component.

Q: What are raw materials inventory turnover and days sales in raw materials inventory? What is the purpose of these measures?

Q: What is the main difference between the income statement of a manufacturer and that of a merchandiser?