Obtaining cost of goods manufactured

Question

Question 1. The journal entry to record $200 of depreciation on factory equipment for the current period involves which of the following?

a.    Debit to Manufacturing Overhead for $200..
b.    Debit to Depreciation Expense Factory Equipment for $200.
c.    Debit to Accumulated Depreciation Factory Equipment for $200.
d.    Credit to Manufacturing Overhead for $200.

Question 2. Which costing system would better account for a unique individual product?

a.    Job costing system.
b.    Overhead costing system.
c.    Product costing system.
d.    Process costing system.

Question 3. Ending work in process is subtracted from total manufacturing costs incurred during the year to obtain cost of goods manufactured.

• TRUE
• FALSE

Question 4. Selling and administrative expenses are subtracted from cost of goods sold to obtain operating income.

• TRUE
• FALSE

Question 5. What is Total Quality Management?

a.    An exchange of information with suppliers and customers to create efficient and effective processes.
b.    A software system that integrates a company's functions, departments and data into a single system.
c.    A philosophy of supplying customers with superior products and services.
d.    A system in which a company produces what it needs when it needs it.

Question 6. A food and beverage company would most likely use a job costing system.

• TRUE
• FALSE

Question 7.  The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.

Purchases                                            $126,000
Selling and Administrative Expenses        $90,000
Merchandise Inventory, 1/1/2009            $14,000
Merchandise Inventory, 12/31/2009         $10,000
Sales Revenue                                     $250,000

What is the cost of goods sold for 2009?

a.    $104,000.
b.    $130,000.
c.    $124,000.
d.    $140,000.

Question 8. Potts Company uses a job costing system and had the following data available for 2009.

Materials Purchased on Account                                               $75,000
Materials Requisitioned (includes $2,000 of indirect materials)    $43,000
Direct Labor incurred                                                              $75,000
Manufacturing Overhead Incurred                                            $95,000
Cost of goods completed                                                       $226,750
Cost of Goods sold                                                                $138,000
Beginning materials inventory                                                  $15,000
Beginning work in process inventory                                         $32,000
Beginning finished goods inventory                                           $31,000
Predetermined manufacturing overhead rate                                 125%
(as a percent of direct labor costs)

a.    Credit to manufacturing overhead $93,750.
b.    Debit to manufacturing overhead $95,000.
c.    Credit to work in process $95,000.
d.    Debit to work in process for $93,750

Question 9. Which of the following cost would appear on the income statements for both a merchandiser and a manufacture?

a.    Cost of goods manufactured
b.    Direct materials used.
c.    Direct labor incurred
d.    Operating expenses

Question 10. The main cost drive for service firms is usually labor hours.

• True
• False

Question 11. James and John provide lawn mowing services in the local community. During the month of July they incurred the following operating costs to mow 200 lawns.

Wages expense                    $5,000
Gasoline expense                 $1,500
Depreciation on equipment    $1,000

They earned $20,000 from moving lawns in July.

Compute the ratio of operating expense to total revenue

a.    50.0%
b.    The100.0%
c.    37.5%
d.    62.5%

Question 12. The record at Smith and Jones Company show Job. No. 110 charged with $11,000 of direct materials and $12,500 of direct labor. Smith and Jones Company allocates manufacturing overhead at 85% of direct labor cost. What is the cost of job no. 110?

a.    $34,125
b.    $20,625
c.    $22,500
d.    $21,625

Question 13. Buncombe company present the following costs data for 2009:

Estimated manufacturing overhead cost    $240,000
Estimated direct labor costs                     $300,000
Estimated direct labor hours                      $30,000
Actual direct labor costs                          $315,000
Actual direct labor hours                           $33,000
Allocation base:    direct labor costs
Other expense
Factory depreciation on equipment             $65,300
Factory rent                                              $51,000
Factory utilities                                          $28,900
Factory property taxes                               $26,000
Indirect labor                                            $23,800

a.    105%.
b.    125%
c.    76%.
d.    80%.

Question 14. Which of the following companies is most likely to use job costing?

a.    DuPont chemical company
b.    Kellogg's cereal company
c.    Exxon Mobil oil refinery
d.    Elizabeth's Custom Furniture Company

Question 15.  The entry to transfer work in process to finished goods includes a credit to the Finished Goods Inventory account.

• TRUE
• FALSE

Question 16. Your company sends you to a conference on a new accounting rule, and you skip the afternoon session to go sightseeing. Which IMA guideline has been violated?

a.    Competence
b.    Confidentiality
c.    Objectivity
d.    Integrity

Question 17. Customer service expense would be found on the Income Statement of a service company but not the Income Statement of a manufacturer.

• TRUE
• FALSE

Question 18. The same accounts are used when preparing the Income Statement for a merchandiser and the Income Statement for a manufacturer.

• TRUE
• FALSE

Question 19. Since service firms do not carry inventory, it is not necessary to know the costs related to different jobs.

• TRUE
• FALSE

Question 20. Beginning inventory. Purchases, and Freight in equal Cost of Goods Sold

• TRUE
• FALSE

Question 21. Which of the following statements about financial accounting is TRUE?

a.    Financial accounting reports can influence employee behavior.
b.    Financial accounting provides help in planning and controlling operations.
c.    Financial provides detailed reports on parts of the company.
d.    Financial accounting helps investors make decisions.

Question 22. A lawn mowing business would be classified as which type of company?

a.    Simple company
b.    Merchandising company
c.    Manufacturing company
d.    Service company

Question 23. The primary goal of Managerial accounting is to provide information to which of the following?

a.    investors
b.    external auditors
c.    creditors
d.    management

Question 24. Service firms as well as manufacturing companies trace direct labor to individual jobs.

• TRUE
• FALSE

Question 25. The entry to transfer direct labor and indirect labor costs from manufacturing wages into production includes a debit to which of the following?

a.    Manufacturing Overhead
b.    Finished Goods Inventory and Work in Process Inventory
c.    Manufacturing Overhead and Work in Process Inventory
d.    Finished Goods Inventory

Question 26. Great Pets provides pet walking services in the local community. In October, the following operating costs were incurred to walk 250 pets.

Wages Expense           $2,400
Supplies                        $600
Telephone Expense        $500
Miscellaneous Expense     $50

Great Pets earned $7,500 in revenues from per walking for the month of October.

What is the Operating Income for October?

a.    $3,950
b.    $7,500
c.    $3,550
d.    None of the above

Question 27. Manufacturing Overhead is credited for actual manufacturing overhead costs incurred throughout the year.

• TRUE
• FALSE

Question 28.  The key to assigning indirect manufacturing costs to jobs is to identify a manufacturing overhead allocation base.

• TRUE
• FALSE

Question 29. The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.

Purchases                                        $126,000
Selling and Administrative Expenses    $90,000
Merchandise Inventory, 1/1/2009        $14,000
Merchandise Inventory, 12/31/2009     $10,000
Sales Revenue                                  $250,000

What is the profit margin percentage?

a.    36%
b.    100%
c.    12%
d.    56%

Question 30. When indirect materials are requisitioned for a job, the Materials Inventory account is credited.

• TRUE
• FALSE

Question 31. Merchandising companies typically have a single category of inventory.

• TRUE
• FALSE

Question 32. Each time jobs are completed, the entire balance in Manufacturing Overhead is transferred to Finished Goods Inventory.

• TRUE
• FALSE

Question 33. Managerial accounting develops reports for internal parties.

• TRUE
• FALSE