Flashcards in Mid course exam Deck (44)
Which of the following is true (managerial vs. financial accounting):
-Must be prepared using GAAP
-Provides more detailed info than Financial
-for internal users, e.g. stockholders & managers
-pertains to business as a whole
-Provides more detailed than financial
On average, studies have shown that the smallest component of total manufacturing cost is
direct labour. Direct materials are the largest component.
What are product costs?
A necessary and integral part of producing the finished product.
How do manufacturers compute COGS?
Manufacturers add beginning finished goods inventory to cost of goods manufactured and subtract ending finished goods inventory to compute the cost of goods sold (“Income Statement”).
Which of the following would you find on the income statement of a manufacturing company, but not on the income statement of a merchandising company?
Cost of goods manufactured
True/False: The cost of the beginning work in process plus the total manufacturing costs for the current period is the cost of goods manufactured.
False. The cost of goods manufactured is the cost of the beginning work in process plus the total manufacturing costs for the current period less ending work in process ("Cost of Goods Manufactured Schedule”).
A cost of goods manufactured schedule shows beginning and ending inventories for
raw materials and work in process only.
Companies compute cost of goods manufactured by subtracting ending work in process inventory from
total cost of work in process.
Model Magic Manufacturing reported the following year-end balances: Beginning work in process inventory, $35,000; beginning raw materials inventory, $18,000; ending work in process inventory, $38,000; ending raw materials inventory, $15,000; raw materials purchased, $510,000; direct labor, $180,000; and manufacturing overhead, $75,000. What is the amount of total work in process for Model Magic for the current year?
First, direct materials used = beginning raw materials inventory ($18,000) + raw materials purchased ($510,000) – ending raw materials inventory ($15,000) = $513,000. Then, total cost of work in process = beginning work in process inventory ($35,000) + direct materials used ($513,000) + direct labor ($180,000) + manufacturing overhead ($75,000) = $803,000
T/F: Companies generally list manufacturing inventories in the order of completion—raw materials, work in process, and finished goods.
False. Companies usually list manufacturing inventories in the order of their liquidity—the order in which they are expected to be realized in cash (“Balance Sheet”).
What is finished goods to a manufacturer vs. merchandiser?
Finished goods is to a manufacturer what merchandise inventory is to a merchandiser.
What do job-order cost systems and process cost systems have in common?
They both use perpetual inventory systems.
A process cost system would be used for all of the following except: cereal manufacture, refining petroleum, producing automobiles, printing wedding invites.
Printing wedding invites. A process cost system would not be used for the printing of wedding invitations because of the unique nature of each different set of invitations.
In accumulating raw materials costs, the cost of raw materials purchased in a perpetual system is debited to
raw materials inventory.
When incurred, factory labor costs are debited to
Calculate cost of direct materials used in production. (tell me formula)
Beg. RMs + RMs purchased - Ending RMs - Indirect RMs used
In recording the issuance of raw materials in a job order cost system, it would be incorrect to
debit Finished Goods Inventory.
The entry when direct factory labor is assigned to jobs is a debit to
work in process inventory and a credit to factory labor.
Assigning manufacturing costs to work in process results in credits to all of the following except: Mfg OH, RM OH, FG Inventory, Factory Labour
When the company assigns factory labor costs to jobs, the direct labor cost is debited to
work in process inventory.
Work in Process Inventory is debited for all of the following except: mfg OH incurred, mfg OH applied, dir mats used, factory labour used
manufacturing overhead incurred.
In Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month, $210,000 of factory labor costs are incurred, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead incurred was $200,000. The amount of overhead debited to Work in Process Inventory should be
In Mynex Company, Job No. 26 is completed at a cost of $4,500 and later sold for $7,000 cash. A correct entry is
debit Finished Goods Inventory $4,500 and credit Work in Process Inventory $4,500.
At the end of an accounting period, a company using a job costing system calculates the cost of goods manufactured
the Work in Process Inventory account
At the end of the year a company has a $1,200 debit balance in Manufacturing Overhead. If this amount is considered immaterial, the company will
make an adjusting entry by debiting Cost of Goods Sold for $1,200 and crediting Manufacturing Overhead for $1,200.
For which of the following activities will direct labor hours and direct labor cost be an appropriate cost driver? Engineering changes, machine setups, painting, oil well drilling
Which of the following statements is false concerning the use of ABC in service industries?
-In most service industries, a large portion of overhead costs are company-wide costs.
-When using ABC for service industries, special methods must be used to identify cost pools and cost drivers due to the unique nature of the services offered.
-The notion regarding eliminating as many non-value-added activities as possible applies equally to manufacturers and service providers.
-All of the statements are true concerning the use of ABC in service industries.
FALSE: When using ABC for service industries, special methods must be used to identify cost pools and cost drivers due to the unique nature of the services offered.
Fixed costs are costs that remain the same in total...
regardless of changes in the activity level (“Fixed Cost”).
Which of the following is likely to contain a linear relationship between costs and activities?