ACCT 202 Chapter 15 Flashcards

Questions and Answers

What does a cost accounting system include?

It accumulates production costs and assigns them to products and services.

Job order production is most likely used by companies that produce what?

Customized wedding cakes

To determine the cost of producing each job or job lot, companies use what system?

Job order costing system

Choose the product(s) that are most likely to be manufactured as a job, rather than as a job lot.

Tailored wedding dress Signup and view all the answers

Designate the following as either from job order or process operations.

Custom orders = Job Order operations Mass production = Process operations Signup and view all the answers

What does a cost accounting system help managers to do?

Determine selling prices Signup and view all the answers

What are the three types of manufacturing costs in a job order costing system?

Direct labor Signup and view all the answers

The principle of customization is applicable to both service and manufacturing companies.

True Signup and view all the answers

Which inventory account does not belong to a manufacturer?

Indirect materials inventory Signup and view all the answers

A job order costing system requires the company to keep separate records for each job.

True Signup and view all the answers

Companies use job cost sheets to track the costs of what?

Materials, labor, and overhead costs of a job Signup and view all the answers

What is a job that involves producing more than one unit of a custom product called?

Job lot Signup and view all the answers

After jobs are complete, what is the job cost sheet used to provide a subsidiary ledger for?

Finished goods inventory Signup and view all the answers

Manufacturing of products in a repetitive manner is referred to as (process/job order) __ operations while manufacturing custom products is referred to as (process/job order) _ operations.

process; job order Signup and view all the answers

List the documents in the order they are used when recording direct materials costs in job order cost accounting.

<ol> <li>Receiving reports, 2. Materials ledger cards, 3. Materials requisitions, 4. Job cost sheets</li> </ol> Signup and view all the answers

Which of the following are manufacturing costs?

Direct materials, direct labor, overhead Signup and view all the answers

The correct order of cost flows in a job order costing system is?

Work in process, finished goods, cost of goods sold Signup and view all the answers

What is the journal entry to record the purchase of materials on account?

Debit to Raw Materials Inventory and a credit to Accounts Payable. Signup and view all the answers

Job cost sheets can be used to?

Monitor costs incurred Signup and view all the answers

After jobs are completed and delivered to customers, where is the job cost sheet used?

Cost of Goods Sold Signup and view all the answers

Journal entries are not required when direct materials are requisitioned.

False Signup and view all the answers

List the documents in the order they are used when recording indirect materials costs in job order cost accounting.

<ol> <li>Receiving reports, 2. Materials ledger cards, 3. Materials requisitions, 4. Factory overhead ledger</li> </ol> Signup and view all the answers

Time tickets are used in job order costing to report what?

Hours worked on specific jobs during the payroll period Signup and view all the answers

What are characteristics of materials ledger cards?

All of the above Signup and view all the answers

What is the journal entry to record the purchase of materials on account?

Increase in assets and an increase in liabilities Signup and view all the answers

List the documents in the order they are used when recording indirect labor costs in job order costing.

<ol> <li>Time tickets, 2. Factory overhead ledger, 3. Allocated to specific jobs through factory overhead</li> </ol> Signup and view all the answers

Companies use job cost sheets to track the costs of what?

Materials, labor, and overhead costs of a job Signup and view all the answers

What is the journal entry to record direct labor in production?

Debit Work in Process Inventory and credit Factory Wages Payable. Signup and view all the answers

Materials requisitioned for use on a specific job are always considered to be direct materials.

False Signup and view all the answers

Time tickets are used in job order costing to record the time and cost of what?

Both direct and indirect labor in the production department Signup and view all the answers

Manufacturing costs include direct materials, direct labor, and what?

Applied overhead costs Signup and view all the answers

Requisitions are used in job order costing to record the cost and quantity of what?

Both direct and indirect materials requested by the production department Signup and view all the answers

A company uses direct labor hours as its allocation base. Management estimates the company will have 10,000 hours of direct labor during the year and total overhead costs of $120,000.The predetermined overhead rate will be $______ per hour.

12 Signup and view all the answers

List the documents in the order they are used when recording direct labor costs in job order costing.

<ol> <li>Time tickets, 2. Job cost sheets, 3. Factory wages payable</li> </ol> Signup and view all the answers

The base to which overhead costs are linked, such as direct labor or machine hours, is known as the overhead _______________ base.

allocation or activity Signup and view all the answers

The journal entry to record direct labor will result in a(n):

Increase in assets and increase in liabilities. Signup and view all the answers

A company has a predetermined overhead rate of 50% of direct labor costs. Job 62 incurs $560 in labor costs. Overhead allocated to Job 62 will be $____________.

$280 Signup and view all the answers

The journal entry to record the use of direct materials in production is a(n):

Increase one asset, decrease another Signup and view all the answers

The journal entry to record the allocation of factory overhead to work in process is:

Debit Work in Process Inventory and credit Factory Overhead Signup and view all the answers

Managers use a predetermined overhead rate for which of the following reasons?

Both A and B Signup and view all the answers

A company uses direct labor costs as its allocation base. Management estimates the company will incur $150,000 of direct labor cost during the year and total overhead costs of $200,000. What is their predetermined overhead rate?

133% Signup and view all the answers

Overhead may be applied based on?

Both A and B Signup and view all the answers

Match the following overhead costs with their source documents.

Indirect Materials = Material Requisition Forms Indirect Labor = Time Tickets Factory Utilities = Vouchers Authorizing Payment Depreciation on Factory Equipment = Adjusting Entries Signup and view all the answers

A company works on three jobs and incurs the following: Direct materials - $50,000 and Direct labor - $100,000. The company uses a predetermined overhead rate of 60% of direct labor costs. How much overhead will be allocated to the three jobs?

$60,000 Signup and view all the answers

The journal entry to record the allocation of factory overhead is:

Debit Work in Process Inventory and credit Factory Overhead Signup and view all the answers

The journal entry to record indirect materials costs used in production includes a debit to factory?

Overhead Signup and view all the answers

The journal entry to record indirect labor used in production is to:

Debit Factory Overhead; credit Factory Wages Payable. Signup and view all the answers

The journal entry to record the accrual of factory utilities is to:

Debit Factory Overhead and credit Utilities Payable Signup and view all the answers

Factory overhead includes direct materials and direct labor.

False Signup and view all the answers

Match the following activities to their effect on the general ledger accounts.

Allocate indirect Labor = Credit Factory Wages Payable Pay factory property tax = Debit Factory Overhead Purchase materials = Debit Raw Materials Inventory Use direct materials = Credit Raw Materials Inventory Complete job = Debit Finished Goods Inventory Deliver job = Credit Finished Goods Inventory Signup and view all the answers

A Schedule of Cost of Goods Manufactured includes all of the following costs:

Direct materials used, factory overhead applied, work in process inventory, direct labor used Signup and view all the answers

The journal entry to record indirect materials in production is to:

Debit factory overhead, credit raw materials inventory Signup and view all the answers

If the factory overhead is overapplied, then the adjusting journal entry to close the factory overhead account includes a:

Both A and B Signup and view all the answers

The journal entry to record indirect labor costs used in production includes a debit to Factory ___________.

Overhead Signup and view all the answers

A company incurs factory overhead costs of $1,200 and applied $1,500. If the difference is considered immaterial, then the:

Adjusting entry will require a credit to Cost of Goods Sold and Factory Overhead account has a credit balance of $300 before adjusting Signup and view all the answers

The journal entry to record depreciation on factory equipment is to:

Debit Factory Overhead and credit Accumulated Depreciation - Equipment Signup and view all the answers

At the end of the accounting period, a company's overhead was under applied by $150. If not adjusted, how does this affect net income?

Net income will be overstated by $150 Signup and view all the answers

Match the following activities to their effect on the general ledger accounts.

Allocate overhead costs to jobs = Credit Factory Overhead Pay factory utilities = Debit Factory Overhead Purchase indirect materials = Debit Raw Materials Inventory Use indirect materials = Credit Raw Materials Inventory Direct labor used = Debit Work in Process Inventory Signup and view all the answers

One important difference between service companies and manufacturing companies is that:

Service companies do not have raw materials inventory Signup and view all the answers

A Schedule of Cost of Goods Manufactured includes all of the following costs except:

False Signup and view all the answers

A consulting firm has a predetermined overhead rate of $120 per labor hour. The Smith job required 5 hours to complete. The overhead cost applied to this job is $___________.

600 Signup and view all the answers

The Factory Overhead account is (debited/credited) __________________ for applied overhead costs.

credited Signup and view all the answers

After adjusting for over - or under applied overhead, the balance in the Factory Overhead account will be $_______________.

$0 Signup and view all the answers

At the end of the accounting period, a company's overhead was over applied by $400. The Factory Overhead account was properly adjusted. What effect did the adjustment have on net income?

It increased net income by $400 Signup and view all the answers

Both service companies and manufacturing companies have?

Both A and B Signup and view all the answers

A tax accounting firm pays tax preparers $44 per hour. The firm has a predetermined overhead rate of $24 per labor hour. The Jones tax return required 2.5 hours to complete. The total cost of this job is $_____________.

$170 Signup and view all the answers

The Factory Overhead account is _____________ (debited/credited) for actual overhead costs.

debited Signup and view all the answers

If the factory overhead is under applied, then the adjusting journal entry to close the factory overhead account includes a:

True Signup and view all the answers

Study Notes

Cost Accounting System

Accumulates production costs for products and services.
Used to determine selling prices and control manufacturing costs.

Job Order Production

Suitable for customized products, such as wedding cakes and tailored dresses.
Job order costing systems are employed to calculate costs for specific jobs or job lots.

Manufacturing Costs

Three main types in job order costing: direct labor, direct materials, and overhead.
Overhead includes all production costs excluding direct materials and direct labor.

Inventory Accounts

Manufacturer inventory includes raw materials, work in process, and finished goods.
Indirect materials inventory is not a typical inventory account for manufacturers.

Job Cost Sheets

Track costs related to materials, labor, and overhead for individual jobs.
Used after job completion to provide a subsidiary ledger for finished goods inventory and cost of goods sold.

Overhead Allocation

Dependent on activity base, often direct labor or machine hours.
Predetermined overhead rate is calculated to estimate total job costs before completion.

General Ledger Entries

Journal entries documented for purchases of materials, labor costs, and allocations of overhead.
Over- or under-applied overhead adjustments impact net income at the end of the accounting period.

Direct and Indirect Costs

Direct materials and labor specifically linked to a job; indirect encompasses all other costs.
Time tickets record hours for specific jobs, crucial for tracking labor costs.

Cost of Goods Manufactured

Schedule includes direct materials used, direct labor, and applied factory overhead.
Does not include cost of goods sold.

Differences Between Companies

Service companies do not maintain raw materials inventories, unlike manufacturing firms.
Both company types incur overhead and direct labor costs.

Adjustments for Over/Under Applied Overhead

Overapplied overhead increases net income; underapplied decreases it.
Adjusting entries are imperative to accurately reflect overhead balances, often requiring a debit or credit to cost of goods sold.

Documents Used in Job Order Costing

Various documents such as receiving reports, materials requisitions, and time tickets are crucial for tracking costs and managing records efficiently.

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Description

Test your knowledge of cost accounting with these flashcards from ACCT 202 Chapter 15. This chapter covers essential concepts such as cost accumulation, job order production, and costing systems. Enhance your understanding and retention of critical accounting terms and principles.

ACCT 202 Chapter 15 Flashcards

Questions and Answers

What does a cost accounting system include?

Job order production is most likely used by companies that produce what?

To determine the cost of producing each job or job lot, companies use what system?

Choose the product(s) that are most likely to be manufactured as a job, rather than as a job lot.

Designate the following as either from job order or process operations.

What does a cost accounting system help managers to do?

What are the three types of manufacturing costs in a job order costing system?

The principle of customization is applicable to both service and manufacturing companies.

Which inventory account does not belong to a manufacturer?

A job order costing system requires the company to keep separate records for each job.

Companies use job cost sheets to track the costs of what?

What is a job that involves producing more than one unit of a custom product called?

After jobs are complete, what is the job cost sheet used to provide a subsidiary ledger for?

Manufacturing of products in a repetitive manner is referred to as (process/job order) __________________ operations while manufacturing custom products is referred to as (process/job order) _________________ operations.

List the documents in the order they are used when recording direct materials costs in job order cost accounting.

Which of the following are manufacturing costs?

The correct order of cost flows in a job order costing system is?

What is the journal entry to record the purchase of materials on account?

Job cost sheets can be used to?

After jobs are completed and delivered to customers, where is the job cost sheet used?

Journal entries are not required when direct materials are requisitioned.

List the documents in the order they are used when recording indirect materials costs in job order cost accounting.

Time tickets are used in job order costing to report what?

What are characteristics of materials ledger cards?

What is the journal entry to record the purchase of materials on account?

List the documents in the order they are used when recording indirect labor costs in job order costing.

Companies use job cost sheets to track the costs of what?

What is the journal entry to record direct labor in production?

Materials requisitioned for use on a specific job are always considered to be direct materials.

Time tickets are used in job order costing to record the time and cost of what?

Manufacturing costs include direct materials, direct labor, and what?

Requisitions are used in job order costing to record the cost and quantity of what?

A company uses direct labor hours as its allocation base. Management estimates the company will have 10,000 hours of direct labor during the year and total overhead costs of $120,000.The predetermined overhead rate will be $______ per hour.

List the documents in the order they are used when recording direct labor costs in job order costing.

The base to which overhead costs are linked, such as direct labor or machine hours, is known as the overhead _______________ base.

The journal entry to record direct labor will result in a(n):

A company has a predetermined overhead rate of 50% of direct labor costs. Job 62 incurs $560 in labor costs. Overhead allocated to Job 62 will be $____________.

The journal entry to record the use of direct materials in production is a(n):

The journal entry to record the allocation of factory overhead to work in process is:

Managers use a predetermined overhead rate for which of the following reasons?

A company uses direct labor costs as its allocation base. Management estimates the company will incur $150,000 of direct labor cost during the year and total overhead costs of $200,000. What is their predetermined overhead rate?

Overhead may be applied based on?

Match the following overhead costs with their source documents.

A company works on three jobs and incurs the following: Direct materials - $50,000 and Direct labor - $100,000. The company uses a predetermined overhead rate of 60% of direct labor costs. How much overhead will be allocated to the three jobs?

The journal entry to record the allocation of factory overhead is:

The journal entry to record indirect materials costs used in production includes a debit to factory?

The journal entry to record indirect labor used in production is to:

The journal entry to record the accrual of factory utilities is to:

Factory overhead includes direct materials and direct labor.

Match the following activities to their effect on the general ledger accounts.

A Schedule of Cost of Goods Manufactured includes all of the following costs:

The journal entry to record indirect materials in production is to:

If the factory overhead is overapplied, then the adjusting journal entry to close the factory overhead account includes a:

The journal entry to record indirect labor costs used in production includes a debit to Factory ___________.

A company incurs factory overhead costs of $1,200 and applied $1,500. If the difference is considered immaterial, then the:

The journal entry to record depreciation on factory equipment is to:

At the end of the accounting period, a company's overhead was under applied by $150. If not adjusted, how does this affect net income?

Match the following activities to their effect on the general ledger accounts.

One important difference between service companies and manufacturing companies is that:

A Schedule of Cost of Goods Manufactured includes all of the following costs except:

A consulting firm has a predetermined overhead rate of $120 per labor hour. The Smith job required 5 hours to complete. The overhead cost applied to this job is $___________.

The Factory Overhead account is (debited/credited) __________________ for applied overhead costs.

After adjusting for over - or under applied overhead, the balance in the Factory Overhead account will be $_______________.

At the end of the accounting period, a company's overhead was over applied by $400. The Factory Overhead account was properly adjusted. What effect did the adjustment have on net income?

Both service companies and manufacturing companies have?

A tax accounting firm pays tax preparers $44 per hour. The firm has a predetermined overhead rate of $24 per labor hour. The Jones tax return required 2.5 hours to complete. The total cost of this job is $_____________.

The Factory Overhead account is _____________ (debited/credited) for actual overhead costs.

If the factory overhead is under applied, then the adjusting journal entry to close the factory overhead account includes a:

Study Notes

Cost Accounting System

Job Order Production

Manufacturing Costs

Inventory Accounts

Job Cost Sheets

Overhead Allocation

General Ledger Entries

Direct and Indirect Costs

Cost of Goods Manufactured

Manufacturing of products in a repetitive manner is referred to as (process/job order) __ operations while manufacturing custom products is referred to as (process/job order) _ operations.