Cost Accounting Chapter 15 Flashcards

Questions and Answers

What is a cost accounting system?

It helps managers determine selling prices and is used to control costs of manufacturing activities.

Producing products that are individually designed to meet the needs of a specific customer where each customized product is manufactured separately is referred to as:

Process operations

Mass production

Batch production

Job order production (correct)

What are custom orders?

Job order production.

What is mass production?

Process operations. Signup and view all the answers

Which of the following are manufacturing costs?

Direct materials Signup and view all the answers

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

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

What does a cost accounting system accumulate?

Production costs and assigns them to products and services. Signup and view all the answers

What do job cost sheets track?

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

Job order production is most likely used by companies that produce:

Customized wedding cakes. Signup and view all the answers

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

Receiving reports, materials ledger cards, materials requisitions, job cost sheets. Signup and view all the answers

Manufacturing of products in a repetitive manner is referred to as:

Process operations Signup and view all the answers

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

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

Manufacturing costs include direct materials, direct labor, and:

Applied overhead costs. Signup and view all the answers

All of the following are inventory accounts for a manufacturer except:

Indirect materials inventory Signup and view all the answers

When is the predetermined overhead rate calculated?

At the start of the accounting period. Signup and view all the answers

Job cost sheets can be used to: (Check all that apply)

Provide a record for the Cost of Goods Sold account Signup and view all the answers

List the documents in order used when recording indirect materials costs in job order costing.

Receiving reports, materials ledger cards, materials requisitions, factory overhead ledger. Signup and view all the answers

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

Time tickets, factory overhead, allocated. Signup and view all the answers

What is the predetermined overhead rate if a company estimates 10,000 direct labor hours and $120,000 total overhead costs?

12 per hour. Signup and view all the answers

What is the journal entry to record the allocation of factory overhead?

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

What is the journal entry to record indirect materials in production?

Debit Factory Overhead and credit Raw Materials Inventory. Signup and view all the answers

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

Time tickets, job cost sheets, factory wages payable. Signup and view all the answers

What is the journal entry to record the allocation of factory overhead to work in process?

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

What does the journal entry to allocate overhead costs to jobs entail?

Credit Factory Overhead. Signup and view all the answers

What does the journal entry for purchasing indirect utilities involve?

Debit Factory Overhead. Signup and view all the answers

What is the journal entry to record purchasing indirect materials?

Debit Raw Materials Inventory. Signup and view all the answers

What does the entry for the use of indirect materials involve?

Credit Raw Materials Inventory. Signup and view all the answers

What is the journal entry for direct labor used?

Debit Work in Process Inventory. Signup and view all the answers

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

Cost of goods sold Signup and view all the answers

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

Time tickets, factory overhead, allocated to specific. 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

When is the predetermined overhead rate calculated?

At the start of the accounting period. Signup and view all the answers

When is overhead allocated to jobs?

During the accounting period. Signup and view all the answers

When is the overhead account adjusted for over- or underapplied overhead?

At the end of the accounting period. Signup and view all the answers

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

Debit to Factory Overhead Signup and view all the answers

A Schedule of Cost of Goods Manufactured includes which costs?

Direct materials used Signup and view all the answers

What effect does an adjustment for overapplied overhead have on net income?

It increases net income. Signup and view all the answers

What happens to the Factory Overhead account for applied overhead costs?

It is credited. 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:

Credit to Cost of Goods Sold 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

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

overhead Signup and view all the answers

If a company's overhead is underapplied by $150, how does this affect net income?

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

What does the Factory Overhead account reflect for actual overhead costs?

It is debited. Signup and view all the answers

A company incurs factory overhead costs of $1,200 and applied $1,500. If considered immaterial, the adjusting entry will require:

Factory Overhead account has a credit balance Signup and view all the answers

Both service companies and manufacturing companies have:

A and B Signup and view all the answers

Study Notes

Cost Accounting System

A cost accounting system assists managers in setting selling prices and controlling manufacturing costs.
It accumulates production costs and assigns them to specific products and services.

Job Order Production

Customized products are manufactured separately to meet individual customer needs, known as job order production.
Job order production is exemplified by companies making tailored items, such as wedding cakes.

Production Types

Mass production refers to the manufacturing of products using process operations in a repetitive manner.
Job order production contrasts with mass production, focusing on unique custom orders.

Manufacturing Costs

Types of manufacturing costs include direct materials, direct labor, and applied overhead.
Office salaries are not classified as manufacturing costs.
A Schedule of Cost of Goods Manufactured encapsulates direct materials used, direct labor, and factory overhead applied.

Cost Flows

The proper sequence of cost flows in a job order costing system is from work in process to finished goods, then to cost of goods sold.

Job Cost Sheets

Companies utilize job cost sheets to monitor materials, labor, and overhead costs related to a specific job.

Overhead Rates

The predetermined overhead rate is calculated at the start of the accounting period and is based on direct labor hours.
During the accounting period, overhead costs are allocated to jobs, with adjustments made at the period's end for over- or underapplied overhead.

Journal Entries

To record factory overhead allocation, debit Work in Process Inventory and credit Factory Overhead.
Indirect materials are recorded by debiting Factory Overhead and crediting Raw Materials Inventory.
Indirect labor costs employ a sequence of time tickets and factory overhead before allocating to specific jobs.

Inventory Accounts

Common inventory accounts for manufacturers include raw materials inventory, work in process inventory, and finished goods inventory.
Indirect materials inventory is not typically recognized as a separate inventory account.

Net Income Impact

Adjustments for overapplied or underapplied overhead affect net income, positively impacting it when overhead is overapplied, and negatively when underapplied.

Differences Between Companies

Service companies differ from manufacturing companies as they do not hold raw materials inventory.
Both service and manufacturing companies incur overhead and direct labor costs.

Miscellaneous

The process for recording costs involves various documents, including receiving reports, materials ledger cards, and job cost sheets, arranged in a specific order based on the type of costs being recorded.

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Test your knowledge on cost accounting concepts with these flashcards from Chapter 15. Learn about cost accounting systems, job order production, and customized product orders to enhance your understanding of manufacturing costs.

Cost Accounting Chapter 15 Flashcards

Questions and Answers

What is a cost accounting system?

Producing products that are individually designed to meet the needs of a specific customer where each customized product is manufactured separately is referred to as:

What are custom orders?

What is mass production?

Which of the following are manufacturing costs?

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

What does a cost accounting system accumulate?

What do job cost sheets track?

Job order production is most likely used by companies that produce:

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

Manufacturing of products in a repetitive manner is referred to as:

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

Manufacturing costs include direct materials, direct labor, and:

All of the following are inventory accounts for a manufacturer except:

When is the predetermined overhead rate calculated?

Job cost sheets can be used to: (Check all that apply)

List the documents in order used when recording indirect materials costs in job order costing.

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

What is the predetermined overhead rate if a company estimates 10,000 direct labor hours and $120,000 total overhead costs?

What is the journal entry to record the allocation of factory overhead?

What is the journal entry to record indirect materials in production?

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

What is the journal entry to record the allocation of factory overhead to work in process?

What does the journal entry to allocate overhead costs to jobs entail?

What does the journal entry for purchasing indirect utilities involve?

What is the journal entry to record purchasing indirect materials?

What does the entry for the use of indirect materials involve?

What is the journal entry for direct labor used?

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

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

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

When is the predetermined overhead rate calculated?

When is overhead allocated to jobs?

When is the overhead account adjusted for over- or underapplied overhead?

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

A Schedule of Cost of Goods Manufactured includes which costs?

What effect does an adjustment for overapplied overhead have on net income?

What happens to the Factory Overhead account for applied overhead costs?

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

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

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

If a company's overhead is underapplied by $150, how does this affect net income?

What does the Factory Overhead account reflect for actual overhead costs?

A company incurs factory overhead costs of $1,200 and applied $1,500. If considered immaterial, the adjusting entry will require:

Both service companies and manufacturing companies have:

Study Notes

Cost Accounting System

Job Order Production

Production Types

Manufacturing Costs

Cost Flows

Job Cost Sheets

Overhead Rates

Journal Entries

Inventory Accounts

Net Income Impact

Differences Between Companies

Miscellaneous

Studying That Suits You

Description

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