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Questions and Answers
Manufacturing costs that cannot be classified as either direct materials or direct labor are known as?
Manufacturing costs that cannot be classified as either direct materials or direct labor are known as?
Manufacturing Overhead
Raw materials that can be conveniently and directly associated with a finished product are called materials overhead.
Raw materials that can be conveniently and directly associated with a finished product are called materials overhead.
False
Which of the following is not a manufacturing cost category?
Which of the following is not a manufacturing cost category?
A manufacturing company reports cost of goods manufactured as a(n)?
A manufacturing company reports cost of goods manufactured as a(n)?
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Which one of the following would not be classified as manufacturing overhead?
Which one of the following would not be classified as manufacturing overhead?
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Which of the following is not classified as direct labor?
Which of the following is not classified as direct labor?
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Which one of the following is not a direct material?
Which one of the following is not a direct material?
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Both direct labor cost and indirect labor cost are product costs.
Both direct labor cost and indirect labor cost are product costs.
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Managerial accounting is primarily concerned with managers and external users.
Managerial accounting is primarily concerned with managers and external users.
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The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year.
The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year.
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Managerial accounting applies to each of the following types of businesses except.
Managerial accounting applies to each of the following types of businesses except.
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Finished goods inventory does not appear on a cost of goods manufactured schedule.
Finished goods inventory does not appear on a cost of goods manufactured schedule.
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How much is total manufacturing costs incurred during 2017 for Ogleby?
How much is total manufacturing costs incurred during 2017 for Ogleby?
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Assuming that the direct materials used are $1,700,000, compute the total manufacturing costs.
Assuming that the direct materials used are $1,700,000, compute the total manufacturing costs.
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Using the following information, compute the direct materials used.
Using the following information, compute the direct materials used.
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If total manufacturing costs are $680,000, what is the total cost of goods manufactured?
If total manufacturing costs are $680,000, what is the total cost of goods manufactured?
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Factory labor should be assigned to selling and administrative expenses on a proportionate basis.
Factory labor should be assigned to selling and administrative expenses on a proportionate basis.
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Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred.
Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred.
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A job order cost system identifies costs with a particular job rather than with a set time period.
A job order cost system identifies costs with a particular job rather than with a set time period.
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Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.
Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.
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In a job order cost accounting system, the Raw Materials Inventory account is?
In a job order cost accounting system, the Raw Materials Inventory account is?
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When raw materials are purchased, the Work in Process Inventory account is debited.
When raw materials are purchased, the Work in Process Inventory account is debited.
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A job order cost system is most appropriate when a large volume of uniform products are produced.
A job order cost system is most appropriate when a large volume of uniform products are produced.
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Which one of the following should be equal to the balance of the Work In Process Inventory account at the end of the period?
Which one of the following should be equal to the balance of the Work In Process Inventory account at the end of the period?
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The two basic types of cost accounting systems are?
The two basic types of cost accounting systems are?
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Total manufacturing costs for a period consist of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.
Total manufacturing costs for a period consist of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.
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What is the entry to record the transfer of materials from the storeroom?
What is the entry to record the transfer of materials from the storeroom?
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The Manufacturing Overhead account shows debits of $30,000, $24,000, and $28,000 and one credit for $86,000. Based on this information, manufacturing overhead has been overapplied.
The Manufacturing Overhead account shows debits of $30,000, $24,000, and $28,000 and one credit for $86,000. Based on this information, manufacturing overhead has been overapplied.
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How much is the amount of over- or underapplied overhead for Cotte Manufacturing?
How much is the amount of over- or underapplied overhead for Cotte Manufacturing?
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Hayward Manufacturing Company's total manufacturing costs for the period is?
Hayward Manufacturing Company's total manufacturing costs for the period is?
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Using machine hours as a base, the amount of overhead applied during the year for Monroe Company is?
Using machine hours as a base, the amount of overhead applied during the year for Monroe Company is?
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The amount of gross profit for the year for Gannon Company is?
The amount of gross profit for the year for Gannon Company is?
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In January, how many units were completed if there were 200 units in the ending work in process inventory?
In January, how many units were completed if there were 200 units in the ending work in process inventory?
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A process cost system has one work in process account for each process.
A process cost system has one work in process account for each process.
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In a process cost system, total costs are determined at the end of a month or year.
In a process cost system, total costs are determined at the end of a month or year.
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Which of the following manufacturing cost elements occurs in a process cost system?
Which of the following manufacturing cost elements occurs in a process cost system?
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In a process cost system, a production cost report is prepared?
In a process cost system, a production cost report is prepared?
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In a process cost system, costs are tracked through a series of connected manufacturing processes rather than by individual jobs.
In a process cost system, costs are tracked through a series of connected manufacturing processes rather than by individual jobs.
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How many units were transferred out of the process in June?
How many units were transferred out of the process in June?
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How much are total costs to be assigned to inventory?
How much are total costs to be assigned to inventory?
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What are the unit production costs for July?
What are the unit production costs for July?
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20,000 units in a process that are 70% complete are referred to as?
20,000 units in a process that are 70% complete are referred to as?
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Not all activities labeled non-value-added are totally wasteful, nor can they be totally eliminated.
Not all activities labeled non-value-added are totally wasteful, nor can they be totally eliminated.
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To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.
To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.
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Direct labor is sometimes the appropriate basis for assigning overhead cost to products. It is appropriate to use direct labor when which of the following is true?
Direct labor is sometimes the appropriate basis for assigning overhead cost to products. It is appropriate to use direct labor when which of the following is true?
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Each of the following is a limitation of activity-based costing except that it decreases control over overhead costs.
Each of the following is a limitation of activity-based costing except that it decreases control over overhead costs.
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Use of activity-based costing will result in the development of?
Use of activity-based costing will result in the development of?
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Traditional costing systems use multiple predetermined overhead rates.
Traditional costing systems use multiple predetermined overhead rates.
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Which would be an appropriate cost driver for the machining activity cost pool?
Which would be an appropriate cost driver for the machining activity cost pool?
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Which of the following is a value-added activity?
Which of the following is a value-added activity?
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The first step in activity-based costing is to?
The first step in activity-based costing is to?
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Which of the following is true of activity-based costing?
Which of the following is true of activity-based costing?
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Identifying and classifying activities is the?
Identifying and classifying activities is the?
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Which of the following is not typical of traditional costing systems?
Which of the following is not typical of traditional costing systems?
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Using activity-based costing, how much assembly cost is assigned to titanium racquets?
Using activity-based costing, how much assembly cost is assigned to titanium racquets?
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Overhead applied to Supreme using traditional costing using direct labor hours is?
Overhead applied to Supreme using traditional costing using direct labor hours is?
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How much overhead is assigned to each product for Thomsen Computer Company?
How much overhead is assigned to each product for Thomsen Computer Company?
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How much of the inspecting cost pool should be assigned to throw rugs?
How much of the inspecting cost pool should be assigned to throw rugs?
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Compute the overhead rate for each activity in Bark Manufacturing.
Compute the overhead rate for each activity in Bark Manufacturing.
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Study Notes
Manufacturing Costs
- Manufacturing overhead includes costs that cannot be classified as direct materials or direct labor.
- Direct materials are raw materials directly associated with a finished product, while direct labor includes employee wages directly tied to manufacturing.
Cost Categories
- Cost of goods sold is not classified as a manufacturing cost category.
- Direct labor costs exclude wages for supervisory roles.
- Finished goods inventory does not feature in the cost of goods manufactured schedule.
Total Manufacturing Costs
- Total manufacturing costs comprise direct materials, direct labor, and manufacturing overhead.
- The calculation of total manufacturing costs can be illustrated with practical examples involving raw materials, labor, and overhead expenses.
Job Order Cost Systems
- These systems identify costs by job rather than by time period, and significant costs are assigned to specific jobs.
- The raw materials inventory acts as a control account, while transfers from the storeroom are recorded in work in process and manufacturing overhead.
Under- or Overapplied Overhead
- Overhead can be either overapplied or underapplied based on the comparison between applied and actual costs.
- A process cost system tracks costs through connected manufacturing processes, while job order cost systems focus on individual jobs.
Process Cost Systems
- They maintain a single work in process account for each process, determining total costs at the end of a specific period.
- In process cost systems, production cost reports are prepared for each department, assessing equivalent units of production.
Activity-Based Costing (ABC)
- Involves multiple cost pools with overhead rates based on specific activities.
- Identifying and classifying activities constitutes the first step in implementing ABC, aiming for accurate cost allocation.
Cost Drivers and Allocation
- Cost drivers such as machine hours, direct labor, and parts can influence the allocation of overhead.
- The application of overhead in traditional systems often lacks the granularity found in ABC methods, which assign costs based on more specific drivers.
Practical Applications and Examples
- Various examples, including calculations of gross profit and total costs, provide insight into applied manufacturing costs and overhead applications.
- Real-world scenarios demonstrate the financial implications of different cost accounting methods, including activity-based costing.
Summary of Key Terms
- Job Order Costing: System identifies costs per job.
- Process Costing: Tracks costs per department or process.
- Manufacturing Overhead: Includes indirect costs associated with production.
- Direct Materials: Raw materials directly contributing to product creation.
- Activity-Based Costing: Assigns overhead based on specific activities and their drivers.
Relationships and Comparisons
- ABC versus traditional costing highlights differences in cost allocation techniques, impacting financial decisions and efficiency.
- Understanding both job order and process costing systems is crucial for managing different types of manufacturing environments effectively.
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