ACC 220 Chapter 3 Extra Practice Problems

Front

If there is a Debit Balance to Manufacturing Overhead Cost at the end of the period, that means manufacturing overhead was:

Back

Underapplied

Answer explanation

If, at the end of the period, Manufacturing overhead has a Debit balance, that means not enough of the overhead cost incurred was allocated to to production cost. Therefore, overhead would be underapplied.

Front

If a company has underapplied overhead for a period, the journal entry to dispose of it would include:

Back

Debit Cost of Goods Sold

Answer explanation

If there is underapplied overhead, that means not enough manufacturing overhead cost was applied to Cost of Goods Sold. To correct this, additional manufacturing overhead cost would be moved to Cost of Goods Sold. Ultimately, that results in a Debit to Cost of Goods Sold (increase) and a credit to Manufacturing Overhead (decrease).

Front

What is Wolfpack Inc Cost of goods manufactured during September if they began with $20,000 in work in process inventory and completed jobs TF69 and WD420 with total production costs of $245,000, $389,000, $212,000, and $450,000?

Back

$654,000

Answer explanation

Cost of Goods Manufactured = Beginning Work in Process Inventory + Total Production Cost - Ending Work in Process Inventory

Since only Job WD420 and TF69 were completed, the ending Work in Process inventory consist of the cost for Jobs AF123 and WY5& (they are not completed)

Total Production Cost = 245,000 + 389,000 + 212,000 + 450,000 = $1,296,000

Ending Work in Process inventory = 212,000 + 450,000 = $662,000

Cost of Goods Manufactured = $20,000 + $1,296,000 - $662,000 = $654,000

Front

What is XYZ Corp’s Ending Work in Process inventory for June?

Back

$15,400

Answer explanation

Beginning Work in Process + Total Production Cost – Ending Work in Process= Cost of Goods Manufactured.

With the information provided, we are only given Beginning Work in process. Therefore, we need to solve for Total Production cost and Cost of Goods Manufactured first.

Total Production Cost= Raw materials used in production + Direct Labor + Manufacturing overhead.

Total Production Cost for XYZ Corp= 25,800 + 36,100 + 13,500= $75,400.

Beginning Finished Goods + Cost of Goods Manufactured – Ending Finished Goods= Cost of Goods Sold.

10,200 + Cost of Goods manufactured – 3,400= 75,500.

Cost of Goods manufactured for XYZ Corp= $68,700.

8,700 + 75,400 – Ending Work in Process= 68,700.

Ending Work in Process for XYZ Corp= $15,400.

Front

Which of the following properly records the cash payment of $32,000 in direct labor wages and $13,000 of indirect labor wages? Options: Credit Cash $45,000, Debit Cash $19,000, Debit Cash $45,000, Credit Cash $19,000

Back

Credit Cash $45,000