ACC 2 Unit 5.00

The Jamison Corporation makes computers. Mary Wiggins is the accountant who completes the job cost sheets. Her pay is $17 per hour. How should Mary's pay be classified?

• direct labor

• direct materials

• indirect labor

• indirect materials

The Cowboy Uniform Company manufactures blue jeans. During the manufacturing process, razors are used to cut the denim. How should the razors be classified?

• direct labor

• indirect labor

• direct materials

• indirect materials

The Jamison Corporation makes computers. The purchasing agent ordered 1,000 pounds of plastic for use in the production process. How should the plastic be classified?

• indirect materials

• direct materials

• indirect labor

• direct labor

The EarthReady Corporation manufactures environmentally safe light bulbs. Sam, the accountant, is preparing the month-end journal entries. He received Materials Requisition No. 228, for the issue of 200 pounds of silica at $10.50 per pound. The correct journal entry to record this transaction is:

• debit Materials, $2,100; credit Work in Process, $2,100.

• debit Work in Process, $2,100; credit Materials, $2,100.

• debit Factory Overhead, $2,100; credit Materials, $2,100.

• debit Materials, $2,100; credit Cost of Goods Sold, $2,100.

The Sweet Shop manufactures cookies for sale by the Girl Scouts. The accountant is preparing the month-end financial statement and reports for the company. The Sweet Shop records applied (estimated) overhead to job cost sheets as a percentage of direct labor costs. The rate that the Sweet Shop uses is 85% and the direct labor costs from the job cost sheets for the month of March totaled $150,000. Actual factory overhead was $126,000. The journal entry to record the applied factory overhead is:

• debit Work in Process; $126,000; credit Factory Overhead, $126,000.

• debit Factory Overhead, $126,000; credit Work in Process, $126,000.

• debit Work in Process, $127,500; credit Factory Overhead, $127,500.

• debit Factory Overhead, $127,500; credit Work in Process, $127,500.

The EarthReady Corporation manufactures environmentally safe light bulbs. Samuel, the accountant, has just received requisitions from the plant managers. Indirect material requisitions totaled $567; and direct material requisitions totaled $3,251. The correct entry to record this transaction is:

• debit Work in Process, $3,818; credit Materials, $3,818.

• debit Factory Overhead, $3,818; credit Materials, $3,818.

• debit Work in Process, $567, Factory Overhead, $3,251; credit Materials $3,818.

• debit Work in Process, $3,251, Factory Overhead, $567; credit Materials, $3,818.

The Hambrick Company manufactures terry cloth towels. The company accountant is preparing the month-end reports and journal entries. The accountant sees that during the month of June, Hambrick Company transferred $112,000 of completed towels to the appropriate account. The journal entry to record this transaction is:

• debit Finished Goods, $112,000; credit Work in Process, $112,000.

• debit Work in Process, $112,000; credit Finished Goods, $112,000.

• debit Cost of Goods Sold, $112,000; credit Finished Goods, $112,000.

• debit Finished Goods, $112,000; credit Cost of Goods Sold, $112,000.

The Magnum Steel Corporation manufactures sheet metal for the automotive industry. The company accountant has received requisitions from the plant managers. Indirect material requisitions totaled $2,123 and direct material requisitions totaled $3,779. The correct entry to record this transaction is:

• debit Work in Process, $5,902; credit Materials, $5,902.

• debit Factory Overhead, $5,902; credit Materials, $5,902.

• debit Work in Process, $2,123, Factory Overhead, $3,779; credit Materials, $5,902.

• debit Work in Process, $3,779, Factory Overhead, $2,123; credit Materials, $5,902.

SafeColor manufactures ammonia-free hair color for hair salons. SafeColor uses a factory overhead applied rate based upon direct labor costs to charge overhead costs to its manufactured products. The plant manager estimates that SafeColor will manufacture 40,000 units next year. For this amount of production, the accountant estimates total factory overhead costs to be $350,000 and estimated direct labor costs to be $450,000. What is the factory overhead rate applied for the next year?

• 75%

• 78%

• 88%

• 129%

The Magnum Steel Corporation manufactures sheet metal for the automotive industry. Each month, the accountant for the company calculates and posts factory overhead. The following information was available for the month of July: depreciation expense, $35,000; utility expense, $11,350; insurance expense, $620; miscellaneous expense, $359; payroll tax expense, $16,456; supplies expense, $3,159; federal income tax expense, $25,000; and Cost of Goods Sold expense, $34,000. What is the journal entry to record the factory overhead?

• debit Factory Overhead, $66,944; credit individual expense accounts, $66,944

• debit Factory Overhead, $91,944; credit individual expense accounts, $91,944

• debit Factory Overhead, $100,944; credit individual expense accounts, $100,944

• debit Factory Overhead, $125,944; credit individual expense accounts, $125,944