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WorksheetsAccounting Chapter 9
Total questions: 67
Worksheet time: 52mins
Indicate the correct order of the steps in developing and applying overhead application rates.
Identify, classify production activities by level, then determine the appropriate cost driver for each activity
Estimate the amount of overhead related to each cost driver
Estimate the amount of each cost driver to be used
Determine the predetermined overhead rate for each cost driver
Apply manufacturing overhead to Work-in-Process Inventory using the predetermined overhead rates
Match the definition with the term:
A temporary account used to reflect the indirect manufacturing cost of the period
Manufacturing overhead
An estimated amount of overhead added to work-in-process during the period
Applied manufacturing overhead
The amount of overhead incurred during a time period
Actual manufacturing overhead
When the estimated amount of overhead included in work-in-process exceed the actual cost of overhead
Overapplied overhead
Match the definition with the term.
The difference between the standard and actual amounts of inputs
Variance
A group of cost that change in response to a cost driver
Cost pool
The estimated amount of overhead divided by the estimated amount of the cost driver
Predetermined overhead rate
A variance that indicates the change in direct material cost due to purchasing a different quantity of materials than what was used.
Direct materials inventory variance
The Spinners Ceiling Fan Company has the following costs. Match the cost with its classification:
Blades for fans
Electric motor for fan
Wages paid for assembly workers
Salary of plant supervisor
Polish to shine metal casing of fans
Utilities for assembly plant
Depreciation on building housing the assembly facility
Salary of accounting department
Cost of sales force commissions
Which of the following is an activity of the conversion process?
Scheduling production
Paying the salary of the chief financial officer
Paying freight to ship finished inventory
Selling finished goods
The journal entry to record the purchase of direct materials on account would include a
debit to Manufacturing Overhead
debit to Raw Materials Inventory
credit to Accounts Receivable
credit to Cash
Which of the following is NOT included in cost of work-in-process?
Direct labor
Requisition of raw material
Purchase of raw material
Application of overhead
The journal entry to record wages earned by assembly line workers would include a:
credit to Indirect Labor
debit to Manufacturing Overhead
debit to Work-in-Process Inventory
credit to Cost of Goods Manufactured.
The entry to deal with the overapplication of overhead during a time period is:
debit Manufacturing Overhead (applied) credit Manufacturing Overhead (actual)
debit Manufacturing Overhead (applied) credit Cost of Goods Sold
debit Manufacturing Overhead (actual) credit Work-in-Process
debit Finished Goods Inventory credit Manufacturing Overhead (applied)
The estimated amount of overhead per cost driver is referred to as the:
predetermined overhead rate
accounting cost rate
overhead cost pool
activity cost pool
Overapplied manufacturing overhead exists when:
there is a debit balance in the manufacturing overhead account at the end of the period
actual manufacturing overhead is less than applied manufacturing overhead
the products manufactured during a period are undercosted.
applied overhead is larger than direct labor.
The journal entry to record the completion and transfer of the cost of goods manufactured includes a:
debit to Cost of Goods Sold
debit to Manufacturing Overhead
credit to Finished Goods Inventory
credit to Work-in-Process Inventory
The journal entry to record the sale of a product, assuming a perpetual inventory system, would include a
debit to Sales Revenue
credit to Cost of Goods Sold
debit to Work-in-Process Inventory
credit to Finished Goods Inventory
The entry to close out a significant amount of overapplied manufacturing overhead would affect all of the below EXCEPT:
decrease the cost of goods manufactured
decrease finished goods inventory
increase cost of goods sold
increase net income
Sarasota Copy Company applies batch-related manufacturing overhead on the basis of the number of production runs. The following information is available:
Estimated Production Runs: 500
Actual Production Runs: 535
Estimated Manufacturing Overhead Costs: $775,000
Actual Manufacturing Overhead Costs: $846,370
The predetermined manufacturing overhead rate per production run is: _______
Sarasota Copy Company applies batch-related manufacturing overhead on the basis of the number of production runs. The following information is available:
Estimated Production Runs: 500
Actual Production Runs: 535
Estimated Manufacturing Overhead Costs: $775,000
Actual Manufacturing Overhead Costs: $846,370
The predetermined manufacturing overhead rate per production run is $1,550.
The amount of manufacturing overhead applied to Work-in-Process Inventory is:
Sarasota Copy Company applies batch-related manufacturing overhead on the basis of the number of production runs. The following information is available:
Estimated Production Runs: 500
Actual Production Runs: 535
Estimated Manufacturing Overhead Costs: $775,000
Actual Manufacturing Overhead Costs: $846,370
The predetermined manufacturing overhead rate per production run is $1,550.
The amount of manufacturing overhead applied to Work-in-Process Inventory is $829,250.
The amount of over/underapplied manufacturing overhead is:
$17,120 overapplied
$54,250 underapplied
$17,120 underapplied
$54,250 overapplied
Which of the following is NOT an inventory account for a manufacturer?
Raw materials
Finished goods
Work-in-process
Manufacturing overhead inventory
Which of the following shows the order of cost flows through the manufacturing inventories?
Raw materials, finished goods, work-in-process
Raw materials, work-in-process, finished goods
Work-in-process, raw materials, finished goods
Work-in-process, finished goods, raw materials
The differences between standard and actual financial amounts of inputs are referred to as:
standard deviations
variances
appraisals
exceptions
The standard cost for direct material is $45,000 if the company produces 10,000 units of product. Actual direct materials used to produce 10,500 units of product amounted to $48,300. What is the standard cost for the direct material at the actual level of production?
The direct labor usage variance is calculated as:
(standard price - actual price) x actual quantity
(actual price - standard price) x standard quantity allowed
(standard quantity allowed - actual quantity) x actual price
(actual quantity - standard quantity allowed) x standard price
BAK Systems, Inc. gathered the following direct labor cost information for the month of July:
Actual direct labor hours: 68,500
Standard direct labor hours allowed for actual production: 67,200
Actual direct labor rate per hour: $12.10
Standard direct labor rate per hour: $11.75
The direct labor price variance is:
$23,520 favorable
$23,975 unfavorable
$15,275 favorable
$15,730 unfavorable
BAK Systems, Inc. gathered the following direct labor cost information for the month of July: Actual direct labor hours: 68,500 Standard direct labor hours allowed for actual production: 67,200 Actual direct labor rate per hour: $12.10 Standard direct labor rate per hour: $11.75 The direct labor usage variance is:
$15,275 unfavorable
$23,975 unfavorable
$15,730 favorable
$23,520 favorable
A large U.S. manufacturer recently announced that it was "in the dark" about the costs of producing more than half its products. Why might this situation have adverse effects on the firm? (multiple correct answers)
It could lead to poor pricing decisions and thus reduce profitability.
It would actually improve the firm's ability to innovate because it would be free of artificial constraints.
It would guarantee higher sales volumes because of pressure of unknown profit margins.
It would ensure better cost control.
It would make it difficult to make appropriate resource-allocation decisions.
If a firm tried to use actual overhead instead of applied overhead in determining product costs, what would be the result? (multiple correct answers)
Product costs would fluctuate and be less predictable because overhead is sporadic.
Product costs would be more accurate, but there would be a time delay.
Product costs would always be understated.
Product costs would always be overstated.
Product pricing would be difficult without timely cost information.
Dynamic Company has an unfavorable material price variance and a favorable usage variance. What might have caused both variances? (multiple correct answers)
The purchaser paid more for a lesser quality raw material, so more material was needed for the product
There may have been an unexpected price increase in the materials, but the skill level of the workers increased so less material was wasted.
The purchasers may have gotten lazy and just not have looked for the best deal for materials, the workers may have skimped on materials and created a favorable use variance but a lousy product.
Purchased higher quality materials at a higher price, resulting in less waste during production.
There may have been an unexpected price decrease in materials, and the skill of the workers may have produced a favorable usage variance.
Acme Folding Chair Company has the following costs. Categorize the costs
Aluminum tubing used for chair frames
Webbing used in the chairs
Wages of workers who assemble chairs
Salary of production supervisor
Depreciation on the machinery on shop floor
Cost of utilities used to run the manufacturing plant
Polish used to shine the aluminum before chairs are assembled
Commission on sale of chairs
Boxes used to ship chairs
Depreciation on finished goods warehouse
Match the following overhead activity levels with the type of activity, type of cost and type of cost driver listed below
Designing products
Product-sustaining
Insurance on buildings
Facility-sustaining
Machine time used to manufacture product
Unit-related
Ordering cost
Batch-related
. The Memory Time Picture Frame Company has the following cost. Match the cost with one of the following four classifications
Glass for the frames
Wood for frames
Wages paid for assembly workers
Depreciation on building housing the assembly facility
Salary of plant supervisor
Glass cleaner
Cost of sales force commissions
Which of the following is not one of the activities of the conversion process?
Schedule production
Obtain raw material
Use labor and other manufacturing resources to create finished goods
Selling finished goods
Which of the following is not considered manufacturing overhead?
Depreciation on factory equipment
Supervisors salaries
Cost of utilities for factory
Depreciation on warehouse that stores finished goods
Which of the following is not included in cost of work-in-process?
Direct labor
Requisition of raw material
Purchase of raw material
Application of overhead
Which of the following is an activity of the conversion process?
Scheduling production
Paying the salary of chief financial officer
Paying freight to ship finished inventory
Selling finished goods
This prenumbered document is issued by the production function and triggers the manufacture of the company's product:
Materials requisition
Production order
Job cost record
Sales invoice
Which of the following is not considered manufacturing overhead?
Depreciation on factory equipment
Supervisors salaries
Cost of utilities for factory
Depreciation on warehouse that stores finished goods
Which of the following is included in cost of work-in-process?
Depreciation on finished goods warehouse
Cost to ship finished goods to customer
Salary of manager of raw materials warehouse
Salary of vice president of finance
The journal entry to record the requisition of indirect materials from the raw materials storeroom and the transfer of the materials to the factory would include a:
credit to Cost of Goods Manufactured
debit to Work-in-Process Inventory
debit to Manufacturing Overhead
credit to Accounts Payable
The journal entry to record wages earned by assembly line workers would include a:
credit to Indirect Labor
debit to Manufacturing Overhead
debit to Work-in-Process Inventory
credit to Cost of Goods Manufactured
The journal entry to record wages earned by the factory maintenance personnel would include a
credit to Direct Labor
credit to Administrative Wages
debit to Manufacturing Overhead
debit to Work-in-Process Inventory
The entry to deal with the overapplication of overhead during a time period is:
Dr. Manufacturing Overhead (applied)
Cr. Manufacturing Overhead (actual).
Dr. Manufacturing Overhead (applied)
Cr. Cost of Goods Sold.
Dr. Manufacturing Overhead (actual)
Cr. Work in process.
Dr. Finished Good Inventory
Cr. Manufacturing Overhead (applied).
The journal entry to record the application of manufacturing overhead to work in process includes a:
debit to Indirect Materials.
credit to Manufacturing Overhead
credit to Work-in-Process Inventory
debit to Cost of Goods Manufactured
The estimated amount of overhead per cost driver is referred to as the
predetermined overhead rate.
accounting cost rate.
overhead cost pool.
activity cost pool.
A group of costs that change in response to changes in the same cost driver referred to as:
a cost pool.
activity costs.
conversion costs.
a cost accumulation group.
The activity "setting up machines" is part of the activity level:
product sustaining
facility sustaining
batch related.
unit related.
Overapplied manufacturing overhead exists when:
there is a debit balance in the manufacturing overhead account at the end of the period
actual manufacturing overhead is less than applied manufacturing overhead
the products manufactured during a period are undercosted
applied overhead is larger than direct labor
Underapplied manufacturing overhead exists when
there is a debit balance in the manufacturing overhead account at the end of the period.
actual manufacturing overhead is less than applied manufacturing overhead
the products manufactured during a period are undercosted
applied overhead is larger than direct labor
The journal entry to record the completion and transfer of the cost of goods manufactured includes a:
debit to Cost of Goods Sold.
debit to Manufacturing Overhead
credit to Finished Goods Inventory.
credit to Work-in-Process Inventory
When a product has completed the manufacturing process, what is the journal entry to record the transfer of its cost?
Debit to Cost of Goods Sold, credit Work-in-Process
Debit to Finished Goods, credit of Work-in-Process
Debit to Cost of Good Sold, credit to Finished Goods Inventory
Debit to Work-in-Process Inventory, credit to Finished Good Inventory
The journal entry to record the sale of a product, assuming a perpetual inventory system, would include a:
debit to Sales Revenue
credit to Cost of Goods Sold.
debit to Work-in-Process Inventory
credit to Finished Goods Inventory
Microsmart, Inc.'s ending balances for Work-in-Process and Finished Goods Inventory were $365,800 and $743,200, respectively. The unadjusted Cost of Goods Sold was $1,543,700, and underapplied manufacturing overhead amounted to $148,000, which was deemed significant. When Microsmart closed out the underapplied manufacturing overhead, the Cost of Goods Sold account would have been (rounded to the nearest whole dollar):
credited for $148,000
debited for $106,324.
debited for $86,126
credited for $14,189.
The entry to close out a significant amount of overapplied manufacturing overhead would affect all of the below except:
decrease the cost of goods manufactured.
decrease finished goods inventory
increase cost of goods sold
increase net income
Which of the following is not an inventory account for a manufacturer?
Raw materials
Finished goods
Work-in-process
Manufacturing overhead inventory
Which of the following shows the order of cost flows through the manufacturing inventories?
Raw materials, finished goods, work-in-process
Raw materials, work-in-process, finished goods
Work-in-process, raw materials, finished goods
Work-in-process, finished goods, raw materials
Crawford, Inc. manufactures lamps. Which of the following is a direct labor cost?
Wages of machine operators
Wages of shop foreperson
Salary of office manager
Salary of president
Hunter Corporation, a computer manufacturer, tests each completed computer before shipping it. This is an example of what kind of cost?
Product sustaining
Facility sustaining
Batch related
Unit related
Paltrow Corporation applies unit-related overhead at the rate of $100 per direct-labor hour. If 3,000 direct labor hours were used, which of the following entries should be made?
Debit to finished goods and credit to manufacturing overhead
Debit to manufacturing overhead and credit to finished goods
Debit to work-in-process and credit to manufacturing overhead
Debit to manufacturing overhead and credit to work-in-process
Winslett Company had a $34,000 beginning balance in its raw materials inventory and a $30,000 ending balance. During the period $197,000 of raw materials was purchased. What amount of raw materials was used?
The differences between standard and actual financial amounts of inputs are referred to as:
standard deviations.
variances.
appraisals.
exceptions.
The standard cost for direct labor is $190,000 if the company produces 15,200 units of product. Actual direct labor cost to produce 15,800 units of product totaled $213,300. What is the standard cost for direct labor at the actual level of production?
The standard cost for direct material is $45,000 if the company produces 10,000 units of product. Actual direct materials used to produce 10,500 units of product amounted to $48,300. What is the standard cost for the direct material at the actual level of production?
The standard cost for facility sustaining manufacturing overhead is $536,000 if the company produces 78,000 units of product. Actual facility sustaining manufacturing overhead to produce 79,500 units of product was $531,500. What is the standard cost of sustaining manufacturing overhead at the actual level of production?
The direct labor price variance is calculated as
(Actual Price – Standard Price) x Actual Quantity
(Standard Price – Actual Price) x Standard Quantity Allowed
(Standard Quantity Allowed – Actual Quantity) x Actual Price
(Actual Quantity – Standard Quantity Allowed) x Standard Price
The direct labor usage variance is calculated as
(Standard Price – Actual Price) x Actual Quantity
(Actual Price – Standard Price) x Standard Quantity Allowed
(Standard Quantity Allowed – Actual Quantity) x Actual Price
(Actual Quantity – Standard Quantity Allowed) x Standard Price
The direct materials price variance is calculated as
(Standard Price – Actual Price) x Standard Quantity Allowed
(Actual Price – Standard Price) x Actual Quantity Purchased
(Standard Quantity Allowed – Actual Quantity Purchased) x Actual Price
(Actual Quantity Purchased – Standard Quantity Allowed) x Standard Price
The direct materials usage variance is calculated as
(Standard Price – Actual Price) x Standard Quantity Allowed
(Actual Price – Standard Price) x Actual Quantity Allowed
(Standard Quantity Allowed – Actual Quantity Used) x Actual Price
(Actual Quantity Used – Standard Quantity Allowed) x Standard Price
The direct materials inventory variance is calculated as
(Standard Price – Actual Price) x Standard Quantity Allowed
(Actual Price – Standard Price) x Actual Quantity Used
(Actual Quantity Used – Actual Quantity Purchased) x Actual Price
(Actual Quantity Purchased – Actual Quantity Used) x Standard Price
