True/False Questions: labor-intensive (cần nhiều nhân công)

Chapter 3
True/False Questions
1. Job-oder costing is used in those situations where many different products or services are
produced each period to customer specifications. F
Level: Easy LO: 1
2. The basic approach in Process costing is to accumulate costs in a particular operation or
department for an entire period (month, quarter, year) and then to divide this total by the
number of units produced during the period. F
Level: Easy LO: 1
3. If a company uses predetermined overhead rates, actual manufacturing overhead costs of a
period will be recorded in the Manufacturing Overhead account, but they will not be recorded
on the job cost sheets for the period. T
Level: Medium LO: 2
4. In a job-order cost system, direct labor is assigned to a job by using the labor time ticket as a
source document. F
Level: Medium LO: 2
5. The formula for computing the predetermined overhead rate is: Estimated total
manufacturing overhead costs ÷ Estimated total amout of allocation base F
Level: Easy LO: 3
6. The fact that one department may be labor-intensive (cần nhiều nhân công) while another
department is machine intensive may explain in part the existence of multiple predetermined
overhead rates in larger companies. T
Level: Easy LO: 3
7. If a company closes any under- or overapplied overhead to the Cost of Goods Sold account,
then Cost of Goods Sold will be credited if manufacturing overhead is overapplied for the
period. T
Level: Medium LO: 4,8
8. The following entry would be used to record the transfer of material from the storeroom to
production if 80% of the material was direct material and 20% was indirect material: T
Work in Process ............................. 40,000
Manufacturing Overhead ............... 10,000
Raw Material ........................ 50,000
Level: Easy LO: 4
9. Even if a job is not completed at the end of the year, manufacturing overhead cost should be
applied to that job. F
Level: Medium LO: 5
10. When raw materials are purchased, they are recorded as inventory. F
Level: Medium LO: 7
11. In a job-order cost system, depreciation on factory equipment should be charged directly to
the manuafacturing overhead account. F
Level: Medium LO: 7
12. The entire difference between the actual manufacturing overhead cost for a period and the
applied manufacturing overhead cost is typically closed to the COGS account. F
Level: Easy LO: 8
13. If the actual manufacturing overhead costs for a period exceed the manufacturing
overhead costs applied, then overhead would be considered to be underapplied. F
Level: Medium LO: 8
14. When the predetermined overhead rate is based on the level of activity at capacity, the
overhead underapplied may be called the Cost of Unused Capacity and treated as a period
expense.
Level: Easy LO: 9 Appendix: 3A
15. The absorption cost approach is so named because it provides for the absorption of all
manufacturing costs, fixed and variable, into units of product. T
Level: Easy LO: 10
Multiple Choice Questions
16. Which of the following industries would be most likely to use a process costing system?
A) Ship builder
B) Movie studio
C) Oil refinery
D) Hospital
Level: Easy LO: 1
17. A process cost system is employed in those situations where:
A) many different products, jobs, or batches of production are being produced each period.
B) where manufacturing involves a single, homogeneous product that flows evenly through the
production process on a continuous basis.
C) a service is performed such as in a law firm or an accounting firm.
D) full or absorption cost approach is not employed.
Level: Easy LO: 1
18. Emco Company uses direct labor cost as a basis for computing its predetermined
overhead rate. In computing the predetermined overhead rate for last year, the company
misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification
will be to:
A) understate the predetermined overhead rate.
B) overstate the predetermined overhead rate.
C) have no effect on the predetermined overhead rate.
D) cannot be determined from the information given.
Level: Medium LO: 3
19. Which of the following entries would record correctly the application of overhead cost?
A) Work in Process .................................. XXX
Accounts Payable ...................... XXX
B) Manufacturing Overhead .................... XXX
Accounts Payable ...................... XXX
C) Manufacturing Overhead .................... XXX
Work in Process ......................... XXX
D) Work in Process .................................. XXX
Manufacturing Overhead ........... XXX
Level: Easy LO: 4,5
20. The operations of Kalispell Company resulted in overapplied overhead for the month just
completed. Which of the following journal entries can be correct if Kalispell allocates under-
or overapplied overhead among accounts?
A) Cost of Goods Sold ................................. XXX
Manufacturing Overhead ............... XXX
B) Manufacturing Overhead ........................ XXX
Cost of Goods Sold ........................ XXX
C) Work in Process ...................................... XXX
Finished Goods ....................................... XXX
Manufacturing Overhead ............... XXX
D) Manufacturing Overhead ........................ XXX
Work in Process ............................. XXX
Finished Goods .............................. XXX
21. Which of the following entries would record correctly the monthly salaries earned by the
top management of a manufacturing company?
A) Manufacturing Overhead ........................... XXX Salaries and Wages Payable ............. XXX
B) Salaries Expense ........................................ XXX Salaries and Wages Payable ............. XXX
C) Work in Process ......................................... XXX Salaries and Wages Payable ............. XXX
D) Salaries and Wages Payable ....................... XXX Salaries Expense ............................... XXX
Level: Easy LO: 4
22. The journal entry to record applying overhead during the production process is:
A) Manufacturing Overhead .................................... XXX
Work In Process ......................................... XXX
B) Finished Goods ................................................... XXX Manufacturing
Overhead ........................... XXX
C) Manufacturing Overhead .................................... XXX Finished
Goods .......................................... XXX
D) Work In Process .................................................. XXX Manufacturing
Overhead ........................... XXX
Level: Easy LO: 4
23. When manufacturing overhead is applied to production, it is added to:
A) the Cost of Goods Sold account.
B) the Raw Materials account.
C) the Work in Process account.
D) the Finished Goods inventory account.
Level: Easy LO: 5,7
24. Which of the following statements is true?
I. Overhead application may be made slowly as a job is worked on.
II. Overhead application may be made in a single application at the time of completion of the
job.
III. Overhead application should be made to any job not completed at year-end in order to
properly value the work in process inventory.
A) Only statement I is true.

B) Only statement II is true.
C) Both statements I and II are true.
D) Statements I, II, and III are all true.
Level: Easy LO: 5
25. On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured
figure represents:
A) the amount of cost charged to Work in Process during the period.
B) the amount of cost transferred from Finished Goods to Cost of Goods Sold during the period.
C) the amount of cost placed into production during the period.

D) the amount of cost of goods completed during the current year whether they were started
before or during the current year.
Level: Hard LO: 6
26. Under a job-order costing system, the dollar amount transferred from Work in Process to
Finished Goods is the sum of the costs charged to all jobs:
A) started in process during the period.
B) in process during the period.
C) completed and sold during the period.
D) completed during the period.
Level: Medium LO: 7
27. If a company applies overhead to production on the basis of a predetermined rate, a debit
balance in the Manufacturing Overhead account at the end of the period means that:
A) actual overhead cost was greater than the amount charged to production.
B) actual overhead cost was less than the amount of direct labor cost.
C) more overhead cost has been charged to production than has been charged to finished
goods during the period.
D) actual overhead cost was less than the amount charged to production.
Level: Medium LO: 8
28. Overapplied overhead means that:
A) the applied overhead cost was less than the actual overhead cost.
B) the applied overhead cost was greater than the actual overhead cost.
C) the estimated overhead cost was less than the actual overhead cost.
D) the estimated overhead cost was less than the applied overhead cost.
Level: Easy LO: 8
29. A job order cost system uses a predetermined overhead rate based on estimated activity
and estimated manufacturing overhead cost. At the end of the year, underapplied overhead
might be explained by which of the following situations?
Actual activity - Actual manufacturing overhead costs
A) Greater than estimated - Greater than estimated
B) Greater than estimated - Less than estimated
C) Less than estimated - Greater than estimated
D) Less than estimated - Less than estimated
Level: Medium LO: 8 Source: CPA, adapted
30. Departmental overhead rates are generally preferred to plant-wide overhead rates
when:
A) the activities of the various departments in the plant are not homogeneous.
B) the activities of the various departments in the plant are homogeneous.
C) most of the overhead costs are fixed.
D) all departments in the plant are heavily automated.
Level: Easy LO: 10 Source: CMA, adapted Appendix: 3A
31. The Work in Process inventory account of a manufacturing company shows a balance of
$18,000 at the end of an accounting period. The job cost sheets of the two uncompleted jobs
show charges of $6,000 and $3,000 for materials, and charges of $4,000 and $2,000 for direct
labor. From this information, it appears that the company is using a predetermined overhead
rate, as a percentage of direct labor costs, of:
A) 50%
B) 200%
C) 300%
D) 20%
Level: Medium LO: 2,3,5
32. Blackwood Co. uses a predetermined overhead rate based on direct labor cost to apply
manufacturing overhead to jobs. The predetermined overhead rates for the year are 200% for
Department A and 50% for Department B. Job 123, started and completed during the year,
was charged with the following costs:
The total manufacturing costs associated with Job 123 should be:
A) $135,000
B) $180,000
C) $195,000
D) $240,000 Source: CPA, adapted
33. Fisher Company uses a predetermined overhead rate based on direct labor cost to apply
manufacturing overhead to jobs. The following information about Fisher Company's Work in
Process inventory account has been provided for the month of May:
May 1 balance ........................................... $26,000
Debits during May: Direct Materials ...................................... $40,000
Direct Labor ........................................... $50,000
Manufacturing Overhead ........................ $37,500 33000
During the month, Fisher Company's Work in Process inventory account was credited for
$120,500, which represented the Cost of Goods Manufactured for the month. Only one job
remained in process on May 31; this job had been charged with $9,600 of applied overhead
cost. The amount of direct materials cost in the unfinished job would be:
A) $10,600
B) $16,700
C) $12,800
D) $23,400
Level: Hard LO: 3,5,6,7
34. At the beginning of the year, manufacturing overhead for the year was estimated to be
$477,590. At the end of the year, actual direct labor-hours for the year were 29,000 hours,
the actual manufacturing overhead for the year was $472,590, and manufacturing overhead
for the year was overapplied by $110. If the predetermined overhead rate is based on direct
labor-hours, then the estimated direct labor-hours at the beginning of the year used in the
predetermined overhead rate must have been:
A) 29,300 direct labor-hours
B) 28,987 direct labor-hours
C) 28,993 direct labor-hours
D) 29,000 direct labor-hours
Level: Hard LO: 3,5,8
for the year was overapplied by $22,100. If the predetermined overhead rate is based on
direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in
the predetermined overhead rate must have been:
for the year was underapplied by $27,550. If the predetermined overhead rate is based on
direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in
the predetermined overhead rate must have been:
37. Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate. At the
beginning of the year, the estimated direct labor-hours were 17,500 hours. At the end of the
year, actual direct labor-hours for the year were 16,000 hours, the actual manufacturing
overhead for the year was $233,000, and manufacturing overhead for the year was
underapplied by $15,400. The estimated manufacturing overhead at the beginning of the
year used in the predetermined overhead rate must have been:
A) $249,375
B) $217,600
C) $228,000
D) $238,000
38. Braam Corporation uses direct labor-hours in its predetermined overhead rate. At the
underapplied by $18,220. The estimated manufacturing overhead at the beginning of the
year used in the predetermined overhead rate must have been:
A) $164,023
B) $125,130
C) $148,350
D) $138,350
39. Braaten Corporation uses direct labor-hours in its predetermined overhead rate. At the
underapplied by $7,600. The estimated manufacturing overhead at the beginning of the year
used in the predetermined overhead rate must have been:
A) $286,100
B) $296,100
C) $298,816
D) $283,500
40. Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At the
beginning of the year, the estimated direct labor-hours were 17,900 hours and the total
estimated manufacturing overhead was $341,890. At the end of the year, actual direct labor-
hours for the year were 16,700 hours and the actual manufacturing overhead for the year
was $336,890. Overhead at the end of the year was:
A) $22,920 underapplied
B) $17,920 overapplied
C) $17,920 underapplied
D) $22,920 overapplied
41. Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the
A) $6,840 overapplied
B) $6,840 underapplied
42. Crick Corporation uses direct labor-hours in its predetermined overhead rate. At the
43. Dagger Corporation uses direct labor-hours in its predetermined overhead rate. At the
beginning of the year, the total estimated manufacturing overhead was $423,870. At the end
of the year, actual direct labor-hours for the year were 19,400 hours, manufacturing
overhead for the year was underapplied by $5,650, and the actual manufacturing overhead
was $418,870. The predetermined overhead rate for the year must have been closest to:
A) $21.59
B) $20.76
C) $21.30
D) $21.85
44. Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the
overhead for the year was overapplied by $8,060, and the actual manufacturing overhead
A) $15.43
B) $15.30
C) $15.17
D) $14.96
45. Dafoe Corporation uses direct labor-hours in its predetermined overhead rate. At the
overhead for the year was overapplied by $21,500, and the actual manufacturing overhead
A) $15.01
B) $17.73
C) $15.35
D) $16.50
46. Juanita Corporation uses a job-order cost system and applies overhead on the basis of
direct labor cost. At the end of October, Juanita had one job still in process. The job cost
sheet for this job contained the following information:
Direct materials ........................................... $480
Direct labor .................................................. $150
Manufacturing overhead applied ................. $600 => $1000
Change in labor => change In overhead applied => have to caculate again
An additional $100 of labor was needed in November to complete this job. For this job, how
much should Juanita have transferred to finished goods inventory in November when it was
completed?
A) $1,330
B) $500
C) $1,230
D) $1,730
47. Wall Company uses a predetermined overhead rate based on direct labor hours to apply
manufacturing overhead to jobs. The company's estimated costs for the next year are:
Direct materials ..................................................... $3,000
Direct labor ............................................................ $20,000
Depreciation on factory equipment ....................... $6,000
Rent on factory ...................................................... $12,000
Sales salaries .......................................................... $29,000
Factory utilities ...................................................... $15,000
Indirect labor ......................................................... $6,000
It is estimated that 10,000 direct labor hours will be worked during the year. The
predetermined overhead rate will be:
A) $3.90
B) $5.90
C) $6.80
D) $9.10
Level: Medium LO: 3
48. The following information relates to Spock Manufacturing Company:
Total estimated manufacturing overhead at beginning of year .. $620,000
Total manufacturing overhead applied to production during the year ....................... $625,000
Total manufacturing overhead incurred during the year ............ $618,000
The company closes out the balance in the Manufacturing Overhead to Cost of Goods Sold at
the end of the year. In the journal entry to close out the balance, the company would:
A) debit cost of goods sold for $2,000
B) credit cost of goods sold for $2,000
C) credit cost of goods sold for $7,000
D) debit cost of goods sold for $7,000
49. Rio Manufacturing Company uses a job order cost system. At the beginning of February,
Rio only had one job in process, Job #594. The direct costs assigned to this job at that time
were $800 of materials and $650 of labor. Job #594 was finished during February incurring
additional direct costs of $120 for materials and $370 for labor. Job #595 was started and
finished during February. The direct costs assigned to this job were $310 for materials and
$190 for labor. Job #596 was started during February but was not finished by the end of the
month. The direct costs assigned to this job were $740 for materials and $300 for labor. Rio
applies manufacturing overhead to its products at a rate of 200% of direct labor cost. What is
Rio's cost of goods manufactured for February? 1230 1210 2420
A) $2,440
B) $3,750
C) $4,860
D) $6,500
Level: Hard LO: 5,6
50. Serenje Manufacturing Company produces nameplates and uses a job-order cost system.
The following amounts relate to nameplate production for the month of June:
Work in process inventory, June 1 ...................................................... $620
Cost of materials directly assigned to production during June ........... $1,800
Cost of labor directly assigned to production during June .................. $1,200
Cost of nameplates completed during June ......................................... $4,300
Serenje applies overhead at a predetermined overhead rate of 60% of direct material cost.
At the end of June, only one job was in Work in Process inventory. This job had been charged
with $150 of direct material cost. What is the direct labor cost assigned to this job?
A) $100
B) $160
C) $225
D) $530
Level: Hard LO: 5,7
51. Dukes Company used a predetermined overhead rate this year of $2 per direct labor
hour, based on an estimate of 20,000 direct labor hours to be worked during the year. Actual
costs and activity during the year were:
Actual manufacturing overhead cost incurred ................. $38,000
Actual direct labor hours worked .................................... 18,500
The under- or overapplied overhead for the year was:
Level: Easy LO: 5,8
52. Sargent Company applies overhead cost to jobs on the basis of 80 percent of direct labor
cost. If Job 210 shows $10,000 of manufacturing overhead cost applied, how much was the
direct labor cost on the job?
A) $12,500
B) $11,000
C) $8,000
D) $10,000
Level: Medium LO: 5
53. In the Vasquez Company, any over- or underapplied overhead is closed out to Cost of
Goods Sold. Last year, the company incurred $27,000 in actual manufacturing overhead cost,
and applied $29,000 of overhead cost to jobs. The beginning and ending balances of Finished
Goods were equal, and the Company's Cost of Goods Manufactured for the year totaled
$71,000. Given this information, Cost of Goods Sold, after adjustment for any over- or
underapplied overhead, for the year must have been:
A) $98,000
B) $73,000
C) $71,000
D) $69,000
Level: Hard LO: 6,8
54. In reviewing the accounting records at year-end, Garff Company's accountant has
determined that the following items and amounts were debited to the Manufacturing
Overhead account during the year:
Factory supervisor’s salary ............................................. $8,000
Sales commissions .......................................................... $7,000
Vacation pay for the materials storeroom clerk ............. $2,000
Including the items listed above, the debits to the Manufacturing Overhead account totaled
$245,000 for the year. Credits to the account totaled $240,000 for the year. Based on this
information, if all entries had been made correctly during the year the Manufacturing
Overhead account would have been:
A) overapplied by $4,000
B) overapplied by $12,000
C) underapplied by $5,000
D) overapplied by $2,000
Level: Hard LO: 7,8
55. Compute the October cost of direct materials used if raw material purchases for the
month were $30,000 and the inventories were as follows:
Beginning Ending
Direct materials ............................. $7,000 $4,000
Work in Process ............................. $6,000 $7,500
Finished goods ............................... $10,000 $12,000
The cost of direct materials used would be:
A) $31,500
B) $29,500
C) $27,000
D) $33,000
Level: Easy LO: 7
56. Hardin Company's manufacturing overhead account showed a $20,000 underapplied
overhead balance on December 31. Other data as of December 31 appear below:
Cost of Goods Sold.......................................................................... $800,000
Overhead applied during the year included in Cost of Goods Sold ... $200,000 – 50% =>10,000
Overhead applied during the year in the ending balances of:
Work in Process inventory ................................................................. $80,000 - 20% => 2,000
Finished Goods inventory .................................................................. $120,000 - 30% => 3,000
If the company allocates the underapplied overhead among Cost of Goods Sold and the
appropriate inventory accounts based on the amount of overhead applied during the year in
the accounts, Cost of Goods Sold after allocation will be:
A) $790,000
B) $820,000
C) $810,000
D) $780,000
Level: Medium LO: 8
Use the following to answer questions 57-60:
The accounting records of Omar Company contained the following information for last year:
Beginning Ending
Direct materials inventory ......................... $9,000 $7,000
Work in process inventory ........................ $17,000 $31,000
Finished goods inventory .......................... $10,000 $15,000
Manufacturing costs incurred:
Direct materials used ................................. $72,000
Overhead applied ...................................... $24,000
Direct labor cost (10,000 hours) ................ $80,000
Depreciation .............................................. $10,000
Rent ........................................................... $12,000
Taxes ......................................................... $8,000
Cost of goods sold ..................................... $157,000* *
Selling and administrative costs incurred:
Advertising ................................................ $35,000
Rent ........................................................... $20,000
Clerical ...................................................... $25,000
*Does not include over- or underapplied overhead.
57. The amount of direct material purchased during the year was:
A) $66,000
B) $70,000
C) $65,000
D) $74,000
Level: Medium LO: 6
58. The total costs added to Work in Process during the year were:
A) $206,000
B) $162,000
C) $176,000
D) $182,000
Level: Medium LO: 6
59. If Omar Company applies overhead to jobs on the basis of direct labor hours and Job 3 took
120 hours, how much overhead should be applied to that job?
A) $960
B) $360
C) $528
D) $288
60. The cost of goods manufactured for the year was:
A) $190,000
B) $162,000
C) $168,000
D) $135,000
Level: Medium LO: 6
At the beginning of the current year, Garber Corporation estimated that its manufacturing
overhead would be $70,000 and the activity level would be 10,000 machine-hours. The level of
activity at capacity is 14,000 machine-hours. The actual manufacturing overhead for the year
was $63,300 and the actual level of activity was 10,100 machine-hours.
90
61. If the company bases its predetermined overhead rate on estimated machine-hours, then
its predetermined overhead rate would have been:
A) $6.27
B) $7.00
C) $5.00
D) $6.33
Level: Medium LO: 3 Appendix: 3A
62. If the company bases its predetermined overhead rate on estimated machine-hours, then
its overhead for the year would have been:
A) $12,800 overapplied
C) $7,400 overapplied
D) $7,400 underapplied
Level: Medium LO: 8 Appendix: 3A
63. If the company bases its predetermined overhead rate on machine-hours at capacity, then
its predetermined overhead rate would have been:
A) $6.33
B) $6.27
C) $5.00
D) $7.00
Level: Medium LO: 3,9 Appendix: 3A
64. If the company bases its predetermined overhead rate on machine-hours at capacity, then
the cost of unused capacity reported on the income statement would have been:
A) $700
B) $7,400
C) $6,700
D) $12,800
Level: Medium LO: 5,9 Appendix: 3A
91
Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has
provided the following data for its most recent year of operations.
Estimated manufacturing overhead ....................... $139,080 Estimated machine-
hours ...................................... 3,800 Actual manufacturing overhead ............................
$137,000 Actual machine-hours ........................................... 3,780
The estimates of the manufacturing overhead and of machine-hours were made at the
beginning of the year for the purpose of computing the company's predetermined overhead
rate for the year.
65. The predetermined overhead rate is closest to:
A) $36.60
B) $36.41
C) $36.24
D) $36.05
Level: Easy LO: 3
66. The applied manufacturing overhead for the year is closest to:
A) $136,269
B) $138,348
C) $136,987
D) $137,630
Level: Easy LO: 5
67. The overhead for the year was:
A) $732 underapplied
C) $732 overapplied
Level: Easy LO: 8
92
Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the
beginning of the most recent year, the company based its predetermined overhead rate on
total estimated overhead of $210,600 and 6,000 estimated direct labor-hours. Actual
manufacturing overhead for the year amounted to $209,000 and actual direct labor-hours were
5,980.
68. The predetermined overhead rate for the year was closest to:
A) $34.95
B) $34.83
C) $34.98
D) $35.10
Level: Easy LO: 3
69. The applied manufacturing overhead for the year was closest to:
A) $208,283
B) $209,001
C) $209,898
D) $209,180
Level: Easy LO: 5
A) $702 underapplied
B) $898 underapplied
C) $702 overapplied
D) $898 overapplied
Level: Easy LO: 8
Caber Corporation applies manufacturing overhead on the basis of machine-hours. At the
beginning of the most recent year, the company based its predetermined overhead rate on
total estimated overhead of $60,600. Actual manufacturing overhead for the year amounted to
$59,000 and actual machine-hours were 5,900. The company's predetermined overhead rate
for the year was $10.10 per machine-hour.
93
71. The predetermined overhead rate was based on how many estimated machine-hours?
A) 5,783
B) 6,000
C) 5,900
D) 5,842
Level: Medium LO: 3
72. The applied manufacturing overhead for the year was closest to:
A) $58,017
B) $59,590
C) $60,600
D) $58,597
Level: Easy LO: 5
B) $590 overapplied
C) $590 underapplied
Level: Easy LO: 8
94
Dapper Company had only one job in process on May 1. The job had been charged with $3,400
of direct materials, $4,640 of direct labor, and $9,200 of manufacturing overhead cost. The
company assigns overhead cost to jobs using the predetermined overhead rate of $23.00 per
direct labor-hour.
During May, the activity was recorded:
Raw materials (all direct materials): Beginning balance .......................................................
$8,500 Purchased during the month ........................................ $42,000 Used in
production ...................................................... $48,500 Labor: Direct labor-hours worked during
the month .............. 2,200 Direct labor cost incurred ............................................ $25,520
Actual manufacturing overhead costs incurred .............. $52,800 Inventories: Raw materials,
May 30 ............................................... ? Work in process, May 30 ............................................
$32,190
Work in process inventory on May 30 contains $7,540 of direct labor cost. Raw materials
consist solely of items that are classified as direct materials.
74. The balance in the raw materials inventory account on May 30 was:
A) $33,500
B) $2,000
C) $40,000
D) $6,500
Level: Medium LO: 6
75. The cost of goods manufactured for May was:
A) $109,670
B) $124,620
C) $143,300
D) $126,820
Level: Hard LO: 6
95
76. The entry to dispose of the under- or overapplied overhead cost for the month would
include a:
A) debit of $2,200 to Manufacturing Overhead
B) debit of $14,950 to Manufacturing Overhead
C) credit of $14,950 to Manufacturing Overhead
D) credit of $2,200 to Manufacturing Overhead
Level: Hard LO: 5,8
The direct labor rate in Brent Company is $9.00 per hour, and manufacturing overhead is
applied to products using a predetermined overhead rate of $6.00 per direct labor hour. During
May, the company purchased $60,000 in raw materials (all direct materials) and worked 3,200
direct labor hours. The Raw Materials inventory (all direct materials) decreased by $3,000
between the beginning and end of May. The Work in Process inventory on May 1 consisted of
one job which had been charged with $4,000 in direct materials and on which 300 hours of
direct labor time had been worked. There was no Work in Process inventory on May 31.
77. The balance in the Work in Process inventory account on May 1 was:
A) $0
B) $6,700
C) $4,500
D) $8,500
Level: Medium LO: 4
78. The debit to Work in Process for the cost of direct materials used during May was:
A) $63,000
B) $61,000
C) $57,000
D) $67,000
Level: Medium LO: 4
79. The debit to Work in Process for direct labor cost during May was:
A) $21,000
B) $26,100
C) $28,800
D) $31,500
Level: Medium LO: 4
96
80. If overhead was underapplied by $2,500 during May, the actual overhead cost for the
month must have been:
A) $16,700
B) $21,700
C) $18,500
D) $23,500
Level: Hard LO: 5,8
Chelm Music Company manufactures violins, violas, cellos, and fiddles and uses a job-order cost
system.
81. What account should Chelm debit when the workers who carve the wood for the
instruments are paid?
A) Direct Labor
B) Work in Process
C) Manufacturing Overhead
D) Salaries and Wages Receivable E) Salaries and Wages Expense
Level: Easy LO: 4
82. What account should Chelm debit when the production manager is paid?
A) Direct Labor
B) Work in Process
Level: Medium LO: 4
83. What account should Chelm debit when the president of the company is paid?
A) Direct Labor
B) Work in Process
Answer: E Level: Easy LO: 4
97
84. What is one of the accounts that Chelm should credit when goods are sold?
A) Finished Goods
B) Work in Process
C) Cost of Goods Sold
D) Manufacturing Overhead E) Cost of Goods Manufactured
Level: Easy LO: 4
The following partially completed T-accounts summarize transactions for Western Company
during the year:
Raw Material Beg Bal 3,000 8,000 5,000 7,000 Finished Goods Beg Bal 9,000 20,000
25,000 Work in Process Beg Bal 6,000 25,000 6,500 9,000 7,000 Wages &
Salaries Payable 10,000 2,000 Beg Bal 12,000 Manufacturing Overhead 1,500 7,000
2,000 750 3,000 Cost of Goods Sold 20,000
98
85. The Cost of Goods Manufactured is:
A) $20,000
B) $34,000
C) $22,500
D) $25,000
86. The direct labor cost was:
A) $9,000
B) $12,000
C) $10,000
D) $14,000
Level: Hard LO: 7
87. The direct materials cost was:
A) $8,000
B) $6,500
C) $9,000
D) $6,000
Level: Hard LO: 7
88. The manufacturing overhead applied was:
A) $9,000
B) $3,000
C) $500
D) $7,000
Level: Hard LO: 5,7
89. The manufacturing overhead was:
A) $250 overapplied
C) $250 underapplied
D) $750 overapplied
99
Kapanga Manufacturing Company uses a job-order costing system and started the month of
October with a zero balance in its work in process and finished goods inventory accounts.
During October, Kapanga worked on three jobs and incurred the following direct costs on those
jobs:
Job B18 Job B19 Job C11 Direct materials ............................. $12,000 $25,000 $18,000 Direct
labor .................................... $8,000 $10,000 $5,000
Kapanga applies manufacturing overhead at a rate of 150% of direct labor cost. During October,
Kapanga completed Jobs B18 and B19 and sold Job B19.
90. What is Kapanga's cost of goods manufactured for October?
A) $ 50,000
B) $ 55,000
C) $ 78,000
D) $ 82,000
91. What is Kapanga's work in process inventory balance at the end of October?
A) $23,000
B) $30,500
C) $32,000
D) $43,000
100
Dillon Company applies manufacturing overhead to jobs using a predetermined overhead rate
of 75% of direct labor cost. Any under or overapplied overhead cost is closed out to Cost of
Goods Sold at the end of the month. During May, the following transactions were recorded by
the company:
Raw materials (all direct materials): Purchased during the month ........................................
$38,000 Used in production ...................................................... $35,000 Labor: Direct labor
hours worked during the month .............. 3,150 Direct labor cost
incurred ............................................ $30,000 Manufacturing overhead cost incurred
(total) ................ $24,500 Inventories: Raw materials (all direct), May 31 ..............................
$8,000 Work in process, May 1 .............................................. $9,000 Work in process, May
31 ............................................ $12,000*
*Contains $4,400 in direct labor cost.
92. The balance on May 1 in the Raw Materials inventory account was:
A) $11,000
B) $5,000
C) $7,000
D) $9,000
Level: Medium LO: 6
93. The amount of direct materials cost in the May 31 Work in Process inventory account was:
A) $7,600
B) $2,000
C) $6,300
D) $4,300
Level: Hard LO: 6
101
94. The entry to dispose of the under or overapplied overhead cost for the month would
include:
A) a debit of $2,000 to the Manufacturing Overhead account
B) a credit of $2,500 to the Manufacturing Overhead account
C) a debit of $2,000 to Cost of Goods Sold
D) a credit of $2,500 to Cost of Goods Sold
Level: Hard LO: 8
95. The Cost of Goods Manufactured for May was:
A) $84,500
B) $95,000
C) $75,500
D) $81,500
Level: Medium LO: 6
Farber Corporation uses a job-order cost system. The information below is from the financial
records of the company for last year:
Total manufacturing costs ......................... $2,500,000 Cost of goods
manufactured ...................... $2,425,000 Predetermined overhead rate ..................... 80% of
direct labor cost
Applied overhead was 30% of total manufacturing costs. The Work in Process inventory at
January 1 was 75% of the Work in Process inventory at December 31.
96. Farber Company's total direct labor cost was:
A) $750,000
B) $600,000
C) $900,000
D) $937,500
Level: Hard LO: 6 Source: CMA, adapted
102
97. Total cost of direct material used by Farber Company was:
A) $750,000
B) $812,500
C) $850,000
D) $1,150,000
98. The Work in Process inventory at December 31 was:
A) $300,000
B) $225,000
C) $100,000
D) $75,000
Killian Company began operations on January 1. The predetermined overhead rate was set at
$6.00 per direct labor-hour. Debits to Work in Process for the year totaled $550,000. Credits to
Work in Process totaled $480,000. Analysis of the Company's records indicates that direct labor
cost totaled $250,000 for the year, which represents 20,000 direct labor-hours.
99. The direct materials used in production during the year totaled:
A) $180,000
B) $240,000
C) $130,000
D) $120,000
Level: Hard LO: 7
100. If the actual manufacturing overhead cost for the year totaled $145,000, then overhead
was:
A) overapplied by $25,000
B) overapplied by $10,000
C) underapplied by $25,000
D) underapplied by $10,000
103
101. The Company's ending work in process inventory consisted of one job, Job 42. The job had
been charged with $28,000 of direct labor cost, which consisted of 2,000 actual labor-hours.
The direct materials cost in Job 42 totaled:
A) $33,000
B) $42,000
C) $17,000
D) $30,000
Level: Hard LO: 7
Echo Corporation uses a job-order costing system and applies overhead to jobs using a
predetermined overhead rate. During the year the company's Finished Goods inventory
account was debited for $360,000 and credited for $338,800. The ending balance in the
Finished Goods inventory account was $36,600. At the end of the year, manufacturing
overhead was overapplied by $15,900.
102. The balance in the Finished Goods inventory account at the beginning of the year was:
A) $15,900
B) $15,400
C) $21,200
D) $36,600
Level: Medium LO: 7
103. If the applied manufacturing overhead was $169,300, the actual manufacturing overhead
cost for the year was:
A) $168,800
B) $153,400
C) $190,000
D) $185,200
Level: Medium LO: 7
104
The following partially completed T-accounts summarize transactions for Farwest Company
during the year:
Raw Materials Beg Bal 4,700 10,000 6,900 Finished Goods Beg Bal 1,900 22,900
26,300 Work in Process Beg Bal 4,600 26,300 7,400 8,000 6,800 Manufacturing
Overhead 2,600 6,800 3,000 1,900 Wages & Salaries Payable 12,300 1,400 Beg Bal
11,000 Cost of Goods Sold 22,900
104. The Cost of Goods Manufactured was:
A) $22,900
B) $26,300
C) $6,400
D) $49,200
Level: Medium LO: 7
105
105. The direct labor cost was:
A) $8,000
B) $12,300
C) $12,600
D) $11,000
Level: Hard LO: 7
106. The direct materials cost was:
A) $8,000
B) $10,000
C) $7,400
D) $4,600
Level: Hard LO: 7
107. The manufacturing overhead applied was:
A) $1,900
B) $6,800
C) $12,900
D) $3,000
Level: Medium LO: 7
108. The manufacturing overhead was:
C) $400 overapplied
Level: Medium LO: 7

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Chapter 3

A) Only statement I is true.

C) the amount of cost placed into production during the period.

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