Question

MANAGERIAL ACCOUTING

1. Overhead costs actually incurred in production are recorded in such a way to:

A.   Increase Work-in-process

B.   Decrease Work-in-process

c. Increase Manufacturing Overhead

d. Decrease Manufacturing Overhead

2. A product, which cost $100 in manufacturing, has been sold for $120 for cash. For this transaction,

             which of the following is a correct accounting treatment?

             A.   Increase Cost of goods sold by $120

B.   Decrease Sales revenue by $120

C.   Decrease Finished goods by $100

d. Increase cash by $20

3. Which of the following is true about Under-applied overhead?

a. It creates a problem because it eventually over-states cost of goods sold.

b. It should be disposed of by increasing Cost of goods sold.

C.   It makes total manufacturing costs over-stated.

D. It implies that the debit side of the Manufacturing Overhead account is smaller than its credit side.

4. In July, I started making 1 unit of a product. I spent $200, but it was not finished. In August, I finished the unit which was started in July. For that unit, I incurred another $100. Also, I started making 6 more units. Of those 6 units, 4 were finished and two units were not. For the four finished units, I incurred $1,200 (for the four together). For the two unfinished units, I incurred $500 (for the two together). For August, my Cost of Goods Manufactured was:

a. $1,200    

   B. $1,300       

C. $1,500        

D. $1,700     

   E. $1,800    

     F. $2,000

5. I made a product at a cost of $120. I incurred a $10 cost in advertising the product. Then, I sold the

product at a price of $180.   My Cost of Goods Sold was:

A.   $60                                   B. $120                       C. $130                                    D. $50

6. The following data are given for a period (Amounts are all in $):

	Beginning	Ending	For period
Raw Materials	100	250
Work In Process	3,000	2,400
Finished Goods	6,000	9,300
Raw (direct) Materials used:			3,500
Direct labor			5,000
Manufacturing Overhead			7,000

The amount of Cost of Goods Manufactured is:

A. $5,400                 B. $15,500                   C. $16,100                   D. $18,300

7. Use the same information given above.The amount of Cost of Goods Sold is:

a. $2,100                 B. $12,200                  C. $12,800                  D. $15,000

8. A company applies overhead on the basis of direct labor hours ($12 per direct labor hours). At the beginning of a period, there were no inventories. The actual amount of overhead incurred during the period was $330. No product was sold during the period. The following additional information is available:

product	Direct Material Cost	Direct labor cost	Actual Direct labor Hours	Job Status
201	$140	$450	15 hrs	Complete
202	$200	$300	10 hrs	Complete
203	$320	$150	4 hrs	Incomplete

At the end of the period, the Work-in-Process account shows what amount? ______________

9. A company actually incurred $10,000 depreciation cost in producing many different products. For this depreciation, the appropriate journal entry will be:

A. dr. Depreciation expense     10,000

cr Accumulated depreciation 10,000

B. dr Manufacturing overhead 10,000

cr Accumulated depreciation 10,000

C. dr. Depreciation expense     10,000

cr Cash                                   10,000

D. dr Administrative Expense 10,000

cr. Accumulated depreciation 10,000

10 . the following amounts are shown as T-accounts:

Debit side credit side

raw materials
100*
500
	x
200**

Debit side credit side

manufacturing overhead
300
	320

Debit Side credit side

work-In Process
900*	1,800
3,000
2,100**

Debit side credit side

Finished Goods
2,000*
1,800
3,800**

* and ** represent beginning and ending balances, respectively.

Which of the following is not true?    

A.   Raw materials used in production amounted $400.

B.    Manufacturing overhead was over-applied.

C.    Cost of goods manufactured was $1,800.

D.   The total manufacturing costs incurred for the period were $3,900.

11. The main document that summarizes costs assigned to a particular job in job-order costing is called

A. Production report    B. Job-cost sheet          C. Bill of costs

12. Which of the following companies is not likely to use job-order costing?

A. Law firm                 B. Custom furniture     C. Electric power plant

The following information relates to Questions 13 through 15.

the following data are given for the period:
Estimated (budgeted) Manufacturing overhead cost	$60,000
Actual manufacturing overhead cost	$67,000
Estimated Activity Base	3,000 machine hours
Actual Activity Base	3,300 machine hours

13. Calculate the predetermined overhead rate. _________________

14. What is the amount of applied overhead (manufacturing overhead applied to production) is: $_________

15. Manufacturing overhead is:

A    Under-applied by $1,000

b. Over-applied by $6,000    

c. Over-applied by $7,000

d. Neither over-applied nor under-applied

Answer 1

1)

When overhead costs are incurred entry will be passed as shown below.

Manufacturing overheads           Debit

Cash                                                      Credit

When manufacturing overhead is applied to production, entry will be passed as shown below.

Work in process                                               Debit

Manufacturing overheads           Credit

Hence, correct option is “c. Increase Manufacturing Overhead”.