Quiz 3

1.  Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:

The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $13.00 per direct labor-hour was based on a cost formula that estimated $520,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

1. Raw materials were purchased on account, $584,000.
2. Raw materials used in production, $537,600. All of of the raw materials were used as direct materials.
3. The following costs were accrued for employee services: direct labor, $470,000; indirect labor, $150,000; selling and administrative salaries, $249,000.
4. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $464,000.
5. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $370,000.
6. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
7. Jobs costing $1,478,700 to manufacture according to their job cost sheets were completed during the year.
8. Jobs were sold on account to customers during the year for a total of $3,367,500. The jobs cost $1,488,700 to manufacture according to their job cost sheets.

What is the ending balance in Raw Materials?

2.  What is the ending balance in Work in Process?

3.  What is the total amount of actual manufacturing overhead cost incurred during the year?

4.  Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?

Debit Work in Process and credit Raw Materials.
Debit Work in Process, debit Manufacturing Overhead, and credit Direct Materials.
Debit Work in Process, debit Manufacturing Overhead, and credit Raw Materials.
Debit Manufacturing Overhead and credit Raw Materials.

5.  When companies incur selling and administrative costs, those costs ________.

multiple choice
should be treated as product costs
do not flow through the three inventory accounts
should flow through the Manufacturing Overhead account
should flow through the Work in Process account

6.   Dacosta Corporation had only one job in process on May 1. The job had been charged with $2,400 of direct materials, $6,966 of direct labor, and $10,104 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $19.60 per direct labor-hour.

During May, the following activity was recorded:

Raw materials (all direct materials):     
Beginning balance    $ 9,100
Purchased during the month    $38,600
Used in production    $39,900
Labor:     
Direct labor-hours worked during the month    2,500
Direct labor cost incurred    $25,110
Actual manufacturing overhead costs incurred    $33,900
Inventories:     
Raw materials, May 30    ?
Work in process, May 30    $17,093
 

Work in process inventory on May 30 contains $3,849 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.

The balance in the raw materials inventory account on May 30 was:

$7,800
$1,300
$29,500
$30,800

7.  For the month of October, Janus Corporation used $30,000 worth of direct materials in production and incurred direct labor costs of $60,000. Actual manufacturing overhead costs were $40,000, whereas $45,000 was the manufacturing overhead applied to work in process. What is the amount of total manufacturing costs added to production that would appear in the Schedule of Cost of Goods Manufactured for October?

$90,000
$130,000
$135,000
$175,000

8.   Zimmer, Incorporated started the month of January with beginning finished goods inventory of $20,000. The cost of goods manufactured during the month was $120,000 and the ending finished goods inventory was $50,000. What is the unadjusted cost of goods sold for January?

$90,000
$120,000
$140,000
$150,000

9.  The following information is available for the current year ending December 31:

Manufacturing overhead applied    $ 150,000     
Actual amount of manufacturing overhead costs    120,000     
Amount of overhead applied during the year that is in:          
Work in Process    $ 37,500    25%
Finished Goods    52,500    35%
Cost of Goods Sold    60,000    40%
Total overhead applied    $ 150,000    100%
 

Knowledge Check 01

If the Manufacturing Overhead account is closed to Cost of Goods Sold, the related entry will ________.

decrease the cost of goods sold by $30,000
increase the cost of goods sold by $30,000
decrease the cost of goods sold by $150,000
increase the cost of goods sold by $150,000

Knowledge Check 02
If the Manufacturing Overhead account is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold, the related entry will include a ________.

debit to Cost of Goods Sold for $12,000
credit to Cost of Goods Sold for $12,000
credit to Cost of Goods Sold for $30,000
debit to Work in Process for $7,500

10.

Baka 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 $240,900 and 5,900 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $242,800 and actual direct labor-hours were 5,000.

The overhead for the year was: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice
$36,750 underapplied
$38,650 underapplied
$36,750 overapplied
$38,650 overapplied