question

Cost Accounting

answer

An area of accounting that involves measuring, recording, and reporting product costs

question

Cost Accounting System

answer

Manufacturing-cost accounts taht are fully integrated into the general ledger of a company

question

Job Cost Sheet

answer

A form used to record the costs chargable to a specific job and to determine the total and unit costs of the completed job

question

Job Order Cost System

answer

A cost accounting system in which costs are assigned to each job or batch

question

Materials Requisition Slip

answer

A document authorizing the ssiance of raw materials from the store room to production

question

Overapplied Overhead

answer

A situation in which overhead assigned to work in proces is greater than the overhead incurred

question

Pre-determined Overhead Rate

answer

A rate based on the relationship betwen estimated annual overhead costs and expected annual operating activity, expressed in terms of a common activity base

question

Process Cost System

answer

A cost accounting systm used whwen a company manufactures a large volume similar products; process is continuous (ie cereal)

question

Summary Entry

answer

A JE that summarizes the totals from multiple transactions

question

Time Ticket

answer

A document that indicates the employee, the hours worked, the accont and job to be charged, and the total labor cost

question

Underapplied Overhead

answer

A situation in which overhead assigned to work in proces is less than the overhead incurred

question

Cost accounting invovlest he measuring, recording, and reporting of (a) Product Costs (b) Future Costs (c) Manufacturing Process (d) Managerial Accounting Decisions

answer

(a) Product Costs

question

A company is more likely to use a job order costing system if (a) it manufactures a large volume of similar products (b) its production is continuous (c) it manufactures products with unique characteristics (d) it uses a periodic inventory system

answer

(c) it manufactures products with unique characteristics

question

In accumulating raw materials costs, companies debit the cost of raw materials purchsed in a perpetual system to (a) raw materials purchases (b) raw materials inventory (c) pruchases (d) work in proceess

answer

(b) raw materials inventory

question

The flow of costs in job order costing (a) beings with work in process inventory and ends with finished goods inventory (b) beigns as soon as a sale occurs (c) parrallels the physical flow of materialsas they are converted into finished goods (d) is necessary to prepare thecost of goods manufactured schedule

answer

(c) parrallels the physical flow of materialsas they are converted into finished goods

question

Raw matierals are assigned to a job when (a) the job is sold (b) the materials are purchased (c) the matierals are recieved from the vendor (d) the materials are issued by the materials storeroom.

answer

(d) the materials are issued by the materials storeroom.

question

The source documents for assigning costs to job cost sheets are (a) invoices, time tickets, and the pre-determined overhead rate (b) materials requisition slips, time tickets, and the actual overhead costs (c) materials requisition slips, payroll register and the pre-determined overhead rate (d) materials requisition slips, time tickets, and the pre-determined overhead rate

answer

(d) materials requisition slips, time tickets, and the pre-determined overhead rate

question

In recording the issuance of raw materials in a job order cost system, it would be INCORRECT to (a) Debit work-in-process inventory (b) debit Finished Goods Inventory (c) debit Manufacturing overload (d) credit raw materials inventory

answer

(b) debit Finished Goods Inventory

question

The entry when direct factory labor is assigned to jobs is a debit to (a) work-in-process inventory and a credit to factory labor (b) manufacturing overhead and credit to factory labor (c) factory labor and a credit to manufacturing overhead (d) factory labor and a credit to work-in-process

answer

(a) work-in-process inventory and a credit to factory labor

question

The formula for computing the pre-determined manufacturing overhead rate is estimated annual overhead costs [divided by] an expected annual operating activity, expressed as (a) direct labor cost (b) direct labor hours (c) machine hours (d) any of the above: direct labor cost, direct labor hours, and machine hours

answer

(d) any of the above: direct labor cost, direct labor hours, and machine hours

question

In company "x", the predetermined overhead rate is 80% of direct labor cost. During the month, company "x" incurs $210,000 of factory labor costs, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead incurred was $200,000. The amount of overhead debited to Work-in-Process inventory should be (a) $200,000 (b) 144,000 (c) $168,000 (d) 160,000

answer

(b) 144,000: $180,000 * 80%

question

Company "Y" completes job #123 at a cost of $4,500 and later sells it for $7,000 cash. A correct entry is: (a) Debit finished goods inventory $7,000 and credit work-in-process inventory $7,000 (b) Debit COGS $7,000 and credit Finished Goods Inventory $7,000 (c) Debit finished goods inventory $4,500 and credit work-in-process inventory $4,500 (d) Debit A/R $7,000 and credit sales $7,000

answer

(c) Debit finished goods inventory $4,500 and credit work-in-process inventory $4,500

question

At the end of an accounting period, a company using a job order costing system prepares the cost of goods manufactured: (a) from the job cost sheet (b) from the work-in-process inventory account (c) by adding direct materials used, direct labor incurred, and manufacturing overhead incurred (d) from the COGS account

answer

(b) from the work-in-process inventory account

question

At the end of the year, a company has a $1,200 debit balance in the Manufacturing Overhead. The company (a) makes an adjusting JE by debiting manufacturing overhead applied for $1,200 and credits the Manufacturing Overhead for $1,200 (b) makes an adjusting JE by debiting Manufacturing overhead expense for $1,200 and credit manufacturing overhead for $1,200 (c) makes an adjusting JE by debiting COGS for $1,200 and crediting manufacturing overhead for $1,200 (d) makes no adjusting JE because difference between actual overhead and the amount applied are a normal part of job order costing and will average out over the next year

answer

(c) makes an adjusting JE by debiting COGS for $1,200 and crediting manufacturing overhead for $1,200

question

Manufacturing overhead is under applied if: (a) actual overhead is less than applied (b) actual overhead is greater than applied (c) the predetermined rate equals he actual rate (d) actual overhead equals applied overead

answer

(b) actual overhead is greater than applied

question

cost accounting involves

answer

the measuring, recording and reporting of product costs

question

what do companies use cost accounting for?

answer

determine which products to produce, what price to charge and the amounts to produce

question

perpetual accounting system

answer

provides immediate, up-to-date information on the cost the cost of a product

question

there are 2 basic kinds of cost accounting systems

answer

1. job order cost system 2. a process cost system

question

an important feature of job order costing

answer

each job or batch has its own distinguishing characteristics

question

the objective of job order costing is to

answer

compute the cost per job

question

process costing

answer

accumulates product-related costs for a period of time (week, month....) instead of assigning cost t specific products or job orders

question

There are two basic types of cost accounting systems

answer

1. job order cost 2. process cost

question

Under a job cost order system, the objective is to

answer

compute the cost per job

question

the objective for both cost accounting systems is to

answer

1. provide unit cost information for product costing 2. cost control 3. inventory valuation 4. financial statement presentation

question

the flow of job order costing is

answer

1. manufacturing costs 2. work-in-process inventory 3. finished goods inventory 4. COGS

question

Manufacturing costs include

answer

1. raw materials 2. factory labor 3. manufacturing overhead

question

two major steps in the flow of costs

answer

1. accumulating the manufacturing costs incurred 2. assigningthe accumulated costs to the work done

question

Raw materials inventory: debit: ______ Credit: _______

answer

debit purchases; credit materials used

question

Factory labor: debit: ______ Credit: _______

answer

debit factory labor incurred credit factory labor used

question

Manufacturing overhead: debit: ______ Credit: _______

answer

debit: depreciation, insurance, repairs; indirect materials used credit indirect labor used

question

work in process inventory debit: ______ Credit: _______

answer

debit: direct materials used, direct labor used, overhead applied credit: cost of completed jobs

question

finished goods inventory debit: ______ Credit: _______

answer

debit: cost of completed jobs credit: COGS

question

COGS debit: ______ Credit: _______

answer

Debit: COGS

question

In a manufacturing company, the cost of factory labor consits of (3) costs:

answer

1. gross earnings of factory workers 2. employer payroll taxes on the earnings 3. fringe benefits (PTO, insurance, etc)

question

As costs are incurred, companies _____ cost to factory labor as they incur the costs

answer

debit

question

overhead costs can be recognized

answer

1. daily 2. periodically (week, month, qtr, year)

question

The purpose of job cost sheets is to

answer

constitute the subsidiary ledger for the Work In Proces Inventory Account

question

subsidary ledger

answer

consists of individual recorfds for each individual item (ie each job)

question

control account

answer

summarizes the detailed data regarding specific jobs contained in the job cost sheets

question

Each entry to work-in-progress inventory must be accompanied by

answer

a corresponding posting to one or more job cost sheets

question

Companies assign raw materials costs when

answer

their materials storeroom issues the materials

question

the company may use any of the following iventory costing methods in costing the requistions to the individual job cost sheets

answer

1. LIFO 2. FIFO 3. average cost

question

companies assign factory labor costs to jobs on the basis of

answer

time tickets prepared when the work is performed

question

manufacturing overhead

answer

relates to production operations as a whole; costs cannot be based on specific jobs

question

pre-determined overhead rate

answer

based on the relationship between eseetimated annual overhead costs and expected annual activity expressed in terms of "activity base"

question

the activity cost may be stated in terms of

answer

1. direct labor costs 2. direct labor hours 3. machine hours 4. other measures to prove themselves useful

question

formula for pre-determined overhead rate

answer

estimated annual overhead cost/expected annual operating activity

question

Actual activity based used [x] pre-determined overhead rate

answer

assigned to work in process --> individual jobs

question

the use of a pre-determined overhead rate

answer

enables the company to determine the approximate total cost of each job when it completes the job

question

activity-based costing is the preferred method of costing becuase

answer

it can more accurately allocate overhead costs based on the activities that give rise to costs

question

At the end of each (week, month, qtr, year), the balance in the work-in-process inventory should equal

answer

the sum of the costs shown on the job cost sheets of the individual jobs

question

what type of acount is "finshed goods inventory"?

answer

controlled account

question

cost-plus contracts

answer

the customer's bill is the sum fo the costs incurred on the job plus a profit amount that is calculated as a % of the costs incurred

question

up-to-date cost records

answer

enable a service company to immediately notify a customer of cost overruns due to customer equest for changes in the original plan or unexpected complications

question

service contracts-in-process

answer

record job costs prior to completion

question

the cost flows can be categorized in 1 of 4 types

answer

1. accumulation 2. assignment to jobs 3. completed jobs 4. when goods are sold

question

accumulation is done in (3) steps

answer

1. purchasing raw materials 2. incurring labor costs 3. incurring manufcturing overhead costs

question

assignment to jobs

answer

1. assigns materials to work in process or treats them as overhead if the raw materials cannot be associated with a specific job 2. assigns factor labor in the same methodolgy as materials 3. assignes manufacturing overhead to work in process

question

completed jobs

answer

the company transfers the cost of the completed job out of work of process inventory into finished goods inventory

question

when goods are sold

answer

the company tranfers the cost out of finished goods inventory and into COGS

question

when using a pre-determined overhead rate....

answer

do not assisgn overhead using actual overhead costs; rather use a pre-determined rate

question

Job cost sheets are derived from the following source documents

answer

1. materials requisition slips 2. labor time tickets 3. pre-determined overhead rate

question

the advantage of job order costing

answer

1. more precise in assignment of costs than process costing 2. provides more useful information for determining the profitability of particular projects and estimating costs

question

disadvantage of job order costing

answer

requires a significant amount of data entry; yet barcoding, scanners help alleviate this issue

question

a common problem of all costing systems

answer

how to allocate overhead to the finished product

question

the cost of goods manufactured schedule

answer

shows manufacturing overhead applied as opposed to actual costs

question

the amount of manufacturing overhead applied is added to

answer

the amount of direct materials and direct labor to deterimine total manufacturing costs

question

when manufacturing overhead has a ____ balance, overhead is said to be underapplied

answer

debit

question

when manufacturing overhead has a ____ balance, overhead is said to be over-applied

answer

credit

question

if actual overhead is GREATER than applied, manufacturing overhead is

answer

underapplied

question

if actual overhead is LESS than applied, manufacturing overhead is

answer

overapplied

question

Underapplied overhead is ____ to COGS

answer

debited

question

Overapplied overhead is ____ to COGS

answer

credited

question

COGS is reported on the income statemente before/after adjusting it

answer

after

Accounting 1020 (Chapter 15) – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards