Accounting MCQs and other Problems

1. Cost of raw materials is debited to Raw Materials Inventory when the a. materials are ordered. b. materials are received. c. materials are put into production. d. bill for the materials is paid. 2. Managerial accounting is applicable to a. service entities. b. manufacturing entities. c. not-for-profit entities. d. all of these. 3. The principal accounting record used in assigning costs to jobs is a. a job cost sheet. b. the cost of goods manufactured schedule. c. the Manufacturing Overhead control account. d. the store ledger cards. 4. When manufacturing overhead costs are assigned to production in a process cost system, they are debited to a. the Finished Goods Inventory account. b. Cost of Goods Sold. c. a Manufacturing Overhead account. d. the Work in Process account. 5. A process cost accounting system is most appropriate when a. a variety of different products are produced, each one requiring different types of material, labor, and overhead. b. the focus of attention is on a particular job or order. c. similar products are mass-produced. d. individual products are custom made to the specification of customers. 6. Internal reports are generally a. aggregated. b. detailed. c. regulated. d. unreliable. 7. Equivalent units are calculated by a. multiplying the percentage of work done by the equivalent units of output. b. dividing physical units by the percentage of work done. c. multiplying the percentage of work done by the physical units. d. dividing equivalent units by the percentage of work done. 8. On the cost of goods manufactured schedule, the cost of goods manufactured agrees with the a. balance of Finished Goods Inventory at the end of the period. b. total debits to Work in Process Inventory during the period. c. amount transferred from Work in Process Inventory to Finished Goods during the period. d. debits to Cost of Goods Sold during the period. 9. Job cost sheets constitute the subsidiary ledger for the a. Finished Goods Inventory account. b. Cost of Goods Sold account. c. Work In Process Inventory account. d. Cost of Goods Manufactured account. 10. If annual overhead costs are expected to be $600,000 and direct labor costs are expected to be $1,000,000, then a. $1.67 is the predetermined overhead rate. b. for every dollar of manufacturing overhead, 60 cents of direct labor will be assigned. c. for every dollar of direct labor, 60 cents of manufacturing overhead will be assigned. d. a predetermined overhead rate cannot be determined. 11. The flow of costs in a job order cost system a. involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done. b. cannot be measured until all jobs are complete. c. measures product costs for a set time period. d. generally follows a LIFO cost flow assumption. 12. A manufacturing company reports cost of goods manufactured as a. a current asset on the balance sheet. b. an administrative expense on the income statement. c. a component in the calculation of cost of goods sold on the income statement. d. a component of the raw materials inventory on the balance sheet. 13. Both direct materials and indirect materials are a. raw materials. b. manufacturing overhead. c. merchandise inventory. d. sold directly to customers by a manufacturing company. 14. Factory Labor is a(n) a. expense account. b. control account. c. subsidiary account. d. manufacturing cost clearing account. In the month of June, a department had 6,000 units in beginning work in process that were 70% complete. During June, 24,000 units were transferred into production from another department. At the end of June there were 3,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process while conversion costs are incurred uniformly throughout the process. 15. The equivalent units of production for materials for June was a. 27,000 equivalent units. b. 30,000 equivalent units. c. 31,200 equivalent units. d. 24,000 equivalent units. 16. The wages of a timekeeper in the factory would be classified as a. a prime cost. b. direct labor. c. indirect labor. d. compliance costs. 17. In determining total manufacturing costs on the cost of goods manufactured schedule, a. beginning work in process inventory should have a zero balance. b. actual manufacturing overhead costs appear as a deduction. c. manufacturing overhead applied is added to direct materials and direct labor. d. ending work in process inventory is deducted from beginning work in process inventory. 18. Debits to Work in Process Inventory are accompanied by a credit to all but one of the following accounts: a. Raw Materials Inventory. b. Factory Labor. c. Manufacturing Overhead. d. Cost of Goods Sold. 19. Manufacturing costs that cannot be classified as either direct materials or direct labor are known as a. period costs. b. nonmanufacturing costs. c. selling and administrative expenses. d. manufacturing overhead. 20. Overhead application is recorded with a a. credit to Work in Process Inventory. b. credit to Manufacturing Overhead. c. debit to Manufacturing Overhead. d. credit to job cost sheets.(Problem #21 is 16 points) 21. For each item, identify all applicable cost labels. Use the following code in your answer: 1 Conversion Cost 2 Product Cost 3 Period Cost a. Advertising b. Direct materials used c. Sales salaries d. Indirect factory labor _____ e. Repairs to office equipment f. Factory manager’s salary g. Direct labor h. Indirect materials (Problem #22 is 14 points) 22. Manufacturing costs for Carson Company for selected months are as follows: April July October Beginning work in process $ 80,000 (f) $ 98,000 Direct materials used 280,000 $190,000 155,000 Direct labor 195,000 170,000 ( j ) Manufacturing overhead (a) 150,000 90,000 Total manufacturing costs 870,000 510,000 430,000 Total cost of work in process (b) 640,000 (k) Ending work in process 75,000 (g) ( l ) Cost of goods manufactured (c) 505,000 385,000 Beginning finished goods (d) 38,000 (m) Cost of goods available for sale 960,000 (h) 480,000 Ending finished goods (e) 75,000 (n) Cost of goods sold 820,000 ( i ) 355,000 INSTRUCTIONS Indicate the missing amounts. (Problem #23 is 10 points)23. Hardy Company manufactures a single product by a continuous process, involving two production departments. The records indicate that $120,000 of direct materials were issued to and $200,000 of direct labor was incurred by Department 1 in the manufacture of the product. The factory overhead rate is $20 per machine hour; machine hours were 5,000 in Department 1. Work in process in the department at the beginning of the period totaled $35,000; and work in process at the end of the period was $25,000. INSTRUCTIONS Prepare entries to record (a) The flow of costs into Department 1 for (1) direct materials (2) direct labor (3) overhead (b) The transfer of production costs to Department 2.