Exam 3: Cost Accumulation for Job-Shop and Batch Production Operations

Use the following to answer questions: Before prorating overhead, the current period overhead component of Cost of Goods Sold for Wilmington Company was $230,000, while the current period overhead component of the ending inventory was $80,000. Manufacturing overhead of $310,000 was applied during the period, whereas $296,000 was actually incurred. Wilmington has no Work-in-Process inventory at the end of the period. -By how much will Wilmington Company's operating income differ if the manufacturing-overhead variance is closed to Cost of Goods Sold instead of prorated between inventory and cost of goods sold?

If the amount of Transfers Out exceeds the amount of Transfers In of an account during the period:

Use the following to answer questions: Key: BB = Beginning Balance EB = Ending Balance -The missing amount for letter f is:

Use the following to answer questions: Mansfield Corporation estimates its manufacturing overhead costs to be $160,000 and its direct labor costs to be $320,000 for 2007. The actual manufacturing labor costs were $80,000 for job 1, $120,000 for job 2 and $160,000 for job 3 during 2007. Manufacturing overhead is applied to jobs on the basis of direct labor costs using a predetermined overhead rate. The actual manufacturing overhead cost for the year was $172,000. -The amount of the manufacturing overhead variance during 2007 was:

The journal entry to record cost of goods sold would include a:

Oak Bluff Company incorrectly assigns a $50,000 overhead item to selling expense. Borden has more inventory at the end of the year than at the beginning of the year. The result of this error will be to:

An unethical contractor will be more likely to understate the actual percentage of completion on a job than to overstate it.

The overhead variance is the difference between the actual overhead spending and the applied overhead.

Use the following to answer questions: Use the following information for Swansea Manufacturing Company for the next three questions: -The ending Balance in Work-in-Process was:

The left side of the Manufacturing Overhead account applies overhead costs using the predetermined rate, while the right side accumulates actual overhead costs.

If actual manufacturing overhead is greater than applied manufacturing overhead, most companies will:

Which of the following companies would most likely use a process costing system?

(1) Denotes materials purchased Assume that the following T accounts represent data from the Bertelson Corporation's accounting records. Required: (a) Find the missing amounts represented by the letters a, b, c, d and e. (b) Determine the company's predetermined overhead rate, based on labor cost. (c) Compute the Manufacturing Overhead variance. BB = Beginning Balance; EB = Ending Balance TO = Transferred Out

Operation costing is appropriate when companies produce large batches of similar products and wish to trace the direct labor component of each unit.

The Work-in- Process inventory account represents the cost of all active jobs that have not yet been completed.

The Button Box is a custom decorating and design store. The company prepares custom draperies to order for customers. The following transactions were incurred to support job number 757, custom drapes and furniture coverings for a luxury home: (a) Purchased $4,000 of materials on account. (b) Issued $200 supplies from the materials inventory. (c) Paid for the materials purchased in transaction (a) (d) Issued $3,200 of materials to the production department. (e) Incurred hourly labor to sew curtains of $1,500 and supervisory labor of $1,000. Supervisors are assigned to as many as 10 jobs at once. (f) Paid $2,000 for utilities and other miscellaneous items for the manufacturing plant. (g) Overhead is applied at 200% of direct labor cost. (h) Recorded depreciation on factory equipment of $1,000 and Sales director's company car of $500. Required: Prepare journal entries to record these transactions.

Both normal costing and standard costing use actual inputs to assign direct costs to units produced.

What is the cost of goods sold for 2007? The following information pertains to Natick Wood Shop:

The job-order costing process is basically the same in both service and manufacturing firms.

In a job-order costing system, the journal entry to record depreciation on factory equipment would be recorded by a: