Mitchell Franklin; Patty Graybeal; Dixon Cooper

1.

LO 4.1A printing company manufactures notebooks of various sizes. The company manufactures 3,000 notebooks each day. Should the company use process costing or job order costing?

2.

LO 4.1Burnham Industries incurs these costs for the month:

A list of costs reads “Direct materials $2,000”, “Direct labor 3,000”, “Factory depreciation expense 3,500”, “Utility expense 750”, “CEO’s salary 4,000”.

What is the prime cost?

3.

LO 4.1Choco’s Chocolates incurs these costs for the month:

A list of costs reads “Direct materials $15,000”, “Direct labor 25,000”, “Factory depreciation expense 45,000”, “Utility expense 2000”, “Payroll staff’s salary 15,000”.

What is the conversion cost?

4.

LO 4.1How do job order costing and process costing differ with respect to recording direct materials and direct labor?

5.

LO 4.1Why are product costs assigned to the product and period costs immediately expensed?

6.

LO 4.3Is the cost of goods manufactured the same as the cost of goods sold?

7.

LO 4.3From beginning to end, place these items in the order of the flow of goods.

cost of goods sold
raw materials inventory
finished goods inventory
work in process inventory

8.

LO 4.4How is the predetermined overhead rate determined?

9.

LO 4.4How is the predetermined overhead rate applied?

10.

LO 4.5Why are the overhead costs first accumulated in the manufacturing overhead account instead of in the work in process inventory account?

11.

LO 4.6Why is the manufacturing overhead account debited as expenses are recognized and then credited when overhead is applied?

12.

LO 4.7Match the concept on the left to its correct description.

A. job order costing	i. computes the overhead applied to each job
B. materials requisition sheet	ii. source document indicating the number of hours an employee worked on specific jobs
C. overapplied overhead	iii. source document indicating the raw materials assigned to a specific production job
D. predetermined overhead rate	iv. the cost accounting system used by pet food manufacturers
E. process costing	v. the cost accounting system used by law firms
F. time ticket	vi. the result when the actual overhead is less than the amount assigned to each specific job
G. underapplied overhead	vii. the result when the actual overhead is more than the amount assigned to each specific job

13.

LO 4.8When compared to manufacturing companies, service industries do not generally use ________ as a component of product cost.

Questions