ACCOUNTING ON-LINE EXAM

Part A -

1. Managerial accounting applies to each of the following types of businesses except

A) service firms.

B) merchandising firms.

C) manufacturing firms.

D) Managerial accounting applies to all types of firms.

2. Internal reports must be communicated

A) daily.

B) monthly.

C) annually.

D) as needed.

3. Which of the following is not a manufacturing cost category?

A) Cost of goods sold

B) Direct materials

C) Direct labor

D) Manufacturing overhead

4. Which one of the following costs would not be inventoriable?

A) Period costs

B) Factory insurance costs

C) Indirect materials

D) Indirect labor costs

5. Sales commissions are classified as

A) overhead costs

B) period costs.

C) product costs.

D) indirect labor.

6. For inventoriable costs to become expenses under the matching principle,

A) the product must be finished and in stock.

B) the product must be expensed based on its percentage-of-completion.

C) the product to which they attach must be sold.

D) all accounts payable must be settled.

7. A manufacturing company reports cost of goods manufactured as a(n)

A) current asset on the balance sheet.

B) administrative expense on the income statement.

C) component in the calculation of cost of goods sold on the income statement.

D) component of the raw materials inventory on the balance sheet.

8. Hollern Combines, Inc. has $10,000 of ending finished goods inventory as of December 31, 2010. If beginning finished goods inventory was $5,000 and cost of goods sold was $20,000, how much would Hollern report for cost of goods manufactured?

A) $22,500

B) $5,000

C) $25,000

D) $15,000

9. If the amount of "Cost of goods manufactured" during a period exceeds the amount of "Total manufacturing costs" for the period, then

A) ending work in process inventory is greater than or equal to the amount of the beginning work in process inventory.

B) ending work in process is greater than the amount of the beginning work in process inventory.

C) ending work in process is equal to the cost of goods manufactured.

D) ending work in process is less than the amount of the beginning work in process inventory.

10. Carly Manufacturing Company's accounting records reflect the following inventories:

During 2010, $500,000 of raw materials were purchased, direct labor costs amounted to $600,000, and manufacturing overhead incurred was $480,000. The total raw materials available for use during 2010 for Carly Manufacturing Company is

A) $810,000.

B) $260,000.

C) $450,000.

D) $760,000.

11. Carly Manufacturing Company's accounting records reflect the following inventories:

During 2010, $500,000 of raw materials were purchased, direct labor costs amounted to $600,000, and manufacturing overhead incurred was $480,000. If Carly Manufacturing Company's cost of goods manufactured for 2010 amounted to $1,390,000, its cost of goods sold for the year is

A) $1,500,000.

B) $1,250,000.

C) $1,350,000.

D) $1,430,000.

12. Hopkins Manufacturing Inc.'s accounting records reflect the following inventories:

During 2010, Hopkins purchased $760,000 of raw materials, incurred direct labor costs of $100,000, and incurred manufacturing overhead totaling $128,000. How much is raw materials transferred to production during 2010 for Hopkins Manufacturing?

A) $992,000

B) $776,000

C) $760,000

D) $744,000

13. Modine Manufacturing Inc.'s accounting records reflect the following inventories:

During 2010, Modine purchased $1,140,000 of raw materials, incurred direct labor costs of $150,000, and incurred manufacturing overhead totaling $192,000. How much would Modine Manufacturing report as cost of goods manufactured for 2010?

A) $1,464,000

B) $1,524,000

C) $1,518,000

D) $1,488,000

14. Which one of the following does not appear on the balance sheet of a manufacturing company?

A) Finished goods inventory

B) Work in process inventory

C) Cost of goods manufactured

D) Raw materials inventory

15. If the cost of goods manufactured is less than the cost of goods sold, which of the following is correct?

A) Finished Goods Inventory has increased.

B) Work in Process Inventory has increased.

C) Finished Goods Inventory has decreased.

D) Work in Process Inventory has decreased.

16. As of December 31, 2010, Stand Still Industries had $1,500 of raw materials inventory. At the beginning of 2010, there was $1,200 of materials on hand. During the year, the company purchased $183,000 of materials; however, it paid for only $175,500. How much inventory was requisitioned for use on jobs during 2010?

A) $175,200

B) $182,700

C) $183,300

D) $175,800

17. In a job order cost accounting system, the Raw Materials Inventory account is

A) an expense.

B) a control account.

C) not used.

D) a period cost.

18. When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is

A) Finished Goods Inventory

Direct Materials

Direct Labor

Manufacturing Overhead

B) Work In Process Inventory

Direct Materials

Direct Labor

Manufacturing Overhead

C) Raw Materials Inventory

Work In Process Inventory

D) Finished Goods Inventory

Work In Process Inventory

19. 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.

20. A materials requisition slip showed that direct materials requested were $53,000 and indirect materials requested were $9,000. The entry to record the transfer of materials from the storeroom is

A) Work In Process Inventory     53,000

Raw Materials Inventory                              53,000

B) Direct Materials                           53,000

Indirect Materials                            9,000

Work In Process Inventory                          62,000

C) Manufacturing Overhead       62,000

Raw Materials Inventory                              62,000

D) Work In Process Inventory     53,000

Manufacturing Overhead             9,000

Raw Materials Inventory                              62,000

21. Which one of the following should be equal to the balance of the work in process inventory account at the end of the period?

A) The total of the amounts transferred from raw materials for the current period

B) The sum of the costs shown on the job cost sheets of unfinished jobs

C) The total of manufacturing overhead applied to work in process for the period

D) The total manufacturing costs for the period

22. If the entry to assign factory labor showed only a debit to Work In Process Inventory, then all labor costs were

A) direct labor.

B) indirect labor.

C) overtime related.

D) regular hours.

23. The following information is available for completed Job No. 402: Direct materials, $60,000; direct labor, $90,000; manufacturing overhead applied, $45,000; units produced, 5,000 units; units sold, 4,000 units. The cost of the finished goods on hand from this job is

A) $30,000.

B) $195,000.

C) $39,000.

D) $156,000.

24. As of December 31, 2010, Nilsen Industries had $2,000 of raw materials inventory. At the beginning of 2010, there was $1,600 of materials on hand. During the year, the company purchased $244,000 of materials; however it paid for only $234,000. How much inventory was requisitioned for use on jobs during 2010?

A) $244,400

B) $234,400

C) $233,600

D) $243,600

25. A company expected its annual overhead costs to be $600,000 and direct labor costs to be $1,000,000. Actual overhead was $580,000, and actual labor costs totaled $1,100,000. How much is the company's predetermined overhead rate to the nearest cent?

A) $0.58

B) $0.53

C) $0.60

D) $0.55

26. Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $615,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $630,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12?

A) $630

B) $30,750

C) $31,500

D) $615

27. Manufacturing overhead is applied to each job

A) at the time when the overhead cost is incurred.

B) by means of a predetermined overhead rate.

C) at the end of the year when actual costs are known.

D) only if the overhead costs can be directly traced to that job.

28. If annual overhead costs are expected to be $750,000 and direct labor costs are expected to be $1,000,000, then

A) $1.33 is the predetermined overhead rate.

B) for every dollar of manufacturing overhead, 75 cents of direct labor will be assigned.

C) for every dollar of direct labor, 75 cents of manufacturing overhead will be assigned.

D) a predetermined overhead rate cannot be determined.

29. Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?

A) Goods available for sale

B) Raw materials purchased

C) Work in process

D) Direct materials used

30. When determining costs of jobs, how does a company account for indirect materials?

A) It is added to work in process as used.

B) It remains part of raw materials inventory.

C) It is transferred out of raw materials into manufacturing overhead when used.

D) It is transferred out of raw materials into work in process as used.

31. In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit to

A) Cost of Goods Manufactured.

B) Finished Goods Inventory.

C) Work in Process Inventory.

D) Raw Materials Inventory.

32. During 2010, Lawson Manufacturing expected Job No. 26 to cost $600,000 of overhead, $1,000,000 of materials, and $400,000 in labor. Lawson applied overhead based on direct labor cost. Actual production required an overhead cost of $560,000, $1,100,000 in materials used, and $440,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?

A) $2,000,000

B) $2,100,000

C) $2,140,000

D) $2,200,000

33. Debits to Work in Process Inventory are accompanied by a credit to all but which one of the following accounts?

A) Raw Materials Inventory

B) Factory Labor

C) Manufacturing Overhead

D) Cost of Goods Sold

34. 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.

35. Gannon Company had the following information at December 31:

Finished goods inventory, January 1 $ 50,000

Finished goods inventory, December 31 150,000

If the cost of goods manufactured during the year amounted to $2,100,000 and annual sales were $2,750,000, the amount of gross profit for the year is

A) $650,000.

B) $2,000,000.

C) $750,000.

D) $550,000.

36. Kimble Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period:

Estimated annual overhead cost $1,200,000

Actual annual overhead cost $1,145,000

Estimated machine hours 300,000

Actual machine hours 280,000

A) $1,120,000 applied and $25,000 overapplied

B) $1,200,000 applied and $25,000 overapplied

C) $1,120,000 applied and $25,000 underapplied

D) $1,145,000 applied and neither under- nor overapplied

37. A company assigned overhead to work in process. At year end, what does the amount of overapplied overhead mean?

A) The overhead assigned to work in process is greater than the estimated overhead costs.

B) The overhead assigned to work in process is less than the estimated overhead costs.

C) The overhead assigned to work in process is less than the actual overhead.

D) The overhead assigned to work in process is greater than the overhead incurred.

38. At the end of the year, any balance in the Manufacturing Overhead account is generally eliminated by adjusting

A) Work In Process Inventory.

B) Finished Goods Inventory.

C) Cost of Goods Sold.

D) Raw Materials Inventory.

39. If manufacturing overhead has been underapplied during the year, the adjusting entry at the end of the year will show a

A) debit to Manufacturing Overhead.

B) credit to Cost of Goods Sold.

C) debit to Work in Process Inventory.

D) debit to Cost of Goods Sold.

40. Overapplied manufacturing overhead exists when overhead assigned to work in process is

A) more than overhead incurred and there is a debit balance in Manufacturing Overhead at the end of a period.

B) less than overhead incurred and there is a debit balance in Manufacturing Overhead at the end of a period.

C) more than overhead incurred and there is a credit balance in Manufacturing Overhead at the end of a period.

D) less than overhead incurred and there is a credit balance in Manufacturing Overhead at the end of a period.

Part B -

PROBLEM 1 - Presented below is a list of costs and expenses incurred in the factory by Nu-Way Corporation, a manufacturer of recreational vehicles.

1. Property taxes on the factory land

2. Nails and glue used in production

3. Cabinet maker's wages

4. Factory supervisors' salaries

5. Metal used in manufacturing

6. Depreciation on factory machines

7. Factory utilities

8. Carpeting for the recreational vehicles

9. Property taxes on the factory building

10. Insurance on factory equipment

Instructions - Classify the above items into the following categories:

DM - Direct Materials

DL - Direct Labor

MO - Manufacturing Overhead