University Of Liberia

College of Business, Graduate Studies

Accounting 531 (Cost Accounting)
First Major Assignment

Name:_________________________________________________________________id#________
Instruction: Please do as would be necessary to satisfy the requirement of the questions, they are
either, True or False, Fill in blank, or Multiple Choice. Circle your rightful choice. (2pts f each)

1. In the preparation of the cost of Production report, if the beginning and

ending inventory of the work -in- process are the same than total
manufacturing cost will be equal to Cost of Goods Manufactured. True or
Fales?

2. In determining total Work In Process manufacturing costs on the cost of

Production Report,
a. beginning work in process inventory should be added to the TMC.
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.

3. In the preparation of the cost of Production report, if the beginning and

ending inventory of the work -in- process are the same than total
manufacturing cost will be equal:
a. Total Cost of Goods Manufactured b. Total Work In Process
c. Total Cost of Goods available for Sales d. None of the Above

4. Direct materials requisitioned from the storeroom should be charged to the

Work In Process Inventory account and the job cost sheets for the individual
jobs on which the materials were used. True or Fales?

5. Actual manufacturing overhead costs are assigned to each job by tracing

each overhead cost to a specific job.
6. Overapplied overhead means that actual manufacturing overhead costs were
greater than the manufacturing overhead costs applied to jobs

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 7. When goods are sold, the Cost of Goods Sold account is debited and Work
in Process Inventory account is credited.

8. If the entry to assign factory labor showed only a debit to Work In Process
Inventory, then all labor costs were
a. indirect labor. b. direct labor. c. overtime related. d. regular hours

9. Fill in the blanks with correct word/words.

(i) .......................... process of accounting for the incurrence of cost and the control of
cost.
(ii) The objective of determining the .......................... of products is of main importance in
cost accounting.
(iii) Cost accounting provides information regarding the cost to make
and .......................... product or services.
(iv) Cost accounting helps the management in providing information for ..........................
decisions for formulating operative policies.
(v) A .......................... system provides immediate information regarding stock of raw
material, semi-finished and finished goods.

10. 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.

11. When the company assigns factory labor costs to jobs, the direct labor cost is
debited to:
a. Direct Labor. b. Factory Labor. c. Manufacturing Overhead. d. Work in
Process Inventory.

12.DJ Co. has a job-order cost system. The following debits (credits) appeared
in the Work in Process account for the month of March:

June 1, balance $ 12,000

June 31, direct materials 40,000
June 31, direct labor 30, 000
June 31, manufacturing overhead applied 24, 000
June 31, to finished goods (100,000)

DJ Co. applies overhead at a predetermined rate of 80% of direct labor cost.

Job No. 101, the only job still in process at the end of June, has been

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 charged with manufacturing overhead of $2,200. What was the amount of
direct materials charged to Job No. 101?

a. $2,250 b. $2,500 c. $1,250 d. $1,050

13.On January 1 Maples had two jobs in process: #10006 with assigned costs of
$10,500 and #10007 with assigned costs of $14,250. During January these
three new jobs were introduced and started, #10008 through #10010, and
these three jobs, #10006 through #10008 were completed. Materials and
labor costs added during January were as follows:

Job number Materials Labor

10006 $ 0 $2,000
10007 0 1,500
10008 4,000 3,600
10009 3,800 2,000
10010 2,600 3,100

Manufacturing overhead is assigned at the rate of 200 percent of labor.

What is the January cost of goods manufactured and transferred from
work-in- process?

a. $50,050 b. $35,850 c. $42,950 d. $25,300

Jobs 506 – 508 were the only jobs completed so the costs of these jobs is the focus of this question.
DM and DL for those jobs is $35,850, but OH had to beadded at ($2,000 + $1,500 + $3,600) x
200% = ($7,100 x 2) + $35,850 = $50,050.

14.Jonathan Mfg. adopted a job-costing system. For the current year, budgeted
cost driver activity levels for direct labor hours and direct costs were 20,000
and $100,000, respectively. In addition, budgeted variable and fixed factory
overhead were $50,000 and $25,000, respectively. Actual costs and hours
for the year were as follows.

Direct labor hours 21, 000

Direct labor costs $110,000
Machine hours 35, 000

For a particular job, 1,500 direct-labor hours were used. Using direct-labor
hours as the cost driver, what amount of overhead should be applied to the
job?

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 a. $3,214 b. $5,357 c. $5,625 d. $7,500

15.Richard Company has underapplied overhead of $60,000 for the calendar

year. Before disposition of the underapplied overhead, selected year-end
balances from Richard’s accounting records are:

Sales $1,200,000
Cost of goods sold 900,000
Direct materials inventory 150,000
Work-in-process inventory 200,000
Finished goods inventory 100,000

Under Richard’s cost accounting system, over or underapplied overhead is

allocated to appropriate inventories and cost of goods sold based on year-end
balances. In its annual statement, Richard should report costs of goods sold
as

a. $858,750 b. $855,000 c. $945,000 d. $941,250

16.An increase in production level within a relevant rang most likely would
result in
a. Increasing the total cost c. Increasing the variable cost per unit
b. Decreasing the total fixed cost d. Decreasing the variable cost per unit

17. During September at Blamo Corporation, $65,000 of raw materials were

requisitioned from the storeroom for use in production. These raw materials
included both direct and indirect materials. The direct materials totaled $35,000.
The journal entry to record this requisition would include a debit to Work In
Process of: A) $65,000 B) $4,000 C) $35,000 D) $61,000
18. Gullett Corporation had $26,000 of raw materials on hand on November 1.
During the month, the company purchased an additional $75,000 of raw materials.
The journal entry to record the transferred of raw materials both direct and indirect
to production would include a:
A) debit to Work in Process and debit to Manufacturing Overhead
B) credit to Raw Materials
C) debit to Raw Materials
D) Both A and B are correct

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19. During July at XYZ Corporation, $83,000 of raw materials were requisitioned
from the storeroom for use in production. These raw materials included both direct
and indirect materials. The indirect materials totaled $5,000. The journal entry to
record the requisition from the storeroom would include a:
A) debit to Work in Process of $78,000
B) debit to Work in Process of $83,000
C) credit to Manufacturing Overhead of $4,000
D) debit to Raw Materials of $83,000

20. In October, Koon Inc. incurred $73,000 of direct labor costs and $6,000 of
indirect labor costs. The journal entry to record the accrual of these wages would
include a:
A) Debit to Manufacturing Overhead of $6,000
B) debit to Work in Process of $73,000
C) credit to Manufacturing Overhead of $79,000
D) Credit to Salaries and Wages Payable of $79,000

21. Chokopepe Corporation incurred $87,000 of actual Manufacturing Overhead

costs during September. During the same period, the Manufacturing Overhead
applied to Work in Process was $89,000. The journal entry to record the incurrence
of the actual Manufacturing Overhead costs would include a:
A) debit to Work in Process of $89,000 and credit to Manufacturing
Overhead of $89,000
B) credit to Manufacturing Overhead of $87,000
C) debit to Manufacturing Overhead of $87,000
D) credit to Work in Process of $89,000

22. Marc Corp. has a job-order costing system. The following debits (credits)
appeared in the Work in Process account for the month of April:

April 1 Balance $10,000

April Direct materials $60,000
April Direct labor $40,000
Manufacturing
April overhead $32,000
April To finished goods $(120,000)

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Marc applies overhead to jobs at a predetermined rate of 80% of direct labor cost.
Job No. 23, the only job still in process at the end of April has been charged with
direct labor of $5,000. The amount of direct materials charged to Job No. 23 was:
A) $6,250 B) $7,500 C) $33,000 D) $17,000
23. Write against each of the following indicating the party i.e. management, employees and
creditors, benefitted from cost accounting :

1. Using budgetary control and standard costing, costing used to control material cost, labour cost, etc.
__________

2. Installation of an efficient costing system results in the increase in productivity and earnings
capacity.____________

3. Studies and reports submitted by the cost accountant enables judging the profitability and prospects
of the enterprise.__________________

4. It enables to check the wastage in term of time and expenses._________________

24. Christiana Tue Manufacturing Company uses a job-order costing system. At

the beginning of April, Christiana Tue only had one job in process, Job #898. This
job was finished during April by incurring additional direct costs of $350 for
materials and $700 for labor. Also during April, Job #899 was started and finished.
The direct costs assigned to this job were $1,200 for materials and $950 for labor.
Job #900 was started during April but was not finished by the end of the month.
The direct costs assigned to this job were $820 for materials and $540 for labor.
Christiana Tue applies manufacturing overhead to its products at a rate of 300% of
direct labor cost. Christiana's cost of goods manufactured for April was $14,570.
What was Christiana's work in process inventory balance at the beginning of
April?
A) $3,440 B) $6,590 C) $9,570 D) $6,420
25. The following information relates to Sombee Manufacturing Company:
Total manufacturing overhead estimated for the
year $864,000
Predetermined overhead rate (based on direct $5.00 per
labor-hours) DLH
25,000
Total direct labor-hours incurred during the year DLHs
Manufacturing overhead overapplied for the year $4,600
How much manufacturing overhead cost did Sombee actually incurred?
A) $103,500 B) $119,600 C) $120,400 D)$129,600

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26. Prime cost comprises the following combination of costs: A. Direct materials
and factory overhead b. Direct labour and factory overhead c. Direct material
direct labour and direct expense d. None of these
27. Conversion and prime costs are: a. Synonymous and can be used induce
changeably B. Both include factory overhead with its variable and fixed
components c. Represent cost incurred on joint product before the split off point
d. None of these
28. In a job-order costing system, the application of manufacturing overhead would
be recorded as a debit to:
A) Raw Materials inventory. B) Finished Goods inventory.
C) Work in Process inventory. D) Cost of Goods Sold.

29. In a job-order costing system, the incurrence of indirect labor costs would
usually be recorded as a debit to:
A) Manufacturing Overhead B) Finished Goods.
C) Work in Process. D) Cost of Goods Sold.

30. If overhead is underapplied, then:

A) actual overhead cost is less than estimated overhead cost.
B) the amount of overhead cost applied to Work in Process is less than
the actual overhead cost incurred.
C) the predetermined overhead rate is too high.
D) the Manufacturing Overhead account will have a credit balance at the
end of the year.

31. Barger Company had the following information at December 31:

Finished goods inventory, January 1 $ 90,000
Finished goods inventory, December 31 $120,000
If the cost of goods manufactured during the year amounted to $1,120,000 and
annual sales were $2,609,000, how much is the amount of gross profit for the year?
a. $1,419,000
b. $1,519,000
c. $1,759,000
d. $1,435,000

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32. Christiana Manufacturing Company developed the following data:
Beginning work in process inventory $ 120,000
Direct materials used 700,000
Actual overhead 840,000
Overhead applied 510,000
Cost of goods manufactured 1,400,000
Ending work in process 90,000
How much are total manufacturing costs for the period?
a. $1,370,000 b. $1,890,000 c. $1,650,000 d. $1,830,000

33. Rachel Inc. applies overhead to production at a predetermined rate of 80%

based on direct labor cost. Job No. 130, the only job still in process at the
end of August, has been charged with manufacturing overhead of $6,400.
What was the amount of direct materials charged to Job 130 assuming the
balance in Work in Process inventory is $20,000?
a. $7,000. B. $6,400. C. $5,600. D. $20,000.

34. 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.

35. 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 stores ledger cards.

36. In calculating a predetermined overhead rate, a recent trend in automated

manufacturing operations is to choose an activity base related to
a. direct labor hours b. indirect labor dollars. c. machine time d. raw
materials dollars.

37. 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.

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38. In a job-order costing system, the application of manufacturing overhead would be recorded as a
debit to:
A) Raw Materials inventory.
B) Finished Goods inventory.
C) Work in Process inventory.
D) Cost of Goods Sold.

39. If the Manufacturing Overhead account has a debit balance at the end of a
period, it means that
a. actual overhead costs were less than overhead costs applied to jobs.
b. actual overhead costs were greater than overhead costs applied to jobs.
c. actual overhead costs were equal to overhead costs applied to jobs.
d. no jobs have been completed.

40. If manufacturing overhead has been underapplied during the year, the
adjusting entry at the end of the year will show a
a. debit to Finished Goods Inventory b. debit to Cost of Goods Sold.
c. debit to Work in Process Inventory. d. All of the Above

41. Cost of goods manufactured equals $85,000 for 2017. Finished goods
inventory is $4,000 at the beginning of the year and $8,500 at the end of the
year. Beginning and ending work in process for 2017 are $4,000 and $5,000,
respectively. How much is cost of goods sold for the year?
a. $87,500 b. $83,000 c. $81,500 d. $80,500

42. Smith Company applies overhead on the basis of 150% of direct labor cost
of $200,000. Job No. 176 is charged with $160,000 of direct materials costs
and $170,000 of manufacturing overhead. The total manufacturing costs for
Job No. 176 is
a. $330,000. b. $630,000. c. $450,000. d. $530,000.

43. Koon Company applies overhead on the basis of 120% of direct labor cost
and the 120% is equal to $150,000. Job No. 190 is charged with $140,000 of
direct materials costs and $180,000 of manufacturing overhead. The total
manufacturing costs for Job No. 190 is

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 a. $320,000. b. $500,000. c. $470,000. d. $490,000.

44. For Rachel Company, the predetermined overhead rate is 80% of direct
labor cost. During the month, $700,000 of factory labor costs are incurred of
which $140,000 is indirect labor. Actual overhead incurred was $320,000.
The amount of overhead debited to Work in Process Inventory should be:
a. $448,000 b. $320,000 c. $420,000 d. None of the above

45. Simpson Company applies overhead on the basis of 200% of direct labor
cost. Job No. 305 is charged with $180,000 of direct Labor costs and
$200,000 of manufacturing overhead. The Direct materials charged to
production Job No. 305 is: ___________________ if the Total
Manufacturing Cost is $500,000
a. $180,000 b. $380,000 c. $120,000 d. $400,000

46. Which of the following is cost behavior-oriented approach to: A. Product

costing b. Absorption cost c. Process costing d. Marginal costing.
47. Job – order costing: An item of cost that is direct for one business may be
………. for another business. A, Direct B. Indirect c. Variable d. Fixed
48. Direct labour costs would include wages paid to all the following except: a,
Machine operators b. Assembly line workers C. Janitors d. Brick layers
49. Indirect labour costs would include wages paid to the following except
A. Machine operators b. Material handlers c. Storekeepers d. Forklift operators
50. Prime cost comprises the following combination of costs: A. Direct materials
and factory overhead b. Direct labour and factory overhead c. Direct material
direct labour and direct expense d. None of these

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