D101 Cost and Managerial Accounting - Set 5 - Part 2

Correct Answer: To track direct labor hours worked on a specific job

A time ticket is used to track the amount of time an employee spends on a specific job, which helps assign direct labor costs to that job.

Correct Answer: Applied overhead exceeds actual overhead

Overapplied overhead means that the overhead allocated to jobs is greater than the actual overhead incurred. This leads to an adjustment at the end of the period to reduce the cost of goods sold.

Correct Answer: Direct materials

Variable costs change with the level of production, and direct materials are an example since the amount of materials used increases as more units are produced.

Correct Answer: Debit work-in-process inventory, credit manufacturing overhead

When overhead is applied to a job, work-in-process inventory is debited (increased) and manufacturing overhead is credited (decreased).

Correct Answer: Direct labor

Direct labor is a cost that can be directly traced to a specific job or product, unlike indirect costs such as factory rent and utilities.

Correct Answer: $200,000

The break-even point in dollars is calculated by dividing total fixed costs by the contribution margin ratio. In this case, $60,000 / 0.30 = $200,000.

Correct Answer: Indirect cost

Factory utilities are considered an indirect cost because they cannot be directly traced to individual products but are part of the overall manufacturing overhead.

Correct Answer: Debit manufacturing overhead, credit accumulated depreciation

Factory depreciation is recorded as a manufacturing overhead cost. The debit goes to manufacturing overhead, and the credit goes to accumulated depreciation.

Correct Answer: Assigning costs to each department or process

In process costing, costs are accumulated by department or process, as it is used for industries that produce large quantities of identical products.

Correct Answer: Factory rent

Fixed costs, such as factory rent, remain constant regardless of production levels, while variable costs, such as direct materials, fluctuate with production.

Correct Answer: Debit manufacturing overhead, credit salaries payable

Indirect labor costs are part of manufacturing overhead and are recorded by debiting manufacturing overhead and crediting salaries payable.

Correct Answer: $8 per labor hour

The predetermined overhead rate is calculated by dividing estimated overhead costs by the estimated labor hours. In this case, $400,000 / 50,000 = $8 per labor hour.

Correct Answer: Total costs transferred to finished goods inventory

The cost of goods manufactured represents the total costs of jobs completed during the period and transferred from work-in-process to finished goods inventory.

Correct Answer: Debit raw materials inventory, credit accounts payable

When raw materials are purchased on account, raw materials inventory is debited to reflect the increase in materials, and accounts payable is credited to reflect the liability.

Correct Answer: A partially completed unit expressed in terms of a fully completed unit

An equivalent unit of production represents a partially completed unit converted into the amount of work required to produce a fully completed unit.

Correct Answer: Current sales - break-even sales

The margin of safety measures how much sales can drop before reaching the break-even point, calculated by subtracting break-even sales from current sales.

Correct Answer: Indirect cost

The salary of a factory supervisor is considered an indirect cost because it cannot be traced directly to a specific product but is part of the overall manufacturing overhead.

Correct Answer: Contribution margin / sales revenue

The contribution margin ratio expresses the proportion of sales revenue that exceeds variable costs and is available to cover fixed costs and generate profit.

Correct Answer: The cost is transferred to cost of goods sold

When a job is sold, the cost of the job is transferred from finished goods inventory to cost of goods sold, representing the expense of the job.

Correct Answer: To account for partially completed units

Equivalent units of production are used to measure the work done on partially completed units, allowing accurate allocation of costs in a process costing system.