Managerial Accounting Chapters 1-3

Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports.

Determining the unit cost of manufacturing a product is an output of financial accounting.

Controlling is the process of determining whether planned goals are being met.

Decision-making is an integral part of the planning, directing, and controlling functions.

Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead.

Both direct labor cost and indirect labor cost are product costs.

Raw materials are equal to direct materials minus indirect materials.

In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from net sales.

When the physical association o raw materials with the finished product is too small to trace in terms of cost, they are usually classified as indirect materials.

Many companies have significantly lowered inventory levels and costs using just-in-time inventory methods.

The inventory accounts that show the cost of completed goods on hand and the costs applicable to production that is only partially completed are, respectively...

Many companies now focus on reducing defects in finished with the goal of zero defects. This is called...

Given the following data for Harder Comany, compute cost of goods manufactured:

Wood Company has beginning work in process inventory of $138,000 and total manufacturing costs of $477,000. If cost of goods manufactured is $480,000, what is the cost of the ending work in process inventory?

Worth Company reported the following year-end information: beginning work in process inventory, $180,000; cost of goods manufactured, $866,000; beginning finished goods inventory, $252,000; ending work in process inventory, $220,000; and ending finished goods inventory, $264,000. Worth Company's cost of goods sold for the year is...

Under a job order system, the company assigns costs to each job, or each batch of goods, to fill a specific customer order or replenish inventory.

Manufacturing costs incurred in a job order system are accumulated by debits to Purchases, Factory Labor, and Manufacturing Overhead.

Each debit to Work in Progress Inventory must be accompanied by a corresponding posting to one or more job cost sheets.

Manufacturing overhead costs cannot be traced directly to a specific job

The requisition of factory supplies to production requires a debit to the Manufacturing Overhead Account.

Actual overhead costs are debited to the Manufacturing Overhead account.

The entry to record the cost of goods sold includes a debit to Finished Goods Inventory.

A debit balance in the Manufacturing Overhead Account at the end of the period indicates that overhead has been overapplied.

In preparing the costs of goods manufactured schedule in job order costing, manufacturing costs include direct materials used, direct labor used, and manufacturing overhead applied.

A job cost sheet is a form used to record the costs chargeable to a specific job and to determine the total and unit cost of the completed job.

A job order cost sheet includes

Companies assign raw materials costs to jobs

In a job order cost system, debits to Work in Process Inventory originate from all of the following except

The predetermined overhead rate is computed by dividing estimated

If annual overhead costs are expected to be $1,000,000 and $200,000 total labor hours are anticipated (80% direct, 20% indirect), the overhead rate based on direct labor hours is

Costs are assigned to each specific job in a process cost system.

In a process cost system, total costs are determined at the end of a period of time, such as a month.

In a process cost system, the unit cost is total manufacturing costs divided by the equivalent units produced during the period.

The accumulation of the costs of materials, labor, and manufacturing overhead is the same in a process cost system as in a job order cost system.

More materials requisitions are generally required in a process cost system than in a job order cost system.

Equivalent units of production equals units completed and transferred out + units in beginning work in process.

Two equivalent unit computations are necessary – one for materials and the other for conversion costs.

The first step in preparing a production cost report is to compute the equivalent units of production.

The cost reconciliation schedule shows that the total costs accounted for equal the total costs to be accounted for.

Units in work in process at the beginning of the period are included in units “started and completed” under the FIFO method.