# CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. True-False Statements

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1 CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements 1. 1 K 8. 2 K K C C 2. 1 C 9. 2 C K K C 3. 1 C C K C sg C 4. 1 C C K C sg K 5. 1 C C C K sg K 6. 1 K K C K sg K 7. 1 C C K K sg K Multiple Choice Questions K K AP C C K C AP C K K C AP C C C K AP C AP C K AP AP C C AP AP AP C C K AP AP C C C AP C C AP K AP C C K K C AP C K K K AP C C C C AP C K C C AP st K C K K AP sg K C K AP AP st K C C C AP sg K K C K AP st K C K AP AP sg AP K AP C AP st K K AP C AP sg C AP AP C C st K K AP AP C sg K Brief Exercises AP AP AP AP AP AP AP AP AP AP sg st This question also appears in the Study Guide. This question also appears in a self-test at the student companion website.

2 20-2 Test Bank for Accounting Principles, Eighth Edition SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY Exercises AP AP AP ,5 AP ,6 AP C AP ,3,6 AP ,5 AP AP AP AN AP AP AP C AP AP ,6 AP ,3 AP ,3 AP AN ,6 AP Completion Statements K K K K K K K AP K K SUMMARY OF STUDY OBJECTIVES BY QUESTION TYPE Item Type Item Type Item Type Item Type Item Type Item Type Item Type Study Objective 1 1. TF 4. TF 7. TF 37. MC 40. MC 43. MC 180. C 2. TF 5. TF 31. TF 38. MC 41. MC 136. MC 181. C 3. TF 6. TF 36. MC 39. MC 42. MC 179. C Study Objective 2 8. TF 15. TF 48. MC 55. MC 138. MC 160. Ex 167. Ex 9. TF 16. TF 49. MC 56. MC 146. BE 161. Ex 168. Ex 10. TF 32. TF 50. MC 57. MC 147. BE 162. Ex 182. C 11. TF 44. MC 51. MC 58. MC 156. Ex 163. Ex 183. C 12. TF 45. MC 52. MC 59. MC 157. Ex 164. Ex 13. TF 46. MC 53. MC 60. MC 158. Ex 165. Ex 14. TF 47. MC 54. MC 137. MC 159. Ex 166. Ex Study Objective TF 62. MC 69. MC 76. MC 148. BE 162. Ex 169. Ex 18. TF 63. MC 70. MC 77. MC 149. BE 163. Ex 170. Ex 19. TF 64. MC 71. MC 78. MC 157. Ex 164. Ex 171. Ex 20. TF 65. MC 72. MC 79. MC 158. Ex 165. Ex 172. Ex 21. TF 66. MC 73. MC 80. MC 159. Ex 166. Ex 184. C 33. TF 67. MC 74. MC 139. MC 160. Ex 167. Ex 185. C 61. MC 68. MC 75. MC 140. MC 161. Ex 168. Ex Study Objective TF 83. MC 89. MC 95. MC 157. Ex 164. Ex 175. Ex 23. TF 84. MC 90. MC 96. MC 158. Ex 166. Ex 176. Ex 24. TF 85. MC 91. MC 141. MC 159. Ex 168. Ex 186. C 34. TF 86. MC 92. MC 142. MC 161. Ex 170. Ex 81. MC 87. MC 93. MC 150. BE 162. Ex 173. Ex 82. MC 88. MC 94. MC 151. BE 163. Ex 174. Ex

3 Job Order Cost Accounting 20-3 Study Objective TF 99. MC 105. MC 111. MC 117. MC 164. Ex 177. Ex 26. TF 100. MC 106. MC 112. MC 118. MC 166. Ex 178. Ex 27. TF 101. MC 107. MC 113. MC 152. BE 168. Ex 28. TF 102. MC 108. MC 114. MC 161. Ex 170. Ex 97. MC 103. MC 109. MC 115. MC 162. Ex 171. Ex 98. MC 104. MC 110. MC 116. MC 163. Ex 172. Ex Study Objective TF 121. MC 126. MC 131. MC 143. MC 155. BE 175. Ex 30. TF 122. MC 127. MC 132. MC 144. MC 166. Ex 176. Ex 35. TF 123. MC 128. MC 133. MC 145. MC 167. Ex 187. C 119. MC 124. MC 129. MC 134. MC 153. BE 168. Ex 188. C 120. MC 125. MC 130. MC 135. MC 154. BE 174. Ex Note: TF = True-False BE = Brief Exercise C = Completion MC = Multiple Choice Ex = Exercise The chapter also contains one set of ten Matching questions and four Short-Answer Essay questions. CHAPTER STUDY OBJECTIVES 1. Explain the characteristics and purposes of cost accounting. Cost accounting involves the procedures for measuring, recording, and reporting product costs. From the data accumulated, companies determine the total cost and the unit cost of each product. The two basic types of cost accounting systems are job order cost and process cost. 2. Describe the flow of costs in a job order cost accounting system. In job order cost accounting, manufacturing costs are first accumulated in three accounts: Raw Materials Inventory, Factory Labor, and Manufacturing Overhead. The accumulated costs are then assigned to Work in Process Inventory and eventually to Finished Goods Inventory and Cost of Goods Sold. 3. Explain the nature and importance of a job cost sheet. A job cost sheet is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. Job cost sheets constitute the subsidiary ledger for the Work in Process Inventory control account. 4. Indicate how the predetermined overhead rate is determined and used. The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity. This is expressed in terms of a common activity base, such as direct labor cost. The rate is used in assigning overhead costs to work in process and to specific jobs. 5. Prepare entries for jobs completed and sold. When jobs are completed, the cost is debited to Finished Goods Inventory and credited to Work in Process Inventory. When a job is sold the entries are: (a) Debit Cash or Accounts Receivable and credit Sales for the selling price, and (b) Debit Cost of Goods Sold and credit Finished Goods Inventory for the cost of the goods.

4 20-4 Test Bank for Accounting Principles, Eighth Edition 6. Distinguish between under- and overapplied manufacturing overhead. Underapplied manufacturing overhead means that the overhead assigned to work in process is less than the overhead incurred. Overapplied overhead means that the overhead assigned to work in process is greater than the overhead incurred. TRUE-FALSE STATEMENTS 1. Cost accounting is primarily concerned with accumulating information about product costs. 2. A job order cost system is most appropriate when a large volume of uniform products are produced. 3. A process cost accounting system is appropriate for similar products that are continuously mass produced. 4. The perpetual inventory method cannot be used in a job order cost system. 5. A job order cost system and a process cost system are two alternative methods for valuing inventories. 6. A job order cost system identifies costs with a particular job rather than with a set time period. 7. A company may use either a job order cost system or a process cost system, but not both. 8. Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used. 9. Accumulating and assigning manufacturing costs are two important activities in a job order cost system. 10. Recording the acquisition of raw materials is a part of accumulating manufacturing costs. 11. Manufacturing costs are generally incurred in one period and recorded in a subsequent period. 12. The Purchases account is credited for all raw materials purchase returns and allowances. 13. The stores ledger cards are the subsidiary ledger for Raw Materials Inventory control account in the general ledger. 14. When raw materials are purchased, the Work in Process Inventory account is debited. 15. Factory labor should be assigned to selling and administrative expenses on a proportionate basis. 16. Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

6 20-6 Test Bank for Accounting Principles, Eighth Edition 34. The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base. 35. At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold. Answers to True-False Statements Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. T 6. T 11. F 16. T 21. T 26. T 31. T 2. F 7. F 12. F 17. T 22. F 27. F 32. F 3. T 8. F 13. T 18. T 23. T 28. T 33. T 4. F 9. T 14. F 19. T 24. F 29. F 34. T 5. T 10. T 15. F 20. F 25. F 30. T 35. F MULTIPLE CHOICE QUESTIONS 36. Which of the following is one of the components of cost accounting? a. It involves measuring product costs. b. It involves the determination of company profits. c. It requires GAAP to be applied. d. It requires cost minimizing principles. 37. A major purpose of cost accounting is to a. classify all costs as operating or nonoperating. b. measure, record, and report period costs. c. provide information to stockholders for investment decisions. d. measure, record, and report product costs. 38. The two basic types of cost accounting systems are a. job order and job accumulation systems. b. job order and process cost systems. c. process cost and batch systems. d. job order and batch systems. 39. A process cost system would most likely be used by a company that makes a. motion pictures. b. repairs to automobiles. c. breakfast cereal. d. college graduation announcements. 40. Which of the following would be accounted for using a job order cost system? a. The production of personal computers b. The production of automobiles c. The refining of petroleum d. The construction of a new campus building 41. Process costing is used when a. the production process is continuous. b. production is aimed at filling a specific customer order. c. dissimilar products are involved. d. costs are to be assigned to specific jobs.

7 42. Process costing is not used when a. similar goods are being produced. b. large volumes are produced. c. jobs have distinguishing characteristics. d. a series of connected manufacturing processes is necessary. 43. An important feature of a job order cost system is that each job a. must be similar to previous jobs completed. b. has its own distinguishing characteristics. c. must be completed before a new job is accepted. d. consists of one unit of output. Job Order Cost Accounting As of December 31, 2008, Stand Still Industries had \$1,500 of raw materials inventory. At the beginning of 2008, 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 2008? a. \$175,200 b. \$182,700 c. \$183,300 d. \$175, The flow of costs in a job order cost system a. involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done. b. cannot be measured until all jobs are complete. c. measures product costs for a set time period. d. generally follows a LIFO cost flow assumption. 46. 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. 47. 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

8 20-8 Test Bank for Accounting Principles, Eighth Edition 48. The two major steps in the flow of costs are a. allocating and assigning. b. acquiring and accumulating. c. accumulating and assigning. d. accumulating and amortizing. 49. The Raw Materials Inventory account is a. a subsidiary account. b. debited for invoice costs and freight costs chargeable to the purchaser. c. debited for purchase discounts taken. d. debited for purchase returns and allowances. 50. Records of individual items of raw materials would not be maintained a. electronically. b. manually. c. on store ledger cards. d. in the Raw Materials Inventory account. 51. 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. 52. Raw Materials Inventory records are also referred to as a. the Raw Materials control account. b. the store ledger cards. c. the purchases journal. d. periodic inventory records. 53. After all postings have been completed, the sum of the balances in the raw materials subsidiary ledger should equal the a. balance in the Raw Materials Inventory control account. b. cost of materials charged to Work in Process Inventory. c. cost of materials purchased. d. cost of materials placed into production. 54. Factory labor costs a. are accumulated in a control account. b. do not include pension costs. c. include vacation pay. d. are based on workers net pay. 55. Factory Labor is a(n) a. expense account. b. control account. c. subsidiary account. d. manufacturing cost clearing account.

9 Job Order Cost Accounting Kline Manufacturing has the following labor costs: Factory Gross wages \$195,000 Factory Net wages 160,000 Employer Payroll Taxes Payable 25,000 The entry to record the cost of factory labor and the associated payroll tax expense will include a debit to Factory Labor for a. \$220,000. b. \$195,000. c. \$185,000. d. \$170, Factory labor costs a. accumulate in advance of utilization. b. accumulate in a control account. c. include sick pay earned by factory workers. d. accumulate in the Factory Labor Expense account. 58. Which of the following is not a control account? a. Manufacturing Overhead b. Factory Labor c. Accounts Receivable d. Raw Materials Inventory 59. Manufacturing Overhead would not have a subsidiary account for a. utilities. b. property taxes. c. insurance. d. raw materials inventory. 60. The entry to record the acquisition of raw materials on account is a. Work in Process Inventory Accounts Payable b. Manufacturing Overhead Raw Materials Inventory Accounts Payable c. Accounts Payable Raw Materials Inventory d. Raw Materials Inventory Accounts Payable 61. Which one of the following best describes a job cost sheet? a. It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. b. It is used to track manufacturing overhead costs to specific jobs. c. It is used by management to understand how direct costs affect profitability. d. It is a daily form that management uses for tracking worker productivity on which employee raises are based.

10 20-10 Test Bank for Accounting Principles, Eighth Edition 62. Job cost sheets constitute the subsidiary ledger for the a. Finished Goods Inventory account. b. Cost of Goods Sold account. c. Work In Process Inventory account. d. Cost of Goods Manufactured account. 63. 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, The job cost sheet does not show a. costs chargeable to a specific job. b. the total costs of a completed job. c. the unit cost of a completed job. d. the cost of goods sold. 65. Under an effective system of internal control, the authorization for issuing materials is made a. orally. b. on a prenumbered materials requisition slip. c. by the accounting department. d. by anyone on the production line. 66. A copy of the materials requisition slip a. is routed to the treasurer's office for payment. b. becomes the subsidiary ledger for the Work in Process Inventory. c. can be used as a subsidiary ledger for Raw Materials Inventory. d. is retained by the storeroom, and the original is sent to accounting. 67. Materials requisition slips are costed a. by production supervisors. b. by factory personnel who work on the production line. c. after the goods have been sold. d. using any of the inventory costing methods. 68. Posting to control accounts in a costing system are made a. monthly. b. daily. c. annually. d. semi-annually.

11 Job Order Cost Accounting 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 70. Which of the following shows entries only to control accounts? a. Factory Labor Wages Payable b. Work in Process Factory Labor Raw Materials Inventory Wages Payable c. Work in Process Manufacturing Overhead Raw Materials Inventory d. Factory Labor Raw Materials Inventory Accounts Payable Wages Payable 71. A time ticket does not indicate the a. employee's name. b. account to be charged. c. number of personal exemptions claimed by the employee. d. job number. 72. Which one of the following is a source document that impacts the job cost sheet? a. Raw materials receiving slips b. Materials purchase orders c. Labor time tickets d. Finished goods shipping documents 73. Time tickets should be approved by a. the audit committee. b. co-workers. c. the employee's supervisor. d. the payroll department. 74. 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. 75. 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 store ledger cards.

12 20-12 Test Bank for Accounting Principles, Eighth Edition 76. 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, Sportly, Inc. completed Job No. B14 during The job cost sheet listed the following: Direct materials \$33,000 Direct labor \$18,000 Manufacturing overhead applied \$12,000 Units produced 3,000 units Units sold 1,800 units How much is the cost of the finished goods on hand from this job? a. \$63,000 b. \$37,800 c. \$25,200 d. \$30, Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2008 totaled \$12,000 of materials, \$6,000 of direct labor costs, and \$4,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled \$10,000, and the ending balance is \$6,000. During the year, the company completed 40 machines. How much is the cost per machine? a. \$450 b. \$650 c. \$550 d. \$ As of December 31, 2008, Nilsen Industries had \$2,000 of raw materials inventory. At the beginning of 2008, 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 2008? a. \$244,400 b. \$234,400 c. \$233,600 d. \$243, Cost of goods manufactured equals \$44,000 for Finished goods inventory is \$2,000 at the beginning of the year and \$5,500 at the end of the year. Beginning and ending work in process for 2008 are \$4,000 and \$5,000, respectively. How much is cost of goods sold for the year? a. \$46,500 b. \$42,000 c. \$40,500 d. \$47,500

17 Use the following information for questions Baxter Company developed the following data for the current year: Beginning work in process inventory \$150,000 Direct materials used 90,000 Actual overhead 180,000 Overhead applied 135,000 Cost of goods manufactured 165,000 Total manufacturing costs 450, Baxter Company's direct labor cost for the year is a. \$45,000. b. \$225,000. c. \$135,000. d. \$180, Baxter Company's ending work in process inventory is a. \$435,000. b. \$300,000. c. \$285,000. d. \$135,000. Job Order Cost Accounting Russell Manufacturing Company developed the following data: Beginning work in process inventory \$180,000 Direct materials used 140,000 Actual overhead 220,000 Overhead applied 160,000 Cost of goods manufactured 240,000 Ending work in process 300,000 Russell Manufacturing Company's total manufacturing costs for the period is a. \$380,000. b. \$360,000. c. \$260,000. d. cannot be determined from the data provided Which of the following is not used in assigning manufacturing costs to work in process inventory? a. Actual manufacturing overhead b. Time tickets c. Materials requisitions d. Predetermined overhead rate 110. 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.

18 20-18 Test Bank for Accounting Principles, Eighth Edition 111. Gannon Company had the following information at December 31: Finished goods inventory, January 1 \$ 50,000 Finished goods inventory, December ,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, Vernon Company incurred direct materials costs of \$500,000 during the year. Manufacturing overhead applied was \$90,000 and is applied at the rate of 60% of direct labor costs. Vernon Company s total manufacturing costs for the year was a. \$740,000. b. \$644,000. c. \$590,000. d. \$944,000. Use the following information for questions Payne Company developed the following data for the current year: Beginning work in process inventory \$ 34,000 Direct materials used 52,000 Actual overhead 44,000 Overhead applied 46,000 Cost of goods manufactured 225,000 Total manufacturing costs 214, How much is Payne Company's direct labor cost for the year? a. \$127,000 b. \$150,000 c. \$116,000 d. \$82, How much is Payne Company's ending work in process inventory for the year? a. \$23,000 b. \$121,000 c. \$21,000 d. \$93, Chmelar Manufacturing Company developed the following data: Beginning work in process inventory \$ 20,000 Direct materials used 120,000 Actual overhead 140,000 Overhead applied 135,000 Cost of goods manufactured 320,000 Ending work in process 15,000

24 20-24 Test Bank for Accounting Principles, Eighth Edition BRIEF EXERCISES BE 146 During the first year of operations, Shapiro Tool accumulated the following manufacturing costs: Raw materials purchased on account \$8,000 Factory labor accrued 6,000 Incurred manufacturing overhead on account 4,000 Prepare separate journal entries for each manufacturing cost. Solution 146 (4 min.) Raw Materials Inventory... 8,000 Accounts Payable... 8,000 Factory Labor... 6,000 Factory Wages Payable... 6,000 Manufacturing Overhead... 4,000 Accounts Payable... 4,000 BE 147 In January, Harlan, Inc. production supervisor requisitioned raw materials for production as follows: Job 1 \$600, Job 2 \$900, Job 3 \$300, and general factory use, \$520. Prepare a summary journal entry to record raw materials used. Solution 147 (2 min.) Work in Process Inventory... 1,800 Manufacturing Overhead Raw Materials Inventory... 2,320 BE 148 Lando Company reported the following amounts for 2008: Raw materials purchased \$98,000 Ending work in process inventory \$ 6,300 Beginning raw materials inventory 5,200 Manufacturing overhead costs applied 36,000 Ending raw materials inventory 4,500 Beginning work in process inventory 6,100 Calculate the cost of materials used in production

26 20-26 Test Bank for Accounting Principles, Eighth Edition BE 151 (cont.) Compute the predetermined overhead rate. Solution 151 (2 min.) \$140,000 5,000 = \$28.00 per direct labor hour BE 152 The manufacturing operations of Reason, Inc. had the following balances for the month of January: Inventories January 1 January 31 Raw materials \$12,000 \$13,000 Work in process 21,000 23,000 Finished goods 14,000 16,000 Reason transferred \$220,000 of completed goods out of work in process during January. Compute the cost of goods sold. Solution 152 (2 min.) \$14,000 + \$220,000 \$16,000 = \$218,000 BE 153 The following amounts were reported by Samli Company before adjusting its immaterial overapplied manufacturing overhead of \$8,000. Raw Materials Inventory \$ 40,000 Finished Goods Inventory 60,000 Work in Process Inventory 100,000 Cost of Goods Sold 840,000 Compute what amount Samli will report as cost of goods sold after it disposes of its overapplied overhead. Solution 153 (2 min.) \$840,000 \$8,000 = \$832,000

27 Job Order Cost Accounting BE 154 During 2008, Mix Company incurred the following direct labor costs: January \$10,000 and February \$20,000. Mix uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months, respectively, totaled \$13,000 and \$23,800. Actual overhead for the 2 months, respectively, totaled \$12,300 and \$21,800. Determine if overhead is over- or underapplied for each of the two months and the respective amounts. Solution 154 (4 min.) Overhead applied: January: 120% \$10,000 = \$12,000 February: 120% \$20,000 = \$24,000 Over- or underapplied: January: \$12,000 \$12,300 = \$300 underapplied February: \$24,000 \$21,800 = \$2,200 overapplied BE 155 At December 31, Ding Company reported the following balances in its accounts: Cost of Goods Sold \$210,000 Finished Goods Inventory 30,000 The company s balance in its Manufacturing Overhead account at the same date was a debit of \$6,600. Prepare the entry to adjust the over- or underapplied overhead amount at December 31. Solution 155 (2 min.) Cost of Goods Sold... 6,600 Manufacturing Overhead... 6,600

28 20-28 Test Bank for Accounting Principles, Eighth Edition EXERCISES Ex. 156 The manufacturing operations of Seeley, Inc. had the following balances for the month of January: January 1 January 31 Raw materials \$12,000 \$13,000 Work in process 21,000 23,000 Finished goods 14,000 16,000 Seeley transferred \$250,000 of completed goods out of work in process during January. Compute the cost of goods sold for January. Solution 156 (3 min.) \$14,000 + \$250,000 - \$16,000 = \$248,000 Ex. 157 A selected list of accounts used by Sloan Manufacturing Company follows: Code Code A Cash F Accounts Payable B Accounts Receivable G Factory Labor C Raw Materials Inventory H Manufacturing Overhead D Work In Process Inventory I Cost of Goods Sold E Finished Goods Inventory J Sales Sloan Manufacturing Company uses a job order system and maintains perpetual inventory records. Place the appropriate code letter in the columns indicating the appropriate account(s) to be debited and credited for the transactions listed below. Account(s) Account(s) Transactions Debited Credited 1. Raw materials were purchased on account. 2. Issued a check to Estes Machine Shop for repair work on factory equipment. 3. Direct materials were requisitioned for Job Factory labor was paid as incurred. 5. Recognized direct labor and indirect labor used.

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