This Study Resource Was: Accounting 225 - Quiz #2 - Version A - April 13, 2016

Accounting 225 | Quiz #2 | Version A | April 13, 2016
Name: __________________________ Student Number: ___________________
TA: _____________________________ Quiz Section: CA CB CC CD
Instructions: There are 10 multiple-choice questions and 5 quantitative questions on the

following pages. Your final answers must be entered in the spaces provided on this cover page
in order to be graded.
Code of Conduct: By signing below you acknowledge that you are a member of a learning
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community at the Foster School of Business that is committed to the highest academic standards
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and that you adhered to these standards while completing this quiz. Specific to this quiz, by
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signing below you acknowledge that you did not receive or give help to others, nor did you
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witness others receiving or giving help to others, during the quiz.
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“By signing below I affirm that I have not received assistance from any other student, that I have
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not provided assistance to any other students, and that I have not witnessed any students acting
unethically during the administration of this quiz.”
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Signature: _________________________________ Date: _____________________

(Signature required)
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Multiple Choice Answers:

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1 2 3 4 5
A C D D C
6 7 8 9 10
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C C B B B
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Quantitative Answers:
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11 12 13
$26,300 $8,000 $217,600
14 15
$13.60 $238,000
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Multiple Choice Questions (1 point each)
Be sure to record your answers in the spaces provided on the cover sheet.
1. Departmental overhead rates are generally preferred to plant-wide overhead rates when:
A. the activities of the various departments in the plant are not homogeneous.
B. the activities of the various departments in the plant are homogeneous.
C. most of the overhead costs are fixed.
D. all departments in the plant are heavily automated.
2. A proper journal entry to record issuing raw materials to be used on a job would be:
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3. On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured
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figure represents:
A. the amount of cost charged to Work in Process during the period.

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B. the amount of cost transferred from Finished Goods to Cost of Goods Sold during the period.
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C. the amount of cost placed into production during the period.

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D. the amount of cost of goods completed during the current year whether they were started
before or during the current year.
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4. Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for
the upcoming year. Data for the upcoming year appear below:
The predetermined overhead rate for the recently completed year was closest to:
A. $22.04
B. $29.59
C. $7.67
D. $29.71
Estimated total manufacturing overhead = $1,630,960 + ($7.67 per machine-hour × 74,000
machine-hours) = $2,198,540
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total
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amount of the allocation base = $2,198,540 ÷ 74,000 machine-hours = $29.71 per
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machine-hour
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5. Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At the
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beginning of the year, the estimated direct labor-hours were 17,900 hours and the total
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estimated manufacturing overhead was $341,890. At the end of the year, actual direct labor-
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hours for the year were 16,700 hours and the actual manufacturing overhead for the year was
$336,890. Overhead at the end of the year was:
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A. $22,920 underapplied
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B. $17,920 overapplied
C. $17,920 underapplied
D. $22,920 overapplied
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Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount
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of the allocation base

= $341,890 ÷ 17,900 direct labor-hours
= $19.10 per direct labor-hour
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Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
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= $19.10 per direct labor-hour × 16,700 direct labor-hours

= $318,970
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Overhead over or underapplied:
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6. Parsons Corporation uses a predetermined overhead rate based on direct labor-hours to apply
manufacturing overhead to jobs. Last year, Parsons Corporation incurred $250,000 in actual
manufacturing overhead cost. The Manufacturing Overhead account showed that overhead
was overapplied $12,000 for the year. If the predetermined overhead rate was $8.00 per
direct labor-hour, how many hours did the Corporation work during the year?
A. 31,250 hours
B. 30,250 hours
C. 32,750 hours
D. 29,750 hours
Overapplied manufacturing overhead = Manufacturing overhead applied - Actual manufacturing overhead

Manufacturing overhead applied = Actual manufacturing overhead + Overapplied manufacturing overhead
= $250,000 + $12,000
= $262,000
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Manufacturing overhead applied = Predetermined overhead rate × Actual direct labor-hours
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Actual direct labor-hours = Manufacturing overhead applied ÷ Predetermined overhead rate
= $262,000 ÷ $8.00 per direct labor-hour
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= 32,750 direct labor-hours
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7. Epolito Corporation incurred $87,000 of actual Manufacturing Overhead costs during
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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:
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A. debit to Work in Process 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
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To record the incurrence of actual Manufacturing Overhead costs:

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8. Cerrone Inc. has provided the following data for the month of July. The balance in the
Finished Goods inventory account at the beginning of the month was $39,000 and at the
end of the month was $47,000. The cost of goods manufactured for the month was
$188,000. The actual manufacturing overhead cost incurred was $71,000 and the
manufacturing overhead cost applied to Work in Process was $67,000. The adjusted cost of
goods sold that would appear on the income statement for July is:
A. $196,000
B. $184,000
C. $180,000
D. $188,000
Manufacturing overhead underapplied (overapplied) = Actual manufacturing overhead incurred -

Manufacturing overhead applied = $71,000 - $67,000 = $4,000 underapplied
Adjusted cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured
- Ending finished goods inventory + Manufacturing overhead underapplied
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= $39,000 + $188,000 - $47,000 + $4,000
= $184,000
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9. There are two acceptable methods for closing out any balance of underapplied or overapplied
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manufacturing overhead. One method involves allocation of the balance among several
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accounts, whereas the other closes any balance directly to:
A. Finished Goods inventory.

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B. Cost of Goods Sold.

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C. Cost of Goods Manufactured.

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D. Work in Process inventory.
10. Which of the following entries would record correctly the monthly salaries earned by the top
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management of a manufacturing company?

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Quantitative Questions (1 point each)
Be sure to record your final answers in the spaces provided on the cover sheet.
Use the following information for the next two questions (#11, #12):
The following partially completed T-accounts summarize transactions for Farwest Corporation
during the year:
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*Wages & Salaries include both direct and
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indirect labor costs
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direct and indirect materials
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11. The Cost of Goods Manufactured was:
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12. The direct labor cost was:
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The key is to recognize that the 7,400 debit entry in the Work in Process account represents
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direct materials. The journal entry would have been:
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The other debit entry in the Work in Process account in the amount of $6,800 is
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manufacturing overhead applied because there is a corresponding credit entry for the same
amount in the account Manufacturing Overhead.
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Use the following information for the next three questions (#13, #14, #15):
Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate. At the
beginning of the year, the estimated direct labor-hours were 17,500 hours. At the end of the year,
actual direct labor-hours for the year were 16,000 hours, the actual manufacturing overhead for
the year was $233,000, and manufacturing overhead for the year was underapplied by $15,400.
13. What was the amount of overhead that was applied?
Underapplied (overapplied) manufacturing overhead = Actual manufacturing overhead -

Manufacturing overhead applied
Manufacturing overhead applied = Actual manufacturing overhead - Underapplied
manufacturing overhead
= $233,000 - $15,400
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= $217,600
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14. What was the pre-determined overhead rate per direct-labor hour?
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
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Predetermined overhead rate = Overhead applied ÷ Amount of the allocation base incurred
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Predetermined overhead rate = $217,600 ÷ 16,000 direct labor-hours

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= $13.60 per direct labor-hour

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15. The estimated manufacturing overhead at the beginning of the year used in the
predetermined overhead rate must have been:
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Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount
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Estimated total manufacturing overhead = Predetermined overhead rate × Estimated total amount
= $13.60 per direct labor-hour × 17,500 direct labor-hours
= $238,000
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Accounting 225 | Quiz #2 | Version A | April 13, 2016

Name: __________________________ Student Number: ___________________

TA: _____________________________ Quiz Section: CA CB CC CD

Instructions: There are 10 multiple-choice questions and 5 quantitative questions on the

Signature: _________________________________ Date: _____________________

Multiple Choice Answers:

A. the amount of cost charged to Work in Process during the period.

C. the amount of cost placed into production during the period.

of the allocation base

= $19.10 per direct labor-hour × 16,700 direct labor-hours

Overhead over or underapplied:

Overapplied manufacturing overhead = Manufacturing overhead applied - Actual manufacturing overhead

A. debit to Work in Process of $89,000

To record the incurrence of actual Manufacturing Overhead costs:

Manufacturing overhead underapplied (overapplied) = Actual manufacturing overhead incurred -

A. Finished Goods inventory.

B. Cost of Goods Sold.

C. Cost of Goods Manufactured.

D. Work in Process inventory.

management of a manufacturing company?

13. What was the amount of overhead that was applied?

Underapplied (overapplied) manufacturing overhead = Actual manufacturing overhead -

Predetermined overhead rate = $217,600 ÷ 16,000 direct labor-hours

= $13.60 per direct labor-hour

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Name: ________ Student Number: _

Signature: _____________ Date: _