ACCT 2101 Lecture Notes - Lecture 9: Finished Good
ACCT 2101 Full Course Notes
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1.) When products held in inventory are sold:
A.)Cost of Goods Sold is credited.
B.)Work in Process Inventory is credited.
C.)Finished Goods Inventory is credited.
D.)Finished Goods Inventory is debited.
2.)Since manufacturing costs (direct materials, direct labor,and overhead) are incurred in the process of manufacturing units ofproduct, these costs are credited t
| A.) | The Direct Materials Inventory, Direct Labor, and ManufacturingOverhead accounts respectively. |
| B.) | Liability accounts. |
| C.) | The Work in Process Inventory account. |
| D.) | The Cost of Goods Sold account. |
3.)Management accounting systems are designed to assistorganizations in the performance of all of the following functionsexcept:
| A.) | The assignment of decision-making authority over companyassets. |
| B.) | Planning and decision-making. |
| C.) | Monitoring, evaluating, and rewarding performance. |
| D.) | The preparation of income tax returns. |
4.)In a schedule of cost of finished goods manufactured, thefigure for total manufacturing costs:
| A.) May be less than the cost of direct materials used. | |
| B.) May be less than the direct labor costs assigned toproduction. | |
| C.) May be less than the manufacturing overhead applied toproduction. | |
| D.) May be less than the cost of finished goodsmanufactured. |
5.) When a manufacturing company purchases raw materials orcomponent parts to be used in manufacturing finished goods, thesecosts are initially debited to:
| A.) Expense accounts. | |
| B.) Raw Materials Inventory. | |
| C.) Finished Goods Inventory. | |
| D.) Manufacturing Overhead. |
6.) The wages paid to employees working directly on a company'sproducts would be shown as a:
| A.) Credit to Direct Labor. | |
| B.) Debit to Direct Labor. | |
| C.) Credit to Work in Process. | |
| D.) Debit to Manufacturing Overhead. |
7.) Amounts credited to the Work in Process inventory accountmay best be described as:
| A.) The cost of finished goods manufactured. | |
| B.) Total manufacturing costs charged to production. | |
| C.) The cost of goods sold. | |
| D.) Direct materials purchased, direct labor costs paid, andpayments for items classified as manufacturing overhead. |
Zachary Modems, Inc. acquired a subsidiary named Anywhere, Inc. (AI). AI manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary:
| Cash | $ | 184,600 | ||||||
| Raw materials inventory | 3,680 | |||||||
| Work in process inventory | 5,530 | |||||||
| Finished goods inventory | 6,450 | |||||||
| Common stock | $ | 119,060 | ||||||
| Retained earnings | 81,200 | |||||||
| Totals | $ | 200,260 | $ | 200,260 | ||||
The subsidiary completed the following transactions during 2017:
1. Paid $55,380 cash for direct raw materials.
2. Transferred $46,160 of direct raw materials to work in process.
3. Paid production employees $73,860 cash.
4. Applied $48,910 of manufacturing overhead costs to work in process.
5. Completed work on products that cost $150,410.
6. Sold products that cost $131,950 for $167,950 cash. Record the recognition of revenue in a row labeled 6a and the cost of goods sold in a row labeled 6b.
7. Paid $18,450 cash for selling and administrative expenses.
8. Actual overhead costs paid in cash amounted to $50,710.
9. Closed the Manufacturing Overhead account. The amount of over- or underapplied overhead was insignificant (immaterial).
10. Made a $4,580 cash distribution to the owners
REQUIRED
A. Prepare a schedule of cost of goods manufactured and sold.
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1. Azucar, Inc. has six processing departments for refining sugarâAffination, Carbonation, Decolorization, Boiling, Recovery, and Packaging. Conversion costs are added evenly throughout each process. Data from August for the Decolorization Department are as follows:
| â | Metric Tons |
| Beginning Work-in-Process Inventory | 0 |
| Transferred in | 13,500 |
| Completed and transferred out to Boiling in August | 5500 |
| Ending Work-in-Process Inventory | 8000 |
| â | Costs |
| Beginning Work-in-Process Inventory | $0 |
| Costs added during August | â |
| Direct materials | 3,000,000 |
| Direct labor | 1,100,000 |
| Manufacturing overhead | 625,000 |
| Total costs added during August | $4,725,000 |
The ending Work-in-Process Inventory is 100% and 75% complete with respect to direct materials and conversion costs, respectively. The weighted-average method is used. Compute the cost per equivalent unit for direct materials and conversion costs. (Round any intermediate calculations and your final answer to two decimal places.)
| A | $81.48 per metric ton for direct materials; $200.00 per metric ton for conversion costs | |
| B | $200.00 per metric ton for direct materials; $81.48 per metric ton for conversion costs | |
| C | $222.22 per metric ton for direct materials; $150.00 per metric ton for conversion costs | |
| D | $222.22 per metric ton for direct materials; $222.22 per metric ton for conversion costs |
2. Martinez Manufacturing incurred $4000 for indirect labor in Department III. The journal entry to record indirect labor utilized, but not paid is ________. Process costing is used.
| A | debit Manufacturing Overhead, $4000; credit Wages Payable, $4000 | |
| B | debit Wages Payable, $4000; credit Manufacturing Overhead, $4000 | |
| C | debit Accounts Payable, $4000; credit Manufacturing Overhead, $4000 | |
| D | debit Manufacturing Overhead, $4000; credit Accounts Payable, $4000 |
3. The managerial role that involves the day-to-day running of the business is the ________.
| A strategic planning function | ||
| B directing function | ||
| C planning function | ||
| D controlling function |
4. Manufacturing costs flow from Work-in-Process Inventory to Cost of Goods Sold to Finished Goods Inventory.
A True
B False
5. Payton Corporation provided the following information for the year:
| Beginning BalanceâWork-in-Process Inventory | $26,000 |
| Ending BalanceâWork-in-Process Inventory | 55,000 |
| Beginning Balanceâ Direct Materials | 81,000 |
| Ending Balanceâ Direct Materials | 59,000 |
| Purchases â Direct Materials | 360,000 |
| Direct Labor | 471,000 |
| Indirect Labor | 19,000 |
| Depreciation on Factory Plant and Equipment | 24,000 |
| Plant Utilities and Insurance | 268,000 |
What was the amount of the cost of goods manufactured for the year?
| A | $1,363,000 | |
| B | $1,164,000 | |
| C | $1,193,000 | |
| D | $1,135,000 |
