practice quiz

Which of the following statements are false

• overapplied or underapplied should be removed from the factory overhead account at the end of each accounting period

• if overhead is underapplied, it means that individual jobs have not been charged enough during the year and the cost of goods sold reported is too low

• both direct and indirect labor costs are recorded on the individual job cost sheets

• overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the overhead incurred during the period

in a manufacturing company, the cost of goods completed during the period would include which of the following elements?

• marketing costs

• raw materials used

• beginning finished goods inventory

• all of the above

which of the following statements is TRUE

• period costs only affect the balance sheet

• product costs affect only the balance sheet

• product costs affect only the income statement

• product costs eventually affect both the balance sheet and the income statement

which of the following would be accounted for using a JOB ORDER COST SYSTEM

• the refining of petroleum

• the production of automobiles

• the payroll system of a university

• the production of personal computers

which of the following statements is TRUE for a company that maintains beginning and ending work in process and finished goods inventories?

• if the company closes its underapplied overhead entirely to cost of good sold it will cause net operating income to be lower than the net operating income reported if the company had closed its underapplied overhead porportionally to work in process, finished goods and cost of goods sold

• if the company closes its underapplied overhead entirely to cost of good sold it will cause net operating income to be higher than the net operating income reported if the company had closed its underapplied overhead porportionally to work in process, finished goods and cost of goods sold

• if the company closes its underapplied overhead entirely to cost of good sold it will cause net operating income to be same than the net operating income reported if the company had closed its underapplied overhead porportionally to work in process, finished goods and cost of goods sold

• if the company closes its underapplied overhead entirely to cost of good sold it will cause the gross margin to be higher than the gross margin reported if the company had closed its underapplied overhead porportionally to work in process, finished goods and cost of goods sold

Fogg company, which uses labor hours to apply overhead to manufacturing, may have increased amounts of underapplied overhead at month-end if

• direct laborers are granted a wage increase

• employees are hit hard with a widespread outbreak of the flu

• suppliers of direct materials have an across-the-board price increase

• an accountant failed to record the period's charges for plan maintenance and security

an employee accidentally overstated the year's advertising expense by PHP50,000. Which of the following correctly depicts the effect of this error

• cost of goods sold will be overstated by PHP50,000

• cost of goods manufactured will be overstated by PHP50,000

• both cost of goods manufactured and cost of goods sold will be overstated by PHP50,000

• None of the above

what effect will the underapplied overhead have on net operating income

• net operating income will be unaffected

• net operating income will increase

• net operating income will decrease

• not enough information to come up with a conclusion

if the factory overhead cost incurred is less than the amount applied, the factory overhead account will have

• a debit balance and be underapplied

• a credit balance and be underapplied

• a credit balance and be overapplied

• a debit balance and be overapplied

electricity costs that were incurred b a company's production processes should be debited to utilities expense

manufacturing overhead is a pool of indirect production costs that must somehow be attached to each unit manufactured

• only statement I is true

• only statement II is true

• both statements are true

• both statements are false