Multiple Choice Answers

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Question 1
Nails, depreciation, and foreman salaries are examples of:
A. raw materials.
B. manufacturing overhead.
C. direct labor.
D. none of the above.

Question 2
What is the journal entry to record the direct labor summarized on the labor distribution report?
A. Debit Finished Goods; credit Payroll
B. Debit Payroll; credit Cash
C. Debit Work-in-Process; credit Payroll
D. Debit Payroll; credit Direct Labor

Question 3
During the week ended November 30, total factory payroll incurred was $6,000. Of this total, 80% was for direct labor. The entry to record the payroll distribution would include:
A. debit Work-in-Process Inventory for $6,000.
B. debit Work-in-Process Inventory for $4,800 and Overhead-Applied for $1,200.
C. debit Work-in-Process Inventory for $4,800 and Indirect Labor Expense for $1,200.
D. debit Work-in-Process Inventory for $4,800 and Overhead-Control for $1,200.

Question 4
Raw material inventory appears on the:
A. balance sheet.
B. income statement.
C. cost of goods manufactured statement.
D. Both A and C are correct.

Question 5
Journal entries crediting Payroll and debiting Work-in-Process Inventory are made for:
A. hourly manufacturing labor.
B. raw materials.
C. foremen’s salaries.
D. administrative salaries.

Question 6
Lumber used in construction of a building is part of:
A. raw material costs.
B. manufacturing overhead.
C. labor costs.
D. None of these answers are correct.

Question 7
The Overhead-Control account is used for the:
A. accumulation of all actual overhead costs and it has a debit balance.
B. application of overhead to production and it has a credit balance.
C. accumulation of all actual overhead costs and it has a credit balance.
D. application of overhead to production and it has a debit balance.

Question 8
The second step in determining total manufacturing costs is to calculate:
A. the direct labor cost for the month.
B. factory overhead cost for the month.
C. the raw material cost for the month.
D. None of these answers are correct.

Question 9
What is the journal entry to record issuing supplies from the storeroom?
A. Debit Overhead-Control; credit Supplies Inventory
B. Debit Overhead-Applied; credit Supplies Inventory
C. Debit Supplies Inventory; credit Overhead-Applied
D. Debit Overhead-Applied; credit Raw Materials Inventory

Question 10
Direct labor includes the wages of:
A. maintenance workers.
B. an hourly worker producing the product.
C. administrators.
D. the shop foreman.

Question 11
The formula for cost of goods manufactured is:
A. beginning work-in-process plus total manufacturing cost minus ending work-in-process.
B. raw materials plus direct labor minus overhead plus beginning work-in-process inventory plus ending work-in-process inventory.
C. raw materials minus direct labor plus overhead plus beginning work-in-process inventory plus ending work-in-process inventory.
D. raw materials plus direct labor less overhead plus beginning work-in-process inventory less ending work-in-process inventory.

Question 12
Manufacturing cost includes:
A. manufacturing overhead.
B. raw material.
C. direct labor.
D. All of these answers are correct.

Question 13
The purchase of direct materials was recorded as the purchase of office supplies. This error will cause:
A. the cost of goods manufactured to be overstated.
B. the cost of goods sold to be overstated.
C. the net income to be overstated.
D. None of these are correct.

Question 14
Ending finished goods inventory is subtracted from ________ to get cost of goods sold.
A. cost of goods manufactured
B. net purchases
C. cost of goods available for sale
D. none of the above

Question 15
Adams Manufacturing has estimated manufacturing overhead at $72,000 and has estimated direct labor of 10,000 direct labor hours at $9.00 per hour. The overhead rate per direct labor dollar would be:
A. $8.00.
B. $1.25.
C. $0.80
D. $7.20.

Question 16
What inventories are included in determining total manufacturing costs?
A. Beginning and ending finished goods
B. Beginning and ending work-in-process
C. Beginning and ending raw materials
D. None of the above answers is correct.

Question 17
The work-in-process beginning inventory was overstated. This error will cause:
A. the cost of goods manufactured to be understated.
B. the cost of goods sold to be overstated.
C. the net income to be overstated.
D. Answers B and C are correct.

Question 18
There was no accrual for the direct labor at the end of the year. This error will cause:
A. the cost of goods manufactured to be overstated.
B. the cost of goods sold to be overstated.
C. the net income to be understated.
D. None of these answers is correct.

Question 19
What is the journal entry to record issuing raw materials from the storeroom?
A. Debit Raw Materials Inventory; Credit Work-in-Process
B. Debit Work-in-Process; Credit Raw Materials Inventory
C. Debit Overhead-Control; Credit Work-in-Process
D. Debit Work-in-Process; Credit Overhead-Control

Question 20
Freight costs to bring the raw materials in should be charged to:
A. Manufacturing overhead.
B. Cost of Goods Sold.
C. Raw Materials Inventory.
D. Work-in-Process Inventory.