Sample Multiple-Choice Questions

1. Which terms will make the following statement true? When manufacturing overhead is underapplied, the Manufacturing Overhead account has a __________ balance and __________ manufacturing overhead is greater than __________ manufacturing overhead.

a. debit, actual, applied

b. credit, actual, applied

c. debit, applied, actual

d. credit, applied, actual

2. Thames Corporation uses machine hours in its predetermined overhead rate. At the beginning of the year, the estimated machine hours were 32,840 hours and the total estimated manufacturing overhead was $295,560. At the end of the year, actual machine hours for the year were 34,750 hours and the actual manufacturing overhead for the year was $310,450. The overhead applied for the year was:

a. $295,560

b. $310,450

c. $312,750

d. $4,280 underapplied

3. Reichelderfer Corporation has provided data concerning the company's Manufacturing Overhead account for the month of August. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $50,000 and the total of the credits to the account was $72,000. Which of the following statements is true?

a. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $72,000.

b. Manufacturing overhead applied to Work in Process for the month was $50,000.

c. Actual manufacturing overhead for the month was $50,000.

d. Manufacturing overhead for the month was underapplied by $22,000.

4. In May, Hervey Inc. incurred $60,000 of direct labor costs and $3,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

a. credit to Manufacturing Overhead of $3,000

b. debit to Work in Process of $63,000

c. credit to Work in Process of $63,000

d. debit to Manufacturing Overhead of $3,000

5. The Donaldson Company uses a job-order costing system. The following data were recorded for July:

Overhead is applied to jobs at the rate of 80% of direct materials cost. Jobs 475, 477, and 478 were completed during July and transferred to finished goods. Jobs 475 and 478 have been delivered to the customer. Donaldson's Work in Process inventory balance on July 31 was:

a. $7,280

b. $2,600

c. $3,160

d. $3,320

6. Which of the following products probably would be produed by a company using a process costing system?

a. A house

b. A customized chocolate

c. Potato chips

d. A movie

7. Raisin Company's overhead cost was overapplied by $1,500 in the current year. The estimated overhead was $170,000, and the applied overhead was $166,000. Compute the actual overhead.

a. $164,500

b. $169,500

c. $168,500

d. $171,500

8. A manufacturing company applies overhead based on direct labor hours. At the beginning of the year, it estimated that overhead costs would be $720,000 and direct labor hours would be 90,000. Actual overhead costs incurred were $754,400, and actual direct labor hours were 92,000. Compute the predetermined overhead rate per direct labor hour.

a. $7.83

b. $8.38

c. $8.20

d. $8.00

9. A manufacturing company applies overhead based on direct labor hours. At the beginning of the year, it estimated that overhead costs would be $720,000 and direct labor hours would be 90,000. Actual overhead costs incurred were $754,400, and actual direct labor hours were 92,000. The entry to assign overhead costs during the year would include a

a. debit to Overhead for $720,000

b. credit to Overhead for $754,400.

c. credit to Overhead for $736,000

d. debit to Overhead for $754,400.