MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS

STATEMENT OF COST OF GOODS MANUFACTURED & SOLD Factory Overhead

Inventory Accounts 3. Indirect material is
75. For a manufacturer, the three inventory accounts are A. Factory overhead cost C. Irrelevant cost
a. raw materials, finished goods, and cost of goods sold B. Fixed cost D. Prime cost CPAR 1012
b. raw materials, overhead, and cost of goods sold
3
c. raw materials, direct labor, and overhead . Which of the following costs is not an example of factory overhead that might be found on a
d. raw materials, work in process, and finished goods H&M cost of goods manufactured statement
A Supplies C Depreciation
16. The three primary inventory accounts in a manufacturing company are B Indirect Labor D Materials available for use
a. Merchandise Inventory, Supplies Inventory, and Finished Goods Inventory.
b. Merchandise Inventory, Work in Process Inventory, and Finished Goods Inventory. Work-in-Process
c. Supplies Inventory, Work in Process Inventory, and Finished Goods Inventory. Barfields 68. Which of the following accounts would appear on the financial statements of ONLY a
d. Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory. manufacturing enterprise? (E*)
a. bonds payable d. retained earnings
Raw Materials b. work-in-process inventory e. common stock
64. A company has purchased some steel to use in the production of steel railings. If this steel has c. prepaid insurance H&M
NOT been put into production, it would be classified as
4
a. direct materials inventory d. office supplies . What is the nature of the work-in-process account? (E)
b. factory supplies e. finished goods inventory a. Inventory. c. Productivity.
c. work-in-process inventory H&M b. Cost of goods sold. d. Nominal. Gleim
1 5
. Theoretically, cash discounts permitted on purchased raw materials should be (D) . The manufacturing (work-in-process) account is
a. Added to other income, whether taken or not. A. Neither a real nor a nominal account.
b. Added to other income, only if taken. B. A hybrid account (both a real and a nominal account).
c. Deducted from inventory, whether taken or not. C. An inventory account indicating the beginning and ending inventory of goods being
d. Deducted from inventory, only if taken. AICPA 0586 processed.
D. A nominal account to which indirect costs are charged as incurred and credited as these
2
. When should cash discounts be deducted from the unit cost of direct materials? costs are charged to production. Gleim 2000
A. Only if the discounts are taken.
B. If costs are determined by estimate. 20. Conversion of inputs to outputs is recorded in the (E)
C. If the rate of discount exceeds reasonable interest rates. a. Work in Process Inventory account. c. Raw Material Inventory account.
D. If there are excessive purchasing, receiving inspection, storage, etc., costs. Gleim 2000 b. Finished Goods Inventory account. d. both a and b. Barfields
6
4. The expense that theoretically is not a correct part of inventory cost is: . The debits in work-in-process are BWIP, direct labor, direct materials, and factory overhead.
A. freight-in D. accounting costs for materials received The account should be credited for production that is completed and sent to finished goods
B. freight-out E. purchasing costs inventory. The balance is
C. inspection costs Carter & Usry A. EWIP, which is a debit.
B. EWIP, which is a credit.
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MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS

C. Total production costs to be accounted for. 9. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals
D. Closed out at the end of the accounting period. Gleim 2000 a. cost of goods manufactured in the year. c. total manufacturing costs to account for.
b. ending Work in Process Inventory. d. cost of goods available for sale. Barfields
49. The ending work-in-process inventory is deducted on the (E)
a. balance sheet d. statement of cash flows Cost of Goods Manufactured
b. statement of cost of goods manufactured e. statement of financial position. Cost of goods manufactured
c. income statement H&M 27. A good description of “cost of goods manufactured” is the recorded cost of the: (M)
A. units completed during the period.
. The completion of goods is recorded as a decrease in work-in-process control when using B. work done on all units during the period.
G&M A B C D C. units started and completed during the period.
Job order costing Yes Yes No No D. work done this period on units completed this period. G&N 12e
Process costing Yes No Yes No
52. The cost of units completed during a period is called
Finished Goods a. cost of goods sold d. finished goods inventory
63. Which type of inventory is normally sold to other organizations? b. cost of goods manufactured e. goods available for sale.
a. direct materials d. office supplies c. current manufacturing costs H&M
b. factory supplies e. finished goods
c. work-in-process H&M 32. The final figure in the Schedule of Cost of Goods Manufactured represents the
a. cost of goods sold for the period.
65. The merchandise inventory in a merchandising business corresponds most closely to which of b. total cost of manufacturing for the period.
the following items in a manufacturing firm? (M2**) c. total cost of goods started and completed this period.
a. raw materials inventory d. work-in-process inventory d. total cost of goods completed for the period. Barfields
b. cost of goods available for sale e. finished goods inventory
c. cost of goods manufactured H&M Cost of Goods Manufactured Statement
. The cost of goods manufactured statement is
Total Manufacturing Costs A. The cost of goods sold for a manufacturing company.
17. The components of manufacturing cost are B. A reconciliation of the income statement and balance sheet of manufacturing company.
a. Variable costs, fixed costs, and overhead costs. C. A summarized presentation of the details of transactions recorded in the manufacturing
b. Materials, direct labor, and overhead. (work-in-process) account.
c. Purchases, wages, and manufacturing overhead. D. A report of standard costs, variance analysis, and allocation of variances to inventory and
d. Wages and salaries, maintenance and repairs, utilities, and depreciation. L&H cost of goods sold accounts. G&M

45. The sum of the total additions to work-in-process during a period is . The final figure in the cost of goods manufactured statement is usually
a. total manufacturing costs added d. cost of goods manufactured A. The cost of goods sold for the period.
b. factory overhead applied e. direct labor costs. B. The total cost of manufacturing for the period.
c. raw materials used H&M C. The total cost of manufactured goods completed during the period.
D. The total cost of manufactured goods started and completed this period. G&M
Total Manufacturing Costs to Account for
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MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS
7
. Information from the Cost of Goods manufactured statement flows through to which of the
following statements Manufacturing
A Income Statement C Cash Flow Statement 7. Cost of goods manufactured is used to compute (D)
B Balance Sheet D Statement of retained Earnings a. Manufacturing overhead applied. c. Direct materials used.
b. Finished goods inventory. d. Cost of goods sold. RPCPA 0598
Manufacturing vs. Merchandising company
8
. Which of the following would a merchandising company use in place of cost of goods Analysis
manufactured on a statement of cost of goods sold? (E**) 9. Statement 1 Prime cost is direct material cost plus indirect material cost.
A. Conversion costs C. Net purchases Statement 2 In general, if unit cost is multiplied by the number of units at a certain level of
B. Materials inventory D. Prime costs Wiley 2012 activity, the result would be a total cost that is also appropriate for a different
level of activity.
. In what account in a retailing enterprise is cost of goods manufactured analogous? Statement 3 Total manufacturing costs incurred plus the decrease in work in process
A. Cost of goods sold. C. Overhead. inventory is equal to cost of goods manufactured. (E)
B. Inventory. D. Purchases. G&M RPCPA 0592 a. b. c. d.
Statement 1 True False True False
34. Which of the following replaces the retailing component "Purchases" in computing Cost of Statement 2 True False True False
Goods Sold for a manufacturing company? Statement 3 True False False True
a. direct material used c. total prime cost
b. cost of goods manufactured d. cost of goods available for sale Barfields Total Manufacturing Cost vs. Cost of Goods Manufactured
54. If a firm's work in process inventory has increased during the period,
6. Cost of goods sold is a component of the Income Statement. In a merchandising A. its cost of goods sold will be less than its cost of goods manufactured
establishment, this refers to purchases adjusted for changes in inventory. In a manufacturing B. its cost of goods sold will be greater than its cost of goods manufactured S,E&R 12
company, what replaced purchases to arrive at cost of goods sold? (E) C. its manufacturing costs for the period will be less than its costs of goods manufactured
a. Finished goods. c. Work in process inventory. D. its manufacturing costs for the period will be more than its costs of goods manufactured
b. Fixed manufacturing overhead. d. Cost of goods manufactured. RPCPA 0594
9
Cost of Goods Sold vs. Cost of Goods Manufactured
. In a retailing enterprise, the income statement includes cost of goods sold. Cost of goods sold 46. Cost of goods sold equals cost of goods manufactured
is, in effect, purchases adjusted for changes in inventory. In a manufacturing company, the a. when finished goods inventories remain constant
purchases account is replaced by which account? (M2) b. when work-in-process inventories remain constant
a. Inventory. c. Finished goods. c. plus beginning work-in-process inventory minus ending work-in-process inventory
b. Cost of goods manufactured. d. Cost of goods sold. Gleim d. when raw materials inventories remain constant
e. both a and c. H&M
Cost of Goods Sold
Manufacturing vs. Merchandising 31. If the cost of goods sold is greater than the cost of goods manufactured, then: (E)
8. The principal difference in accounting for a merchandising business and for a manufacturing a. work in process inventory has decreased during the period.
business may be found in computing the (E) RPCPA 1079 b. finished goods inventory has increased during the period.
a. Cost of goods sold. c. The expected return on profits. c. total manufacturing costs must be greater than cost of goods manufactured.
b. Cost of advertising. d. The selling and administrative expenses. d. finished goods inventory has decreased during the period. G & N 9e
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b. Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-

Gross Margin process inventory = Cost of goods sold
10
. The term "gross margin" for a manufacturing firm refers to excess of sales over (E) c. Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods
A. Manufacturing costs, excluding fixed manufacturing costs. inventory = Cost of goods sold.
B. Cost of goods sold, including fixed indirect manufacturing costs. d. Cost of goods manufactured + Beginning finished goods inventory - Ending finished
C. Cost of goods sold, excluding fixed indirect manufacturing costs. goods inventory = Cost of goods sold. Horngren
D. All variable costs, including variable selling and administrative expenses. CMA 0694
COST FLOW & JOURNAL ENTRIES
Formula Cost Flow
11
Cost of goods manufactured . The order in which costs flow through a system is
31. The formula to compute cost of goods manufactured is (E*) A Materials Inventory, Finished Goods, Work in Process, Cost of Goods Sold
a. beginning Work in Process Inventory plus purchases of raw material minus ending Work B Work in Process, Finished Goods, Materials Inventory, and Cost of Goods Sold
in Process Inventory. C Cost of Goods Sold, Materials Inventory, Work in Process, and Finished Goods
b. beginning Work in Process Inventory plus direct labor plus direct material used plus D Materials Inventory, Work in Process, Finished Goods and Cost of Goods Sold
overhead incurred minus ending Work in Process Inventory.
c. direct material used plus direct labor plus overhead incurred. Raw Materials Account
d. direct material used plus direct labor plus overhead incurred plus beginning Work in Debit entries
Process Inventory. Barfields Purchase of Materials for Cash
54. On December 1, Mogro Corporation had $26,000 of raw materials on hand. During the month,
Cost of goods sold the company purchased an additional $60,000 of raw materials. During December, $62,000 of
121.Which of the following formulas determine cost of goods sold in a merchandising entity? (E) raw materials were requisitioned from the storeroom for use in production. The debits to the
a. Beginning inventory + Purchases + Ending inventory = Cost of goods sold Raw Materials account for the month of December total: (E)
b. Beginning inventory + Purchases - Ending inventory = Costs of goods sold A. $26,000 C. $62,000
c. Beginning inventory - Purchases + Ending inventory = Cost of goods sold B. $60,000 D. $86,000 G&N 12e
d. Beginning inventory - Ending inventory - Purchases = Cost of goods sold Horngren
Credit entries
33. The formula for cost of goods sold for a manufacturer is (E) Issuance of Materials
a. beginning Finished Goods Inventory plus Cost of Goods Manufactured minus ending 55. At the beginning of December, Altro Corporation had $26,000 of raw materials on hand.
Finished Goods Inventory. During the month, the company purchased an additional $76,000 of raw materials. During
b. beginning Work in Process Inventory plus Cost of Goods Manufactured minus ending December, $72,000 of raw materials were requisitioned from the storeroom for use in
Work in Process Inventory. production. The credits to the Raw Materials account for the month of December total: (E)
c. direct material plus direct labor plus applied overhead. A. $26,000 C. $76,000
d. direct material plus direct labor plus overhead incurred plus beginning Work in Process B. $72,000 D. $102,000 G&N 12e
Inventory. Barfields
Work-in-Process Account
122.Which of the following formulas determine cost of goods sold in a manufacturing entity? (E) Debit entries
a. Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in- Raw materials used
12
process inventory = Cost of goods sold . Gallon Corporation had $24,000 of raw materials on hand on April 1. During the month, the
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MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS

company purchased an additional $52,000 of raw materials. During April, $62,000 of raw would include a debit to Manufacturing Overhead of:
materials were requisitioned from the storeroom for use in production. These raw materials A. $0 C. $61,000
included both direct and indirect materials. The indirect materials totaled $2,000. The debits to B. $4,000 D. $65,000 G&N 12e
the Work in Process account as a consequence of the raw materials transactions in April total:
(E) Indirect labor
16
A. $0 C. $60,000 . In October, Raddatz Inc. incurred $73,000 of direct labor costs and $6,000 of indirect labor
B. $52,000 D. $62,000 G&N 12e costs. The journal entry to record the accrual of these wages would include a: (E)
A. debit to Manufacturing Overhead of $6,000
Credit Entries B. credit to Manufacturing Overhead of $6,000
Finished goods C. debit to Work in Process of $79,000
13
. During March, Zea Inc. transferred $50,000 from Work in Process to Finished Goods and D. credit to Work in Process of $79,000 G&N 12e
recorded a Cost of Goods Sold of $56,000. The journal entries to record these transactions
would include a (E) G&N 12e 26. A credit to the Manufacturing Overhead control account represents the
A. credit to Work in Process of $50,000 C. debit to Finished Goods of $56,000 a. actual cost of overhead incurred.
B. credit to Finished Goods of $50,000 D. credit to Cost of Goods Sold of $56,000 b. actual cost of overhead paid this period.
c. amount of overhead applied to production.
6. A credit to Work in Process Inventory represents d. amount of indirect material and labor used during the period. Barfields
a. work still in process.
17
b. raw material put into production. . Piekos Corporation incurred $90,000 of actual Manufacturing Overhead costs during June.
c. the application of overhead to production. During the same period, the Manufacturing Overhead applied to Work in Process was
d. the transfer of completed items to Finished Goods Inventory. Barfields $92,000. The journal entry to record the application of Manufacturing Overhead to Work in
Process would include a (E)
Factory Overhead Control Account A. debit to Work in Process of $90,000
Debit entries B. credit to Work in Process of $90,000
Overhead incurred C. debit to Manufacturing Overhead of $92,000
14
. Epolito Corporation incurred $87,000 of actual Manufacturing Overhead costs during D. credit to Manufacturing Overhead of $92,000 G&N 12e
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 Cost of Goods Sold Account
costs would include a: (E) 33. Debits to Cost of Goods Sold typically represent the
A. debit to Work in Process of $89,000 a. transfer of completed items to Finished Goods Inventory.
B. credit to Work in Process of $89,000 b. costs of items sold.
C. debit to Manufacturing Overhead of $87,000 c. selling price of items sold.
D. credit to Manufacturing Overhead of $87,000 G&N 12e d. the cost of goods manufactured. Barfields

Indirect materials
15
. During September at Renfro Corporation, $65,000 of raw materials were requisitioned from the Journal Entries
storeroom for use in production. These raw materials included both direct and indirect Purchase of Materials
18
materials. The indirect materials totaled $4,000. The journal entry to record this requisition . Gullett Corporation had $26,000 of raw materials on hand on November 1. During the month,
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MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS

the company purchased an additional $75,000 of raw materials. The journal entry to record the B. debit to Work in Process of $83,000
purchase of raw materials would include a (E) C. debit to Raw Materials of $83,000
A. debit to Raw Materials of $75,000 C. debit to Raw Materials of $101,000 D. credit to Manufacturing Overhead of $4,000 G&N 12e
B. credit to Raw Materials of $75,000 D. credit to Raw Materials of $101,000 G&N
22
12e . If $200 of direct materials and $125 of supplies were issued to work-in-process, which of the
following entries is correct? Gleim
Purchase of Materials for Cash a. Work-in-process $325
19
. What is the journal entry for the purchase of $500 of direct materials and $250 of supplies for Materials $200
cash? Gleim Supplies 125
a. Supplies and materials $750 b. Work-in-process $125
Accounts payable $750 Overhead control 200
b. Work-in-process $500 Materials $200
Factory overhead 250 Supplies 125
Accounts payable $750 c. Work-in-process $200
c. Stores control $750 Overhead control 125
Cash $750 Stores control $325
d. Work-in-process $750 d. Materials and supplies $325
Cash $750 Stores control $325

Purchase of Materials on Account Purchase & use of raw materials

20
. What is the journal entry to record the purchase of materials on account? Use the following to answer questions 112-113: G&N 12e
A. Accounts payable XX On January 1, Schaf Corporation had $23,000 of raw materials on hand. During the month, the
Raw materials inventory XX company purchased an additional $50,000 of raw materials. During January, $50,000 of raw
B. Accounts receivable XX materials were requisitioned from the storeroom for use in production. These raw materials
Accounts payable XX included both direct and indirect materials. The indirect materials totaled $6,000.
C. Raw materials inventory XX
23
Accounts payable XX . The journal entry to record the purchase of raw materials would include a: (E)
D. Raw materials inventory XX A. debit to Raw Materials of $50,000 C. debit to Raw Materials of $73,000
Cash XX B. credit to Raw Materials of $50,000 D. credit to Raw Materials of $73,000
Gleim 2000 24
. The journal entry to record the requisition from the storeroom would include a (E)
A. debit to Raw Materials of $50,000
Issuance of raw materials B. debit to Work in Process of $44,000
21
. During July at Loeb Corporation, $83,000 of raw materials were requisitioned from the C. debit to Work in Process of $50,000
storeroom for use in production. These raw materials included both direct and indirect D. credit to Manufacturing Overhead of $6,000 G&N 12e
materials. The indirect materials totaled $4,000. The journal entry to record the requisition from
the storeroom would include a (E) Labor Cost Incurred
25
A. debit to Work in Process of $79,000 . During June, Buttrey Corporation incurred $67,000 of direct labor costs and $7,000 of indirect
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MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS

labor costs. The journal entry to record the accrual of these wages would include a: (E) vacation costs monthly instead of recognizing them as incurred. Select the journal entry to
A. debit to Work in Process of $67,000 C. debit to Work in Process of $74,000 record payroll and accrue the estimated vacation costs for the month of January. Gleim
B. credit to Work in Process of $67,000 D. credit to Work in Process of $74,000 a. Work-in-process $180,000
G&N 12e Factory O/H control 75,000
Estimated liability for vacation pay $ 30,000
26
. What is the correct journal entry if $5,000 of direct labor and $1,250 of indirect labor were Accrued payroll 225,000
incurred? Gleim b. Wage expense $225,000
a. Work-in-process $6,250 Accrued payroll $225,000
Accrued payroll $6,250 c. Vacation expense $300,000
b. Work-in-process $5,000 Accrued payroll $300,000
Overhead control 1,250 d. Work-in-process $225,000
Accrued payroll $6,250 Accrued payroll $225,000
c. Work-in-process $6,250
Overhead control 1,250 Payment of Payroll
29
Accrued payroll $6,250 . The Herron Company has a gross payroll of $2,000 per day based on a normal 40-hour work-
Applied overhead 1,250 week. Withholdings for income taxes amount to $200 per day. Gross payroll consists of
d. Payroll expense $6,250 $1,200 direct labor, $400 indirect labor, $280 selling expenses, and $120 administrative
Accrued payable $6,250 expenses each day. Assuming the weekly payroll and employer payroll taxes payable (but not
employees’ withholdings) have already been accrued, what is the journal entry to record the
27
. Ajax Candy Company has a gross payroll of $75,000 per month consisting of $65,000 of direct payment of the weekly payroll? Gleim
labor and $10,000 of indirect factory labor. Assume that the tax rate on employee is 0.8% for a. Accrued payroll $5,000
federal unemployment, 1.55% for state unemployment, 7.65% for Social Security benefits, a Cash $5,000
total payroll tax rate of 10%. What is the journal entry to accrue the monthly payroll and b. Accrued payroll $10,000
payroll taxes? Gleim Cash $8,330
a. Salary expense $75,000 Employees’ income taxes payable 1,000
Accrued wages $75,000 Employees’ FICO taxes payable 670
b. Salary expense $82,500 c. Accrued payroll $10,000
Accrued wages $75,000 Cash $8,330
Accrued payroll tax 7,500 Work-in-process 1,670
c. Work-in-process $65,000 d. Work-in-process $6,000
Factory O/H control 17,500 Factory overhead 2,900
Accrued payroll $75,000 Selling and administrative expenses 2,000
Employer payroll taxes payable 7,500 Accrued payroll $10,000
d. Work-in-process $7,500 Employer payroll taxes payable 900
Accrued payroll taxes payable $7,500
Payroll taxes
28 30
. ABC Company estimates its total vacation costs for the year to be $360,000. Direct labor . What is the journal entry to record Legal Corporation’s payment of state unemployment taxes
costs are $180,000 monthly, and indirect labor costs are $45,000. ABC has chosen to accrue for $600 if the tax has been accrued? Gleim
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a. State unemployment taxes payable $600 B. credit to Work in Process of $60,000

Cash $600 C. debit to Manufacturing Overhead of $62,000
b. State unemployment taxes payable $600 D. credit to Manufacturing Overhead of $62,000 G&N 12e
Accrued payroll $600
c. Factory overhead $600 Completion of Product
33
State unemployment taxes payable $600 . What is the entry to record completion of a particular product or group of products? Gleim
d. Accrued payroll $600 a. Finished goods XXX
Cash $600 Cost of goods sold XXX
b. Work-in-process XXX
Insurance Finished goods XXX
27. The journal entry to record the incurrence and payment of overhead costs for factory c. Finished goods XXX
insurance requires a debit to Work-in-process XXX
a. Cash and a credit to Manufacturing Overhead. d. Cost of goods sold XXX
b. Manufacturing Overhead and a credit to Accounts Payable. Work-in-process XXX
c. Manufacturing Overhead and a credit to Cash.
d. Work in Process Inventory and a credit to Cash. Barfields Sales
30. In a perpetual inventory system, the sale of items for cash consists of two entries. One entry is
Applied Factory Overhead Account a debit to Cash and a credit to Sales. The other entry is a debit to
22. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead a. Work in Process Inventory and a credit to Finished Goods Inventory.
control and a debit to b. Finished Goods Inventory and a credit to Cost of Goods Sold.
a. Finished Goods Inventory. c. Cost of Goods Sold. c. Cost of Goods Sold and a credit to Finished Goods Inventory.
b. Work in Process Inventory. d. Raw Material Inventory. Barfields d. Finished Goods Inventory and a credit to Work in Process Inventory. Barfields

Incurrence & application of overhead Comprehensive

Use the following to answer questions 114-115: G&N 12e Use the following to answer questions 102-105: G&N 12e
During March, Pendergraph Corporation incurred $60,000 of actual Manufacturing Overhead costs. The following journal entries without dollar data were taken from the accounting records of a
During the same period, the Manufacturing Overhead applied to Work in Process was $62,000. company that has a job-order costing system in which overhead is applied to jobs using a
predetermined overhead rate.
31
. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would
include a (D) 1 XX
A. credit to Work in Process of $62,000 . Work in Process X
B. debit to Work in Process of $62,000 XX
C. debit to Manufacturing Overhead of $60,000 Manufacturing Overhead X
D. credit to Manufacturing Overhead of $60,000 G&N 12e XX
Wages Payable X
32
. The journal entry to record the application of Manufacturing Overhead to Work in Process
would include a: (E) 2 XX
A. debit to Work in Process of $60,000 . Salary Expense X
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XX 103. The entry to transfer the cost of goods manufactured for the period is: (E)
Wages Payable X A. 1 C. 5
B. 4 D. 7
3 XX
. Manufacturing Overhead X 104. The entry to record the application of overhead is (E)
XX A. 1 C. 5
Accumulated Depreciation X B. 3 D. 6

4 XX 105. The entry to record depreciation on manufacturing equipment is (E)

. Work in Process X A. 1 C. 4
XX B. 3 D. 5
Raw Materials X
Use the following to answer questions 106-111: G&N 12e
5 XX On November 1, Arvelo Corporation had $32,000 of raw materials on hand. During the month, the
. Work in Process X company purchased an additional $78,000 of raw materials. During November, $95,000 of raw
XX materials were requisitioned from the storeroom for use in production. These raw materials
Manufacturing Overhead X included both direct and indirect materials. The indirect materials totaled $3,000.

6 XX Prepare journal entries to record these events. Use those journal entries to answer the following
. Manufacturing Overhead X questions:
XX
34
Raw Materials X . The debits to the Raw Materials account for the month of November total: (E)
A. $78,000 C. $95,000
7 XX B. $32,000 D. $110,000
. Finished Goods X
35
XX . The credits to the Raw Materials account for the month of November total: (E)
Work in Process X A. $32,000 C. $95,000
B. $78,000 D. $110,000
8 XX
36
. Raw Materials X . The debits to the Work in Process account as a consequence of the raw materials transactions
XX in November total: (E)
Accounts Payable X A. $0 C. $92,000
B. $78,000 D. $95,000
37
102. The entry to record the purchase of raw materials is: (E) . The credits to the Work in Process account as a consequence of the raw materials
A. 1 C. 6 transactions in November total: (E)
B. 4 D. 8 A. $0 C. $92,000
B. $78,000 D. $95,000
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38
. The debits to the Manufacturing Overhead account as a consequence of the raw materials Sales Return
transactions in November total (E) 25. Finished Goods is debited and Cost of Goods Sold is credited for:
A. $0 C. $92,000 A. transfer of completed goods to the customer
B. $3,000 D. $95,000 B. sale of a customer order
C. return of materials to the supplier
39
. The credits to the Manufacturing Overhead account as a consequence of the raw materials D. return of goods by the customer Carter & Usry
transactions in November total: (E)
A. $0 C. $92,000 Account Analysis
B. $3,000 D. $95,000 Comprehensive
Use the following to answer questions 116-121: G&N 12e
Explanation of Journal Entries The following T accounts are for Stanford Company:
Issuance of direct materials Raw Materials
21. Work in Process is debited and Materials is credited for: 24,00
A. the issuance of direct materials into production Beg. Bal. 7,000 (2) 0
B. the issuance of indirect materials into production (1) 19,000
C. the return of materials to the storeroom
D. the application of materials overhead Carter & Usry
Cost of Goods Sold
11. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material
Inventory. The explanation for this would be that
a. indirect material was placed into production.
b. raw material was purchased on account. Sales Salaries Expense
c. direct material was placed into production. (4)
d. direct labor was utilized for production. Barfields 11,000

Labor Cost Incurred

22. Factory Overhead Control is debited and Payroll is credited for: Work in Process
A. the recording of payroll C. the distribution of direct labor costs Beg. Bal. 11,000
B. the distribution of indirect labor costs D. the distribution of withholding taxes (2) 15,000 (7) ?
(4) 18,000
Insurance (6) 31,000
21. The logical explanation for an entry that includes a debit to Manufacturing Overhead control
and a credit to Prepaid Insurance is
a. the insurance company sent the company a refund of its policy premium. Accounts Payable
b. overhead for insurance was applied to production. 19,00
c. insurance for production equipment expired. (1) 0
d. insurance was paid on production equipment. Barfields (5) 5,000
RPCPA, AICPA, CMA & CIA EXAMINATION QUESTIONS Page 10 of 20
MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS
42
. The cost of goods sold (after adjustment for underapplied or overapplied overhead) is: (D)
A. $58,000 C. $69,000
Manufacturing Overhead B. $65,000 D. $72,000
31,00
(2) 9,000 (6) 0
43
(3) 16,000 . The manufacturing overhead applied is (M)
(4) 8,000 A. $24,000 C. $38,000
(5) 5,000 B. $31,000 D. $42,000
7,000
44
. The cost of direct materials used is (D)
Wages & Salaries Payable A. $14,000 C. $18,000
Beg. B. $15,000 D. $24,000
Bal. 7,000
45
37,00 . The ending Work in Process account balance would be (D)
(4) 0 A. $13,000 C. $64,000
B. $20,000 D. $75,000

Use the following to answer questions 156-160: G&N 12e

Finished Goods The following partially completed T-accounts summarize transactions for Faaberg Company during
Beg. Bal. 18,000 the year:
(7) 62,000 Raw Materials
End. Bal. 15,000 B 8,000
al. 4,500
Accumulated Depreciation—Factory 4,700
Beg. 82,00
Bal. 0
16,00 Finished Goods
(3) 0 B 19,90
al. 1,700 0
21,70
40
. The indirect labor cost is (D) 0
A. $8,000 C. $18,000
B. $15,000 D. $37,000
Work in Process
41
. The cost of goods manufactured is: (D) B 21,70
A. $62,000 C. $71,000 al. 3,600 0
B. $64,000 D. $82,000 5,700
8,000
RPCPA, AICPA, CMA & CIA EXAMINATION QUESTIONS Page 11 of 20
MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS
50
7,800 . The manufacturing overhead was: (M)
A. $200 overapplied C. $2,700 overapplied
B. $200 underapplied D. $2,700 underapplied
Manufacturing Overhead
2,300 7,800 Accounting Error
3,000 33. In the preparation of the schedule of Cost of Goods Manufactured, the accountant incorrectly
2,700 included as part of manufacturing overhead the rental expense on the firm's retail facilities.
This inclusion would: (D)
A. understate the cost of goods manufactured.
Wages & Salaries Payable B. have no effect on the cost of goods manufactured.
19,90 B 2,000 C. overstate period expenses on the income statement.
0 al. D. overstate the cost of goods sold on the income statement. G&N 12e
11,00
0 Comprehensive
51
. A company experienced a machinery breakdown on one of its production lines. As a
consequence of the breakdown, manufacturing fell behind schedule, and a decision was
Cost of Goods Sold made to schedule overtime to return manufacturing to schedule. Which one of the following
19,90 methods is the proper way to account for the overtime paid to the direct laborers?
0 A. The overtime hours times the sum of the straight-time wages and overtime premium
would be treated as direct labor.
B. The overtime hours times the sum of the straight-time wages and overtime premium
would be charged entirely to manufacturing overhead.
46
. The Cost of Goods Manufactured was (M) C. The overtime hours times the overtime premium would be charged to manufacturing
A. $7,700 C. $21,700 overhead, and the overtime hours times the straight-time wages would be treated as
B. $19,900 D. $41,600 direct labor.
D. The overtime hours times the overtime premium would be charged to repair and
47
. The direct labor cost was (D) maintenance expense, and the overtime hours times the straight-time wages would be
A. $8,000 C. $11,600 treated as direct labor. CIA 1193
B. $11,000 D. $19,900
48
. The direct materials cost was (D)
A. $2,300 C. $5,700
B. $3,600 D. $8,000
49
. The manufacturing overhead applied was (M)
A. $2,700 C. $7,800
B. $3,000 D. $13,700

RPCPA, AICPA, CMA & CIA EXAMINATION QUESTIONS Page 12 of 20

MANAGEMENT ADVISORY SERVICES COST ACCOUNTING DEFINITIONS

ANSWER EXPLANATIONS

RPCPA, AICPA, CMA & CIA EXAMINATION QUESTIONS Page 13 of 20

1
.REQUIRED: The treatment of purchase discounts.
DISCUSSION: (C) Cash discounts on purchases should be treated as reductions in the invoiced prices of specific
purchases so that goods available for sale reflect net purchase prices. Any discounts not taken are recorded as losses
in the income statement. The net method is preferable to recording inventories and payables at gross amounts because
the net amounts are the most accurate exchange prices. Moreover, it measures management stewardship by recording
as financing charges any discounts not taken.
Answers (A) and (B) are incorrect because cash discounts are never added to other income. Answer (D) is incorrect
because deducting only discounts taken (the gross method) is theoretically inferior.
2
.Answer (C) is correct. Direct material costs consist of quantities of materials that can be specifically identified with the
cost object in an economically feasible manner priced at the unit price of direct material. It includes sales taxes,
customs duties, cost of delivery, and is net of trade discounts, refunds, and rebates. Cash discounts should be
deducted from the unit cost direct materials only if the rate of discount exceeds reasonable interest rates, i.e., in effect
are trade discounts or rebates. See SMA 4A, Definition of Measurement of Direct Material Cost.
Answer (B) is incorrect because estimates are used in the calculation of direct material costs only if they are sufficiently
accurate. Answer (D) is incorrect because purchasing, receiving, inspection, and storage costs are not a direct
material cost, per se. Answer (A) is incorrect because cash discounts should not be reflected whether the discounts are
taken or not. If they are taken, they should be recorded as an interest saving, not as a reduction in the cost of
materials.
3
.The correct answer was D.
(D) Materials available for use is listed on a cost of goods manufactured statement as a Direct Materials
4
.REQUIRED: The nature of the work-in-process account.
DISCUSSION: (A) Work-in-process is an inventory account. All the manufacturing costs charged to work-in-process
this period and those remaining in the account from last period (BWIP) are allocated between goods that are completed
and goods that are incomplete at year-end (EWIP). However, the costs of abnormal spoilage will be removed and
charged to a loss account.
Answer (B) is incorrect because CGS is CMG adjusted for the change in finished goods inventory. Hence, it an expense
(nominal) account. Answer (C) is incorrect because productivity is a nonsense term in this context. Answer (D) is
incorrect because an inventory account is a real rather than a nominal account.
5
.Answer (C) is correct. The manufacturing account is an inventory account to which direct materials, direct labor, and
factory overhead costs are charged as they are incurred in the production process. The sum of these costs plus the
cost of BWIP is the total production cost to be accounted for in any one period. The total is allocated to goods
completed during the period, i.e., to finished goods, and to EWIP. The manufacturing account may also be credited for
abnormal spoilage.
Answer (A) is incorrect because work-in-process is an inventory or real account. Answer (B) is incorrect because work-
in-process is a real account. Answer (D) is incorrect because the factory overhead account pools the indirect costs as
incurred and charges them to production systematically.
6
.Answer (A) is correct. The sum of the debits to WIP equals total production costs to be accounted for. Ignoring
possible spoilage, production consists either of goods that have been completed or those still in process. Accordingly,
after the account is credited for the cost of goods completed and transferred to the FG inventory, the debit balance in
the account is EWIP.
Answer (B) is incorrect because EWIP is credited when completed units are transferred but should never have a credit
balance. Answer (C) is incorrect because total production costs to be accounted for include finished goods as well as
EWIP. Answer (D) is incorrect because work-in-process is an asset (inventory) account. Asset accounts are real
accounts that are not closed out at the end of the period.
7
.The correct answer was A.
(A) The results of the cost of goods manufactured statement flow through to the cost of goods sold section on the
Income Statement
8
.The correct answer is (C). The income statement for a merchandising company looks similar to that of a manufacturing
company, except that it uses net purchases instead of cost of goods manufactured.
9
.REQUIRED: The account in a manufacturing company equivalent to purchases.
DISCUSSION: (B) Instead of purchasing goods and services for resale, a manufacturing company manufactures goods
and services for sale. Accordingly, the CGM account is similar to the purchases account. CGS is equal to the BI of
finished goods, plus CGM, minus the EI of finished goods. CGM includes the costs of labor, materials, and overhead for
goods completed within the current period and transferred to finished goods inventory.
Answer (A) is incorrect because both manufacturing and retailing companies have inventory accounts.. Answer (C) is
incorrect because the finished goods account of a manufacturer is akin to the merchandise inventory (goods held for
resale) of a retailer. Answer (D) is incorrect because CGS is purchases or CGM adjusted for changes in inventory.
10
.Answer (B) is correct. Gross margin or gross profit is the excess of sales over cost of goods sold, calculated on a full
absorption basis. Cost of goods sold would include all manufacturing costs, both fixed and variable.
Answer (A) is incorrect because fixed costs are also included in the calculation of gross margin. Answer (C) is incorrect
because fixed indirect manufacturing costs are included in the calculation of gross margin. Answer (D) is incorrect
because fixed costs are also included in the calculation of gross margin.
11
.The correct answer was D.
(D) Costs flow through the Materials Inventory, Work in Process, Finished Goods and Cost of Goods Sold on the Income
Statement
12
.Answer is (C).
Total materials requisitioned $62,000
Less: Indirect materials 2,000
Total raw materials debited to Work in Process in April $60,000
13
.Answer is (A).
Finished Goods 50,000
Work in Process 50,000
Cost of Goods Sold 56,000
Finished Goods 56,000
14
.Answer is (C).
Manufacturing Overhead 87,000
Accounts Payable 87,000
15
.Answer is (B).
Manufacturing Overhead 4,000
Work in Process 61,000
Raw Materials 65,000
16
.Answer is (A).
Work in Process 73,000
Manufacturing Overhead 6,000
Wages Payable 79,000
17
.Answer is (D).
Work in Process 92,000
Manufacturing Overhead 92,000
18
.Answer is (A).
 Raw Materials 75,000
Accounts Payable 75,000
19
.REQUIRED: The journal entry for the cash purchase of materials and supplies.
DISCUSSION: (C) The correct entry to record the purchase of materials and supplies is to debit the stores control
account for the combined cost of the materials and supplies ($750) and to credit cash.
Answer (A) is incorrect because cash, not a payable, is credited. Answer (B) is incorrect because the supplies and
materials were purchased with cash. Also, the materials and supplies are not debited to WIP and factory overhead,
respectively, until they are used pr transferred out of storage . Answer (D) is incorrect because raw materials is charged
to WIP only when put into production. Supplies are charged to overhead when used.
20
.Answer (C) is correct. The correct entry to record a purchase of materials on account is to increase the appropriate
asset and liability accounts. Materials are charged to an inventory; the corresponding liability is accounts payable. The
asset account(s) could be stores control and/or supplies or a number of other accounts. Also, subsidiary ledgers may
be used to account for various individual items (a perpetual inventory system). The term control implies that a
subsidiary ledger is being used.
Answer (A) is incorrect because the entry to record the return of materials to suppliers debits accounts payable and
credits raw materials inventory. Answer (B) is incorrect because this entry reclassifies credit balances in accounts
receivable as liabilities or debit balances in accounts payable as assets. Answer (D) is incorrect because this entry
would record the purchase of materials for cash.
21
.Answer is (A).
Total raw materials $83,000
Less: indirect raw materials 4,000
Total raw materials debited to Work in Process $79,000
22
.REQUIRED: The entry to record the issuance of direct materials and supplies.
DISCUSSION: (C) The cost of direct materials should be debited to the WIP account as the materials are used in the
production of goods. The cost of supplies should be debited to factory overhead control as the supplies are used
because their use cannot be identified with particular products. The credit should be to stores control or, if used,
separate direct materials and supplies accounts.
Answer (A) is incorrect because supplies are charged to overhead as they are used. Answer (B) is incorrect because
the overhead and WIP figures are reversed. Answer (D) is incorrect because direct materials and supplies transferred
out of stores control are debited to WIP and overhead control respectively.
23
.Answer is (A).
Raw Materials 50,000
Account Payable 50,000
24
.Answer is (B).
Work in Process* 44,000
Manufacturing Overhead 6,000
Raw Materials 50,000
*$50,000 − $6,000 = $44,000
25
.Answer is (A).
Work in Process 67,000
Manufacturing Overhead 7,000
Wages Payable 74,000
26
.REQUIRED: The journal entry to record the incurrence of direct and indirect labor.
DISCUSSION: (B) The WIP account is charged with the $5,000 direct labor cost. The $1,250 of indirect labor is
debited to factory overhead because the labor cannot be identified with a particular product; e.g., general maintenance
 is a cost of production that cannot be allocated t specific products. The liability of $6,250 must also be recognized.
Accounting for payroll taxes is assumed to be done when the payroll is paid by debiting accrued payroll and crediting
cash and the employee withholding liabilities.
Answer (A) is incorrect because the indirect labor should be charged to overhead. Answer (C) is incorrect because only
$5,000 goes to WIP. The remaining $1,250 is charged to overhead. Answer (D) is incorrect because factory labor costs
must be inventoried rather than expensed.
27
.REQUIRED: The journal entry to accrue company payroll taxes.
DISCUSSION: (C) (1) Debit work-in-process for the amount of direct labor costs. (2) Debit factory overhead for the
amount of indirect labor costs plus the employer payroll tax ($10,000 + $7,500). (3) Credit accrued payroll for the
amount of total direct and indirect labor costs. (4) Credit employer’s payroll taxes payable for the amount of the payroll
tax. (0.10 x $75,000 = $7,500).
Answer (A) is incorrect because payroll taxes are not taken into consideration, and payroll is not being charged to WIP
(for direct labor costs) and factory O/H (for indirect labor costs). Answer (B) is incorrect because payroll must be
charged to WIP for direct labor costs and factory O/H for indirect labor costs. Answer (D) is incorrect because WIP
should be debited for the amount of direct labor costs, factory O/H should be debited for the amount of indirect labor
costs plus the employer payroll taxes, accrued payroll should be credited for the amount of total direct and indirect labor
costs, and taxes payable should be credited for 10% of the total wages.
28
.REQUIRED: The journal entry to accrue estimated vacation costs for the month of January.
DISCUSSION: (A) (1) Debit work-in-process for direct labor incurred. (2) Debit factory overhead for indirect labor and
estimated vacation costs [$45,000 + ($360,000  12). (3) Credit estimated liability for vacation pay for 1/12 of the annual
expected cost of $360,000. (4) Credit accrued payroll for the gross payroll (total due to employees including their
deductions). Note that the liability for vacation pay should be debited for any vacation pay taken.
Total vacation costs for the year are estimated to be $360,000. The explanation assumes that the annual cost if divided
by 12 to arrive at a monthly cost of $30,000. More sophisticated approaches are available, e.g., accruing vacation costs
in proportion to total labor expense.
Answer (B) is incorrect because direct labor should be charged to WIP, factory O/H control should be debited for indirect
labor and estimated vacations costs, and estimated liability for vacation pay should be credited for 1/12 of its annual
expected cost. Answer (C) is incorrect because direct labor and indirect labor should be charged to WIP and factory
O/H control, respectively. A credit should also be made for the estimated liability for vacation pay, and accrued payroll
should be credited for $225,000. Answer (D) is incorrect because WIP should be debited for direct labor and factory
O/H control should be debited for indirect labor and estimated vacation costs. Estimated liability for vacation pay and
accrued payroll should be credited.
29
.REQUIRED: The journal entry to record the payment of the weekly payroll.
DISCUSSION: (B) (1) Debit accrued payroll for the balance in the account. (2) Credit cash for the actual amount of
cash disbursed (3) Credit employees’ income taxes payable for the amount of taxes withheld from the employees’
paychecks. (4) Credit employees’ FICA taxes payable and other liabilities for the amount of FICA taxes and other items
withheld from the employees’ paychecks.
Income taxes of $200 per day ($1,000 per week) should be withheld from the employees for income taxes payable. An
amount should also be withheld for the employees’ portion of FICA taxes. In this instance, the assumption must be
made that the amount is $670, although no basis for the calculation is given. Employees’ FICA taxes payable should be
recognized, and no other entry given will satisfy the requirement.
Alternatively, if the employee withholdings had been recognized as liabilities when the payroll was accrued, the entry
would be to debit the payroll liability and credit cast for $8,330.
Answer (A) is incorrect because $8,330 (not $5,000) is the amount of cash disbursed. Furthermore, employee taxes
payable are not recorded. Answer (C) is incorrect because employee tax withholding liabilities are credited, not WIP.
Answer (D) is incorrect because debits to WIP, O/H control, and expense accounts, with credits to various payables,
record the payroll liability rather than its payment.
30
.REQUIRED: The journal entry to record payment of state unemployment taxes.
 DISCUSSION: (A) The correct journal entry to record the payment of accrued state unemployment taxes is to debit
state unemployment taxes payable and credit cash for the amount of state unemployment taxes paid.
Answer (B) is incorrect because cash is credited when a liability is paid. Answer (C) is incorrect because debiting
overhead and crediting a payable is the entry to accrue an expense, not record payment. Answer (D) is incorrect
because the question indicates that a tax liability, not accrued payroll, had been credited.
31
.Answer is (C).
Manufacturing Overhead 60,000
Accounts Payable 60,000
32
.Answer is (D).
Work in Process 62,000
Manufacturing Overhead 62,000
33
.REQUIRED: The entry to record completion of a job.
DISCUSSION: (C) The entry to record completion of a job is to charge finished goods inventory and credit WIP for the
amounts of actual direct materials and actual direct labor used and of factory overhead applied.
Answer (A) is incorrect because a debit to FG and a credit to CGS is the reverse of the entry to expense inventory that is
sold. Answer (B) is incorrect because a debit to WIP and a credit to FG reverses the entry to transfer cost of goods
finished from WIP to FG. Answer (D) is incorrect because all items sold are charged to FG; no entries should transfer
costs directly from WIP to CGS.
34
.Answer is (A).
Purchases ($78,000) are debited to the Raw Materials account.
35
.Answer is (C).
The $95,000 of raw materials requisitioned is credited to the Raw Materials account.
36
.Answer is (C).
The amount of the debit entry to Work in Process is $92,000 as a result of the raw materials transactions (total
requisition $95,000 less the portion that was indirect materials $3,000, leaving $92,000 to be debited).
37
.Answer is (A).
There are no credits to Work in Process as a result of the raw materials transactions.
38
.Answer is (B).
The indirect materials of $3,000 is the amount of the debit to the Manufacturing Overhead account.
39
.Answer is (A).
There were no credits to the Manufacturing Overhead account as a result of the raw materials transactions.
40
.Answer is (A).
Journal entry (4):
Sales Salaries Expense 11,000
Work in Process 18,000
Manufacturing Overhead 8,000
Wages and Salaries Payable 37,000
41
.Answer is (A).
Journal entry (7):
Finished Goods 62,000
Work in Process 62,000*
*To balance Finished Goods debit of $62,000
42
.Answer is (D).
Finished Goods
Beg. Bal. 18,000 COGS 65,000*
(7) 62,000
End. Bal. 15,000
*18,000 + 62,000 − Cost of Goods Sold = 15,000
Cost of Goods Sold = 65,000

Manufacturing Overhead
31,00
(2) 9,000 (6) 0
(3) 16,000
(4) 8,000
(5) 5,000
7,000

The $7,000 debit balance represents underapplied overhead; the $7,000 will be added to the original $65,000 Cost of
Goods Sold to arrive at an adjusted Cost of Goods Sold of $72,000.
43
.Answer is (B).
Journal entry (6):
Work in Process 31,000
Manufacturing Overhead 31,000
44
.Answer is (B).
Journal entry (2):
Work in Process 15,000
Manufacturing Overhead 9,000
Raw Materials 24,000
The debit to Work in Process ($15,000) represents the direct materials used.
45
.Answer is (A).
Journal entry (7):
Finished Goods 62,000
Work in Process 62,000*
*To balance Finished Goods debit of $62,000

Work in Process
Beg. Bal. 11,000
62,00
(2) 15,000 (7) 0
(4) 18,000
(6) 31,000
End. Bal. 13,000
46
.Answer is (C).
Journal entry for Cost of Goods Manufactured:
Finished Goods 21,700
Work in Process 21,700
47
.Answer is ().
Journal entry for direct labor cost:
 Work in Process 8,000
Manufacturing Overhead 3,000
Wages and Salaries Payable 11,000
The direct labor cost is the debit to Work in Process in this journal entry.
48
.Answer is (C).
Journal entry for direct materials used:
Work in Process 5,700
Manufacturing Overhead 2,300
Raw Materials 8,000
The debit to Work in Process represents the direct materials cost.
49
.Answer is (C).
The credit to Manufacturing Overhead is the manufacturing overhead applied.
50
.Answer is (B).
Actual manufacturing overhead (2,300 + 3,000 + 2,700) $8,000
Applied manufacturing overhead* 7,800
Underapplied manufacturing overhead $ 200
* The credit to Manufacturing Overhead is the manufacturing overhead applied.
51
.Answer (C) is correct. Direct labor costs are wages paid to labor that can feasibly be specifically identified with the
production of finished goods. Factory overhead consists of all costs, other than direct materials and direct labor, that
are associated with the manufacturing process. Thus, straight-time wages would be treated as direct labor; however,
because the overtime premium cost is a cost that should be borne by all production, the overtime hours times the
overtime premium should be charged to manufacturing overhead.
Answer (B) is incorrect because the straight-time wages times the overtime hours should still be treated as direct labor.
Answer (A) is incorrect because only the overtime premium times the overtime hours is charged to overhead. Answer
(D) is incorrect because labor costs are not related to repairs and maintenance expense.