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L When materials are transferred from the Direct Materials Inventory account to

ID: 2523439 • Letter: L

Question

L When materials are transferred from the Direct Materials Inventory account to the Work-in- process Inventory account, an entry is made to debit the Direct Materials Inventory account. a. True. b. False. 2 The Direct Materials Inventory account decreases as materials are used in production. a. True. b. False. 3 Job cost systems can be used in manufacturing companies as well as service organizations. a. True. b. False 4: A product's cost should remain on the Balance Sheet until the product is sold b. False. a. True. 5: In a job order cost system, the sum of debits to the Work in Process controlling account during a particular period is equal to each of the following except a The total of debits to the Materials Inventory, Direct Labor, and Manufacturing Overhead accounts during the period. The total of direct materials, direct labor, and manufacturing overhead costs applied to jobs during the period The total of amounts entered on job cost sheets during the period. The total of credits to the Materials Inventory, Direct Labor, and Manufacturing Overhead accounts during the period. b c d

Explanation / Answer

Work in process inventory account -------debit

To, Direct materials inventory-----------Credit

14

Estimated total manufacturing overheads

100000

Estimated total direct labour hours

10000

Predetermined overhead rate (100000/10000)

10

15

Number of units

3000

Total units to be produced

5000

Total direct labour hours

10000

No. of hours per unit (10000/5000)

2

Total units for the customer

3000

Total direct labour hours used for 3000 units

6000

Predetermined overhead rate (100000/10000)

10

Total amount of overhead that will be added (6000 x 10)

60000

16. True, at the time of direct materials are received by a manufacturing company the direct materials inventory account will increase.

14

Estimated total manufacturing overheads

100000

Estimated total direct labour hours

10000

Predetermined overhead rate (100000/10000)

10

15

Number of units

3000

Total units to be produced

5000

Total direct labour hours

10000

No. of hours per unit (10000/5000)

2

Total units for the customer

3000

Total direct labour hours used for 3000 units

6000

Predetermined overhead rate (100000/10000)

10

Total amount of overhead that will be added (6000 x 10)

60000