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 dExplanation / 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
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