I. Cost Classifications: Fleet Company manufactures shoes. Label each item as to the type of cost: DM, DL, MO or P (direct material, direct labor, mfg overhead or period cost) _____1. Cost of wages of workers who assemble the shoes. _____2. Depreciation on the factory in which the shoes are built. _____3. The cost of leather used in the shoes. _____4. Wages of the cleanup crew at the factory. _____5. Research costs for a new type of shoe under development. _____6. Depreciation on the sewing machines in the factory. _____7. Indirect materials such as shoe polish, used to condition the leather. _____8. Factory supervisors salary. _____9. Salary of the night watchman at the factory. ____10. Depreciation on the robotic machine used to build the shoe boxes.

____11. Direct Materials cost is debited to: a. Raw Materials Inventory b. Manufacturing Overhead c. Cost of Goods Sold d. Direct Materials e. Work in Process ____12. Beginning Finished Goods Inventory + X Ending Finished Goods Inventory = Cost of Goods Sold. What is X? a. Direct Materials b. Manufacturing Overhead c. Cost of Goods Manufactured d. Beginning Work in Process Inventory

____13. One way to calculate the Predetermined Overhead Rate is: a. estimated MO divided by estimated Direct Labor Cost b. actual MO divided by actual Direct Labor cost c. actual Direct Labor cost divided by actual MO d. actual MO divided by applied MO _____14. Depreciation on the salesmans automobile would be debited to: a. depreciation expense b. manufacturing overhead c. indirect labor cost d. finished goods inventory ____15. What criterion must be satisfied for inventory costs to move from Work in Process to Finished Goods Inventory? A. the goods get sold B. the manufacturing overhead is applied C. the goods get finished D. the goods get damaged

____16. What criterion must be satisfied for inventory costs to move from Finished Goods to Cost of Goods Sold? A. the goods get sold B. the manufacturing overhead is applied C. the goods get finished D. a requisition is approved

II. Cost Computations. Here are some costs incurred at Williams Manufacturing Company.

Item	Beginning of Year	End of Year
Raw Materials Inventory	$15,000	$25,000
Work in Process Inventory	$40,000	$31,000
Finished Goods Inventory	$10,000	$25,000
	During the Year
Purchases of Raw Material	$82,000
Direct Labor Costs	$95,000
Manufacturing Overhead	$50,000

Answer..Calculations $__________1. Direct Materials Used ________________________________ $__________2. Total Manufacturing Costs Incurred ____________________________ $__________3. Total Manufacturing Cost__________________ $__________4. Cost of Goods Manufactured___________________________ $__________5. Cost of Goods Sold___________________________________ III. Journal Entries. Make the appropriate journal entries for these transactions. DR CR

1. Raw materials were purchased on account, $40,000.

2. Actual MO costs were $80,000 on account.

3. A total of $60,000 of raw materials were moved to the factory, $50,000 direct, $10,000 indirect.

4. Direct Labor costs were $50,000 direct; indirect labor was $7,000.

5. MO is applied at the rate of 80% of direct labor cost.

6. Goods costing $45,000 were completed.

7. Sales were $55,000 on account; and COGS was $40,000.

IV. Process Costing Problem

Stein Industries manufactures outdoor chairs in its Plant #2. Stein began July with 500 units in Beginning Work in Process. A total of 18,000 units were started into production. Ending WIP was 500 units that were 80% complete. July Cost Data:

Work in Process July 1	$15000
Materials	288,000
Labor	133900
Manufacturing Overhead	96,700
Total	$533,600

Units Table	Whole Units
Beginning WIP
Units Started
Units to Acct For		Equivalent Units
Units Transferred
Ending WIP
Units Acct'd For

Total Costs	$
Equivalent Units	EU
Cost Per Unit	$

Cost of Units Compl/Transferred:	$
Cost of Ending WIP:	$
Total Costs	$

Problem At the end of the year, Johnson Manufacturing ended up with a debit balance of $900 in the Manufacturing Overhead account. 1. Was the MO overapplied or underapplied?

2. Show the entry to close the MO account at the end of the year.

3. Why is the applied Manufacturing Overhead an estimate rather than an actual amount?