Midtown paper company is trying to determine the correct way to handle allocating the cost of depreciation on its factory to the various paper products it produces. As the company's newly hired cost accounting manager, what advice would you give to management?

Multiple Choice

• Since depreciation expense is always a period expense, it would not be appropriate to allocate it to manufactured products.

• Unless the compmany wants to get into trouble with its external auditors, the managerial cost accounting system should follow generally accepted accounting principles (GAAP).

• Factory depreciation should be allocated to product cost as part of manufacturing overhead under an absorption costing system.

• None of the above.

Which of the following statements would incorrect in a manufacturing plant?

Multiple Choice

• Completed goods are included in the finished goods inventory.

• Partially completed goods are part of the work-in-process inventory.

• Work-in-process may also be called "goods in process."

• Materials put into production are always included in the direct materials category.

Tyare Corporation had the following inventory balances at the beginning and end of May:

	May 1			May 30
Raw materials	$	30,000		$	39,000
Finished Goods	$	79,500		$	75,000
Work in Process	$	18,000		$	17,193

During May, $63,000 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 390 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,500 of direct materials cost. The Corporation incurred $43,350 of actual manufacturing overhead cost during the month and applied $42,300 in manufacturing overhead cost.

The amount of direct labor cost in the May 30 Work in Process inventory was:

• $4,308

• $5,385

• $4,995

• $9,693

The balance in the Work in Process account equals:

Multiple Choice

• the balance in the Finished Goods inventory account.

• the balance in the Cost of Goods Sold account.

• the balances on the job cost sheets of uncompleted jobs.

• the balance in the Manufacturing Overhead account.