1. What items decrease the following accounts: Raw Materials Inventory, Work in ProcessInventory, Finished Goods Inventory, Manufacturing Overhead, and Cost of GoodsSold?
2. Why must manufacturing overhead be allocated, what is thepredetermined overhead rate and how is it calculated?
3. Describe why companies that use job order costing have over-/orunder-applied overhead and list the two methods used to dispose of any over-/orunder-applied overhead?
4. Assume you have recently accepted a position as cost accountant fora large manufacturing company. The sales manager approaches you immediatelyabout a particular product the company sells and expresses his belief that theproduct is overpriced and impossible to sell unless you do something to make itmore marketable. You are not aware of any environmental or technology issueswith the product that would inhibit its sales.Discuss four things you would do to investigate the concern expressed bythe sales manager. Include more than just cost issues in your discussion.
5.Students who have not taken anaccounting class may not understand what is included in the cost of a product.Explain the three product cost classifications, the three manufacturingoverhead cost classifications, and the difference in product and period costs.
6. Explain the flow of a product through the production process. Inyour explanation include the events that increase and decrease each inventoryaccount. In addition, discuss the effect of transactions related to the flow ofproducts on the balance sheet and income statements.
7. Your friend who has had the first accounting course understands theitems that appear on the balance sheet and income statement. However, when youtold her your homework involved preparing a Schedule of Cost of GoodsManufactured she was confused and ask if that was the cost of goods sold thatappears on the income statement. Explain to your friend the purpose of theSchedule of Cost of Goods Manufactured, how it is prepared, and itsrelationship to the balance sheet and income statement.
8. Companies that use job order costing often have under- oroverapplied overhead. Discuss three reasons to apply overhead and explain howoverhead is applied. Give two reasonswhy overhead might be under- or overapplied and discuss the two methodscompanies use to dispose of over- or underapplied overhead.