ACCTMIS 2300 Exam 2 Questions with Correct Answers Latest Update 2025/2026
Manufacturing Costs - Answers Costs incurred in the production of a product
Direct Materials - Answers Raw materials that become an integral part of the finished product
AND the cost can be easily and efficiently traced to the product
Direct Labor - Answers The payroll cost of the employees that work directly on the product
being manufactured
(Do their hands touch the product?)
Manufacturing Overhead - Answers All manufacturing costs other than direct materials and
direct labor
BUZZWORDS: Factory, Indirect
Example of indirect labor - Answers Wages paid to employees who work in the factory but not
directly on the product
-maintenance workers, janitors, security
Example of indirect materials - Answers Materials used to support the production process
-cleaning supplies
Non-manufacturing costs
(S&A costs) - Answers Costs incurred outside of the manufacturing process
Examples: CEO's salary, advertising, commission, utilities, rent on S&A buildings and equipment
Production supervisor's salary is always considered part of... - Answers Overhead unless told
otherwise
Product Costs - Answers Manufacturing costs- DM, DL, Manufacturing OH
Initially recorded as part of inventory on the balance sheet- expensed on the income statement
when sold
Period Costs - Answers Non-manufacturing costs- S&A costs
Never recorded as inventory- recorded as an expense as soon as they occur
Direct Materials Used= - Answers Beginning Direct Materials Inventory
+Direct Materials purchased
-Ending Direct Materials Inventory
, Cost of Goods Manufactured - Answers The costs transferred from work in process to finished
goods
Cost of Goods Manufactured= - Answers Beginning work in process inventory
+Direct materials used
+Direct labor
+Overhead
-Ending work in process inventory
Cost of Goods sold= - Answers Beginning finished goods inventory
+Cost of goods manufactured
-Ending finished goods inventory
Prime Costs= - Answers Direct Material+Direct Labor
Conversion Costs= - Answers Direct Labor+Manufacturing Overhead
Net Income(Cost Concepts)= - Answers Sales Revenue
-COGS
-S&A expenses
Predetermined Overhead Rate (PDR)= - Answers Used to apply overhead to products
Estimated Manufacturing overhead cost/Estimated Activity level
Applied Overhead= - Answers The amount of overhead cost assigned to products
PDR*Actual Activity
Underapplied overhead - Answers Exists when the amount of overhead applied to products
using the predetermined rate is less than the total amount of overhead actually occurred
Overapplied overhead - Answers Exists when the amount of overhead applied to products using
the predetermined rate is greater than the total amount of overhead actually occurred
When you have underapplied overhead what happens to COGS - Answers Increase
When you have over applied overhead what happens to COGS - Answers Decrease
Process costing - Answers A company produces many units of a SINGLE product
One unit is indistinguishable from another
Manufacturing Costs - Answers Costs incurred in the production of a product
Direct Materials - Answers Raw materials that become an integral part of the finished product
AND the cost can be easily and efficiently traced to the product
Direct Labor - Answers The payroll cost of the employees that work directly on the product
being manufactured
(Do their hands touch the product?)
Manufacturing Overhead - Answers All manufacturing costs other than direct materials and
direct labor
BUZZWORDS: Factory, Indirect
Example of indirect labor - Answers Wages paid to employees who work in the factory but not
directly on the product
-maintenance workers, janitors, security
Example of indirect materials - Answers Materials used to support the production process
-cleaning supplies
Non-manufacturing costs
(S&A costs) - Answers Costs incurred outside of the manufacturing process
Examples: CEO's salary, advertising, commission, utilities, rent on S&A buildings and equipment
Production supervisor's salary is always considered part of... - Answers Overhead unless told
otherwise
Product Costs - Answers Manufacturing costs- DM, DL, Manufacturing OH
Initially recorded as part of inventory on the balance sheet- expensed on the income statement
when sold
Period Costs - Answers Non-manufacturing costs- S&A costs
Never recorded as inventory- recorded as an expense as soon as they occur
Direct Materials Used= - Answers Beginning Direct Materials Inventory
+Direct Materials purchased
-Ending Direct Materials Inventory
, Cost of Goods Manufactured - Answers The costs transferred from work in process to finished
goods
Cost of Goods Manufactured= - Answers Beginning work in process inventory
+Direct materials used
+Direct labor
+Overhead
-Ending work in process inventory
Cost of Goods sold= - Answers Beginning finished goods inventory
+Cost of goods manufactured
-Ending finished goods inventory
Prime Costs= - Answers Direct Material+Direct Labor
Conversion Costs= - Answers Direct Labor+Manufacturing Overhead
Net Income(Cost Concepts)= - Answers Sales Revenue
-COGS
-S&A expenses
Predetermined Overhead Rate (PDR)= - Answers Used to apply overhead to products
Estimated Manufacturing overhead cost/Estimated Activity level
Applied Overhead= - Answers The amount of overhead cost assigned to products
PDR*Actual Activity
Underapplied overhead - Answers Exists when the amount of overhead applied to products
using the predetermined rate is less than the total amount of overhead actually occurred
Overapplied overhead - Answers Exists when the amount of overhead applied to products using
the predetermined rate is greater than the total amount of overhead actually occurred
When you have underapplied overhead what happens to COGS - Answers Increase
When you have over applied overhead what happens to COGS - Answers Decrease
Process costing - Answers A company produces many units of a SINGLE product
One unit is indistinguishable from another
