Accounting 2 test 2 formulas

common cost

A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.

costs transferred in

A company has three processing departments: Mixing, Baking, and Packaging. The Baking Department transfers 500 units to the Packaging Department. How will the Packaging Department account for the costs of those 500 units?

direct cost

Adventure Holiday sells thousands of tour packages each month thought its various branches. A branch manager's salary would be a(n) _________ of the branch.

indirect cost

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of selling a tour package.

25,000

Audio Corporation purchased $20,000 of DVDs during the current year. The company had DVD inventory of $15,000 at the beginning of the year. An end of the year audit revealed that the company had DVD inventory of $10,000. The amount that would be reported as cost of goods sold in the income statement for the current year is ________.

5,000

Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equal ________.

40 (The contribution margin per unit equals selling price per unit less variable cost per unit, $100 − $60 = $40.)

Davidson Company has a product with a selling price per unit of $100, the unit variable cost is $60, and the total monthly fixed costs are $30,000. If the company sells 1,000 units, how much is Davidson's contribution margin per unit?

135, 000

For the month of October, Janus Corporation used $30,000 worth of direct materials in production and incurred direct labor costs of $60,000. Actual manufacturing overhead costs were $40,000, whereas $45,000 was the manufacturing overhead applied to work in process. What is the amount of total manufacturing costs that would appear in the Schedule of Cost of Goods Manufactured for October?

17,500 (The company would need 7 welders (7 × $2,500 = $17,500) to complete the work. The relevant range here is 1,201 to 1,400 machine-hours.)

In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is paid a monthly salary of $2,500. If the total monthly requirement is 1,300 machine-hours, the total salaried employee expense is ________.

total fixed manufacturing overhead cost

In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ________.

the level of activity

In the equation, Y = a + bX, X represents ________.

operation costing

Sneaker Styles Company manufactures a wide variety of sneakers. which of the following systems is most suitable for sneaker styles?

4000 (Predetermined overhead rate = $200,000 ÷ 10,000 DLHs = $20 per DLH For 200 DLHs, the manufacturing overhead that would be applied is = $20 per DLH × 200 DLHs = $4,000)

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?

10 per machine hour (Estimated total overhead cost = $300,000 + ($4 per MH × 50,000 MHs) = $500,000 Predetermined overhead rate = Estimated total overhead cost of $500,000 ÷ 50,000 MHs = $10 per MH)

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?

credit of 30,000 overapplied

What is the balance of the Manufacturing Overhead account and is overhead underapplied or overapplied at the end of the year?

debit WIP, debit MOH, credit salaries and wages payable

Which of the following best describes the journal entry to record the use of direct and indirect labor in production?

debit WIP, debit MOH, credit raw materials

Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?

124

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job's unit product cost (per audio controller)?

6200

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?

90,000

Zimmer, Inc. started the month of January with beginning finished goods inventory of $20,000. The cost of goods manufactured during the month was $120,000 and the ending finished goods inventory was $50,000. What is the unadjusted cost of goods sold for January?

sunk cost

_________ is always an irrelevant cost.

product costs

__________ best describe the wages of a sheet metal worker in a fabrication plant.

direct labor

___________ is sometimes called "touch labor"

direct labor

_____________ is common to both prime cost and conversion cost

sunk cost

a cost that has already been incurred and can't be changed by any decision made now or in the future

fixed cost

a cost that remains constant in total with changes in the level of activity

differential cost

a difference in costs between any two alternatives

differential revenue

a difference in revenues between any two alternatives

multiplying POHR by the actual amount of allocation base incurred by the job

a normal cost system applies overhead to jobs by _____________.

sales commissions

all of the following are product costs except ________. manufacturing overhead costs, raw materials, sales commissions, direct labor

multiple predetermined overhead rates

companies can improve job cost accuracy by using _____________.

direct labor and MOH

conversion cost is composed of _____________.

relevant in making business decisions

differential costs are always ___________.

some costs will change, other costs will remain the same

if a firm increases its activity level, ___________.

manufacturing overhead costs

items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ____________.

debit WIP, credit raw materials

journal entry: direct materials are issued into production for a specific job

debit MOH, credit raw materials

journal entry: lubricating oil, waste cotton, and solder are used in the factory

debit WIP, credit MOH

journal entry: manufacturing overhead is applied to jobs using a POHR

debit MOH, credit salaries and wages payable

journal entry: salary of the production supervisor is payable

debit WIP, credit salaries and wages payable

journal entry: the wages of direct laborers who worked on a particular job are payable

debit COGS, credit finished goods

journal entry:Finished bricks that cost $100,000 were sold to customers.

debit finished goods, credit WIP shaping

journal entry:Finished snowboards worth $80,000 were transferred from the Shaping Department to the finished goods warehouse.

debit WIP shaping, credit MOH

journal entry:Manufacturing overhead was applied to the Shaping Department, $10,000.

debit WIP cutting, credit raw materials

journal entry:Raw materials worth $12,000 were issued for use in the Cutting Department.

debit WIP shaping, credit WIP cutting

journal entry:Unshaped, cut snowboards worth $60,000 were transferred from the Cutting Department to the Shaping Department.

administrative

manufacturing costs include all of the following except ___________. administrative, direct labor, direct materials, manufacturing overhead

direct materials

materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product are called __________.

non manufacturing costs

property taxes associated with a company's administrative facility are considered _____________.

false

t/f: process costing is used when a company produces a continuous flow of units that are distinguishable from one another

false

t/f:raw material costs are added only to the first processing department

matching principle

the _________ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that the revenue is recognized.

decreases COGS, increases net operating income

the adjustment for over applied overhead, ____________.

total cost to be accounted for

the cost of beginning WIP inventory plus the costs added to production during the period equals the ________________.

bill of materials

the direct materials required to manufacture each unit of a product are listed on a ___________.

opportunity cost

the potential benefit that is given up when one alternative is selected over another

costs of goods sold, selling and administrative expenses

the traditional income statement uses which of the following cost categories?

number of partially completed units x percentage complete

what is the formula to find equivalent units?

underapplied

what is the term used when a company applies less overhead to production than it actually incurs?

it separates costs into fixed and variable categories

what is true about the contribution approach?

credit MOH

what occurs when MOH is applied to WIP?

subsidiary ledger

when all of a company job cost sheets are viewed collectively, they form what is known as a ________.

in the period in which they incurred

when are period costs expensed?

do not flow through inventories on the balance sheet

when companies incur selling and administrative costs, those costs _________.

credit WIP

which of the following occurs when a job has been completed and transferred to the finished goods warehouse?

debit COGS

which of the following occurs when finished jobs are shipped to customers?

to allocate resources and set pricing

why do businesses use a POHR?