Chapter 10 Class Prep

A certain set of backpacks requires 60 hours to construct at a rate of $18 per hour. The total direct labor cost would be:

$1,080

The cost of employee wages that is an integral part of the finished product is called ________.

Direct labor cost

The cost elements included in manufacturing are:

Direct labor, direct materials, and overhead.

(T/F) Just-in-time (JIT) processing is a management approach that focuses on reducing time and cost, but not on eliminating poor quality.

False

(T/F) Reporting under managerial accounting is restricted by specific rules such as GAAP.

False

When a job is complete, the costs of the completed job are transferred from the work-in-process account to:

Finished Goods Account

In an audit firm, when a job is completed and billed, the costs are transferred to ________ account.

cost of services

Financial accounting requires transactions and events to be reported ________.

periodically

A guitar manufacturer estimates total factory overhead cost of $75,000 for the year and an activity base of 25,000 direct labor hours. 50,000 guitars are estimated to be produced during the year. What is the predetermined factory overhead rate?

$3 per direct labor hour

If the total estimated overhead cost for Big Bytes, a bakery shop, is $9,600, and the total estimated direct labor hours are 2,400. The overhead rate is:

$4 per direct labor hour

An activity dictionary consists of a(an) _________.

Activity description Cost object Activity driver

The first stage of an activity-based costing system does not involve:

Assigning costs

If actual overhead is $500 and an applied overhead is $430, then the journal entry to record the under applied overhead is:

Cost of goods sold: 70 Factory overhead: 70

uses job order costing?

Customized car manufacturers

In a just-in-time system, processing functions are combined into work centers, called ________.

Manufacturing cells

what is the output of the processing activity?

Number of transactions

(T/F) Activity-based costing method allocates factory overhead costs more accurately than the single plant-wide overhead rate.

True

(T/F) The two main types of cost accounting systems for manufacturing operations are job order cost and process cost systems.

True

(T/F)Any materials or supplies used in rendering services are included as a part of the overhead cost.

True

(T/F)The cost incurred in the purchase of raw materials used in production is called direct material cost.

True

(T/F)The work-in-process inventory consists of direct materials costs, direct labor costs, and factory overhead costs that have entered the manufacturing process but are associated with products that have not been completed.

True

Under activity-based costing method, factory overhead costs are initially accounted for in ________.

activity cost pool