Chapter 2 Connect

Estimated machine-hours: 49,300 Estimated variable manufacturing overhead: $ 6.37 Estimated total fixed manufacturing overhead: $997,832 Actual machine-hours for the year: 45,800 What is the predetermined overhead rate?

$26.61 per machine hour

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?

$4,000

Direct labor hours: 5,200 Machine-hours: 68,400 Total fixed manufacturing overhead cost: $390,000 Variable manufacturing overhead per MH: $3.00 What is the estimated total manufacturing overhead in the Assembly Department?

$595,200

Direct Materials: $2,414 Direct labor-hours: 74 Direct Labor wage rate: $17 Machine hours: 137 Predetermined overhead rate is $18 per machine hour. What is the total cost recorded?

$6,138

Current period: $5,000 for direct materials $8,000 for direct labor Year End: $2,500 for direct materials $4,000 for direct labor 1. Should any overhead cost be applied to Job W at year-end? 2. How much overhead cost should be applied to Job W? 3. How will the cost included in Job W's job cost sheet be reported within Sigma Corporation's financial statements at the end of the year?

1. Yes 2. $3,000 3. Work-in-Process

T/F: The fact that one department may be labor intensive while another department is machine intensive explains why multiple predetermined overhead rates are often used in larger companies.

TRUE

A company assigns overhead cost to jobs on the basis of 116% of direct labor cost. The job cost sheet includes $12,204 in direct materials cost and $10,600 in direct labor cost. A total of 1,300 units were produced. What is the total manufacturing cost? What is the unit product cost?

Total Manufacturing cost: $35,100 Unit Product Cost: $27

The predetermine overhead rates in Assembly and Testing & Packaging are $16.00 per direct labor-hour and $12.00 per direct labor hour, respectively. The company's direct labor wage rate is $20.00 per hour Assembly DM: $340 Assembly DL: $180 Testing & Packaging DM: $25 Testing & Packaging DL: $40 What is the total manufacturing cost? What is the Unit Product cost, if the job consists of 10 units?

Total Manufacturing cost: $753 Unit Product cost: $75.30

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

Underapplied

The direct materials required to manufacture each unit of product are listed on a

bill of materials

A normal cost system applies overhead to jobs

by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job

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

total fixed manufacturing overhead cost

Companies can improve job cost accuracy by using

multiple predetermined overhead rates

When all of a company's job cost sheets are viewed collectively they form what is known as a

subsidiary ledger

T/F: If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used.

FALSE

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

Machine-hours required to support estimated production: 250,000 Fixed manufacturing overhead cost: $6,000,000 Variable manufacturing overhead cost per machine-hour: $2.00 Direct Materials: $1,932 Direct Labor Cost: $1,386 Machine-hours used: 89 What is the plantwide predetermined overhead rate? The company started, completed, and sold to the customer for $4,200, what is the overhead applied?

Plantwide Predetermined Overhead Rate: $26 Overhead applied: $2,314

The adjustment for overapplied overhead

decreases costs of goods sold and increases net operating income

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?

$10.00 per machine hour

Direct labor-hours: 62,000 Machine-hours: 11,900 Total fixed manufacturing overhead cost: $419,000 Variable manufacturing overhead per DLH: $3.75 What is the predetermined overhead rate for the Packaging Department?

$10.51 per DLH

Wilson Products uses a plantwide predetermine overhead rate of $10 per direct labor-hour. Direct materials 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 the job's unit product cost( per audio controller)?

$124

Direct Materials: $6,000 Direct Labor: $20,000 Rent on factory building: $15,000 Sales salaries: $25,000 Depreciation on factory equipment: $8,000 Indirect Labor: $12,000 Production supervisor's salary: $15,000 20,000 direct labor hours estimated What is the predetermined overhead rate per hour?

$2.50 per direct labor-hour

Total Machine hours: 30,200 Total fixed manufacturing overhead cost: $120,800 Variable manufacturing overhead per machine hour: $6 Number of units in the job: 10 Total machine hours: 40 Direct materials: $710 Direct labor cost: $1,410 What is the selling price with a 40% unit product cost markup?

$352.80

Wilson Products uses a plantwide predetermine overhead rate of $10 per direct labor-hour. Direct materials 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?

$6,200

Direct Materials cost: $2,132 Direct labor hours: 40 Machine Hours: 238 Direct labor wage rate: $17 Predetermined overhead rate per machine hour: $23 What is the total cost?

$8,286

T/F: In a job-order cost system, indirect labor is assigned to a job using information from the employee time ticket.

FALSE

T/F: Actual overhead costs are not assigned to jobs in a job costing system.

TRUE