Chapter 2 Questions

The formula for a predetermined overhead rate is:

Estimated manufacturing overhead cost/estimated allocation base

Which of the following would not be a good allocation base for manufacturing overhead? a) accounting hours b) direct labor hours c) machine hours d) units of product

a

A journal entry that debits Work in process and Manufacturing overhead and credits Raw materials records the: a) issuance of materials b) purchase of materials c) application of manufacturing overhead d) completion of goods

a) issuance of materials

Manufacturing overhead... a) consists of only manufacturing costs b) is an indirect cost c) consists of only variable costs d) includes some materials and some labor e) consists of traceable costs

a, b, and d

Which of the following costs would be classified as manufacturing overhead? a) factory manager salary b) factory utilities c) marketing costs d) assembly wages e) factory rent

a, b, and e

Categories of manufacturing costs include: a) manufacturing overhead b) administrative expenses c) direct labor d) selling expenses e) direct materials

a, c, and e

Widely used allocation bases in manufacturing are: a) direct labor cost b) produce revenue c) machine hours d) nonmanufacturing costs e) units of product f) direct labor hours

a, c, e, and f

The process used to assign overhead costs to products is called overhead _______________.

allocation

A measure such as direct labor-hours or machine hours used to assign overhead costs to products and services is called a cost driver or an __________ ___________.

allocation base

Factory labor charges that cannot be easily traced to a job are treated as ____________. a) nonmanufacturing costs b) manufacturing overhead c) direct labor

b

What kinds of costs are assigned to units of product in absorption costing? a) variable selling and administrative costs b) fixed manufacturing costs c) fixed selling and administrative costs d) variable manufacturing costs

b and d

Which of the following are used to calculate cost of goods available for sale on the schedule of cost of goods sold? a) cost of goods sold b) beginning finished goods inventory c) ending finished goods inventory d) cost of goods manufactured

b and d

Place the following steps in requisitioning and issuing materials in order. a) The materials requisition form is presented to the storeroom clerk b) A production order is issued. c) The production department prepares a materials requisition form. d) The storeroom clerk issues materials.

b, c, a, d

Manufacturing Overhead... a) is directly traceable to units produced b) consists of many different types of costs c) contains fixed costs d) is an indirect cost

b, c, and d

Typical cost drivers include: a) machine depreciation b) computer time c) flight-hours d) machine-hours e) utilities cost

b, c, and d

A job cost sheet contains: a) the selling price of the job b) materials costs charged to the job c) labor costs charged to the job d) selling costs charged to the job e) manufacturing overhead costs charged to the job

b, c, and e

Costs assigned to units of product in absorption costing include ________________ manufacturing costs.

both variable and fixed

Which of the following costs are charged directly to the income statement? a) direct materials b) manufacturing overhead c) administrative costs d) direct labor e) selling costs

c and e

The journal entry to record the purchase of materials credits: a) work in process b) raw materials c) accounts payable d) manufacturing overhead

c) accounts payable

When a job is completed, its costs are transferred into ___________. a) work in process b) cost of goods sold c) sales revenue d) finished goods

d) finished goods

The schedule of cost of goods ________ summarizes costs that remain in Finished Goods inventory and that have been transferred to Cost of goods sold.

sold

Place these items from the income statement in the order in which they should appear: - net operating income - sales - selling and administrative expenses - gross margin - cost of goods sold

- sales - cost of goods sold - gross margin - selling and administrative expenses - net operating income

Steps for schedule of cost of goods manufactured

- total manufacturing costs - add: beginning work in process inventory - deduct: ending work in process inventory - cost of goods manufactured