Chapter 3 accounting 202 MATT ****ING Walseman
The POHR is determined using a four step process, what is this process?
1. Estimate the total amount of the allocation base (the denominator) that will be required for next period's estimated level of production. 2. Estimate the total fixed manufacturing overhead cost for the coming period and the variable manufacturing overhead cost per unit of the allocation base. 3. Use the following equation to estimate the total amount of manufacturing overhead: 4. Compute the predetermined overhead rate.
Job-order costing systems are used when
1. Many different products are produced each period. 2. Products are manufactured to order. 3. The unique nature of each order requires tracing or allocating costs to each job, and maintaining cost records for each job.
What effect will the overapplied overhead have on PearCo's net operating income? a. Net operating income will increase. b. Net operating income will be unaffected. c. Net operating income will decrease.
A
Beginning finished goods inventory was $130,000. The cost of goods manufactured for the month was $760,000. And the ending finished goods inventory was $150,000. What was the cost of goods sold for the month? $ 20,000 $740,000 $780,000 $760,000
$130,000 + $760,000 = $890,000 $890,000 - $150,000 = $740,000
Examples of companies that would use job-order costing include: What is it exactly?????
1. Boeing (aircraft manufacturing) 2. Bechtel International (large scale construction) 3. Walt Disney Studios (movie production) Charge direct material and direct labor cost to each job as work is performed, and manufacturing overhead including indirect materials and indirect labor are allocated to all jobs rather than directly traced to each job
Applied over head = _____ x ________
Applied Overhead = POHR × Actual Direct Labor Hours
Beginning raw materials inventory was $32,000. During the month, $276,000 of raw material was purchased. A count at the end of the month revealed that $28,000 of raw material was still present. What is the cost of direct material used? $276,000 $272,000 $280,000 $ 2,000
Beg. raw materials $32,000 +Raw materials purchased 276,000 =Raw materials available for use in production $308,000 -Ending raw materials inventory 28,000 =Raw materials used in production $280,000
Beginning work in process was $125,000. Manufacturing costs added to production for the month were $835,000. There were $200,000 of partially finished goods remaining in work in process inventory at the end of the month. What was the cost of goods manufactured during the month? $1,160,000 $ 910,000 $ 760,000 Cannot be determined.
Beginning work in process inventory $125,000 + Mfg. costs incurred for the period 835,000 = Total work in process during the period $960,000 - Ending work in process inventory 200,000 = Cost of goods manufactured $760,000
Ideally the allocation base is a ____ _____ that causes overhead
Cost Driver
POHR
Estimated total manufacturing overhead cost for the coming period _____________________ Estimated total units in the allocation base for the coming period
Are non manufacturing costs assigned to individual jobs in job ordering cost system?
Nonmanufacturing costs are not assigned to individual jobs, rather they are expensed in the period incurred.
_______ ____ exists when the amount of overhead applied to jobs during the period using the predetermined overhead rate is greater than the total amount of overhead actually incurred during the period
Overapplied overhead
Tiger, Inc. had actual manufacturing overhead costs of $1,210,000 and a predetermined overhead rate of $4.00 per machine hour. Tiger, Inc. worked 290,000 machine hours during the period. Tiger's manufacturing overhead is a. $50,000 overapplied. b. $50,000 underapplied. c. $60,000 overapplied. d. $60,000 underapplied
Overhead Applied $4.00 per hour × 290,000 hours = $1,160,000 Underapplied Overhead $1,210,000 - $1,160,000 = $50,000
What calculates the manufacturing costs associated with goods that were finished during the period.
Schedule of Cost of Goods Manufactured:
What calculates the cost of raw material and direct labor used in production and the amount of manufacturing overhead applied to production
Schedule of cost of goods manufactured
What is POHR
The predetermined overhead rate used to apply overhead to jobs is determined before the period begins
______ _________ exists when the amount of overhead applied to jobs during the period using the predetermined overhead rate is less than the total amount of overhead actually incurred during the period.
Underapplied overhead
In absorption costing all manufacturing costs, both fixed and variable, are assigned to ____ _ ______
Units of product
All manufacturing costs added to production during the period are added to the beginning balance of ______ __ _____
Work in process
In chapter three we use _____ _____ to determine product cost.
absorption cost
Finished goods
consist of completed units of product that have not been sold to customers
Work in process
consists of units of production that are only partially complete and will require further work before they are ready for sale to customers.
what are costs incurred to convert the direct material into a finished product.
conversion costs
As items are removed from raw materials inventory and placed into the production process, they are called
direct materials
Raw materials
include any materials that go into the final product.
Cost of goods manufactured
include the manufacturing costs associated with the goods that were finished during the period,
Job-order costing is used in many different types of service companies. For example
law firms, accounting firms, and medical treatment
To this point, we have assumed that there is a single predetermined overhead rate called a plantwide overhead rate. however large companies often use _____ _______ overhead rates.
multiple predetermined overhead rates
Cost of goods manufacturing schedule contains three types of costs what are they?
namely direct materials, direct labor, and manufacturing overhead
A managerial costing system should provide cost data to help managers ____, ____, and _____ ______?
plan, control, and make decisions
Why use an Allocation Base?
to assign manufacturing overhead to individual jobs because: a.It is impossible or difficult to trace overhead costs to particular jobs. b.Manufacturing overhead consists of many different items ranging from the grease used in machines to the production manager's salary. c.Many types of manufacturing overhead costs are fixed even though output fluctuates during the period.
The difference between the overhead cost applied to Work in Process and the actual overhead costs of a period is referred to as either _____ or _____ ________
underapplied or overapplied overhead
Direct materials used in production totaled $280,000. Direct labor was $375,000, and $180,000 of manufacturing overhead was added to production for the month. What were total manufacturing costs incurred for the month? $555,000 $835,000 $655,000 Cannot be determined.
Direct Materials $280,000 + Direct Labor 375,000 + Mfg. Overhead Applied 180,000 = Mfg. Costs Incurred for the Month $835,000
