Cost Acctning
The amount of overhead applied to a particular job equals the actual amount of overhead caused by the job.
False
The formula for computing the predetermined overhead rate is: Predetermined overhead rate = Estimated total amount of the allocation base ÷ Estimated total manufacturing overhead cost
False
Goal of Cost Accounting
Determine COGS / Calculate unit of production
If the overhead rate is computed annually based on the actual costs and activity for the year, the manufacturing overhead assigned to any particular job can be computed as soon as the job is completed.
False
It is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs.
False
Opportunity costs represents cost that can be reduced by effective management of operations
False
Avoidable costs are irrelevant costs in decision
False
Book value of an old machine is always considered an opportunity cost in a decision
False
Fixed cost are irrelevant in decisions about whether a product should be dropped
False
Fixed cost are sunk cost
False
Future cost that do not differ between the alternatives in a decision are avoidable costs
False
If a company uses a predetermined overhead rate, actual manufacturing overhead costs of a period will be recorded in the Manufacturing Overhead account and will be recorded on the job cost sheets.
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.
Which of the following is the correct formula to compute the predetermined overhead rate?
Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base
Managerial Accounting
Plan Control & Decision Making
A cost that can be avoided by choosing one alternative over another is relevant for decision making
True
A cost that will be incurred regardless of which alternative is selected is not relevant when choosing between alternatives
True
Fixed cost maybe relevant in decision making
True
Income statement need not be prepared as part of a differential cost analysis
True
Sunk Cost are never relevant in decision making
True
The costs attached to products that have not been sold are included in ending inventory on the balance sheet.
True
Two or more products that are produced from a common input are known as joint products
True
Variable cost of a product are relevant in a decision concerning whether to eliminate the product
True
