Managerial Accounting Ch 2

Materials requisition forms are used for

- Making journal entries in accounting records - Controlling the flow of materials into production

The total cost of a job includes

-Direct Materials Cost -Direct Labor Cost -Applied Manufacturing Overhead

Job XYZ has a total manufacturing cost of 600. if the markup percentage is 40% the job with sell for

600+ 600(.40)= 840

A multiple predetermined overhead rate system is more accurate than a plant wide overhead rate system because it

Reflects differences in how overhead costs are incurred within departments

The predetermined overhead rate is calculated

before the period begins

Cost assigned to units of product in absorption costing include _____ manufacturing costs

both fixed and variable costs

Allocation bases that do not drive overhead costs

can cause product costs to be distorted

Costs assigned to units of product under absorption costing include

fixed manufacturing and variable manufacturing

Average manufacturing overhead cost per unit usually varies from one period to the next because

fixed manufacturing overhead remains constant in total even when production changes

Companies that make many different products each period use

job order costing

A job cost sheet contains

manufacturing overhead costs chawed to the job materials costs charged to the job labor costs chawed to the job

The manufacturing overhead account contains

many different kinds of indirect costs

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find

overhead applied to the job

To keep track of labor time and costs, many firms have replaced

paper time tickets with computerized systems

A single predetermined overhead rate is called a ___ overhead rate

plantwide

A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because it

reflects differences in overhead ...

An hour by hour summary of an employees activities throughout the day is found on the

time ticket

The unit product cost is the same as the

total job cost divided by the number of units average product cost per unit

Widely used allocation bases in manufacturing are

units of product machine hours direct labor hours direct labor costs

cost plus pricing occurs when

a markup percentage is added to the cost of a job

When a company creates overhead rates based on the actions it performs, it is employing an approach called

activity based costing

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 a

allocation base

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

A job order costing system may inaccurately assign costs to jobs due to

an inappropriate allocation base

The process used to assign overhead costs to products is called overhead ____

application

The total cost of a job is calculated by adding the total direct labor cost, direct materials cost and

applied manufacturing overhead cost

Labor costs that are easily traced to a job are called __ labor costs

direct

Manufacturing cost

direct materials, direct labor, manufacturing overhead

Companies assign costs to products and services to

establish selling prices understand product profitability value ending inventory

An allocation base is a

measure of activity used to assign overhead costs to products and services

A normal cost system assigned overhead to jobs using

predetermined overhead rate

The formula for applying overhead to a specific job is

predetermined overhead rate X amount of allocation base incurred by job

A normal costing system applies overhead by job multiplying a _______ ________ rate by the _________ amount of the allocation base incurred by the job

predetermined overhead, actual

The average manufacturing overhead cost per unit tends to

vary from one period to the next

Direct materials costs are recorded on the job cost sheet when the

materials are issued to the job

All manufacturing costs are assigned to units of product and all nonmanufactoring costs are treated as period cost under

absorption costing

Manufactoring overhead costs

consist of many different items are indirect cost

To calculate a predetermined overhead rate, divide estimated manufacturing overhead by the

estimated allocation base

Typical cost drivers include

machine-hours, flight-hours, computer time

Companies that use job order costing make

many different products

A bill of materials contains the

type of each direct material needed to complete a unit of product quantity of each direct material needed to complete a unit of product