Acc 202 Exam 1

Which of the following is only true in a multiple predetermined overhead rate system?

Each production department may have its own predetermined overhead rate.

The difference between direct labor and indirect labor is that direct labor ______.

can be easily traced to jobs, while indirect labor cannot

Job-order costing would most likely be used in a(n) ______.

construction company

Manufacturing overhead ______.

contains fixed costs, is an indirect cost, consists of many different types of costs

A factor that causes overhead costs is called a ______.

cost driver

An allocation base should be ______.

cost driver

When a predetermined markup is applied to a base to determine the target selling price, the company is using

cost plus pricing

The adjustment for underapplied overhead ______.

increases cost of goods sold and decreases net income

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the ______.

job cost sheet

A SERVICE firm that would most likely use job-order costing is a ______.

law practice

Materials requisition forms are used for ______.

making journal entries in accounting records, and controlling the flow of materials into production

Factory labor charges that cannot be easily traced to a job are treated as ______.

manufacturing overhead

Companies that use job-order costing make ______.

many different products

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

materials are issued for the job

Why do companies use a predetermined overhead rate rather than an actual overhead rate?

An actual overhead rate is not known until the end of the period.

Jones Company uses a job-order costing system with a predetermined overhead rate of 120% of direct labor cost. The job cost sheet for Job #420 listed $4,000 in direct materials cost and $5,000 in direct labor cost to manufacture 7,500 units. The unit cost of Job #420 is ______.

$2.00Total cost of Job #420 = Direct Materials + Direct Labor + Predetermined overhead rate x Direct labor cost = $4,000 + $5,000 + 120% x $5,000 = $15,000Unit product cost = $15,000/$7,500 = $2.00 per unit

The appeal of using predetermined departmental overhead rates is they presumably provide ______.

enhanced information for decision making and a more accurate accounting of costs

True or false: The root cause of inaccurately assigning costs to jobs is generally due to poor tracking of direct labor costs.

false

True or false: When a company uses cost-plus pricing, they consider both the costs of production and the desired profit.

false

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

The type and quantity of materials to be drawn from the storeroom and the job that will be charged for the materials is specified on the ______.

materials requisition form

An allocation base is a(n) ______.

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

When compared to a departmental approach, using activity-based costing using results in ______ overhead rates.

moew

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

overhead applied to the job

A normal costing system applies overhead by job by multiplying a(n) _______ ________ rate by the Blank ______ amount of the allocation base incurred by the job

predetermined, overhead, actual

A bill of materials contains the ______.

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

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

reflects differences in how overhead costs are incurred within departments

When all overhead is assigned using direct-labor hours, the company has chosen to use a(n) ______ predetermined overhead rate

single

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n) _____________ _________________

subsidiary ledger

An hour-by-hour summary of an employee's activities throughout the day is found on the

time ticket

The document used to record the time workers spend on each job and task is called a ______.

time ticket

In the formula Y = a + bX, a represents the estimated ______.

total fixed manufacturing overhead cost

The unit product cost is the same as the ______.

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

True or false: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

true

Murphy Manufacturing estimated total manufacturing overhead for 2017 to be $100,000 and uses direct labor-hours as the allocation base. They estimated that 5,000 hours would be used. Actual overhead for 2017 was $120,000 and actual direct labor-hours were 7,500. How much overhead was applied to a job completed during 2017 that used 200 direct labor-hours?

$4,000 - (The predetermined overhead rate = $100,000/5,000 direct labor-hours = 20 per direct labor-hour. The overhead applied to the job = $20 per direct labor-hours x 200 direct labor-hours = $4,000.)

Smith, Inc. uses a job-order costing system with the predetermined overhead rate of $12 per machine-hour. The job cost sheet for Job #42A listed $12,000 in direct labor cost, $18,000 in direct materials cost, 1,200 direct labor-hours and 1,100 machine-hours. The total cost of Job #42A is $ Blank 1 of 1.

$43,200un

Job XYZ has a total manufacturing cost of $600. If the mark-up percentage is 40%, the job will sell for $

840 ($600 + ($600x40%) = $840)

Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced?

The cost to produce another unit is the incremental or marginal cost.

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing?

The salary of the manager at a hair salon

Which of the following would not be considered a job in a service firm that uses job-order costing?

The tax department in an accounting firm

Using a departmental approach to overhead application results in ______ as using a plantwide rate.

a different selling price

A cost driver is ______.

a factor that causes overhead costs to occur

Cost-plus pricing occurs when ______.

a markup percentage is added to the cost of a job

A normal cost system assigns overhead to jobs using ______.

a predetermined overhead rate

What is the most common approach to product costing throughout the world?

absorption costing

Which of the following would not be a good allocation base for manufacturing overhead?

accounting hours

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

activity based

Manufacturing overhead consists of ______.

all manufacturing costs except direct materials and direct labor

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(n

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 type and quantity of each type of direct material needed to complete a unit of product is listed on the ______.

bill of materials

The adjustment for overapplied overhead ______.

decreases cost of goods sold and increases net income

Widely used allocation bases in manufacturing include ______.

direct labor hours units of product direct labor cost machine hours

Categories of manufacturing costs include ______.

direct labor, direct material, and MO

The total cost of a job includes ______.

direct materials cost, direct labor cost, applied manufacturing overhead

To calculate the unit product cost using the job cost sheet ______.

divide the total job cost by the number of units produced

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(n) ________ overhead rate.

plantwide

The formula for applying overhead to a specific job is ______.

predetermined overhead rate × amount of allocation base incurred by job

Total manufacturing overhead costs tend to:

remain fairly constant

In the formula Y = a + bX, b represents the estimated ______.

variable manufacturing overhead cost per unit

The average manufacturing overhead cost per unit tends to ______.

vary from one period to the next

Allocation bases that do not drive overhead costs ______.

will not accurately measure the cost of overhead used

Jones Company uses a job-order costing system with a predetermined overhead rate of 120% of direct labor cost. The job cost sheet for Job #420 showed that Jones Company spent $4,000 on direct materials and $5,000 on direct labor on the job. What is the total cost of Job #420?

Cost of Job #420 = Direct Materials + Direct Labor + Predetermined overhead rate x Direct labor cost = $4,000 + $5,000 + 120% x $5,000 = $15,000

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

applied manufacturing overhead cost

Manufacturing overhead costs ______.

are indirect costs, and consist of many different items

Overhead application is the process of ______.

assigning manufacturing overhead cost to jobs

Bar codes can be used to ______.

automatically record and post direct labor costs to jobs