ACC212: Chapter 2

A company's calculated predetermined overhead rate is $90 per direct labor hour. If a job requires 4 direct labor hours, ______.

$360 is assigned to the job to cover indirect costs

True or false: Job-order costing can only be used in manufacturing firms.

False

True or false: Materials purchases are initially recorded in Raw Materials and then all materials used are transferred to Work in Process.

False

True or false: The cost of each individual unit is tracked to products under both job order and process costing.

False

What document specifies the type and quantity of direct materials used on a specific job?

Materials Requisition Form

What is the formula for applying overhead to a specific job?

Predetermined overhead rate × the actual cost driver usage for the specific job

Which of the following is not a manufacturing cost category?

Selling & administrative costs

Murphy Manufacturing estimated $100,000 in manufacturing overhead and 5,000 direct labor hours for 2016. Actual overhead for the year was $120,000 and 7,500 actual direct labor-hours were used. How much overhead was applied to a job completed during 2016 that used 200 direct labor-hours?

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 × 200 direct labor-hours = $4,000.

A cost driver is ______.

a measure that explains or influences the amount of manufacturing overhead cost incurred

As jobs are worked on, the Work in Process account accumulates ______.

actual direct materials, actual direct labor, and applied overhead costs

The first step in assigning manufacturing overhead is to determine the __________ _________ or cost driver.

allocation base

A direct labor time ticket includes the ______.

amount of time spent on each job job numbers of jobs worked on

Predetermined overhead rates are ______.

based on some secondary allocation measure

When is the predetermined overhead rate calculated?

before the period begins

Finished goods ______.

consists of completed, unsold goods

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

construction company

Materials requisition forms are used to ______.

control the flow of materials from inventory into production record the cost of raw materials in the accounting system

When calculating a predetermined overhead rate, the ideal allocation base should be a(n)

cost driver

When goods are sold to customers, ______.

costs are transferred from Finished Goods to Cost of Goods Sold

Categories of manufacturing costs include ______.

direct labor direct materials manufacturing overhead

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

direct labor time ticket

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

estimated total cost driver

A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total cost driver.

estimated, estimated

True or false: A predetermined overhead rate of $50 per direct labor hour means that the total cost of direct labor and indirect cost equals $50 per hour.

false

A predetermined overhead rate of $20 per direct labor hours means that ______.

for each direct labor hour, $20 is added to cover indirect costs

The predetermined overhead rate is multiplied by the actual cost driver usage for a job to calculate the ______ the job.

overhead applied to

All materials that will be used in future production are first recorded in the __________ __________ inventory account.

raw materials

The major difference between job order and process costing is ______.

whether the products produced are similar or different

Costs of partially completed units are accounted for in ______.

work in process

An allocation base is a(n) ______.

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