accounting ch 1
Assigning manufacturing overhead to a specific job is complicated by all of the below except
A) Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job. B) Manufacturing overhead is incurred only to support some jobs. C) Manufacturing overhead consists of both variable and fixed costs. D) The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period
In a job-order costing system that is based on machine-hours, which of the following formulas is correct?
A) Predetermined overhead rate = Actual manufacturing overhead ÷ Actual machine-hours B) Predetermined overhead rate = Actual manufacturing overhead ÷ Estimated machine-hours C) Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours D) Predetermined overhead rate = Estimated manufacturing overhead ÷ Actual machine-hours
Which of the following is the correct formula to compute the predetermined overhead rate?
A) Predetermined overhead rate = Estimated total units in the allocation base ÷ Estimated total manufacturing overhead costs B) Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base C) Predetermined overhead rate = Actual total manufacturing overhead costs ÷ Estimated total units in the allocation base D) Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Actual total units in the allocation
ESTION] Which of the following statements about using a plantwide overhead rate based on direct labor is correct?
A) Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs. B) Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs. C) It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overheadcost driver. D) The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs
Which of the following would usually be found on a job cost sheet under a normal cost system
Actual direct Actual manufacturing material cost overhead cost A) Yes Yes B) Yes No C) No Yes D) No N
A company will improve job cost accuracy by using multiple overhead rates even if it cannot identify more than one overhead cost driver
F
A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes direct costs
F
A job cost sheet is used to record how much a customer pays for the job once the job is completed.
F
Generally speaking, when going through the process of computing a predetermined overhead rate, the estimated total manufacturing overhead cost is determined before estimating the amount of the allocation base
F
Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year Direct materials...................................... $6,000 Direct labor............................................ $20,000 Rent on factory building......................... $15,000 Sales salaries........................................ $25,000 Depreciation on factory equipment........ $8,000 Indirect labor.......................................... $12,000 Production supervisor's salary............... $15,000 Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:
A) $2.00 per direct labor-hour B) $2.79 per direct labor-hour C) $3.00 per direct labor-hour D) $4.00 per direct labor-hour
Which of the following statements is not correct concerning multiple overhead rate systems?
A) A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate. B) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. C) A company may choose to create a separate overhead rate for each of its production departments. D) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine- hours rather than on direct labor-hours.
If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when apredetermined overhead rate is used
F
If the allocation base in the predetermined overhead rate does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs because of the averaging process.
F
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
F
In a job-order cost system, indirect labor is assigned to a job using information from the employee time ticket.
F
In a job-order costing system, costs are traced to individual units of product. The sum total of such traced costs is called the unit product cost
F
In absorption costing, nonmanufacturing costs are assigned to units of product.
F
Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job.
F
The amount of overhead applied to a particular job equals the actual amount of overhead caused by the job.
F
The formula for computing the predetermined overhead rate is: Predetermined overhead rate = Estimated total amount of the allocation base ÷ Estimated total manufacturing overhead cost
F
A bill of materials is a document that lists the type and quantity of each type of direct material needed to complete a unit of product
T
Actual overhead costs are not assigned to jobs in a job costing system.
T
An employee time ticket is an hour-by-hour summary of the employee's activities throughout the day
T
An employee time ticket is an hour-by-hour summary of the employee's activities throughout the day.
T
Job-order costing systems often use allocation bases that do not reflect how jobs actually use overhead resources.
T
Most countries require some form of absorption costing for external reports.
T
The appeal of using multiple departmental overhead rates is that they presumably provide a more accurate accounting of the costs caused by jobs.
T
The costs attached to products that have not been sold are included in ending inventory on the balance sheet.
T
The fact that one department may be labor intensive while another department is machine intensive explains in part why multiple predetermined overhead rates are often used in larger companies
T