ACCT 1020 - connect 3

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 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

manufacturing overhead costs:

- consist of many different items - are indirect costs

a job cost sheet contains:

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

the total cost of a job includes:

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

companies assign costs to products and services to:

-value ending inventory -understanding product profitability -establish selling prices

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?

10.00 per machine-hour estimated totoal overhead cost = 300,000 + (4 per MH X 50,000 MHs) = 500,000 the predetermined overhead rate = estimated total overhead cost of 500,000/50,000 MHs = 10 per MH

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job's unit product cost (per audio controller)?

124

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 _

15,000

estimated manufacturing overhead - 500,000 estimated direct labor cost - 250,000 actual manufacturing overhead - 720,000 actual direct labor cost - 300,000 based on this information, the predetermined overhead rate per direct labor dollar is:

2.00 formula: estimated manufacturing overhead/estimated allocation base 500,000/250,000 = 2

estimated manufacturing overhead - 450,000 estimated direct labor hours - 150,000 actual manufacturing overhead - 405,000 actual direct labor hours - 180,000 based on this information, the predetermined overhead rate per direct labor hours is $ _

3

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?

4,000 the predetermined overhead rate is 20 (200,000/10,000 DLHs). for 200 DLHs, the manufacturing overhead that would be applied is 4,000 (20X200 DLHs)

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?

6,200

estimated manufacturing overhead - 450,000 estimated direct labor hours - 150,000 actual manufacturing overhead - 405,000 actual direct labor hours - 180,000 base on this information, the amount of overhead allocated to a job that used 300 direct labor hours is $ _

900

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

accounting hours

which of the following would not be a good allocation based for manufacturing overhead?

accounting hours

the process used to assign overhead costs to products is called overhead _

allocation

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

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.

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

the unit product cost is the same as the:

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

the predetermined overhead rate is calculated_

before the period begins

a normal cost system applies overhead to jobs _

by multiplying a predetermined overhead rate by the actual amount of the allocation based incurred by he job

job-order costing would most likely be used in a(n) _

construction company

the adjustment for overapplied overhead:

decreases cost of goods sold and increases net operating income.

underapplied or overapplied overhead it the _

difference between overhead applied to work in process and actual overhead

Widely used allocation bases in manufacturing are:

direct labor hours machine hours direct labor cost units of product

to calculate the unit product cost using job cost sheet:

divide the total job cost by the number of units produced

a predetermined overhead rate is calculated by dividing the _ total manufacturing overhead by the _ total amount of the allocation base.

estimated estimated

to calculate a predetermined overhead rate, divide estimated manufacturing overhead by:

estimated allocation base

true or false: job-order costing can only be used in manufacturing firms

false

the adjustment for underapplied overhead:

increases cost of goods sold and decreases net operating income

Labor charges that cannot be easily traced to a job are considered:

indirect labor manufacturing overhead

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

job cost sheet

companies that make many different products each period use _ _ costing

job-order

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

law practice

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

manufacturing overhead

the manufacturing overhead account contains:

many different kinds of indirect costs

an allocation base is a(n):

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

the difference between overhead applied to work in process and actual overhead is _

overapplied or underapplied overhead

the predetermined overhead rate is multiplied by the actual allocation based incurred by a job to find:

overhead applied to the job

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

paper tickets with computerized systems

the formula for applying overhead to a specific job is:

predetermined overhead rate X amount of allocation base incurred by job

which of the following is not a manufacturing cost catrgory?

selling and administrative costs

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

the cost to produce another unit is the incremental or margin cost

An hour by hour summary of an employees 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, X represents the estimated:

total amount of the allocation base

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

true

true or false: underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimated of costs and activity levels.

true

in the formula Y = a + bX, b represents the estimated:

variable manufacturing overhead cost per unit