Acct 200 chapter 2

When a company uses cost-plus pricing, they consider both the costs of production and the desired profit. T OR F

FALSE

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

Job Cost Sheet

Companies that make many different products each period use ____

Job Order Costing

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

Materials are issued to the job.

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

More

Compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is ______complex and _____ accurate.

More and more

The approach used when overhead is applied to jobs by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the jobs is called

Normal Costing

A bill of materials contains the Blank______.

Type of each direct material needed to complete a unit of product Quantity of each direct material needed to complete a unit of product

The average manufacturing overhead cost per unit tends to Blank______ when the number of units produced fluctuate.

Vary from one period to the next

Cost-plus pricing occurs when

a markup percentage is added to the cost of a job

Companies use a predetermined overhead rate rather than an actual overhead rate because

an actual rate is not known until the end of the period.

Overhead application is the process of:

applying manufacturing overhead cost to jobs

An essential quality of an overhead allocation base is that it must Blank______.

be common to all the company's products and services.

The predetermined overhead rate is calculated Blank______.

before the period begins

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

bill of materials

The adjustment for overapplied overhead Blank______ net income.

decreases cost of goods sold and increases

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

fixed manufacturing overhead remains constant in total even when production changes

In a system that uses multiple predetermined overhead rates, overhead is applied Blank______.

in each department as jobs proceed through the department

The adjustment for underapplied overhead Blank______.

increases cost of goods sold and decreases net operating income

An allocation base is a(n)

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

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

overhead applied to the job

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

predetermined manufacturing overhead cost.

The formula for applying overhead to a specific job is: Blank______ amount of allocation base incurred by job.

predetermined overhead rate * amount of allocation base incurred by job.

A normal cost system assigns overhead to jobs using a

predetermined overhead rate.

A company's job cost sheets provide a Blank______ that summarizes the specific jobs that comprise the amounts reported in Work in Process and Finished Goods on the balance sheet as well as Cost of Goods Sold on the income statement.

subsidiary ledger

A company's job cost sheets provide a(n)_______, _______ that summarizes the specific jobs that comprise the amounts reported in Work in Process and Finished Goods on the balance sheet as well as Cost of Goods Sold on the income statement

subsidiary ledger

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

total amount of the allocation base

Allocation bases that do not drive overhead costs Blank______.

will not accurately measure the cost of overhead used

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

840$

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

Activity Based

The process of assigning overhead cost to jobs is called overhead

Allocation

A factor that causes overhead costs is called a Blank______.

Cost driver

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

Cost-Plus pricing

When a predetermined markup is applied to a base to determine the target selling price, the company is using______ - _______pricing

Cost-plus

Widely used allocation bases in manufacturing include

Machine hours Direct labor hours Direct labor cost Units of product

To calculate the predetermined overhead rate per direct labor dollar, use the formula:

Predetermined Overhead Rate= Estimated Manufacturing Overhead/Estimated direct labor costs

The unit product cost is different from the cost that would be incurred if another (additional) unit were produced because:

The unit product cost is an average, not an incremental cost.

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 hours workers spend on each job and task is called a Blank______.

Time Ticket

One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors. T OR F

True

To calculate the unit product cost using the job cost sheet Blank______ by the number of units produced.

divide the total job cost

The formula for a predetermined overhead rate is:

estimated total manufacturing overhead cost ÷ estimated total allocation base

A company's job cost sheets provide a(n)___________.__________ that summarizes the specific jobs that comprise the amounts reported in Work in Process and Finished Goods on the balance sheet as well as Cost of Goods Sold on the income statement.

subsidiary, ledger