BACC 222 test 2

The difference between overhead applied to work in process and actual overhead is

overapplied or underapplied overhead

Each department has a separate Work in Process account when using Blank______ costing.

process

Actual overhead costs may not be proportional to the actual amount of the allocation base used because

-many actual overhead costs are fixed -overhead spending may not be under control

Actual overhead costs appear in the Work in Process account but not on the job cost sheet. T/F

False

Job B was not completed by April 30. If an April balance sheet is prepared, the costs accumulated for Job B will NOT appear on it. T/F

False

The equivalent units of production computed under the weighted-average method takes into account the percentage completed of the beginning inventory. T/F

False

Traditional cost systems tend to undercost standard products and overcost specialty products T/F

False

Traditional cost systems tend to undercost standard products and overcost specialty products. T/F

False

activity-based costing includes reducing the total overhead cost of a company T/F

False

Users can easily judge the impact on profits of changes in selling price, cost or volume when using an income statement constructed under the _______approach.

contribution margin

Actual manufacturing overhead was $50,000, while overhead applied to jobs was $45,000. Work in process contained 10% of applied overhead, Finished goods contained 40%, and Cost of goods sold contained 50%. The entry to dispose of underapplied or overapplied overhead using the allocation method

debits Work in process $500

Underapplied or overapplied overhead is the

difference between overhead applied to work in process and actual overhead

conversion costs are

direct labor plus manufacturing overhead

A journal entry that includes Manufacturing overhead and Cost of goods sold is recorded to -recognize the completion of goods -apply manufacturing overhead to jobs -dispose of underapplied or overapplied overhead -recognize the sale of goods

dispose of underapplied or overapplied overhead

Equivalent units of production under the weighted-average method equals

equivalent units in ending work in process plus units transferred out

An activity cost pool accumulates costs for ______ activity measure

exactly one

An activity cost pool accumulates costs for ______ activity measure(s)

exactly one

Activity-cost rates may either be computed per product or per activity. T/F

false

When job is finished what does it get moved into

finished goods

in a processing department all outcome is

homogeneous

Usually, traditional costing ______ high-volume products and ______ low-volume products.. (Over cost or under cost)

over costs and under costs

For decision-making purposes, the distinction between manufacturing costs and selling and administrative expenses is ______ (important or unimportant)

unimportant

When only a portion of the units involved in a job are sold, the -unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold -the entire cost of the job is transferred from finished goods to cost of goods sold -unsold units are transferred to another job -cost is held in the finished goods account until all units in the job are sold

unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold

A processing department is an organization unit

where work is performed on a product, and materials, labor or overhead are added

A processing department is an organization unit Blank______

where work is performed on a product, and materials, labor or overhead are added

Which tool can be used to easily calculate the change in profit resulting from a change in sales price, sales volume, variable costs, or fixed costs?

CVP analysis

Underapplied or overapplied manufacturing overhead can be disposed of by closing it to -Cost of goods sold only -Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold -Finished goods or allocating it to Work in process, Finished goods, and Raw materials -Finished goods only

Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold

Process costing accumulates costs by

department

A journal entry that debits Advertising expense and credits Cash would record the incurrence of a Blank______ cost.

selling

To simplify CVP calculations, it is assumed that Blank______ will remain constant.

selling price

The cost of goods manufactured for a period is the

sum of all amounts transferred between the Work in process account and the Finished goods account during that period

The equivalent units completed are valued the same as units Blank______ for purposes of determining the cost per unit.

transferred in

Activity-based costing computes product costs in the same way as traditional costing t/f

true

The flow of costs through manufacturing accounts is basically the same for job-order costing and process costing. t/f

true

A debit balance in Manufacturing overhead means overhead was

underapplied

What methods can be used to dispose of underapplied or overapplied manufacturing overhead?

-Closed proportionally to Work in process, Finished goods, and Cost of goods sold. -Close it to Cost of goods sold.

Using direct-labor hours or another volume based cost driver to assign overhead...

-may result in overcharging customers for products -may result in selling products at a loss -ignores other significant causes of overhead

Implementing activity-based costing

-requires taking employees away from other tasks -requires substantial resources -should be done by a cross-functional team

three benefits of activity base costing

-using cost pools that are more homogeneous than departmental cost pools -using a variety of activity measures to assign overhead costs to products -increasing the number of cost pools used to accumulate overhead cost

Activity rate or participation rate

The number of those in work or unemployed divided by the population of working age expressed as a percentage.

Equivalent Units

The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.

The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next. T/F

True

Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels. T/F

True

difference between overhead applied to work in process and actual overhead T/F

True

Which of the following is a key difference between process and job-order costing?

Under process costing, it makes no sense to try to identify materials, labor and overhead costs with a particular customer order.

any event that causes consumption of overhead resources is a

activity

Overhead is underapplied if

actual overhead is more than applied overhead

Overapplied or underapplied overhead is the difference between

actual total overhead and total overhead applied

When using process costing, which of the following can be added in any department?

all product costs

Activity Based Costing

allocation of overhead to specific jobs based on their percentage of activities

In activity-based costing an activity measure is

an allocation base

Job cost sheets and the work in process account contain Blank______ manufacturing overhead.

applied

Costs per equivalent unit are used to value

both units in ending inventory and units transferred to the next department