BADM 226 - Chapter 2 Smartbook 2.0

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

Accounting hours

Which of the following is only true in a multiple predetermined overhead rate system?

Each production department may have its own predetermined overhead rate.

Which of the following would be considered direct materials in a service firm that uses job-order costing?

Paperwork at a law firm.

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing?

The salary of a manager at a hair salon.

Which of the following would not be considered a job in a service firm that uses job-order costing?

The tax department in an accounting firm

Cost-plus pricing occurs when __________.

a markup percentage is added to the cost of a job

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

bill of materials

Manufacturing overhead costs ______.

consist of many different items and are indirect costs.

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

in each department as jobs proceed through the department

The adjustment for underapplied overhead _____ net income.

increases cost of goods sold and decreases

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

job-cost sheet

Manufacturing overhead consists of

many different kinds of indirect costs.

Direct materials costs are recorded on the job cost sheet when the ____________.

materials are issued to the job

An allocation base is a(n) ______.

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

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

more

Compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is ______ accurate.

more complex and more

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

overhead applied to the job

Widely used allocation bases in manufacturing include _________.

units of product, direct labor cost, direct labor hours, machine hours

The appeal of using predetermined departmental overhead rates is they presumably provide _______.

a more accurate accounting of costs, enhanced information for decision making

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

activity - based

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 or activity base or driver

The process used to assign overhead costs to products is called overhead ________.

application

The adjustment for overapplied overhead __________ net income.

decreases cost of goods sold and increases

When a company uses a departmental approach rather than a plantwide approach to applying overhead, the selling price of the product will always be _________.

different

The total cost of a job includes:

direct labor cost, applied manufacturing overhead, direct materials cost

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

divide the total job cost

Manufacturing overhead _______.

is an indirect cost. contains fixed costs. consists of many different types of costs.

The average manufacturing overhead cost per unit tends to __________.

vary from one period to the next

Typical cost drivers include:

machine-hours, flight-hours, computer time

Labor charges that cannot be easily traced to a job or considered _________.

manufacturing over head and indirect labor.

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

manufacturing overhead

Total manufacturing overhead costs tend to:

remain fairly constant.