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Allocation base

A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects.

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? $6.00 per machine hour. $8.00 per machine hour. $10.00 per machine hour. $12.50 per machine hour.

$10.00 per machine hour.

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)? $52 $62 $100 $124

$124

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? $5,000 $5,200 $6,000 $6,200

$6,200

Predetermined Overhead Rate

(estimated total manufacturing overhead cost)/(estimated total amount of the allocation base)

overhead applied to a particular job

(predetermined overhead rate) x (amount of the allocation base incurred by the job)

absorption costing

, all manufacturing costs, both fixed and variable, are assigned to units of product—units are said to fully absorb manufacturing costs

Absorption costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in unit product costs.

Normal costing

A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.

materials requisition form

A document that specifies the type and quantity of materials to be drawn from the storeroom and that identifies the job that will be charged for the cost of those materials.

Job cost sheet

A form that records the direct materials, direct labor, and manufacturing overhead cost charged to a job.

allocation base

A measure of activity such as direct labor-hours or machine-hours that is used to assign overhead costs to to all of the companys products & services.

What is the term used when a company applies less overhead to production than it actually incurs? Misapplied Overapplied Unadjusted Underapplied

Underapplied

Job Order Costing

a costing system used in situations where many different products, jobs, or services are produced each period

Job-order costing

a costing system used in situations where many different products, jobs, or services are produced each period

Bill of Materials

a document that lists the type and quantity of each type of direct material needed to complete a unit of product

underapplied overhead

amount applied<actual amount underapplied overhead increases cost of goods sold

over applied overhead

amount applied>actual amount overapplied overhead decreases cost of goods

The direct materials required to manufacture each unit of product are listed on a ________. bill of materials materials requisition form materials ticket job order cost sheet

bill of materials

A normal cost system applies overhead to jobs ________. by multiplying a predetermined overhead rate by the estimated amount of the allocation base incurred by the job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job using the actual amount of overhead caused by each job using the normal amount of overhead caused by each job

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

The adjustment for overapplied overhead ________. decreases cost of goods sold and decreases net operating income. decreases cost of goods sold and increases net operating income. increases cost of goods sold and decreases net operating income. increases cost of goods sold and increases net operating income.

decreases cost of goods sold and increases net operating income.

total manufacturing overhead cost for the coming period. This includes the budgeting amounts for items like :

depreciation, utilities, indirect labor, and indirect materials.

Companies can improve job cost accuracy by using ________. a plantwide overhead rate direct-labor hours to apply overhead multiple predetermined overhead rates number of units in the job to apply overhead

multiple predetermined overhead rates

When all of a company's job cost sheets are viewed collectively they form what is known as a ________. general ledger inventory job-order costing system subsidiary ledger

subsidiary ledger

In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ________. total manufacturing overhead cost total fixed manufacturing overhead cost variable manufacturing overhead cost per unit of the allocation base total amount of the allocation base

total fixed manufacturing overhead cost

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? $2,000 $4,000 $6,000 $10,000

$4,000

Overhead application

The process of assigning overhead costs to specific jobs using the following formula: Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job

Predetermined overhead rate

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated total manufacturing overhead cost for the period by the estimated total amount of the allocation base for the period. Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total amount of the allocation base