Chapter 2 A202

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

$600 + ($600 x .40) = 840

Manufacturing overhead costs:

- are indirect costs - consist of many different items

A bill of materials contains the

- quantity of each direct material needed to complete a unit of product - type of each direct material needed to complete a unit of product

The unit product cost is the same as the:

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

Murphy manufacturing estimated total manufacturing a 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 for 2017 was applied to a job completed during 2017 that used 200 direct labor-hours?

100k/5000= $20 per direct labor hour. 20 x 200 direct labor hours = 4000$

How to calculate the overhead allocated to a jon that used 300 direct labor hours

400,000(Est Manufacturing Overhead) / 150,000 (Est Dir Labor Hrs)= $3 x 300(labor hrs used) = 900

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 showed that Jones Company spent $4,000 on direct materials and $5,000 on direct labor on the job. What is the total cost of Job #420?

Dir Materials + Dir Labor + Predetermined Overhead Rate x Dir Labor Cost = 4000 + 5000 + 120% x 5,000 = 15000

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

Job cost sheet

Which of the following is NOT a manufacturing cost category?

Selling & admin costs it only consists of direct labor and material and manufactoring overhead

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

True

The predetermined overhead rate is computed

before the period begins

A factor that causes overhead costs is called a:

cost driver

Costs assigned to units of product under absorption costing include:

fixed manufacturing and variable manufacturing

Companies that make many different products each period use _______________ costing

job order

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

materials are issued to the job

Materials requisition forms are used for

- Controlling the flow of materials into production - Making journal enteries in accounting records

To calculate the unit product cost using the job cost sheet:

Divide the total job cost by the number of units produced

The formula for a predetermined overhead rate is:

Estimated manufacturing overhead cost divided by estimated allocation base.

If the allocation base in the predetermined overhead rate does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs because of the averaging process. T/F

F

An employee time ticket is an hour-by-hour summary of the employee's activities throughout the day. T/F

T

The costs attached to products that have not been sold are included in ending inventory on the balance sheet. T/F

T

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

activity-based

Typical cost drivers include:

machine-hours, flight-hours, computer time

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

paper time tickets with computerized systems

A multiple predetermined overhead rate system is more accurate than a plant wide overhead rate system because it

reflects differences in how overhead costs are incurred within department

An hour by hour summary of an employee's activities throughout the day is found on the _____________________

time ticket