Chapter 2 Accounting

Estimated manufacturing overhead $300,000 Estimated direct labor hours 2,500 Actual manufacturing overhead $370,000 Actual direct labor hours 3,000 Based on the information presented above, calculate the predetermined overhead rate per direct hour. Predetermined overhead rate= estimated total manufacturing overhead cost/ estimated total cost driver

$120.00

Estimated manufacturing overhead $500,000 Estimated direct labor cost $250,000 Actual manufacturing overhead $720,000 Actual direct labor cost $300,000 Based on the information presented above, calculate the predetermined overhead rate per direct labor dollar. Reason: $500,000 ÷ $250,000 = $2.00 per direct labor dollar.

$2.00

Adele's Attic assigns overhead to products based on direct labor hours. For the upcoming year the business plans to use a total of 25,000 machine hours and 5,000 direct labor hours. Total overhead cost is expected to be $35,000. How much overhead would be assigned to a job that used 180 machine hours and 40 direct labor hours?

$280

A method that attempts to assign overhead costs based on what is required to produce products is Blank______ costing.

Activity Based

A technique that attempts to assign overhead costs to products based on the actions they require is called ______-_______ costing.

Activity Based

The first step in assigning manufacturing overhead is to determine the BLANK BLANK or cost driver

Allocation Base

Applied manufacturing overhead cost are credited to the manufacturing overhead account

As the costs are applied to jobs

Job-order costing would most likely be used in an

Construction company

The first step in assigning manufacturing overhead costs using a predetermined overhead rate is to

Determine the allocation base (cost driver)

An integrated management information system that encompasses the entire organization is called a(n)_______ _______ planning system

Enterprise resource

An integrated management information system that encompasses the entire organization is called a(n)________ ________ planning system

Enterprise resource

An integrated management information system that encompasses the entire organization is called a(n) Blank______ system.

Enterprise resource planning

To calculate a predetermined overhead rate, dived the estimated total manufacturing overhead by the

Estimated total cost diver

Companies choose to use predetermined overhead rates based on estimates in order to make costing products easier

False

True or false: Activity-based costing is appropriate for every company.

False

When a job is completed, its costs are transferred into ______.

Finished goods

Predetermined overhead rates are usually calculated

For an entire year

An allocation base is an

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

Calculating the predetermined overhead rate is the _______ Step in assigning manufacturing overhead costs.

Second

The job cost sheet serves an BLANK BLANK to work

Subsidiary Ledger

Overhead costs are debited to Work in Process when

The are applied to jobs

When actual manufacturing overhead costs are incurred, ______.

The manufacturing overhead cost is debited

Indirect costs_____.

are not easily traced to products or services

Actual manufacturing overhead consists of all

manufacturing costs other than direct labor and direct materials

nonmanufacturing costs increase

the Selling, General & Administrative expense accounts

A company assigns overhead based on direct labor costs. The predetermined overhead rate is $3.00 per direct labor dollar. A job that used a total of 20 direct labor hours ($400 in total direct labor costs) would be assigned ______ in total overhead

$1200

Estimated manufacturing overhead $500,000 Estimated direct labor cost $250,000 Actual manufacturing overhead $720,000 Actual direct labor cost $300,000 Based on the information presented above, calculate the predetermined overhead rate per direct labor dollar.

$2.00

Estimated manufacturing overhead $300,000 Estimated direct labor hours 2,500 Actual manufacturing overhead $370,000 Actual direct labor hours 3,000 Based on the information presented above, calculate the predetermined overhead rate per direct hour.

$300,000 / $2,500=$120.00

The document record that summarizes the costs incurred on a specific job, project, or client is called and

Job cost sheet

What name is given to a record of all costs that relate to a particular job?

Job cost sheet

Which of the following is not a volume-based cost driver

Machine setups

Actual manufacturing overhead consists of all_____.

Manufacturing costs other than direct labor and direct materials

Factory labor charges that cannot be easily traced to a job are recorded as

Manufacturing overhead

To compute the per-unit manufacturing cost, add_____ ______ to

Manufacturing overhead

Labor Costs 1. May be direct or indirect 2. are determined from the job cost sheets 3. are always recorded directly into the work in process 4. are recorded in basically the same way as material costs

May be direct or indirect are recorded in basically the same way as material costs

Which of the following would most likely NOT be classified as a direct material? 1. Automobile engine 2. Nails and Screws 3. Laptop Keyboard 4.Drywall

Nails and screws

Activity Based Costing

Offers some advantages over traditional costing systems

Indirect costs are also referred to as________ costs.

Overhead costs

Nonmaufacturing costs incurred during a period are treated as

Period expenses

The formula for a predetermined overhead rate is

Predetermined overhead rate= Estimated total manufacturing overhead cost / Estimated total cost driver

All materials that will be used in the future production are first recorded in the BlANK BLANK inventory account

Raw materials

Which of the following is NOT part of the manufacturing cost per unit? 1. Manufacturing overhead 2. sales commission 3. Direct materials 4. Direct labor

Sales commission

Costs of partially completed units are accounted for in

Work in process inventory

Select all that apply Raw materials inventory represents the cost of materials not yet used in the production. 2. Direct labor costs flow through the raw materials inventory account 3. Raw materials inventory only includes the cost of direct materials 4. When materials are purchased they are recorded in the raw materials inventory account.

Raw materials inventory represents the cost of materials not yet used in production When materials are purchased they are recorded in the raw materials inventory accoount

Direct labor hours and machine hours are both examples of ___ -based cost drivers.

Volume

When a job is completed, its costs are transferred out of______.

Work in process