Chapter 2 Job Order Costing Calculating Unit Product Costs

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

a. accounting hours

The total cost of a job includes

A. -direct materials cost -applied manufacturing overhead -direct labor cost

A job cost sheet contains ______.

A. - materials costs charged to the job -labor costs charged to the job -manufacturing overhead costs charged to the job

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

A. -a more accurate accounting of costs -enhanced information for decision making

Widely used allocation bases in manufacturing include

A. -direct labor cost -direct labor hours -machine hours -units of product

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n

A. subsidiary ledger

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n) ______.

A. subsidiary ledger

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

A. time ticket

Allocation bases that do not drive overhead costs

A. will not accurately measure the cost of overhead used

ased on this information, the amount of overhead allocated to a job that used 300 direct labor hours is $

A. $900

An allocation base should be

A. a cost driver

When a predetermined markup is applied to a base to determine the target selling price, the company is using Blank, Blank, pricing.

A. Cost Plus Pricing

True or false: When a company uses cost-plus pricing, they consider both the costs of production and the desired profit.

A. False

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

A. Paperwork at a law firm

A cost driver is ______.

A. a factor that causes overhead costs to occur

Cost-plus pricing occurs when

A. a markup percentage is added to the cost of a job

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

A. allocation

A factor that causes overhead costs is called a

A. cost driver

The adjustment for overapplied overhead ______ net income.

A. decreases cost of goods sold and increases

Why do companies use a predetermined overhead rate rather than an actual overhead rate?

A. An actual overhead rate is not known until the end of the period.

The adjustment for underapplied overhead ______ net income.

A. increases cost of goods sold and decreases

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

A. 840

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

A. Accounting hours

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

A. Acitivity based

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

A. The salary of the manager at a hair salon

True or false: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

A. True

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)

A. allocation base

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and

A. applied manufacturing overhead cost

Manufacturing overhead costs

A. are indirect costs, consist of many different items

Overhead application is the process of

A. assigning manufacturing overhead cost to jobs

An essential quality of an overhead allocation base is that it must ______.

A. be common to all the company's products and services

The difference between direct labor and indirect labor is that direct labor _

A. can be easily traced to jobs, while indirect labor cannot

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

A. different

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

A. divide the total job cost

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

A. material are issued to the job

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

A. more

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

A. more complex and more

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

A. overhead applied to the job

The formula for applying overhead to a specific job is ______.

A. predetermined overhead rate × amount of allocation base incurred by job

A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because it ______.

A. reflects differences in how overhead costs are incurred within departments

Total manufacturing overhead costs tend to:

A. remain fairly constant


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