Chapter 2 smartbook

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 listed $4,000 in direct materials cost and $5,000 in direct labor cost to manufacture 7,500 units. The unit cost of Job #420 is ______.

$2.00total cost of job = DM + DL + OH (PDOHR x DL cost)

The total cost of a job includes ______.

-Direct Materials Cost -Direct Labor Cost -Applied Manufacturing Overhead

Typical cost drivers include ______

-machine-hours -computer time -flight-hours

Murphy Manufacturing estimated total manufacturing overhead for the year to be $100,000 and that 5,000 direct-labor hours would be used. Actual overhead was $120,000 and actual direct labor-hours were 7,500. The overhead applied to a job completed during the year that used 200 direct labor-hours was ______. Multiple choice question.

4000 The predetermined overhead rate = $100,000 ÷ 5,000 direct labor-hours = $20 per direct labor-hour.The overhead applied to the job = $20 per direct labor-hours ×200 direct labor-hours = $4,000.

Murphy Manufacturing estimated total manufacturing overhead for the year to be $100,000 and that 5,000 direct-labor hours would be used. Actual overhead was $120,000 and actual direct labor-hours were 7,500. The overhead applied to a job completed during the year that used 200 direct labor-hours was

4000The predetermined overhead rate = $100,000 ÷ 5,000 direct labor-hours = $20 per direct labor-hour.The overhead applied to the job = $20 per direct labor-hours ×200 direct labor-hours = $4,000.

Smith, Inc. uses a job-order costing system with the predetermined overhead rate of $12 per machine-hour. The job cost sheet for Job #42A listed $12,000 in direct labor cost, $18,000 in direct materials cost, 1,200 direct labor-hours and 1,100 machine-hours. The total cost of Job #42A is $

43200

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

Each production department may have its own predetermined overhead rate.

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

Estimated manufacturing overhead / Estimated direct labor horus = the amount of overhead allocated to a job$450,000/150,000 = $3.00 per direct labor hour x 300 = $900

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

The Job will sell for $840 Calculation:- $600 + ($600 * 40%) $600 + $240 $840

An allocation base should be

a cost driver

A cost driver is

a factor that causes overhead costs to occur

Cost-plus pricing occurs when

a markup percentage is added to the cost of a job

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

a more accurate accounting for costs and enhanced information for decision making

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?

a.Overhead would be=Predetermined overhead rate*Direct labor cost =5000*120% =$6000 Total cost=Direct materials+Direct labor+Total overhead =(4000+5000+6000) =$15000

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

accounting hours

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

activity based

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

allocation

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 base

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

an actual overhead rate is not known until the end of the period

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

applied manufacturing overhead costs

Overhead application is the process of ______.

assigning manufacturing overhead cost to jobs

The unit product cost is the same as the

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

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

be common to all the company's products and services

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

bill of materials

The difference between direct labor and indirect labor is that direct labor ______.

can easily be traced to jobs, while indirect labor cannot

Job-order costing would most likely be used in a(n) ______.

construction company

Manufacturing overhead ______.

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

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

cost plus

The adjustment for overapplied overhead ______ net income.

decreases costs 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

Widely used allocation bases in manufacturing include ______.

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

Categories of manufacturing costs include ______.

direct materials, direct labor, manufacturing overhead

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

divide the total job cost

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

false

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

job cost sheet

Companies that make many different products each period use - costing

job-order

A job cost sheet contains ______.

labor costs charged to the job, material costs charged to the job, and manufacturing overhead costs charged to the job

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

manufacturing overhead

Manufacturing overhead consists of ______.

many different kinds of indirect costs

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

A single predetermined overhead rate is called a(n) overhead rate

plantwide

The formula for applying overhead to a specific job is ______

predetermined overhead rate × amount of allocation base incurred by job

total manufacturing overhead costs tend to ______.

remain constant

Total manufacturing overhead costs tend to ______. Multiple choice question.

remain fairly constant

Which of the following is not a manufacturing cost category?

selling and administrative costs

When all overhead is assigned using direct-labor hours, the company has chosen to use a(n) predetermined overhead rate.

single

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

subsidiary ledger

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

subsidiary ledger

Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced? Multiple choice question.

the unit cost is an average, not an incremental cost

Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced?

the unit product cost is an average; not an incremental cost

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

time ticket

The document used to record the hours workers spend on each job and task is called a ______. Multiple choice question.

time ticket

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

true

A bill of materials contains the ______.

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

The average manufacturing overhead cost per unit tends to ______.

vary from one period to the next

Allocation bases that do not drive overhead costs ______. Multiple choice question.

will not accurately measure the cost of overhead used