Chapter 2 Study

The fact that one department may be labor intensive while another department is machine intensive explains in part why multiple predetermined overhead rates are often used in larger companies. T/F

True

When a company uses a predetermined overhead rate, manufacturing overhead is applied only to jobs that are completed during an accounting period. It is not applied to jobs that remain in progress. T/F

False

Girrard Corporation uses a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and an estimated 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate per hour is closest to:

$12.10

Dispatch Corporation uses a predetermined overhead rate based on machine-hours. The company has provided the following data for the most recent year. Estimated total manufacturing overhead cost $534,000 Estimated total machine-hours 30,000 Actual total manufacturing overhead $487,000 Actual total machine-hours worked 27,400 The predetermined overhead rate per machine-hour would be closest to:

$17.80

Lemon Corporation uses a predetermined overhead rate of $22.30 per machine-hour. The rate was based on estimated total fixed manufacturing overhead of $446,000 and an estimated 20,000 machine-hours for the period. The company incurred actual total fixed manufacturing overhead of $409,000 and 18,200 total machine-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:

$405,860

The following information is found on the job cost sheet for Job 400, which was recently completed. Direct materials cost was $3,044. A total of 46 direct labor-hours and 104 machine-hours were worked on the job. The direct labor wage rate is $15 per labor-hour. The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $13 per machine-hour. The total cost for the job on its job cost sheet would be:

$5,086

Job 1105 was recently completed. The following data have been recorded on its job cost sheet: Direct materials$2,422 Direct labor-hours 76 labor-hours Direct labor wage rate $15per labor-hour Machine-hours 137 machine-hours The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $16 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 1105 would be:

$5,754

Paris Corporation uses a predetermined overhead rate based on machine-hours. The company has provided the following data for the most recent year. Predetermined overhead rate$23.60per machine-hour Estimated total fixed manufacturing overhead $708,000 Estimated total machine-hours 30,000 Actual total fixed manufacturing overhead $752,000 Actual total machine-hours worked 28,100 The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:

$663,160

Which of the following would usually be found on a job cost sheet? Actual direct material cost Actual manufacturing overhead cost A)YesYes B)YesNo C)NoYes D)NoNo

Choice B

Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job. T/F

False

A company will improve job cost accuracy by using multiple overhead rates even if it cannot identify more than one overhead cost driver. T/F

False

In a job-order costing system that is based on machine-hours, which of the following formulas to compute the predetermined overhead rate is correct?

Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours

A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes costs to be incurred. T/F

True

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

True