Managerial Accounting Ch. 2

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

Manufacturing overhead consists of ______.

Many different kinds of indirect costs

Which of the following is not a manufacturing cost category?

Selling and Administrative Costs

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

The salary of the manager at a hair salon

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

The tax department in an accounting firm

The adjustment for overapplied overhead ______

decreases cost of goods sold and increases net income

The adjustment for overapplied overhead ______.

decreases cost of goods sold and increases net operating income.

The adjustment for underapplied overhead ______.

increases cost of goods sold and decreases net income

An allocation base is a(n) ______.

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

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

predetermined overhead rate × amount of allocation base incurred by job

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

Application

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

Be common to all the company's products and services

Manufacturing overhead ______

Consists of many different types of costs Is an indirect cost Contains fixed costs

Materials requisition forms are used for

Controlling the flow of materials into production and Making journal entries in accounting records

Labor costs that are easily traced to a job are called ____ labor costs

Direct

Categories of manufacturing costs include

Direct Materials, Direct Labor, and Manufacturing Overhead

The total cost of a job includes ______.

Direct labor cost Applied manufacturing overhead Direct materials cost

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

Each production department may have its own predetermined overhead rate.

True or false: Job-order costing can only be used in manufacturing firms.

False; used in service industries

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

Job-Order Costing

A SERVICE firm that would most likely use job-order costing is a

Law Practice

Labor charges that cannot be easily traced to a job are considered

Manufacturing Overhead

Companies that use job-order costing make

Many different products

The type and quantity of materials to be drawn from the storeroom and the job that will be charged for the materials is specified on the ______

Materials Requisition Form

A job cost sheet contains ______.

Materials costs charged to the job Manufacturing overhead costs charged to the job Labor costs charged to the job.

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

Overhead applied to job

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

Plantwide

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

Plantwide or Single

The formula for applying overhead to a specific job is ______

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:

Reflects differences in how overhead costs are incurred within departments

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

True

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

Applied manufacturing overhead cost

Overhead application is the process of ______.

Assigning manufacturing overhead cost to jobs