Managerial Accounting CH2
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 ______.
$4,000 $100,00/5,000= $20 $20 x 200 _ $4,000
Companies that make many different products each period use ___ ___ costing.
(seperate entries) job, order
Job XYZ has a total manufacturing cost of $600. If the mark-up percentage is 40%, the job will sell for $___
600 + (600 x40%) 600 + 240 840
Which of the following would NOT be a good allocation base for manufacturing overhead?
Accounting hours
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.
Manufacturing overhead consists of:
Many different kinds of indirect costs
Which of the following is NOT a manufacturing cost cartegory?
Selling & 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 Think of a job un a service as an individual client
One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors
True
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 of costs, enhanced information for decision making
An essential quality of an overhead allocation base is that is must:
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 lsited on the:
bill of materials
Manufacturing Overhead Costs
consist of many different items, are indirect costs
Job-order costing would most likely be used in a(n)
construction company
A factor that causes overhead costs is called a ______.
cost driver
The adjustment for overappleid overhead __ net income.
decreases cost of goods sold and increases
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 t applying overhead, the selling price of the product will always be __.
different
Widely used alloation bases in manufacturing include:
direct labor cost, direct labor hours, machine hours, units of product
Average manufacturing overhead cost per unit usually varies from one period to the next because:
fixed manufacturing overhead remains constant in total even when production changes
The adjusgtment for unerapplied overhead __ net income
increased cost of goods sold and decreased
(Select all that may apply) Manufacturing overhead:
is an indirect cost, consists of many different types of costs, contains fixed costs
The document that records the materials, labor, and manufacturing overhead costs charged to a job is the ______.
job cost sheet
Typical cost drivers include:
machine-hours, computer time, flight-hours
Labor charges that cannot be easily traced to a job are considered
manufacturing overhead, indirect labor
A job cost sheet contains:
materials costs charged to the job, manufacturing overhead costs charged to the job, and labor costs charged to the job.
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 process used to assign overhead costs to products is called:
overhead application
The predetermined overhead rate is multipled by the actual allocation base incurred by a job to find:
overhead applied to the job
The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost, and:
predetermined manufacturing overhead cost
A bill of materials contains the ______.
quantity of each direct material needed to complete a unit of product, type of each direct material needed to complete a unit of product
The document used to record the hours workers spend on each job and task is called a:
time ticket
An hour-by-hour summary of an employee's activities throughout the day is found on the:
time, ticket (blank 2 options_ ticket, sheet, or card)
One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors:
True
The formula for applying overhead to a specific job is
predetermined overhead rate x amount of allocation base incurred by job
Which of the following is only true in a multiple predetermined overhead rate system?
Each production department may have its own predetermined overhead rate.
Estimated manufacturing overhead $450,000 Estimated direct labor hours 150,000 Actual manufacturing overhead $405,000 Actual direct labor hours 180,000 Based on this information, the amount of overhead allocated to a job that used 300 direct labor hours is $
450,000/150,000 = 3.00 300*3.00 = 900
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:
Direct materials + direct labor + overhead (predetermined OR x direct labor cost) 4,000 + 5,000 + 1.2 x 5,000 = 15,000 Unit product cost = 15,000/7,500 = 2.00
When a company creates overhead rates based on the actions it performs, it is employing an approach called __ __ costing.
activity, based
A measure such as a direct labor-hours or machine hours used to assign overhead costs to producrts and services is called a cost driver or a(n):
allocation, base (or enter: activity, driver)
Overhead application is the process of:
assigning manufacturing overhead cost to jobs
The total cost of a job includes:
direct materials, direct labor, and predetermined manufacturing overhead
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
Costs assigned to units of prduct under absorption costing include:
manufacturing costs (both fixed and variable)
Factory labor charges that CANNOT be easily traced to a job are treated as:
manufacturing overhead
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
The average manufacturing overhead cost per unit tends to:
vary from one perid to the next
Costs assigned to units of product in absorption costing include ______ manufacturing costs.
both variable and fixed