Pre reading chapter 2

Why is the unit product cost different from the cost that would be incurred if another unit were produced? a. There would be no additional cost to produce another unit b. The cost that would be incurred if another unit were produced cannot be calculated c. The predetermined overhead rate changes with each unit produced d. The cost to produce another unit is the incremental or marginal cost

d. The cost to produce another unit is the incremental or marginal cost

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

direct

Categories of manufacturing costs include:

direct materials, direct labor, manufacturing overhead

Calculate predetermined overhead rate, divide estimated manufacturing overhead by the _____________.

estimated allocation base

Typical cost drivers include:

machine-hours, flight-hours, computer time

The manufacturing overhead account contains

many different kinds of indirect costs

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

840(600x.40=240+600)

An allocation base is a(n):

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

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

Accounting hours(not related to manufacturing)

A measure such as direct labor hours, or machine hours that is 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 rate rather than an actual overhead rate?

An actual overhead rate is not know until the end of the period

A job-order costing system may inaccurately adding costs to jobs due to:

An inappropriate allocation base

Overhead application is the process of:

Assigning manufacturing overhead cost to jobs

Bar codes can be used to:

Automatically record and post direct labor costs to jobs

total cost of a job

Direct labor cost Direct materials cost Applied manufacturing overhead

Per unit cost of job

Divide the total job cost by the number of units produced

The formula for a predetermined overhead rate is:

Estimated manufacturing overhead cost divided by estimated allocation base

Predetermined Overhead Rate=________/________

Estimated total manufacturing overhead cost/ estimated total amount of the allocation base

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

False

Costs assigned to units of product under absorption costing include:

Fixed manufacture Variable manufacturing

Companies that use job-order costing make:

Many different products

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.

A normal costing system applies overhead by job by multiplying a(n)_________ _________ rate by the __________ amount of the allocation base incurred by the job.

Predetermined overhead rate by the actual amount

Overhead applied to job=________x________

Predetermined overhead rate x actual direct labor-hours charged to job

The formula for applying overhead to a specific job is:

Predetermined overhead rate x amount of allocation base incurred by job

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

Time ticket

In the formula Y=a+bX, X represents the estimated

Total amount of the allocation base