Smartbook 4

The formula for a predetermined overhead rate is:

Estimated manufacturing overhead cost divided by estimated allocation base

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 not a manufacturing cost category?

Selling & administrative costs

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

accounting hours

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

Manufacturing overhead costs:

are indirect costs consist of many different items

Overhead application is the process of:

assigning manufacturing overhead cost to jobs

The predetermined overhead rate is calculated:

before the period begins

Costs assigned to units of product in absorption costing include _________ manufacturing costs.

both variable and fixed

Categories of manufacturing costs include ______.

direct materials, direct labor, manufacturing overhead

A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total amount of the allocation base.

estimated; estimated

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

All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under ___ costing.

full

The manufacturing overhead account contains:

many different kinds of indirect costs

An allocation base is a(n):

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

Total manufacturing overhead costs tend to:

remain fairly constant

In the formula Y = a + bX, b represents the estimated:

variable manufacturing overhead cost per unit

Based on this information, the predetermined overhead rate per direct labor dollar is:

2

Based on this information, the predetermined overhead rate per direct labor hour is $

3

Murphy Manufacturing estimated total manufacturing overhead for 2017 to be $100,000 and uses direct labor-hours as the allocation base. They estimated that 5,000 hours would be used. Actual overhead for 2017 was $120,000 and actual direct labor-hours were 7,500. How much overhead was applied to a job completed during 2017 that used 200 direct labor-hours?

$4,000

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

900

The average manufacturing overhead cost per unit tends to:

vary from one period to the next

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

Which of the following is an essential quality of an overhead allocation base?

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

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

overhead applied to the job

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

total amount of the allocation base`

To calculate the unit product cost using the job cost sheet:

divide the total job cost by the number of units produced

Widely used allocation bases in manufacturing are:

machine hours units of product direct labor hours direct labor cost