ACC 202 Chapter 1&2 HW

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?

$10 per machine hour

In May, direct labor was 20% of conversion cost. If the manufacturing overhead for the month was $162,400 and the direct materials cost was $21,700, the direct labor cost was:

$40,600

Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equals ________.

$5,000

adjustment for overapplied overhead decreases or increases COGS and net operating income?

Decreases costs of goods sold and increases net operating income

T/F an opportunity cost cannot be changed by any decision made now or in the future

False

The ____ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that revenue is recognized

Matching principle

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?

Predetermined overhead rate = $200,000 ÷ 10,000 DLHs = $20 per DLH For 200 DLHs, the manufacturing overhead that would be applied is = $20 per DLH × 200 DLHs = $4,000

what will happen to cost if a firm increases its activity level

Some costs will change, other costs will reman the same

What does the Y in the Y=a+bX stand for

The estimated total amount of manufacturing overhead cost

Unit Product Cost

Total product cost / number of units

What does the B in the cost formula (Y=a+bX) mean?

Variable manufacturing overhead

What is a sunk cost?

a cost that has already occurred and cannot be recovered

The direct materials required to manufacture each unit of product are listed on a

bill of materials

A normal cost system applies overhead to jobs ________.

by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job

mixed costs

costs that have both a fixed and a variable component

fixed costs

costs that remain constant as output changes

What is common to both prime cost and conversion cost

direct labor

________ is sometimes called "touch labor."

direct labor

Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product

direct materials

Manufacturing costs include _____

direct materials, direct labor, manufacturing overhead

Predetermined Overhead Rate

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

Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.

manufacturing overhead costs

Companies can improve job cost accuracy by using ________.

multiple predetermined overhead rates

Property taxes associated with a company's administrative facility are considered _____

nonmanufacturing costs

How should the wages of a sheet metal worker in a fabrication plant be classified?

product cost

A fixed cost is a cost which

remains constant in total with changes in the level of activity

When all of a company's job cost sheets are viewed collectively they form what is known as a ________.

subsidiary ledger

What is always an irrelevant cost

sunk cost

In the equation, Y=a+bX, X represents

the level of activity

What is opportunity cost?

the loss of potential gain from other alternatives when one alternative is chosen.

In the cost formula (Y=a+bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ___

the total fixed overhead cost

What is the term used when a company applies less overhead to production than it actually incurs?

underapplied