Accounting ch.17

Marty's Metal Shop uses a job order cost system. It applies overhead to jobs at a rate of 175% of direct labor costs. Job No. 2617 required $800 in direct labor costs. The job was initially budgeted to require $850 in direct labor costs. Overhead applied to Job No. 2617 during the period amounted to:

$1,400. $800 × 175% = $1,400

If Riverview applies overhead using a predetermined rate based on machine-hours, what amount of overhead will be assigned to a unit of output which requires 0.5 machine hours and 0.25 labor hours to complete?

$12.00 $6,000,000 ÷ 250,000 = $24 × 0.5 = $12

If Riverview applies overhead using a predetermined rate based on labor-hours, what amount of overhead will be assigned to a unit of output which requires 0.5 machine hours and 0.25 labor hours to complete?

$30.00 $6,000,000 ÷ 50,000 = $120 × 0.25 = $30

Manufacturing overhead is not:

A period cost. Correct

Manufacturing overhead is:

An indirect cost that cannot be traced to a specific job.

The account Work-in-Process Inventory:

Consists of goods being manufactured that are incomplete.

A job order cost system would be appropriate in the manufacturing of:

Custom-made furniture.

The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery. Payments made to Winter for last week's work should be:

Debited to the Manufacturing Overhead account.

The Work in Process account in a job order cost accounting system will be debited for:

Direct labor, direct materials, and applied overhead.

A predetermined overhead application rate:

Expresses an expected relationship between overhead costs and an activity base.

Under-applied overhead at the end of a month:

Is represented by a debit balance remaining in the Manufacturing Overhead account.

Which of the following is a characteristic of manufacturing overhead in a job order cost system?

It is assigned to units produced by means of an overhead application rate.

The basic types of cost accounting systems are:

Job order cost systems, activity based cost systems, and process cost systems.

Debits to the Manufacturing Overhead account record:

The actual amounts of overhead costs incurred during a period.

The document that provides information for the cost of goods manufactured is:

The job cost sheet.

Which of the following is an advantage of developing a predetermined overhead application rate?

The overhead application rate facilitates assigning overhead costs to the ending inventory of work in process.

A job cost sheet usually contains a record of each of the following except:

The overhead costs actually incurred on a particular job.

a. An activity base that can be traced directly to units produced and can be used as a denominator in computing an overhead application rate. b. The total of all direct labor, direct materials, and manufacturing overhead transferred from work in process to finished goods. c. A means of assigning indirect product costs to work in process during the period. d. A debit balance remaining in the Manufacturing Overhead account at the end of the period. e. The type of cost accounting system likely to be used by a construction company. f. The type of cost accounting method likely to be used for overhead costs.

a. Cost driver b. Cost of finished goods manufactured c.Overhead application rate d.None e. Job order costing f. Activity-based costing