Chapter 2 Job-Order Costing: Calculating Unit Product Costs

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 showed that Jones Company spent $4,000 on direct materials and $5,000 on direct labor on the job. What is the total cost of Job #420?

$15,000

Smith, Inc. uses a job-order costing system with the predetermined overhead rate of $12 per machine-hour. The job cost sheet for Job #42A listed $12,000 in direct labor cost, $18,000 in direct materials cost, 1,200 direct labor-hours and 1,1000 machine-hours. The total cost of Job #42A is $____________.

43,200

A normal cost system assigns overhead to jobs using:

a predetermined overhead rate

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

absorption

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and

applied manufacturing overhead cost

The adjustments for overapplied overhead ______

decreases cost of goods sold and increases net income

To calculate a predetermined overhead rate, divide estimated manufacturing overhead by the ___________

estimated allocation base

Companies that make many different products each period use __________ costing.

job-order

the type and quantity of materials to be drawn from the storeroom and the job that will be charged for the materials is specified on the _____

materials requisition form

An allocation base is a(n)

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

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

time ticket

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

total fixed manufacturing overhead cost

Companies assign costs to products and services to:

value ending inventory establish selling prices understand product profitability

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

variable manufacturing overhead cost per unit

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

840

Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced?

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

An allocation base should be:

a cost driver

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and _____________

applied manufacturing overhead cost

Overhead application is the process of:

assigning manufacturing overhead cost to jobs

The type and quantity of each type of direct material needed to complete a unit of product is listed on the ______

bill of materials

The difference between direct labor and indirect labor is that direct labor:

can be easily traded to jobs, while indirect labor cannot

Typical cost drivers include _________

computer time machine-hours flight-hours

Manufacturing overhead costs:

consist of many different items are indirect costs

Manufacturing overhead:

consists of many different types of costs contains fixed costs is an indirect cost

A job cost sheet contains:

materials costs charged to the job manufacturing overhead costs charged to the job labor costs charged to the job

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

overhead applied to the job

A single predetermined overhead rate is called a(n) ____________ overhead rate.

plantwide

Total manufacturing overhead costs tend to:

remain fairly constant