EXAM 2 - Class 12

When choosing a cost driver consideration should be given to

- a correlation between the cost and the activity chosen as the driver - an activity that is common across all products

The difference between normal costing and actual costing is

- actual costing uses actual overhead rates - normal costing uses predetermined overhead rates

Under or over applied manufacturing overhead is the result of

- actual manufacturing overhead being greater than applied manufacturing overhead - the inaccuracy of the predetermined overhead rate - actual manufacturing overhead being less than applied manufacturing overhead

Which of the following statements is incorrect regarding accounting for manufacturing overhead?

- actual manufacturing overhead will always equal applied manufacturing overhead - the manufacturing overhead account is increased by the manufacturing overhead applied

the cost of goods sold schedule shows the

- changes in finished goods inventory for the period - cost of goods manufactured

Which of the following are reasons that direct labor may not be the best choice as a cost driver

- increasing automation - decreasing proportion of direct labor to total cost productions - increasing proportion of manufacturing overhead to total production costs

Which of the following are selling and administrative costs?

- insurance expense - showroom - advertising expense - sales commissions - office supplies expense

Some common alternatives to direct labor as a cost driver for manufacturing overhead are

- machine hours - throughput time

A weakness of actual costing is

- the same product could appear to be profitable of unprofitable, depending upon when it was produced - the variance of costs during a production cycle - actual overhead costs are not timely

The cost of goods manufactured schedule shows the

- total manufacturing costs - direct labor

The proration of under/over applied manufacturing overhead involves which of the following accounts?

- work-in-process inventory - finished goods inventory - cost of goods sold

True or false: Departmental overhead rates are frequently used by organizations because the relationship between overhead costs and a single cost driver are substantially different between production departments

True

What entry(s) are made when goods are sold?

accounts receivable sales revenue cost of goods sold finished goods inventory

The assignment of all manufacturing overhead costs to departmental centers is called cost ___

allocation

The first stage in a two-stage cost allocation involves

assigning overhead costs to the production departments

Which of the following entries is made upon completion of a job?

finished goods inventory work-in-process inventory

In service industries the term engagement costs is equivalent to ___ costing

job-order

Manufacturing overhead is overapplied when actual manufacturing overhead is

less than applied manufacturing overhead

Which of the following entries reflect the use of indirect materials in production?

manufacturing overhead manufacturing supplies inventory

The entry to record the use of indirect labor in production is

manufacturing overhead wages payable

The entry to record the use of indirect labor in production is:

manufacturing overhead wages payable

When an organization uses a single overhead rate it is referred to as a

plantwide overhead rate

A more accurate, but complicated procedure to dispose of underapplied and overapplied manufacturing overhead is called ___

proration

A more accurate, but complicated procedure to dispose of underapplied or overapplied manufacturing overhead is called ___

proration

The entry to record the purchase of materials for use in a job-order costing system is

raw materials inventory accounts payable

The second step in stage one of the cost allocation process is to

reassign all service department costs to production departments

The average amount of time it takes to convert raw materials to finished goods is ___ time

throughput

The cost of goods manufactured schedules shows the amount of goods:

transferred into finished goods inventory

The process of overhead absorption is stage ___ of cost allocation

two

When companies use departmental overhead rates, ___ ___ cost allocation is used to assign manufacturing overhead to production

two stage

Which of the following entries reflect the application of manufacturing overhead costs to jobs?

work-in-process inventory manufacturing overhead

The entry to record the release of direct materials to production in a job-order costing system is:

work-in-process inventory raw materials inventory