Managerial Accounting Ch 2
Materials requisition forms are used for
- Making journal entries in accounting records - Controlling the flow of materials into production
The total cost of a job includes
-Direct Materials Cost -Direct Labor Cost -Applied Manufacturing Overhead
Job XYZ has a total manufacturing cost of 600. if the markup percentage is 40% the job with sell for
600+ 600(.40)= 840
A multiple predetermined overhead rate system is more accurate than a plant wide overhead rate system because it
Reflects differences in how overhead costs are incurred within departments
The predetermined overhead rate is calculated
before the period begins
Cost assigned to units of product in absorption costing include _____ manufacturing costs
both fixed and variable costs
Allocation bases that do not drive overhead costs
can cause product costs to be distorted
Costs assigned to units of product under absorption costing include
fixed manufacturing and variable manufacturing
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
Companies that make many different products each period use
job order costing
A job cost sheet contains
manufacturing overhead costs chawed to the job materials costs charged to the job labor costs chawed to the job
The manufacturing overhead account contains
many different kinds of indirect costs
The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find
overhead applied to the job
To keep track of labor time and costs, many firms have replaced
paper time tickets with computerized systems
A single predetermined overhead rate is called a ___ overhead rate
plantwide
A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because it
reflects differences in overhead ...
An hour by hour summary of an employees activities throughout the day is found on the
time ticket
The unit product cost is the same as the
total job cost divided by the number of units average product cost per unit
Widely used allocation bases in manufacturing are
units of product machine hours direct labor hours direct labor costs
cost plus pricing occurs when
a markup percentage is added to the cost of a job
When a company creates overhead rates based on the actions it performs, it is employing an approach called
activity based costing
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
allocation base
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 an
allocation base
A job order costing system may inaccurately assign costs to jobs due to
an inappropriate allocation base
The process used to assign overhead costs to products is called overhead ____
application
The total cost of a job is calculated by adding the total direct labor cost, direct materials cost and
applied manufacturing overhead cost
Labor costs that are easily traced to a job are called __ labor costs
direct
Manufacturing cost
direct materials, direct labor, manufacturing overhead
Companies assign costs to products and services to
establish selling prices understand product profitability value ending inventory
An allocation base is a
measure of activity used to assign overhead costs to products and services
A normal cost system assigned overhead to jobs using
predetermined overhead rate
The formula for applying overhead to a specific job is
predetermined overhead rate X amount of allocation base incurred by job
A normal costing system applies overhead by job multiplying a _______ ________ rate by the _________ amount of the allocation base incurred by the job
predetermined overhead, actual
The average manufacturing overhead cost per unit tends to
vary from one period to the next
Direct materials costs are recorded on the job cost sheet when the
materials are issued to the job
All manufacturing costs are assigned to units of product and all nonmanufactoring costs are treated as period cost under
absorption costing
Manufactoring overhead costs
consist of many different items are indirect cost
To calculate a predetermined overhead rate, divide estimated manufacturing overhead by the
estimated allocation base
Typical cost drivers include
machine-hours, flight-hours, computer time
Companies that use job order costing make
many different products
A bill of materials contains the
type of each direct material needed to complete a unit of product quantity of each direct material needed to complete a unit of product