Managerial Ch2

Manufacturing overhead costs __________.

- are indirect costs - consist of many different items

Manufacturing overhead:

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

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

A measure such as direct labour-hours or machine hours used to assign overhead costs to products and services is called a cost driver or a(n) ______________ ______________

Blank 1: allocation OR activity Blank 2: base OR driver

Which of the following would be considered direct materials in a service firm that uses job-order costing? - Tools in an auto repair shop - Scissors at a hair salon - Beds in a hospital - Paperwork at a law firm

Paperwork at a law firm

Which of the following is not a manufacturing cost category? - Direct Labor - Selling and Administration costs - Manufacturing Overhead - Direct Materials

Selling and Administration costs

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing? - The salary of an attorney at a law firm - The salary of a surgeon at a hospital - The salary of the manager at a hair salon - The wages of technicians at an auto repair shop

The salary of the manager at a hair salon

Which of the following would not be considered a job in service firm that uses job-order costing? - A client at a law firm - A repair job at an auto repair shop - The tax department in an accounting firm - A patient in a hospital

The tax department in an accounting firm

A cost drive is _______.

a factor that causes overhead costs to occur

A cost driver is ______.

a factor that causes overhead costs to occur

Cost-plus pricing occurs when _______.

a markup percentage is added to manufacturing costs

All manufacturing costs are assigned to units of product and all non manufacturing costs are treated as period cost under _____________ costing.

absorption OR full

An essential quality of an overhead allocation base is that it must _________.

be common to all the company's products and services

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

bill of materials

Cost assigned to units of product in absorption costing include ________ manufacturing costs.

both variable and fixed

The difference between direct labor and indirect labor is that direct labor ______.

can be easily traced to jobs, while indirect labor cannot

Typical cost drivers include

computer time, machine-hours, flight-hours

Job-order costing would most likely be used in a(n) ___________.

construction company

A factor that causes overhead costs is called a _______.

cost driver

The adjustment for overapplied overhead _____ net income.

decreases cost of goods sold and increases

Labor costs that are easily traced to a job are called __________ labor costs.

direct OR touch

The total cost of a job includes ___________.

direct material cost, direct labor cost, predetermined manufacturing overhead

Categories of manufacturing costs include ________.

direct materials, direct labor, manufacturing overhead

To calculate the unit product cost using the job cost sheet _________ by the number of units produced.

divide the total job cost

The adjustment for underapplied overhead _______ net income.

increases cost of goods sold and decreases

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the _______.

job cost sheet

Companies that make many different products each period use ________ - _________ costing.

job order

Categories of manufacturing costs include _________.

manufacturing overhead, direct materials, direct labor

Direct materials costs are recorded on the job cost sheet when the __________.

materials are issued to the job

An allocation base is a(n) _________.

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

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

overhead applied to the job

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

predetermined manufacturing overhead cost

The formula for applying overhead to a specific job is ____________ amount of allocation base incurred by job.

predetermined overhead rate X

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n) _________ _________.

subsidiary ledger