ACCT: Chapter 2
In activity-based absorption costing, the consumption of overhead resources is caused by ______,
an activity
The process used to assign overhead costs to products is called overhead _______.
application
The total cost of a job includes ______.
applied manufacturing overhead direct materials cost direct labor cost
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
Activity-based absorption costing ______.
assigns overhead based on events that consume overhead resources
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
Costs 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
Job-order costing would most likely be used in a(n) ______.
construction company
A "bucket" in which costs are accumulated that relate to a single activity measure is called an activity _______ _______.
cost pool
When a company uses a departmental approach rather than a plantwide approach to applying overhead, the selling price of the product will always be ______.
different
Widely used allocation bases in manufacturing include ______.
direct labor hours machine hours direct labor cost units of product
Categories of manufacturing costs include ______.
direct materials direct labor manufacturing overhead
The appeal of using predetermined departmental overhead rates is they presumably provide ______.
enhanced information for decision making a more accurate accounting of costs
An activity cost pool accumulates costs for ______ activity measure(s).
exactly one
A job cost sheet contains ______.
labor costs charged to the job manufacturing overhead costs charged to the job materials costs charged to the job
Manufacturing overhead consists of ______.
many different kinds of indirect costs
Direct materials costs are recorded on the job cost sheet when the ______.
materials are issued to the job
When compared to a departmental approach, using activity-based costing results in ______ overhead rates.
more
Compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is ______ accurate.
more complex and more
The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find ______.
overhead applied to the job
The formula for applying overhead to a specific job is ______.
predetermined overhead rate × amount of allocation base incurred by job
A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because it ______.
reflects differences in how overhead costs are incurred within departments
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 Direct materials + Direct labor + Predetermined overhead rate × Direct labor cost = $4,000 + $5,000 + 120% × $5,000 = $15,000
Murphy Manufacturing estimated total manufacturing overhead for the year to be $100,000 and that 5,000 direct-labor hours would be used. Actual overhead was $120,000 and actual direct labor-hours were 7,500. The overhead applied to a job completed during the year that used 200 direct labor-hours was ______.
$4,000 The predetermined overhead rate = $100,000 ÷ 5,000 direct labor-hours = $20 per direct labor-hour × 200 direct labor-hours = $4,000.
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 1,100 machine-hours. The total cost of Job #42A is $_______
$43,200
Activity-based absorption costing only assigns variable manufacturing overhead costs to products.
False
Which of the following is not a manufacturing cost category?
Selling & administrative costs
Which of the following would not be a good allocation base for manufacturing overhead?
accounting hours
An event that causes consumption of overhead resources is called a(n) _______.
activity
When a company creates overhead rates based on the actions it performs, it is employing an approach called _______ - _______ costing.
activity-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 a(n) _______ _______ .
allocation base
Manufacturing overhead costs ______.
are indirect costs consist of many different items
Manufacturing overhead ______.
consists of many different types of costs contains fixed costs is an indirect cost
Labor charges that cannot be easily traced to a job are considered ______.
indirect labor manufacturing overhead
Companies that make many different products each period use _______ - _______ costing.
job-order
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
Costs assigned to units of product under absorption costing include ______.
variable manufacturing fixed manufacturing