Chapter 17
Use for questions 5, 6, 7, 8 Gell Corporation manufactures computers. Assume that Gell: • allocates manufacturing overhead based on machine hours • estimated 12,000 machine hours and $93,000 of manufacturing overhead costs • actually used 16,000 machine hours and incurred the following actual costs: Indirect labor $11,000 Depreciation on plant 48,000 Machinery repair 11,000 Direct labor 75,000 Plant supplies 6,000 Plant utilities 7,000 Advertising 35,000 Sales commissions 27,000 5. What is Gell's predetermined overhead allocation rate? a. $7.75/machine hour b. $5.81/machine hour c. $6.92/machine hour d. $5.19/machine hour 6. What is Gell's actual manufacturing overhead cost? a. $158,000 b. $83,000 c. $145,000 d. $220,000 7. How much manufacturing overhead would Gell allocate? a. $83,000 b. $93,000 c. $124,000 d. $220,000
5. Overhead Cost / Allocation Base Overhead Rate = 93,000/12,000 hours *Overhead Rate = 7.75 Per Machine Hour a. 6. Indirect labor 11,000 Depreciation on planet 48,000 Machinery repair 11,000 Plant supplies 6,000 Planet utilities 7,000 *=Total Manufacturing Overhead Cost 83,000 b. 7. Allocated overhead = Predetermined Overhead Allocation rate x Actual Number of machine hour Overhead Rate = 93,000/12,000 hours Overhead Rate = 7.75 Per Machine Hour Allocated overhead = 7.75 per machine hour x 16,000 machine hours *Allocated overhead= 124,000 c.
4. When a manufacturing company uses direct labor, it assigns the cost by debiting a. Work-in-Process Inventory. b. Manufacturing Overhead. c. Direct Labor. d. Wages Payable.
a.
10. For which of the following reasons would David Laugherty, owner of the Laugherty Associates law firm, want to know the total costs of a job (serving a particular client)? a. For inventory valuation b. To determine the fees to charge clients c. For external reporting d. a, b, and c are correct
b.
2. When a manufacturing company uses direct materials, it assigns the cost by debiting a. Direct Materials b. Work-in-Process Inventory c. Manufacturing Overhead d. Raw Materials inventory
b.
8. What entry would Gell make to adjust the manufacturing overhead account for overallocated or underallocated overhead? (look in book pg 937)
b.
9. A manufacturing company completed work on a job. The cost of the job is transferred into ____ with a ____. a. Work-in-Process Inventory; debit b. Finished Goods Inventory; credit c. Finished Goods Inventory; debit d. Cost of Goods Sold; credit
c.
1. Would an advertising agency use job order or process costing? What about a cell phone manufacturer? a. Advertising agency—process costing; Cell phone manufacturer—process costing b. Advertising agency—job order costing; Cell phone manufacturer—job order costing c. Advertising agency—process costing; Cell phone manufacturer—job order costing d. Advertising agency—job order costing; Cell phone manufacturer—process costing
d.
3. When a manufacturing company uses indirect materials, it accumulates the cost by debiting a. Work-in-Process Inventory. b. Indirect Materials. c. Raw Materials Inventory. d. Manufacturing Overhead.
d.
