Chapter 2 Accounting

The predetermined overhead rate is $50 per machine-hour, underapplied overhead is $5,000, and the actual amount of machine-hours is 2,000. What is the actual amount of total manufacturing overhead incurred during the period?

$105,000

Which of the following statements is false with respect to the schedule of cost of goods manufactured? (You may select more than one answer.)

Direct labor costs and actual manufacturing overhead costs are included in the schedule of cost of goods manufactured. The cost of goods manufactured represents the amount that will be debited to Cost of Goods Sold during an accounting period. If the finished goods inventory increases during an accounting period, it will decrease the cost of goods manufactured.

Which of the following statements is true? (You may select more than one answer.)

Direct labor costs are debited to Work in Process and indirect labor costs are debited to Manufacturing Overhead.

The estimated total manufacturing overhead cost is $200,000. The estimated total amount of the allocation base is 40,000 direct labor-hours. The actual total manufacturing overhead cost for the period is $220,000 and the actual direct labor-hours worked on all jobs during the period is 41,000 hours. The total underapplied (overapplied) overhead for the period is:

$15,000 underapplied

Assume that a company's total estimated fixed overhead cost for the coming year is $100,000 and its estimated variable overhead cost is $3.00 per direct labor-hour. If the company estimates that it will work 50,000 direct labor-hours in the coming year, what is its predetermined overhead rate per direct labor-hour?

$5.00

Which of the following statements is false? (You may select more than one answer.)

A normal costing system assigns overhead costs to products by multiplying the actual overhead rate by the actual amount of the allocation base. A unit product cost represents the additional cost that would be incurred if another unit were produced.

Which of the following statements is true with respect to the Manufacturing Overhead clearing account? (You may select more than one answer.)

Actual manufacturing overhead expenses are debited to Manufacturing Overhead. Applied manufacturing overhead costs are credited to Manufacturing Overhead. If the Manufacturing Overhead account has a debit balance at the end of an accounting period, the closing entry pertaining to this account will lower net operating income.

Which of the following statements is true? (You may select more than one answer.)

Manufacturing overhead is an indirect cost. Ideally, the allocation base in a predetermined overhead rate should be a cost driver. A unit product cost includes three types of manufacturing costs—direct materials, direct labor, and manufacturing overhead.