chapter 2 LearnSmart acct 2302
Which of the following would not be a good allocation base for manufacturing overhead?
Accounting hours
Total manufacturing overhead costs tend to:
remain fairly constant
Widely used allocation bases in manufacturing include
units of product, direct labor cost, machine hours, direct labor hours
In the formula Y = a + bX, b represents the estimated
variable manufacturing overhead cost per unit
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
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
An essential quality of an overhead allocation base is that it must
be common to all the company's products and services
Manufacturing overhead costs
consist of many different items, are indirect costs
The adjustment for underapplied overhead
increases cost of goods sold and decreases net income
Factory labor charges that cannot be easily traced to a job are treated as
manufacturing overhead
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 normal costing system applies overhead by job by multiplying a(n) Blank 1 Blank 2 Unavailable rate by the Blank 3
predetermined, overhead, actual
An hour-by-hour summary of an employee's activities throughout the day is found on the
time ticket
In the formula Y = a + bX, X represents the estimated
total amount of the allocation base
In the formula Y = a + bX, a represents the estimated
total fixed manufacturing overhead cost
True or false: When a company uses cost-plus pricing, they consider both the costs of production and the desired profit.
False
Which of the following would be considered direct materials in a service firm that uses job-order costing?
Paperwork at a law firm
Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing?
The salary of the manager at a hair salon
When a predetermined markup is applied to a base to determine the target selling price, the company is using
cost-plus
An allocation base is a(n)
measure of activity used to assign overhead costs to products and services
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: Cost of Job #420 = Direct materials + Direct labor + Predetermined overhead rate × Direct labor cost = $4,000 + $5,000 + 120% × $5,000 = $15,000
Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced?
The cost to produce another unit is the incremental or marginal cost.
Using a departmental approach to overhead application results in ______ as using a plantwide rate.
a different selling price
The appeal of using predetermined departmental overhead rates is they presumably provide
a more accurate accounting of costs, enhanced information for decision making
The adjustment for overapplied overhead
decreases cost of goods sold and increases net income
The total cost of a job includes
direct materials cost, direct labor cost, applied manufacturing overhead
To calculate the unit product cost using the job cost sheet
divide the total job cost by the number of units produced
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
Manufacturing overhead consists of
many different kinds of indirect costs
To keep track of labor time and costs, many firms have replaced
paper time tickets with computerized systems
The average manufacturing overhead cost per unit tends to
vary from one period to the next
Answer Mode Multiple Choice QuestionYour Answer correct 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 listed $4,000 in direct materials cost and $5,000 in direct labor cost to manufacture 7,500 units. The unit cost of Job #420 is ______.
2.00 Reason: Total cost of Job #420 = Direct materials + direct labor + overhead (predetermined overhead rate × direct labor cost) = $4,000 + $5,000 + 1.20 × $5,000 = $15,000 Unit product cost = $15,000 ÷ 7,500 units = $2.00 per unit.
Murphy Manufacturing estimated total manufacturing overhead for 2017 to be $100,000 and uses direct labor-hours as the allocation base. They estimated that 5,000 hours would be used. Actual overhead for 2017 was $120,000 and actual direct labor-hours were 7,500. How much overhead was applied to a job completed during 2017 that used 200 direct labor-hours?
4,000 :Reason: The predetermined overhead rate = $100,000 ÷ 5,000 direct labor-hours = $20 per direct labor-hour. The overhead applied to the job = $20 per direct labor-hours ×200 direct labor-hours = $4,000.
The unit product cost is the same as the
average product cost per unit, total job cost divided by number of units
True or false: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.
true
Which of the following would not be considered a job in a service firm that uses job-order costing?
The tax department in an accounting firm
Why do companies use a predetermined overhead rate rather than an actual overhead rate?
An actual overhead rate is not known until the end of the period.
A normal cost system assigns overhead to jobs using
a predetermined overhead rate
The process used to assign overhead costs to products is called overhead
allocation
