Chapter 2 Prep Video

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?

$10.00 per machine hour.

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?

$4,000

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?

$6200, Total cost associated with the job is $6,200 (Direct material ($4,000) + Direct labor ($1,200) + Manufacturing overhead ($1,000) = $10 × 100 DLH)).

Wilson Products computes its predetermined overhead rate on the basis of direct labor-hours. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. This job involved production of 50 audio controllers. The company uses a predetermined overhead rate of $10 per direct labor-hour. If Job X23 involved 100 hours of actual direct labor, what is the unit product cost?

124, Unit product cost ($124) = Total product cost ($6,200 ) ÷ Number of units (50)

other

Variable Manufacturing Overheads3.75Fixed manufacturin g Overheads per DLH6.76(419000/62000)Pre-determined Oh rate per DLH10.51

The direct materials required to manufacture each unit of product are listed on a ________.

bill of materials

Companies can improve job cost accuracy by using ________.

multiple predetermined overhead rates

When all of a company's job cost sheets are viewed collectively they form what is known as a ________.

subsidiary ledger

A normal cost system applies overhead to jobs ________.

by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job

The adjustment for overapplied overhead ________.

decreases cost of goods sold and increases net operating income.

In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ________.

total fixed manufacturing overhead cost