Chapter 3

Select all that apply Manufacturing overhead costs: tend to vary significantly, in total, from one period to the next consist of many different items do not impact the average cost per unit are indirect costs

consist of many different items are indirect costs

Select all that apply Manufacturing overhead: consists of many different types of costs contains fixed costs is directly traceable to units produced is an indirect cost

consists of many different types of costs contains fixed costs is an indirect cost

Multiple choice question. The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find: overhead applied to the job the predetermined overhead rate for the job the total cost of the job actual overhead

overhead applied to the job

Estimated manufacturing overhead.....$450,000 Estimated direct labor hours.....150,000 Actual manufacturing overhead.....$405,000 Actual direct labor hours.....180,000 Based on this information, the predetermined overhead rate per direct labor hour is $_________.

3 Reason: Estimated manufacturing overhead / Estimated Direct Labor Hours ($450,000/$150,000)

The process used to assign overhead costs to products is called overhead ____________.

application

The predetermined overhead rate is calculated ______. Multiple choice question. before the period begins as soon as actual overhead is known after the period is over as the period progresses

before the period begins

Multiple choice question. A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total amount of the allocation base. estimated; estimated estimated; actual actual; actual actual; estimated

estimated; estimated (Reason: A predetermined overhead rate is calculated by dividing the estimated total manufacturing overhead by the estimated total amount of the allocation base. Neither the actual overhead nor the actual amount of the allocation base should be used in calculating the predetermined overhead rate.)

Multiple choice question. The manufacturing overhead account contains: a single kind of indirect cost many different kinds of indirect costs a single kind of direct cost many different kinds of direct costs

many different kinds of indirect costs

Multiple choice question. Total manufacturing overhead costs tend to: be easily traceable to jobs be impossible to assign to jobs vary greatly with production remain fairly constant

remain fairly constant

Multiple Choice Question 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 $100,000 $3,200 $4,800

$4000 the predetermined overhead rate = $100,000/$5000 direct labor-hours = $20 per direct labor hour. The overhead applied to the job = $20 per direct labor hours X 200 direct labor hours = $20*200 = $4000

Multiple choice question. Which of the following is an essential quality of an overhead allocation base? It must be calculated using a predetermined overhead rate. It must be common to all the company's products and services. It must vary with all overhead costs. It must be a cost associated with producing the firm's goods.

It must be common to all the company's products and services.

Multiple choice question. The formula for applying overhead to a specific job is: Estimated manufacturing overhead x Amount of allocation base incurred by job Estimated manufacturing overhead / Estimated allocation base Predetermined overhead rate x Amount of allocation base incurred by job Estimated manufacturing overhead / Amount of allocation base incurred by job

Predetermined overhead rate x Amount of allocation base incurred by job

Select all that apply Widely used allocation bases in manufacturing are: nonmanufacturing costs direct labor cost units of product product revenue machine hours direct labor hours

direct labor cost units of product machine hours direct labor hours

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

Multiple choice question. Which of the following is not a manufacturing cost category? Selling & administrative costs Manufacturing overhead Direct materials Direct labor

Selling & administrative costs

Estimated manufacturing overhead.....$450,000 Estimated direct labor hours.....150,000 Actual manufacturing overhead.....$405,000 Actual direct labor hours.....180,000 Based on this information, the amount of overhead allocated to a job that used 300 direct labor hours is $________.

900 Reason: Predetermined overhead rate per hour * 300 (given direct labor hours)

Select all that apply Categories of manufacturing costs include ______. administrative expenses selling expenses direct labor manufacturing overhead direct materials

direct labor manufacturing overhead direct materials

Select all that apply Categories of manufacturing costs include ______. administrative expenses direct materials selling expenses manufacturing overhead direct labor

direct materials manufacturing overhead direct labor

Multiple choice question. Average manufacturing overhead cost per unit usually varies from one period to the next because: variable overhead costs per unit vary when production changes the makeup of manufacturing overhead changes from period to period fixed manufacturing overhead remains constant in total even when production changes

fixed manufacturing overhead remains constant in total even when production changes

Multiple choice question. In the formula Y = a + bX, b represents the estimated: total amount of the allocation base total manufacturing overhead cost total fixed manufacturing overhead cost variable manufacturing overhead cost per unit

variable manufacturing overhead cost per unit (b) total fixed manufacturing overhead cost (a) total amount of the allocation base (x)

Multiple choice question. To calculate a predetermined overhead rate, divide estimated manufacturing overhead by: actual manufacturing overhead estimated direct labor hours estimated units of production estimated allocation base

estimated allocation base

Multiple choice question Overhead application is the process of: assigning manufacturing overhead cost to jobs calculating the total cost of a job adjusting accounts for the difference between applied and actual overhead calculating a predetermined overhead rate

assigning manufacturing overhead cost to jobs

Estimated manufacturing overhead $500,000 Estimated direct labor cost $250,000 Actual manufacturing overhead $720,000 Actual direct labor cost $300,000 Multiple choice question. Based on this information, the predetermined overhead rate per direct labor dollar is: $2.88 $1.67 $2.40 $2.00

$2.00 Reason: Estimated manufacturing overhead/ Estimated direct labor cost ($500,000/ $250,000)

Multiple choice question. 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: $1.33 $2.00 $1.20

$2.00 Total cost of Job #420: = Direct materials + Direct Labor + Overhead (predetermined overhead rate x direct labor costs) = $4,000 + $5,000 + 1.20 x $5,000 = $15,000 Unit product cost = $15,000/7,500 units= $2.00 per unit

Multiple choice question. Which of the following would not be a good allocation base for manufacturing overhead? Units of product Machine hours Accounting hours Direct labor hours

Accounting hours

Multiple choice question. To calculate the unit product cost using the job cost sheet: divide the total job cost by the number of units produced add direct labor to manufacturing overhead and divide by the number of units produced multiply the total job cost by the number of units produced add direct labor to direct materials and divide by the number of units produced

divide the total job cost by the number of units produced