Cost Acctning

The amount of overhead applied to a particular job equals the actual amount of overhead caused by the job.

False

The formula for computing the predetermined overhead rate is: Predetermined overhead rate = Estimated total amount of the allocation base ÷ Estimated total manufacturing overhead cost

False

Goal of Cost Accounting

Determine COGS / Calculate unit of production

If the overhead rate is computed annually based on the actual costs and activity for the year, the manufacturing overhead assigned to any particular job can be computed as soon as the job is completed.

False

It is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs.

False

Opportunity costs represents cost that can be reduced by effective management of operations

False

Avoidable costs are irrelevant costs in decision

False

Book value of an old machine is always considered an opportunity cost in a decision

False

Fixed cost are irrelevant in decisions about whether a product should be dropped

False

Fixed cost are sunk cost

False

Future cost that do not differ between the alternatives in a decision are avoidable costs

False

If a company uses a predetermined overhead rate, actual manufacturing overhead costs of a period will be recorded in the Manufacturing Overhead account and will be recorded on the job cost sheets.

False

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

Which of the following is the correct formula to compute the predetermined overhead rate?

Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base

Managerial Accounting

Plan Control & Decision Making

A cost that can be avoided by choosing one alternative over another is relevant for decision making

True

A cost that will be incurred regardless of which alternative is selected is not relevant when choosing between alternatives

True

Fixed cost maybe relevant in decision making

True

Income statement need not be prepared as part of a differential cost analysis

True

Sunk Cost are never relevant in decision making

True

The costs attached to products that have not been sold are included in ending inventory on the balance sheet.

True

Two or more products that are produced from a common input are known as joint products

True

Variable cost of a product are relevant in a decision concerning whether to eliminate the product

True