Managerial Accounting SMartbook chapter 2

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n) ______. A. book of original entry B. financial statement backup C. subsidiary ledger D. job cost ledger

C

When compared to a departmental approach, using activity-based costing results in ______ overhead rates. A. the same number B. less C. more

C

Which of the following is NOT a manufacturing cost category? A. direct materials B. direct labor C. Selling and administrative costs D. manufacturing overhead

C

costs assigned to units of product in absorbtion costing include_____ manufacturing costs. A. only variable B. neither variable nor fixed C. both variable and fixed D. only fixed

C

in the formula Y=a+bX, b represents the estimated____. A. total manufacturing overhead cost B. total amount of the allocation base C. variable manufacturing overhead cost per unit D. total fixed manufacturing overhead cost

C

Which of the following would not be considered a job in a service firm that uses job-order costing? A. a patient in a hospital B. a client at a law firm C. the tax department in an accounting firm D. a repair job at an auto repair shop

C Reason: This is a department; a job would be an individual client

Murphy Manufacturing estimated total manufacturing overhead for 2021 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 2021 was $120,000 and actual direct labor-hours were 7,500. The overhead applied to a job completed during 2021 that used 200 direct labor-hours was ______. A.$4800 B.$3,200 C.$4,000 D. $100,000

($100,000 direct labor/5,000 hours) =$20 per direct labor-hour $20x200=$4,000 A

A SERVICE firm that would most likely use job-order costing is a _____ A. law practice B. clothing shop C. car manufacturer

A

A factor that causes overhead costs is called a _____ A. cost driver B. manufacturing cost C. cost object D. predetermined overhead rate

A

Allocation bases that do not drive overhead costs_____ A. will not accurately measure the cost of overhead used B. cannot be used to calculate overhead using a predetermined rate C. are difficult to keep track of

A

Companies that use job-order costing make________. A. many different products B. very few products in large numbers

A

The adjustment for overapplied overhead ______ net income. A. decreases cost of goods sold and increases B. increases both cost of goods sold and C. increases cost of goods sold and decreases D. decreases both cost of goods sold and

A

The type and quantity of materials to be drawn from the storeroom and the job that will be charged for the materials is specified on the_____ A. materials requisition form B. bill of materials C. time ticket D. production order form

A

Manufacturing overhead costs_____. A. Consist of many different items B. do not impact the average cost per unit C. are indirect costs D. tend to vary significantly, in total, from one period to the next

A,C

The appeal of using predetermined departmental overhead rates is they presumably provide ______. A. a more accurate accounting of costs B. enhanced information for decision making C. higher profitability for the company

AB

Manufacturing overhead_____. A. is an indirect cost B. consists of many different types of costs C. contains fixed costs D. is directly traceable to units produced

ABC

The total cost of a job includes ______. A. direct labor cost B. actual manufacturing overhead C. applied manufacturing overhead D. nonmanufacturing cost E. direct materials cost

ACE

Widely used allocation bases in manufacturing are: A. machine hours B. nonmanufacturing costs C. product revenue D. direct labor cost E. units of product F. direct labor hours

ADEF

All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under_______ costing.

Absorbtion

An allocation base is a(n) A. measure used to assign all manufacturing costs to products and services B. measure of activity used to assign overhead costs to products and services C. activity that causes overhead costs to change

B

Compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is ______ accurate. A. simpler and less B. more complex and more C. simpler and more D. more complex and less

B

the most common approach to product costing throughout the world is _____ costing. A. variable B. Absorbtion

B.

The unit product cost is the same as the ______. A. cost that would be incurred if another unit were produced B. average product cost per unit C. total job cost divided by number of units D. incremental unit cost

BC

Typical cost drivers include A. utilities cost B. flight-hours C. computer time D. machine depreciation E. machine hours

BCE

A normal cost system assigns overhead to jobs using_____. A. an actual overhead rate B. budgeted production standards C. a predetermined overhead rate

C

Direct materials costs are recorded on the job cost sheet when the ______. A. requisition form is submitted to the storeroom clerk B. job is sold to a customer C. materials are issued to the job D. job is complete

C

In the formula Y=a+bX, x represents the estimated_____. A. variable manufacturing cost per unit B. total manufacturing overhead cost C. total amount of the allocation base D. total fixed manufacturing overhead cost

C

A job cost sheet contains_______. A. selling costs charged to the job B. the selling price of the job C. labor costs charged to the job D. manufacturing overhead costs charged to the job E. materials costs charged to the job

C,D,E

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? A. $10,000 B. $9,000 C. $15,000 D. $11,000

Cost of jobs =direct materials + Predetermined OH rate X direct labor cost ($4,000+$5,000 +120%)X5000= $15,000

A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because it ______. A. reflects how different departments use direct materials B. reflects how different departments use direct labor C. is easier to apply than a plantwide system D. reflects difference in how overhead costs are incurred within departments

D

Bar codes can be used to_____. A. trace indirect costs to jobs B. automatically record and post indirect labor costs to jobs C. reduce the amount of direct labor time spent on job D. automatically record and post direct labor costs to jobs

D

True or false: When a company uses cost-plus pricing, they consider both the costs of production and the desired profit.

False

An hour by hour summary of an employees activities throughout the day is found on the __________ __________.

Time, ticket

Labor costs that are easily traced to a job are called _____ labor costs

direct

True or False: Job-order costing can only be used in manufacturing firms

false

True or false: The root cause of inaccurately assigning costs to jobs is generally due to poor tracking of direct labor costs.

false

A single predetermined overhead rate is called a(n)_______ overhead rate

plantwide

A normal costing system applies overhead by job by multiplying a(n)_________ __________ rate by the ________ amount of the allocation base incurred by the job

predetermined, overhead, actual

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n)_____,______

subsidiary ledger

Job XYZ has a total manufacturing cost of $600. If the mark-up percentage is 40%, the job will sell for $______

total manufacturing cost=$600 markup price $600*.40=$240 $600+$240=$840

To calculate the unit product cost using the job cost sheet____ by the number of units produced A. divide the total job cost B. add direct labor to manufacturing overhead and divide C. multiply the total job cost D. add direct labor materials and divide

A

Why do companies use a predetermined overhead rate rather than an actual overhead rate? A. an actual overhead rate is not known until the end of the period B. an actual overhead rate can never be calculated C. A predetermined overhead rate is more accurate D. A predetermined overhead rate is easier to use

A

A bill of materials contains the_____. A. quantity of material needed to complete the storeroom B. type of each direct material needed to complete a unit of product. C. type of materials to be drawn from the storeroom. D. quantity of each direct material needed to complete a unit of product.

B,D

The adjustment for underapplied overhead ______ net income. A. decreases both cost of goods sold and B. increases both cost of goods sold and C. increases cost of goods sold and decreases D. decreases cost of goods sold and increases

C

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find______. A. the total cost of the job B. the predetermined overhead rate for the job C. overhead applied to the job D. actual overhead

C

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 ______.

Total cost of job#420= direct materials+ direct labor+ 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

smith, inc. uses a job-order costing system w/ a predetermined overhead rate of $12/ 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 $____.

Total job cost= direct materials+ direct labor+ predetermined overhead rate X actual machine hours= $18,000+$12,000 +($12/1,100 machine hours)= $43,200

When a company creates overhead rates based on the actions it performs, it is employing an approach called_____,_____.

activity based

True or false: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

true

why is the unit cost different from the cost that would be incurred if another unit were produced? A. the unit product cost is an average, not an incremental cost B. there would be no additional cost to produce another unit C. the cost that would be incurred if another unit were produced cannot be calculated D. the predetermined overhead rate does not change with each unit produced

A

Labor charges that cannot be easily traced to a job are considered_____. A. indirect labor B. manufacturing overhead C. direct labor

A,B

Materials requisition forms are used for______. A. Controlling the flow of materials into production B. making journal entries in accounting records C. summarizing the cost of a job D. Specifying the cost of materials to be ordered

A,B

categories of manufacuturing costs include_______ A. Manufacturing overhead B. Direct labor C. Direct materials D. selling expenses E. administrative expenses

A,B,C

Average manufacturing overhead cost per unit usaully varies from one period to the next because_____. A. variable overhead costs per unit vary when production changes B. fixed manufacturing overhead remains constant in total even when production changes C. the makeup of manufacturing overhead changes from period to period

B

Average manufacturing overhead cost per unit usually varies from one period to the next because______ A. the makeup of manufacturing overhead changes from period to period B. fixed manufacturing overhead remains constant in total even when production changes C. variable overhead costs per unit vary when production changes

B

Cost-plus pricing occurs when_____ A. non-manufacturing costs are added to manufacturing costs B. a markup percentage is added to the cost of a job C. the cost of the job is multiplied by 2

B

Job-order costing would most likely be used in a(n)______. A. oil refinery B. construction company C. Soda bottling factory D. dairy farm that produces raw milk

B

The formula for applying overhead to a specific job is_____. A. estimated manufacturing overhead X amount of allocation base incurred by job B. predetermined overhead rate X amount of allocation base incurred by job C. estimated manufacturing overhead/ amount of allocation base incurred by job D. estimated manufacturing overhead/ estimated allocation base

B

Total manufacturing overhead costs tend to: A. be easily traceable to jobs B. remain fairly constant C. vary greatly with production D. be impossible to assign to jobs

B

Which of the following would not be a good allocation base for manufacturing overhead? A. direct labor hours B. accounting hours C. Units of product D. Machine hours

B

an allocation base should be____ A. a cost object B. a cost driver C. machine hours D. direct labor hours

B

to keep track of labor time and costs, many firms have replaced_____. A. computerized systems with paper time tickets B. paper time tickets with computerized systems C. bar code systems with computerized systems D. computerized systems with bar code systems

B

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing? A. the salary of a surgeon at a hospital B. the salary of the manager at a hair salon C. the salary of an attorney at a law firm D. the wages of technicians at an auto repair shop

B Reason: This would be considered overhead

In the formula Y=a+bX, a represents the estimated_____. A. variable manufacturing cost per unit B. total manufacturing overhead cost C. total amount of the allocation base D. total fixed manufacturing overhead cost

D

The United States requires absorbtion costing for _______ financial reports. A. internal B. both internal and external C. neither internal or external D. external

D

The average manufacturing overhead cost per unit tends to____. A. remain fairly constant B. be more than direct materials cost per unit C. contain direct materials costs D. vary from one period to the next

D

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and______. A. actual manufacturing overhead cost B. actual manufacturing overhead cost and applied nonmanufacturing cost C. applied manufacturing overhead cost and applied nonmanufacturing cost D. applied manufacturing overhead cost

D

The type and quantity of each type of direct material needed to complete a unit of product is listed on the A. time ticket B. production order C. materials requisition form D. bill of materials

D

When a company uses a departmental approach rather than a plantwide approach to applying overhead, the selling price of the product will always be ______. A. higher B. the same C. lower D. different

D

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

application