Unit 4 Normal Costing Concepts

The use of normal costing means that actual overhead costs are assigned directly to jobs.

False

The predetermined overhead rate is usually calculated

at the beginning of the year.

Manufacturing overhead

consists of all manufacturing costs other than direct materials and direct labor.

Which method of measuring costs associated with production is more widely used in practice?

normal costing

Which of the following is the assignment process used with normal costing?

Actual direct material and direct labor costs are assigned to products, but overhead costs are assigned using predetermined rates.

Production costs do not include

All of these are production cost.

Actual overhead is reconciled with applied overhead at the beginning of the period.

False

In a normal costing system, actual overhead is used to arrive at the cost of goods manufactured.

False

In an actual cost system, actual direct materials, actual direct labor and estimated overhead are used to determine unit cost.

False

Which of the following is not true about job-order costing?

It is used in firms that produce homogeneous products.

Which of the following statements is true about overhead?

Overhead costs are not incurred uniformly throughout the year.

If actual overhead is greater than applied overhead, the variance is called underapplied overhead.

True

Production costs consist of direct materials, direct labor, and overhead.

True

The difference between actual overhead and applied overhead is called an overhead variance.

True

The key feature of job-order costing is that the cost of one job differs from that of another job and must be kept track of separately.

True

The three manufacturing cost elements are direct materials, direct labor, and overhead.

True

A normal job-order costing system is a system that uses:

actual costs for direct materials and direct labor and estimated costs for overhead.

Using normal costing requires that

actual overhead costs are not assigned directly to jobs.

Which of the following are easy to trace to individual jobs?

direct materials and direct labor