311 chapter 7

Based on the following information, calculate the manufacturing overhead applied to job 101. Estimated manufacturing overhead cost $300,000 Estimated direct labor cost $150,000 Actual direct labor cost for job 101 $80,000

$300,000/$150,000 x $80,000 160000

Anders Inc. estimated manufacturing overhead rate is 40% of direct labor cost. One of the jobs bid on and completed during the year estimated $10,000 of direct labor. Actual direct labor for the job was $12,000. Based on this, $ of manufacturing overhead cost was applied to the job.

4800

Which of the following is not a common event that leads to manufacturing overhead being recorded? Multiple choice question. Accumulating actual direct materials and labor Completing a job Preparing financial statements for which work-in-process needs to be assessed

Accumulating actual direct materials and labor

Which of the following statements are correct? Multiple select question. Management needs to know the stage of completion of a project to evaluate performance and control costs. Job supervisors who report the stage of completion of their jobs can be tempted to understate it. If job expenditures are 70% of the total estimated to be spent but the job is only 50% complete, the job will require higher costs than estimated.

Management needs to know the stage of completion of a project to evaluate performance and control costs. If job expenditures are 70% of the total estimated to be spent but the job is only 50% complete, the job will require higher costs than estimated.

Which of the following is NOT an inventory account? Multiple choice question. Finished goods Manufacturing overhead Work-in-process Direct materials

Manufacturing overhead

True or false: The job costing procedure is basically the same for both service and manufacturing organizations.

True They are the same except service firms use fewer direct materials.

When the cost of a job is determined by actual direct materials and labor cost plus overhead applied using an actual rate and an actual allocation base, - costing is being used.

actual

The predetermined overhead rate is based on all of the following except ______.

actual annual production volumes

The journal entry to write off over- or underapplied overhead always debits ______. Multiple choice question. cost of goods sold applied manufacturing overhead manufacturing overhead control

applied manufacturing overhead

To reduce the risk of firms misrepresenting the cost of jobs on large government jobs, governments usually require a(n) - of financial records.

audit

All of the following are methods used by firms to record manufacturing costs except ______ costing. Multiple choice question. normal actual standard budgeted

budgeted

An account in the general ledger that summarizes a set of subsidiary ledger accounts is a ______ account.

control

Charging costs to the wrong jobs can result in ______. Multiple select question. better pricing cost-plus pricing errors poor decisions

cost-plus pricing errors poor decisions

A firm chooses to allocate overhead cost using a method that provides the most favorable result rather than attempting to find a true allocation base. This practice ______. Multiple select question. could be considered unethical will misrepresent the cost of the job is always considered illegal is acceptable as the allocation of overhead has an arbitrary element

could be considered unethical will misrepresent the cost of the job

A firm chooses to allocate overhead cost using a method that provides the most favorable result rather than attempting to find a true allocation base. This practice ______. Multiple select question. is always considered illegal could be considered unethical will misrepresent the cost of the job is acceptable as the allocation of overhead has an arbitrary element

could be considered unethical will misrepresent the cost of the job

Debits to the Manufacturing Overhead Control are to record all of the following except ______.

direct materials

True or false: Manufacturing overhead is recorded on the job cost sheet when costs are directly incurred.

false

Which of the following is NOT a component of the work-in-process inventory account? Multiple choice question. Finished goods Direct labor Direct materials Manufacturing overhead

finished goods

The cost of a job using job costing is computed as follows: Select an allocation base for computing the predetermined rate(s). Estimate overhead for each overhead cost pool. Calculate the predetermined rate(s) by dividing the estimated overhead by the estimated allocation base. Record direct costs for each job as they are incurred. Apply overhead using the predetermined rates as jobs are completed or when the financial statements are prepared. If there is over- or underapplied overhead, either write it off directly to Cost of Goods Sold or allocate it to Cost of Goods Sold and ending inventories.

in order

Direct materials, work-in-process, and finished goods are assets that are classified as

inventory accounts

In addition to recording current costs, the -- -- -- also provides valuable information when bidding on similar jobs in the future.

job cost sheet

For a firm that uses a single manufacturing overhead account, the journal entry to write off overapplied manufacturing overhead includes a debit to ______.

manufacturing overhead

Improprieties in job costing are caused by all of the following except ______. misrepresenting costs misstating the completion stage charging costs to the wrong jobs miscalculating predetermined overhead rates

miscalculating predetermined overhead rates

Intentionally charging costs to the wrong job ______. Multiple select question. misleads managers who rely on accurate cost information is done to avoid the appearance of cost overruns is always illegal if done to a cost-plus-fee basis client is always unethical

misleads managers who rely on accurate cost information is done to avoid the appearance of cost overruns is always unethical

When the cost of a job is determined by actual direct materials and labor cost plus overhead applied using a predetermined rate and the actual volume of the allocation base, - costing is being used.

normal

Job costing is ______ used in service organizations.

often

If a job is 60% completed but 80% of the total budget has been spent, job supervisors may be tempted to (over / under) estimate the percentage of completion.

over

A major ethical issue for organizations is the accusation of ______ the cost of jobs they are being reimbursed for.

overstating

A complex job that often takes months or years to complete and requires the work of many different departments, divisions, or subcontractors is called a(n)

projects

Bridges, shopping centers, and other jobs that take months or years to complete and involve the work of many are called ______.

projects

Debits to the Manufacturing Overhead Control account reflect ______ of overhead items.

purchases

When applied overhead is more than actual overhead, the journal entry made at the end of the period ______ Cost of Goods Sold.

reduces

The first step in a job costing system is to ______.

select an allocation base

The job cost sheet summarizes all of the following costs except ______. Multiple choice question. direct materials direct labor manufacturing overhead selling and administrative costs

selling and administrative costs

When the cost of a job is determined by budgeted direct materials and labor cost plus overhead applied using an actual rate and a standard (budgeted) allocation base, normal 1Blank ,costing is being used.

standard

An account that records financial transactions for a specific customer, vendor, or job is a(n)

subsidiary ledger account

The predetermined overhead rate is computed in advance based on annual amounts so ______. Multiple select question. the cost of jobs is not distorted erratic daily or monthly costs and production volumes do not affect the calculation of long-run costs the cost of jobs can be calculated as completed the maximum cost is assigned to each job with higher costs assigned in peak months

the cost of jobs is not distorted erratic daily or monthly costs and production volumes do not affect the calculation of long-run costs the cost of jobs can be calculated as completed

Direct materials, direct labor, and manufacturing overhead are components of the -- inventory account.

work-in-progress