ACC 202 Chapter 1&2 HW
The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?
$10 per machine hour
In May, direct labor was 20% of conversion cost. If the manufacturing overhead for the month was $162,400 and the direct materials cost was $21,700, the direct labor cost was:
$40,600
Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equals ________.
$5,000
adjustment for overapplied overhead decreases or increases COGS and net operating income?
Decreases costs of goods sold and increases net operating income
T/F an opportunity cost cannot be changed by any decision made now or in the future
False
The ____ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that revenue is recognized
Matching principle
Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?
Predetermined overhead rate = $200,000 ÷ 10,000 DLHs = $20 per DLH For 200 DLHs, the manufacturing overhead that would be applied is = $20 per DLH × 200 DLHs = $4,000
what will happen to cost if a firm increases its activity level
Some costs will change, other costs will reman the same
What does the Y in the Y=a+bX stand for
The estimated total amount of manufacturing overhead cost
Unit Product Cost
Total product cost / number of units
What does the B in the cost formula (Y=a+bX) mean?
Variable manufacturing overhead
What is a sunk cost?
a cost that has already occurred and cannot be recovered
The direct materials required to manufacture each unit of product are listed on a
bill of materials
A normal cost system applies overhead to jobs ________.
by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job
mixed costs
costs that have both a fixed and a variable component
fixed costs
costs that remain constant as output changes
What is common to both prime cost and conversion cost
direct labor
________ is sometimes called "touch labor."
direct labor
Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product
direct materials
Manufacturing costs include _____
direct materials, direct labor, manufacturing overhead
Predetermined Overhead Rate
estimated total manufacturing overhead cost/estimated total amount of the allocation base
Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.
manufacturing overhead costs
Companies can improve job cost accuracy by using ________.
multiple predetermined overhead rates
Property taxes associated with a company's administrative facility are considered _____
nonmanufacturing costs
How should the wages of a sheet metal worker in a fabrication plant be classified?
product cost
A fixed cost is a cost which
remains constant in total with changes in the level of activity
When all of a company's job cost sheets are viewed collectively they form what is known as a ________.
subsidiary ledger
What is always an irrelevant cost
sunk cost
In the equation, Y=a+bX, X represents
the level of activity
What is opportunity cost?
the loss of potential gain from other alternatives when one alternative is chosen.
In the cost formula (Y=a+bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ___
the total fixed overhead cost
What is the term used when a company applies less overhead to production than it actually incurs?
underapplied