Accounting 2: Chapter 2-3
Work in process and Manufacturing overhead
only direct
The average manufacturing overhead cost per unit tends to Blank______.
vary from one period to the next
A bill of materials contains the ______.
-type of each direct material needed to complete a unit of product -quantity of each direct material needed to complete a unit of product
Which of the following costs are charged directly to the income statement?
Administrative costs Selling costs
A measure such as direct labor-hours or machine hours used to assign overhead costs to products and services is called a cost driver or a(n)
Allocation Base/Driver
The process used to assign overhead costs to products is called overhead____.
Application
Overhead application is the process of Blank______.
Assigning manufacturing overhead cost to jobs
The type and quantity of each type of direct material needed to complete a unit of product is listed on the Blank______.
Bill of materials
Direct labor and overhead costs incurred to change raw materials into finished products are known as _____ costs.
Conversion
Prime costs include ______
Direct materials and direct labor
True or false: All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.
False
When a company uses cost-plus pricing, they consider both the costs of production and the desired profit.
False
Himber, Inc. just completed a job that cost $14,000 in direct materials, $12,000 in direct labor, and $8,000 in applied manufacturing overhead. The journal entry to record completion of the job debits ______
Finished goods $34,000 and credits Work in process $34,000
An hour-by-hour summary of an employee's activities throughout the day is found on the
Time ticket
One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.
True
A cost driver is ______.
a factor that causes overhead costs to occur
Cost-plus pricing occurs when ______.
a markup percentage is added to the cost of a job
All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under
absorption or full
A journal entry debiting Salaries expense and crediting Salaries and wages payable could be recording ______.
administrative salaries
To calculate total manufacturing costs, add direct materials, direct labor and ______.
applied manufacturing overhead
Actual manufacturing overhead costs are recorded in the Manufacturing Overhead account ______.
as they are incurred
Costs assigned to units of product in absorption costing include ______ manufacturing costs.
both variable and fixed
Materials requisition forms are used for ______.
controlling the flow of materials into production making journal entries in accounting records
Selling and administrative costs are ______ costs.
direct or indirect
The formula for a predetermined overhead rate is ______.
estimated total manufacturing overhead cost ÷ estimated total allocation base
Other names for manufacturing overhead include ______.
factory burden, factory overhead, indirect manufacturing costs
Selling and administrative costs first appear on the ______.
income statement
Manufacturing overhead costs include ______.
indirect materials, factory supervisors' salaries, and factory depreciation
A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.
manufacturing overhead, indirect materials
Companies that use job-order costing make ______.
many different products
A job cost sheet contains ______ the job.
materials costs charged to manufacturing overhead charged to labor costs charged to
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 Blank______.
materials requisition form
When labor costs are incurred, _________ labor costs are added directly to the Work in Process account.
only direct
The total cost of a job includes:
predetermined manufacturing overhead. direct labor cost. direct materials cost.
Nonmanufacturing costs include ______.
sales commissions company president's salary
Selling costs include ______.
sales salaries, sales commissions, and advertising
Cost of goods manufactured is the ______.
sum of all jobs transferred from Work in process to Finished goods
The transfer of costs from one inventory account to the next parallels the physical transfer of goods from one inventory to the next.
true
When only a portion of the units involved in a job are sold, the ______.
unit product cost is used to calculate the amount transferred from finished goods to cost of goods sold
When a job is completed, the job costs are transferred OUT OF ______.
work in process
Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs.
Indirect
Minor cheap items such as nails and glue are usually considered to be
Indirect Costs
The journal entry to record $10,000 in manufacturing overhead applied to Job #40 debits ______.
Work in process $10,000 and credits Manufacturing overhead $10,000
The journal entry to record issuing both direct and indirect materials into production debits ______.
Work in process and Manufacturing overhead
An essential quality of an overhead allocation base is that it must ______.
be common to all the company's products and services
Widely used allocation bases in manufacturing include ______.
direct labor hours direct labor cost machine hours units of product
Costs assigned to units of product under absorption costing include:
fixed manufacturing and variable manufacturing.
In a system that uses multiple predetermined overhead rates, overhead is applied ______.
in each department as jobs proceed through the department
Labor charges that cannot be easily traced to a job are considered Blank______.
manufacturing overhead indirect labor
Costs assigned to units of product under absorption costing include:
variable manufacturing. fixed manufacturing.
The document that records the materials, labor, and manufacturing overhead costs charged to a job is the Blank______.
Job cost sheet
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as?
Manufacturing overhead
Which of the following is a clearing account?
Manufacturing overhead
Factory burden is a synonym for?
Manufacturing/Factory Overhead
Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced?
The unit product cost is an average, not an incremental cost.
A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction debits ______.
Work in process $40,000, debits Manufacturing overhead $30,000 and credits Raw materials $70,000
The predetermined overhead rate is calculated ______.
before the period begins
Categories of manufacturing costs include ______.
direct materials, direct labor, manufacturing overhead
Average manufacturing overhead cost per unit usually varies from one period to the next because Blank______.
fixed manufacturing overhead remains constant in total even when production changes
When all overhead is assigned using direct-labor hours, the company has chosen to use a(n) ______ predetermined overhead
plantwide/single
In the formula Y = a + bX, X represents the estimated ______.
total amount of the allocation base
In the formula Y = a + bX, b represents the estimated ______.
variable manufacturing overhead cost per unit