Accounting Chapter 2

Which of the following is only true in a multiple predetermined overhead rate system?

Each production department may have its own predetermined overhead rate.

All hours on computerized time tickets are automatically posted directly to job cost sheets.

False

T/F Activity-based absorption costing only assigns variable manufacturing overhead costs to products.

False

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.

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

True

T/F The absorption approach to overhead charges products for resources they don't use.

True

Cost-plus pricing occurs when Blank______.

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 __________costing.

absorption

In activity-based costing an activity measure is ______.

allocation base

Companies use a predetermined overhead rate rather than an actual overhead rate because _________.

an actual rate is not known until the end of the period

Activity-based absorption costing ______.

assigns overhead based on events that consume overhead resources

Activity-based absorption costing ________.

assigns overhead based on events that consume overhead resources

The type and quantity of each type of direct material needed to complete a unit of product is listed on the ________.

bill of materials

Costs assigned to units of product in absorption costing include ______ manufacturing costs.

both variable and fixed

Categories of manufacturing costs include ______.

direct materials, direct labor, manufacturing overhead

The adjustment for underapplied overhead ________

increases cost of goods sold and decreases net income

Assigning manufacturing overhead to product is complicated because _______.

it consists of many types of costs, it is an indirect cost

Companies that make many different products each period use ______ -______ costing

job - order

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the _____.

job cost sheet

Companies that use job-order costing make ________.

many products

When compared to a departmental approach, using activity-based costing results in _______ overhead rates.

more

The formula for applying overhead to a specific job is:

predetermined overhead rate x amount of allocation base incurred by job.

The document that provides an hour-by-hour summary of the employee's activities throughout the day is called a _________.

time ticket

The unit product cost is the same as the _______.

total job cost divided by number of units average product cost per unit

Manufacturing overhead ________.

is an indirect cost consists of many different types of costs contains both fixed and variable costs

When predetermined overhead rates are based on budgeted activity ______.

products are charged for resources they don't use unit product costs fluctuate depending upon budgeted level of activity

A bill of materials contains the _____.

quantity of each direct material needed to complete a unit of product type of each direct material needed to complete a unit of product

A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because it ______.

reflects differences in how overhead costs are incurred within departments

Allocation bases that do not drive overhead costs _______.

will not accurately measure costs used by jobs