Accounting Chapter 2

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?

$10.00 per machine hour

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job's unit product cost (per audio controller)?

$124

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?

$4,000

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?

$6,200

What is the term used when a company applies less overhead to production than it actually incurs?

Underapplied

[Y = a + bX] means....

Y = Estimated total manufacturing overhead cost a = Estimated total fixed manufacturing overhead cost b = Estimated variable manufacturing overhead cost per unit of the allocation base X = Estimated total amount of the allocation base

Newhard Company assigns overhead cost to jobs on the basis of 119% of direct labor cost. The job cost sheet for Job 313 includes $31,455 in direct materials cost and $10,500 in direct labor cost. A total of 1,650 units were produced in Job 313. Required: a. What is the total manufacturing cost assigned to Job 313? b. What is the unit product cost for Job 313?

a. $54,450 b. $33

The allocation base is a _________ that causes overhead.

cost driver

Companies can improve job cost accuracy by using ________. a plantwide overhead rate direct-labor hours to apply overhead multiple predetermined overhead rates number of units in the job to apply overhead

multiple predetermined overhead rates

The adjustment for overapplied overhead does what to cost of goods sold and net operating income?

decreases cost of goods sold and increases net operating income.

What is an allocation base?

An allocation base, such as direct labor-hours, direct labor dollars, or machine-hours, is used to assign manufacturing overhead to individual jobs

When all of a company's job cost sheets are viewed collectively they form what is known as a

subsidiary ledger

The direct materials required to manufacture each unit of product are listed on a ________. bill of materials materials requisition form materials ticket job order cost sheet

bill of materials

A normal cost system applies overhead to jobs ________. by multiplying a predetermined overhead rate by the estimated amount of the allocation base incurred by the job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job using the actual amount of overhead caused by each job using the normal amount of overhead caused by each job

by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job

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 ________. total manufacturing overhead cost total fixed manufacturing overhead cost variable manufacturing overhead cost per unit of the allocation base total amount of the allocation base

total fixed manufacturing overhead cost