ACCT SB CH 2

Estimated manufacturing overhead $500,000 Estimated direct labor cost $250,000 Actual manufacturing overhead $720,000 Actual direct labor cost $300,000

$2.00 Reason: $500,000 ÷ $250,000 = $2.00 per direct labor dollar

Based on this information, the predetermined overhead rate per direct labor dollar for Dept. B is $

1.35

Based on this information, the predetermined overhead rate per direct labor dollar for Dept. A is

2.60

Which of the following would not be considered a job in a service firm that uses job-order costing?

The tax department in an accounting firm

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.

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 Reason: Actual overhead rates can be calculated at the end of the period.

The predetermined overhead rate is calculated Blank______.

before the period begins

The total cost of a job includes:

direct labor cost. direct materials cost. predetermined manufacturing overhead.

The formula for a predetermined overhead rate is Blank______.

estimated total manufacturing overhead cost ÷ estimated total allocation base

A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total allocation base.

estimated; estimated

Average manufacturing overhead cost per unit usually varies from one period to the next because

fixed manufacturing overhead remains constant in total even when production changes

Compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is Blank______ accurate.

more complex and more

The approach used when overhead is applied to jobs by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the jobs is called ___ costing

normal

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost, and:

predetermined manufacturing overhead cost.

Allocation bases that do not drive overhead costs Blank______.

will not accurately measure the cost of overhead used

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