accy 207 chp 2

Jones Company uses a job-order costing system with a predetermined overhead rate of 120% of direct labor cost. The job cost sheet for Job #420 listed $4,000 in direct materials cost and $5,000 in direct labor cost to manufacture 7,500 units. The unit cost of Job #420 is:

$2.00 (Total cost of Job #420 = DM +DL +MOH (predetermined rate x DL cost) = $4,000 +$5,000+ (1.20 x $5,000) = $15,000Unit Product Cost = $15,000/7,500 units = $2.00 per unit.

Company Dept. A Dept B. Estimated manufacturing overhead $500,000 $338,000 $162,000 Estimated direct labor cost $250,000 $130,000 $120,000 Actual manufacturing overhead $720,000 $400,000 $320,000 Actual direct labor cost $300,000 $160,000 $140,000 Based on this information, the predetermined overhead rate per direct labor dollar for Dept. B is $

1.35

SPL Enterprises allocates overhead based on number of machine hours. For the upcoming year, they plan to use a total of 250,000 machine hours and 50,000 direct labor hours. Total overhead cost is expected to be $500,000. The predetermined overhead rate per machine hour is $ 2

2 or two

Company Dept. A Dept B. Estimated manufacturing overhead $500,000 $338,000 $162,000 Estimated direct labor cost $250,000 $130,000 $120,000 Actual manufacturing overhead $720,000 $400,000 $320,000 Actual direct labor cost $300,000 $160,000 $140,000 Based on this information, the predetermined overhead rate per direct labor dollar for Dept. A is Blank______.

2.60

Murphy Manufacturing estimated total manufacturing overhead for the year to be $100,000 and that 5,000 direct-labor hours would be used. Actual overhead was $120,000 and actual direct labor-hours were 7,500. The overhead applied to a job completed during the year that used 200 direct labor-hours was Blank______.

4,000 Reason: The predetermined overhead rate = $100,000 ÷ 5,000 direct labor-hours = $20 per direct labor-hour × 200 direct labor-hours = $4,000.

Predetermined overhead rate per direct labor hour $2.10 $2.40 $1.80 Direct labor hours hours worked on Job ABC 40 18 22 Based on this information, the overhead applied to Job ABC using multiple predetermined overhead rates is 82.80

82.80

Job XYZ has a total manufacturing cost of $600. If the mark-up percentage is 40%, the job will sell for $ 840

840

Based on this information, the amount of overhead allocated to a job that used 300 direct labor hours is $3 Estimated manufacturing overhead $450,000 Estimated direct labor hours 150,000 Actual manufacturing overhead $405,000 Actual direct labor hours 180,000

900

Which of the following would not be a good allocation base for manufacturing overhead?

Accounting hours Reason: Accounting hours are not related to manufacturing.

Which of the following is only true in a multiple predetermined overhead rate system? Multiple types of overhead are included to calculate the predetermined overhead rate. Each production department may have its own predetermined overhead rate. Overhead is applied multiple times throughout the period.

Each production department may have its own predetermined overhead rate.

When a company uses cost-plus pricing, they consider both the costs of production and the desired profit.

False

The process of assigning overhead cost to jobs is called overhead application

Field 1: allocation, application, allocating, allocated, or assignment

Estimating the total amount of the allocation base (the denominator) required for next period's estimated level of production is the Blank______ step in computing the predetermined overhead rate.

First

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

True

An allocation base should be:

a cost driver.

Cost-plus pricing occurs when Blank______.

a markup percentage is added to the cost of a job

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

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

Overhead application is the process of:

applying manufacturing overhead cost to jobs

An essential quality of an overhead allocation base is that it must Blank______.

be common to all the company's products and services

A factor that causes overhead costs is called a Blank______.

cost driver

When a predetermined markup is applied to a base to determine the target selling price, the company is using - pricing.

cost plus

When a company uses a departmental approach rather than a plantwide approach to applying overhead, the selling price of the product will always be Blank______.

different

To calculate the unit product cost using the job cost sheet Blank______ by the number of units produced.

divide the total job cost

The appeal of using predetermined departmental overhead rates is they presumably provide Blank______.

enhanced information for decision making a more accurate accounting of costs

The adjustment for underapplied overhead Blank______.

increases cost of goods sold and decreases net operating income

Typical cost drivers include Blank______.

machine-hours flight-hours computer time

Manufacturing overhead consists of Blank______.

many different kinds of indirect costs

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

more

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

more complex and more

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find Blank______.

overhead applied to the job

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

predetermined manufacturing overhead cost.

The total cost of a job includes:

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

The formula for applying overhead to a specific job is: Blank______ amount of allocation base incurred by job.

predetermined overhead rate ×

Estimating the total fixed manufacturing overhead cost for the coming period and the variable manufacturing overhead cost per unit of the allocation base is the Blank______ step in computing the predetermined overhead rate.

second

A company's job cost sheets provide a Blank______ that summarizes the specific jobs that comprise the amounts reported in Work in Process and Finished Goods on the balance sheet as well as Cost of Goods Sold on the income statement.

subsidiary ledger

A company's job cost sheets provide a(n) ____ ____ that summarizes the specific jobs that comprise the amounts reported in Work in Process and Finished Goods on the balance sheet as well as Cost of Goods Sold on the income statement. (Enter only one word per blank.)

subsidiary ledger

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

the salary of the manager at a hair salon Reason: Correct. This would be considered overhead.

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

Allocation bases that do not drive overhead costs Blank______.

will not accurately measure the cost of overhead used