Chapter 2 Practice

a job cost sheet contains

Materials costs charged to the job, manufacturing overhead costs charged to the job, and labor costs charged to the job.

the total cost of a job includes

Total Job Cost = Direct Materials + Direct Labor + Applied Overhead.

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

bill of materials

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

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

840

the adjustment for overapplied overhead

Decreases cost of goods sold and increases net operating income.

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

a normal costing system applies overhead by job by multiplying a __ __ rate by the __ amount of allocation base incurred by the job

Predetermined overhead, actual

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

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

accounting hours

in activity-based absorption costing an activity measure is

an allocation base

overhead application is the process of

assigning manufacturing overhead cost to jobs

activity-based absorption costing

assigns overhead based on events that consume overhead resources

setting up equipment, placing purchase order, and arranging shipments to customers are all examples of ___-level activities.

batch

allocation bases that do not drive overhead costs

cause product costs to be distorted

typical cost drivers include

computer time, machine hours, flight-hours

manufacturing overhead costs

consist of many different items are indirect costs

material requisition forms are used for

controlling the flow of materials into production making journal entries in accounting records

an activity ___ pool relates a single activity measure in the activity-based approach

cost

underapplied or overapplied overhead is the

difference between overhead applied to work in process and actual overhead

labor costs that are easily traced to a job are called ___ labor costs.

direct

activity rate for direct labor support

directlabor support (estimated overhead) / direct labor support (expected activity)

to calculate the unit product cost using the job cost sheet

divide the total job cost by the number of units produced

the formula for a predetermined overhead rate is

estimated manufacturing overhead cost divided by estimated allocation base

predetermined overhead rate per direct labor hour

estimated manufacturing overhead/ estimated direct labor hours

predetermined overhead rate per direct labor dollar for Dept A is

estimating manufacturing overhead / estimated direct labor cost

the united states requires absorption costing for __ financial reports.

external

companies that make any different products each period use ___-____ costing.

job order

a service firm that would most likely use job-order costing is a

law practice

Activity rate

machine setups(over head)/machine setups(expected activity)

categories of manufacturing costs include ___

manufacturing overhead direct labor direct materials

the manufacturing overhead account contains

many different kinds of indirect costs

direct materials costs are recorded on the job cost sheet when the

materials are issued to the job

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

materials requisition form

activity-based absorption costing uses___ cost pools than a traditional approach.

more

a single predetermined overhead rate is called an __ overhead rate.

plantwide

using multiple predetermined overhead rate is

predetermined overhead rate per direct labor hour (Dept A) X direct labor hours hours worked on job ABC (Dept A) + predetermined overhead rate per direct labor hour (Dept B) X direct labor hours hours worked on job ABC (Dept B)

the formula for applying overhead to a specific job is

predetermined overhead rate × amount of allocation base incurred by job

designing and advertising a product are ___-level activities.

product

when all of a company's job cost sheet are viewed collectively, they form what is known as

subsidiary ledger

an hour by hour summary of an employee's activities throughout the day is found on the ___ ___.

time ticket

in the formula y= a + bX, a represents the estimated

total fixed manufacturing overhead cost

what absorption cost system uses a volume-related allocation base for all of the manufacturing costs?

traditional

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

costs assigned to units pf product under absorption costing include

variable and fixed manufacturing

the unit product cost is the same as the

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

direct labor hour is

estimated manufacturing overhead/estimated direct labor hours=3.00 per direct labor hour x 300= $900

manufacturing overhead:

-consists of many different types of costs -is an indirect cost -contains fixed costs

widely used allocation bases in manufacturing are

-direct-labor hours, direct labor cost, units of product (if there is only one product made) or machine hours.

companies assign costs to products and services to

-establish selling prices -value ending inventory -understand product profitability

when predetermined overhead rates are based on budgeted activity

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

in abc, any event that causes consumption of overhead resources is a ____

activity

when a company creates overhead rates based on the actions it performs, it is employing an approach called

activity based

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 an

allocation base

why do companies use a predetermined overhead rate rather than an actual overhead rate

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

the predetermined overhead rate is calculated

before the perid begins