chp 2 acc 252

The total cost of a job includes:

-Direct Materials Cost -Direct Labor Cost -Predetermined Manufacturing Overhead

A job cost sheet contains ______.

-materials costs charged to the job -labor costs charged to the job -manufacturing overhead costs charged to the job

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

The formula for a predetermined overhead rate is ______..

estimated total manufacturing overhead cost ÷ estimated total allocation base

Companies that make many different products each period use _______

job order costing

A SERVICE firm that would most likely use job-order costing is a ______.

law practice

Manufacturing overhead consists of ______.

many different kinds of indirect costs

The unit product cost is the same as the ______.

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

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

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.

Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide predetermined overhead rate based on direct labor-hours, rather than using departmental rates?

Yes

All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under _______ costing

absorption or full

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

bill of materials

Job-order costing would most likely be used in a(n) ______.

construction company

Companies that use job-order costing make ______.

many different products

The average manufacturing overhead cost per unit tends to ______ when the number of units produced fluctuate.

vary from one period to the next Since manufacturing overhead costs do not contain direct material costs, they are not comparable.

Which of the following is only true in a multiple predetermined overhead rate system? 1. Overhead is applied multiple times throughout the period. 2. Each production department may have its own predetermined overhead rate. 3. Multiple types of overhead are included to calculate the predetermined overhead rate.

2. Each production department may have its own predetermined overhead rate. the others are true but only in a plantwide rate system

A cost driver is ______.

a factor that causes overhead costs to occur

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 a(n)

allocation base

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

both variable and fixed

An allocation base should be:

cost driver

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

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.