Managerial Accounting | Chapter 2
The total cost of a job includes:
Direct Labor, direct materials, applied manufacturing overhead
Which of the following is an essential quality of an overhead allocation base?
It must be common to all the company's products and services.
The formula for applying overhead to a specific job is:
Predetermined overhead rate x amount of allocation base incurred by job.
Overhead application is the process of:
assigning manufacturing overhead cost to jobs
Typical cost drivers include:
computer time, machine hours, flight-hours
Materials requisition forms are used for
controlling the flow of materials into production and making journal entries in accounting records.
to calculate a predetermined overhead rate, divide estimated manufacturing overhead by
estimated allocation base
A single predetermined overhead rate is called a ________ overhead rate.
plantwide
________________ hours would not be a good allocation base for manufacturing overhead.
Accounting
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 total cost of a job is calculated by adding the total of direct labor cost, direct material costs and
Applied manufacturing overhead cost
Smith, Inc. uses a job-order costing system with the predetermined overhead rate of $12 per machine-hour. The job cost sheet for Job #42A listed $12,000 in direct labor cost, $18,000 in direct materials cost, 1,200 direct labor-hours and 1,100 machine-hours. The total cost of Job #42A is $43,200. What is the total cost of Job #42A?
Direct materials + Direct Labor + Predetermined overhead rate x Actual machine hours = $18,000 + $12,000 + ($12 per machine-hour x 1, 100 machine-hours) = $43,200.
Companies assign costs to products and services to:
Establish selling prices, value ending inventory, and understand product profitability.
Based on the information, the predetermined overhead rate per direct labor dollar for department B is
Estimated manufacturing overhead / estimated direct labor cost
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.
A cost driver
a factor that causes overhead costs to occur
Cost-plus pricing occurs when:
a markup percentage is added to the cost of a job
The process used to assign overhead costs to products is called overhead __________.
allocation
the process used to assign overhead costs to products is called overhead ________.
allocation
A measure such as direct labor hours, or machine hours that is used to assign overhead costs to products and services
allocation base
The unit product cost is the same as the:
average product cost per unit and the total job cost divided by number of units
A factor that causes overhead costs is called a :
cost driver
Labor costs that are easily traced to a job are called ______ labor costs
direct
The adjustment for underapplied overhead:
increases COGS and decreases net operating income
The document that records the materials, labor, and manufacturing overhead costs charged to a job is:
job cost sheet
companies that make many different products each period use __________ __________ costing
job order
categories of manufacturing costs include
manufacturing overhead, direct materials, direct labor
The manufacturing overhead account contains:
many different kinds of indirect costs.
An allocation base is a(n)
measure of activity used to assign overhead costs to products and services
compared to plantwide overhead rate system, a multiple predetermined overhead rate system is
more complex, more accurate
The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find
overhead applied to the job
The formula for applying overhead to a specific job is
predetermined overhead X amount of allocation base incurred by job
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, represents the estimated:
Total fixed manufacturing overhead cost
The formula y = a + b(x) , X represents the ________________.
X= total amount of the allocation base
All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under ___________ costing
absorption
Manufacturing overhead costs:
are indirect costs and consist of many different items
manufacturing overhead costs:
consist of many different items, contains fixed costs, and are indirect costs
The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find
the overhead applied to the job.
In the formula Y= a + bX, b represents the estimated:
variable manufacturing overhead cost per unit
Factory labor charges that cannot be easily traced to a job are treated as
manufacturing overhead
A normal costing system applies overhead by job my multiplying a ___________ ____________ rate by the _________ amount of the allocation base incurred by the job.
Predetermined overhead, actual
To calculate the unit product cost using the job cost sheet:
divide the total job cost by the number of units produced.
Predetermined overhead rate per direct labor hour
estimated manufacturing overhead (divided by / ) estimated direct labor hours
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
Widely used allocation bases in manufacturing are
direct labor hours, machine hours, direct labor cost, units of product
Total manufacturing overhead costs tend to:
remain fairly constant
A bill of materials contain
quantity of each direct material needed to complete a unit of product and the type of each direct material needed to complete a unit of product.
