Smartbook Chapter 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 showed that Jones Company spent $4,000 on direct materials and $5,000 on direct labor on the job. What is the total cost of Job #420?

$15,000

SPL Enterprises assigns 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

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 Reason: Total cost of Job #420 = Direct materials + direct labor + overhead (predetermined overhead rate × direct labor cost) = $4,000 + $5,000 + (1.20 × $5,000) = $15,000 Unit product cost = $15,000 ÷ 7,500 units = $2.00

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

$2.60

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 $

$43200

Based on the table, cost of goods sold for July is ______.

$476 Reason: Job W: ($50 + $150 + $200 + $100) ÷ 25 = $20 × 10 = $200 + Job Y: ($70 + $120 + $180 + $90) ÷ 50 = $9.20 × 30 = $276 or $476 total

Based on the table, the finished goods inventory is ______.

$484 Reason: Job W: ($50 + $150 + $200 + $100) ÷ 25 = $20 × 10 = $200 + Job Y: ($70 + $120 + $180 + $90) ÷ 50 = $9.20 × 30 = $276 or $484 total

Based on this information, the overhead applied to Job ABC using multiple predetermined overhead rates is ______.

$64.20

Based on the table, the cost of ending work-in-process is Blank______.

$755 Reason: Job X: $60 + $95 + $130 + $65 = $350 and Job Z: $100 + $80 + $150 + $75 = $405 for a total of $755

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

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

1.35

Based on the table, finished goods inventory at July 31 is $ 2

359

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 ______.

4,000

Based on the table, the cost of goods sold for July is $

566

Based on the table, finished goods inventory at July 31 is $

825

Based on the table, the ending work-in-process on July 31 is $

825

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

840

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

Accounting hours

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

False

Companies that make many different products each period use - costing.

Job order

A single predetermined overhead rate is called a(n) _______ overhead rate.

Plantwide

Which of the following is not a manufacturing cost category?

Selling & administrative costs

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.

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.

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

True

A cost driver is ______.

a factor that causes overhead costs to occur

Cost-plus pricing occurs when ______.

a markup percentage is added to the cost of a job

A normal cost system assigns overhead to jobs using ______.

a predetermined overhead rate

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

absorption

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

Overhead application is the process of Blank______.

assigning manufacturing overhead cost to jobs

Overhead application is the process of ______.

assigning manufacturing overhead cost to jobs

The unit product cost is the same as the ______.

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

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

be common to all the company's products and services

The predetermined overhead rate is calculated ______.

before the period begins

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

bill of materials

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

both variable and fixed

An allocation base is a(n) ______.

common measure used to assign overhead costs to products and services

Manufacturing overhead ______.

contains both fixed and variable costs consists of many different types of costs is an indirect cost

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

cost - plus

decreases both cost of goods sold and

decreases cost of goods sold and increases

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

different

Widely used allocation bases in manufacturing include Blank______.

direct labor hours machine hours direct labor cost units of product

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

divide the total job cost

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

enhanced information for decision making a more accurate accounting of costs

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

enhanced information for decision making a more accurate accounting of costs

To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the ______.

estimated total amount of the allocation

The formula for a predetermined overhead rate is ______.

estimated total manufacturing overhead cost ÷ estimated total allocation base

All hours on computerized time tickets are automatically posted directly to job cost sheets.

false

The adjustment for underapplied overhead ______ net income.

increases cost of goods sold and decreases

Assigning manufacturing overhead to product is complicated because ______.

it is an indirect cost it consists of many types of costs

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the

job cost sheet

A job cost sheet contains ______ the job.

labor costs charged to manufacturing overhead charged to materials costs charged to

Categories of manufacturing costs include ______.

manufacturing overhead, direct materials, direct labor

Companies that use job-order costing make ______.

many different products

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

more

Compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is ______ 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 predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find ______.

overhead applied to the job

When a company assumes that direct labor-hours is the only manufacturing overhead cost driver, the company will choose to use a(n) predetermined overhead rate.

plantwide

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

predetermined overhead rate ×

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

When companies have large amounts of fixed manufacturing overhead, total manufacturing overhead costs tend to Blank______.

remain fairly constant from one period to the next

When a company assumes that direct labor-hours is the only manufacturing overhead cost driver, the company will choose to use a(n) predetermined _______ overhead rate.

single

Overhead application is used to apply overhead costs to jobs ______.

throughout the accounting period

The document that provides an hour-by-hour summary of the employee's activities throughout the day is called a

time ticket

The document that provides an hour-by-hour summary of the employee's activities throughout the day is called a ______.

time ticket

In the formula Y = a + bX, b represents the estimated ______.

variable manufacturing overhead cost per unit

The average manufacturing overhead cost per unit tends to ______.

vary from one period to the next

Allocation bases that do not drive overhead costs ______.

will not accurately measure costs used by jobs