ACC112 Exam 1 Review
Direct labor cost is classified as:
conversion and prime cost
Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory? A) The cost of the glue in a chair B) The amount paid to the individual who stains a chair. C) The workman's compensation insurance of the supervisor who oversees production. D) The factory utilities of the department in which production takes place.
B) The amount paid to the individual who stains a chair.
The term that refers to costs incurred in the past that are not relevant to a decision is:
sunk cost
Which of the following is NOT a period cost? A) Depreciation of factory maintenance equipment. B) Salary of a clerk who handles customer billing. C) Insurance on a company showroom where customers can view new products. D) Cost of a seminar concerning tax law updates that was attended by the company's controller.
A) Depreciation of factory maintenance equipment.
Product Costs
All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead.
Which of the following is an example of a period cost in a company that makes clothing? A) Fabric used to produce men's pants. B) Advertising cost for a new line of clothing. C) Factory supervisor's salary. D) Monthly depreciation on production equipment.
B) Advertising cost for a new line of clothing.
In a job-order costing system that is based on machine-hours, which of the following formulas is correct?
Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours
The following costs were incurred in May: Direct materials $33,000 Direct labor $13,000 Manufacturing overhead $23,000 Selling expenses $16,000 Administrative expenses $34,000 Prime costs during the month totaled:
Prime Cost = DM + DL = 33,000 + 13,000 = 46,000
In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the "Total raw materials available" is computed by adding together the "Beginning raw materials inventory" and:
Purchases of raw materials
Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Direct materials $ 6,000 Direct labor $ 20,000 Rent on factory building $ 15,000 Sales salaries $ 25,000 Depreciation on factory equipment $ 8,000 Indirect labor $ 12,000 Production supervisor's salary $ 15,000 Johansen estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:
Total OH/DL Hours Total OH = Rent + Depreciation + IL + Production supervisor salary Total OH = 15,000 + 8,000 + 12,000 + 15,000 = 50,000 POHR = 50,000/20,000 = $2.50 per direct labor-hour
Which costs will change with a decrease in activity within the relevant range?
Unit fixed costs and total variable cost.
Assembling a product is an example of a:
Unit-level activity
In a job-order costing system, manufacturing overhead applied is recorded as a debit to:
Work in Process inventory.
The salary paid to the president of a company would be classified on the income statement as a(n):
administrative expense
Direct costs
can be easily traced to a particular cost object.
Period Costs
costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued
In activity-based costing, the total activity in an activity cost pool can be computed by
dividing the total overhead cost in the activity cost pool by the activity cost pool's activity rate.
Overapplied manufacturing overhead would result if:
manufacturing overhead costs incurred were less than manufacturing overhead costs charged to production.
