Accounting 206
Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $26,000 and the ending balance was $48,000. Raw materials purchases during the month totaled $75,000. Manufacturing overhead cost incurred during the month was $117,000, of which $3,200 consisted of raw materials classified as indirect materials. The direct materials cost for May was:
Direct materials cost = Beginning raw materials inventory + Raw materials purchases - Ending raw materials - Indirect materials
A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes direct costs.
False
A job cost sheet is used to record how much a customer pays for the job once the job is completed.
False
Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company.
False
Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job.
False
The challenge in designing an activity-based costing system is to identify all of the activities that explain the variation in overhead costs.
False
The formula for computing the predetermined overhead rate is:Predetermined overhead rate = Estimated total amount of the allocation base ÷ Estimated total manufacturing overhead cost
False
A cost can be direct or indirect. The classification can change if the cost object changes.
True
A fixed cost is not constant per unit of product.
True
An activity cost pool in activity-based costing is a "cost bucket" in which costs related to a particular activity measure are accumulated.
True
An activity measure in activity-based costing expresses how much of an activity is carried out and it is used as the allocation base for assigning overhead costs to products and services.
True
In the Schedule of Cost of Goods Manufactured, Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory.
True
The costs attached to products that have not been sold are included in ending inventory on the balance sheet.
True
The fact that one department may be labor intensive while another department is machine intensive explains in part why multiple predetermined overhead rates are often used in larger companies.
True
