ACCT 201B

A company estimates that overhead costs for the next year will be $9,234,000 for indirect labor and $156,800 for factory utilities. The company uses machine hours as its overhead allocation base. If 500,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round to two decimal places)

$18.78

From an ABC perspective, what causes costs to be incurred?

Activities

Manufacturing costs include all of the following except: -administrative -direct labor -direct materials -manufacturing overhead

Administrative

A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.

Common Cost

A job order cost accounting system would best fit the needs of a company that makes:

Custom machinery

________ is sometimes called "touch labor."

Direct Labor

Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product are called ________.

Direct Materials

Property taxes associated with a company's administrative facility are considered ________.

Nonmanufacturing Costs

A job cost sheet shows information about each of the following items except:

The costs incurred by the marketing department in selling the job.

In the equation, Y = a + bX, X represents ________.

The level of activity

Which observation is true of period costs?

They are expenses in the period in which they are incurred

If overhead applied is less than actual overhead, it is:

Underapplied

Labor costs in manufacturing can be:

direct or indirect

Davidson Company has a product with a selling price per unit of $100, the unit variable cost is $60, and the total monthly fixed costs are $30,000. If the company sells 1,000 units, how much is Davidson's contribution margin per unit?

$40 (100-60)

Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equal

$5,000 ($5 x $1,000)

Cost of Goods Sold (COGS)

Beginning inventory + Purchases - Ending Inventory

The traditional income statement uses which of the following cost categories?

COGS and Selling and Administrative Expenses

Adventure Holiday sells thousands of tour packages each month thought its various branches. A branch manager's salary would be a(n) _________ of the branch.

Direct Cost

The overhead cost applied to a job during a period is recorded with a credit to Factory Overhead and a debit to:

Goods in Process Inventory

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of selling a tour package.

Indirect Cost

Which of the following is true of the contribution approach?

It separates costs into fixed and variable categories

Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in

Manufacturing Overhead Costs

The ________ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that the revenue is recognized.

Matching Principle

The potential benefit that is given up when one alternative is selected over another

Opportunity Cost

________ best describe the wages of a sheet metal worker in a fabrication plant.

Product Costs

Differential costs are always

Relevant in making business decisions

Contribution Margin per Unit

Selling Price per Unit - Variable Cost per Unit

If a firm increases its activity level, ________.

Some costs will change, other costs will remain the same (VC will increase, TFC will remain constant)

_________ are always an irrelevant cost.

Sunk Cost

a cost that has already been incurred and that cannot be changed by any decision made now or in the future

Sunk Cost

A fixed cost is a cost which ________.

remains constant in total with changes in the level of activity

In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is paid a monthly salary of $2,500. If the total monthly requirement is 1,300 machine-hours, the total salaried employee expense is ________.

$17,500 (7 welders x $2,500)

Audio Corporation purchased $20,000 of DVDs during the current year. The company had DVD inventory of $15,000 at the beginning of the year. An end of the year audit revealed that the company had DVD inventory of $10,000. The amount that would be reported as cost of goods sold in the income statement for the current year is ________.

$25,000 (15,000+20,000-10,000)

K Company estimates that overhead costs for the next year will be $2,900,000 for indirect labor and $800,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?

$46.25

A difference in costs between any two alternatives

Differential Cost

A difference in revenues between any two alternatives

Differential Revenue

________ is common to both prime cost and conversion cost.

Direct Labor

When factory payroll costs are recorded in a job cost accounting system:

Goods in Process Inventory and Factory Overhead are debited and Factory Payroll is credited.

When raw materials are used in production and are recorded in a job cost system:

Goods in Process and Factory Overhead are debited and Raw Materials Inventory is credited.