Acct 285 Ch. 4
Murphy manufacturing estimated total manufacturing overhead for 2015 to be $100,000 and uses direct labor-hours as the allocation base. They estimated that 5,000 hours would be used in 2015. Actual overhead for 2015 was $120,000 and actual direct labor-hours were 7500. How much overhead was applied to a job completed during 2015 that used 200 direct labor-hours?
$4,000. the predetermined overhead rate = 100,000/5,000 direct labor hours = $20 per direct labor-hour. The overhead applied to the job $20 per direct labor-hours x 200 direct labor-hours = 4,000
a company incurred $50,000 in direct labor costs and $35,000 in factory supervisor wages. The transaction would result in a
$50,000 increase on job cost sheets and a $35,000 increase to manufacturing overhead incurred
place these items from the income statement in the order in which they should appear
1. sales 2. cogs 3. gross margin 4. selling and admin expenses 5. net operating income
all manufacturing costs, both fixed and variable, are assigned to products when using __ costing.
absorption
what kind of costing do most companies use in their management reports?
absorption
the process used to assign overhead costs to products is called overhead ___
allocation
the total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and
applied manufacturing overhead cost
the total cost of a job includes
applied manufacturing overhead, direct labor cost, direct materials cost
indirect labor costs
are charged to the manufacturing overhead incurred account
overhead application is the process of
assigning manufacturing overhead cost to jobs
allocation bases that do not drive overhead costs
cause product costs to be distorted
murphy company has 3 departments, and uses a multiple predetermined overhead rate system. Department A manufactures parts in a highly automated process, then department B assembles the parts by hand, department C places completed units in a heat chamber to sterilize them before they are shipped out. Match each department with an appropriate overhead allocation rate
deparment a - machine hours (they are highly automated) department b - direct labor hours (labor-driven) department c - batches (process is applied in batches)
to calculate a predetermined overhead rate, divide estimated manufacturing overhead by
estimated allocation base
t/f job order costing can only be used in manufacturing firms
f
which of the following is a cost that car manufacturers incur that can be directly traced to the product?
factory-installed gps system
completed units that have not yet been sold are found in __ __ inventory
finished goods
what kinds of costs are assigned to units of product in absorption costing?
fixed manufacturing costs variable manufacturing costs
typical cost drivers include
flight-hours, machine-hours, computer time
cost of goods manufactured
includes all manufacturing costs of goods finished during the period
manufacturing overhead
includes some materials and some labor, is an indirect cost, consists of only manufacturing costs
the overhead entered on the job cost sheet ___ the actual amount of overhead caused by the job
is not
a job cost sheet contains
labor costs charged to the job manufacturing overhead costs charged to the job material costs charged to the job
a SERVICE firm that would most likely use job-order costing is a
law practice
widely used allocation bases in manufacturing are
machine hours, direct labor hours, units of product, direct labor cost
manufacturing overhead consists of all
manufacturing costs other than direct labor and direct materials
a predetermined overhead rate is calculated by dividing the __ total manufacturing overhead by the __ total amount of the allocation base
estimated estimated
place the following steps needed to compute the predetermined overhead rate in the order given in the textbook
1. estimate the total amount of the allocation base 2. estime the total fixed manufacturing overhead and variable overhead per unit for the upcoming period 3. estimate the total manufacturing overhead for the upcoming period 4. compute the predetermined overhead rate
the unit product cost is the same as the
average product cost per unit total job cost divided by number of units
an allocation base is a
measure of activity used to assign overhead costs to products and services
compared to a plantwide overhead rate system, a multiple predetermined overhead rate system is
more complex, but more accurate
a normal costing system applies overhead by job by multiplying a __ __ rate by the __ amount of allocation base incurred by the job
predetermined overhead actual
the formula for applying overhead to a specific job is
predetermined overhead rate x amount of allocation base incurred by job
why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced
the cost to produce another unit is the incremental or marginal cost
which of the following is an attribute of companies that use job-order costing
the make many different products
units of product that are only partially complete are contained in __ __ __ inventory
work in process
why have direct labor costs decreased relative to overhead as a component of product costs
products have grown more sophisticated and complex
t/f one reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors
t
actual manufacturing overhead costs are recorded in the Manufacturing overhead account
as they are incurred
to calculate the unit product cost using the job cost sheet
divide the total job cost by the number of units produced
labor charged that cannot be easily traced to a job are considered
manufacturing overhead, indirect labor
The manufacturing overhead account contains
many different kinds of indirect costs
labor costs that are easily traced to a job are called __ labor costs
direct
__ materials are recorded on job cost sheets, and __ materials are charged to the overhead account
direct indirect
how are manufacturing costs that cannot be traced to a particular product assigned to products and services?
by averaging across time and across products