ACCT exam 2.4

Fixed costs remain constant at $450,000 per month. During high-output months variable costs are $300,000, and during low-output months variable costs are $125,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 24,000 for high-output months and 5,000 for low-output months?

$300,000 / 24,000 = 12.50 $450,000 / 24,000 = $18.75 ------------------------------ $450,000 / 5,000 = $90.00 $125,000 / 5,000 = 25.00 ----------------------- High Month = $31.25 Low Month = $115.00

For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $300,000 and estimated machine hours are 50,000. The actual manufacturing overhead costs are $420,000 and actual machine hours are 60,000. Using job costing, the 2018 budgeted manufacturing overhead rate is ________. (Round the final answer to the nearest cent.)

$300,000 / 50,000 mh = $6.00 per machine-hour

Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?

$5,400,000 / 30,000 hours = $180.00

) A local accounting firm employs 28 full-time professionals. The budgeted annual compensation per employee is $41,000. The average chargeable time is 430 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis. Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,000, and the firm expects to have 95 clients during the coming year. What is the budgeted indirect-cost rate per hour?

$787,000 / 430 × 95 = $19.27 per hour

Smith and Jones CPA firm employs 12 accountants and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional laborhour?

((Annual salary of each attorney*12)+(Annual salary of each paraprofessional*10)) / Total professional labor-hours

ABC Manufacturing Inc. ends the month with two jobs still in progress. Job 5 has​ $10,000 of​ materials, $2,000 of direct labor and​ $8,000 of manufacturing overhead allocated. Job 6 has​ $30,000 of​ materials, $2,000 of direct labor and​ $12,000 of manufacturing overhead allocated. The cost of goods sold for the month was​ $40,000 and there was no finished goods in stock as the month ended. If the manufacturing overhead was underallocated by​ $10,000, which of the following choices would be the correct way to prorate it based on ending balances before​ proration? (Round any allocation percentages to one decimal​ place, X.X%.)

6,150 of the underallocated manufacturing overhead should be allocated to​ work-in-process

) For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $340,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $450,000 and actual machine hours are 50,000. What is the difference between the budgeted and the actual manufacturing overhead using job costing? (Round interim and the final answer to the nearest cent.)

Budgeted manufacturing overhead rate: $340,000 / 40,000 mh = $8.50 per machine-hour Actual manufacturing overhead is $450,000 / 50,000 = $9.00 per machine hour. Difference is $9.00 - $8.50 = $0.50

Place the following steps in the order suggested by the seven steps used to assign costs to individual​ jobs: A. Identify indirect costs B. Compute the total cost of the job C. Select​ cost-allocation bases D. Compute the indirect cost rate

CADB

The Robinson Corporation manufactures automobile parts. During the year, the company sold $5,600,000 of parts that had a cost of $3,200,000. At year end, these are the balances for cost of goods sold and its manufacturing overhead accounts: Cost of goods sold $3,200,000 Manufacturing overhead allocated $1,400,000 Manufacturing overhead control $1,495,000 What would be the correct journal entry to close out the overhead accounts assuming that the write-of to cost of goods sold approach is used?

Cost of goods sold $95,000 Manufacturing overhead allocated $1,400,000 Manufacturing overhead control $1,495,000

Global Manufacturing Inc. uses normal costing during the year to allocate manufacturing overhead to jobs in a job costing system. At year end, it uses the adjusted allocation rate approach to account for underallocated or overallocated overhead. During 2018, Global's manufacturing overhead was underallocated by 10%. Job 117 had the following costs: Direct materials $1,600 Direct labor $3,400 Manufacturing overhead allocated $2,000 Which of the following would be the after adjustment cost of Job 117?

DM+DL+MOH(%+1)

A manufacturer utilizes three separate indirect cost pools. Which of the following is​ true?

Each indirect cost pool utilizes a separate​ cost-allocation rate

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirectcost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job What amount of manufacturing overhead costs will be allocated to this job?

High school machine hours*company manufacturing overhead / company Machine hours

Franklin Inc. manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2018: The amount of manufacturing overhead allocated to all jobs during June 2018 totals ________.

Indirect - cost rate * hours

________ is used to record and accumulate all the costs assigned to a specific job.

Job-cost record

Actual​ (rather than​ allocated) manufacturing overhead costs are first recorded in the​ ________.

Manufacturing Overhead Control account

Which account is credited if direct materials of $28,000 and indirect materials of $7,000 are sent to the manufacturing plant floor?

Materials Control for $35,000

Which of the following differentiates job costing from process​ costing?

Process costing is used when each unit of output is​ identical, and job costing deals with unique products not produced in batches.

When​ $10,0000 direct materials are​ requisitioned, which of the following would be the correct journal​ entry?

Work-in-Process Control ​$10,000 Materials Control ​ $10,000

In the service sector​ ________.

a budgeted​ direct-labor cost rate may be used to apply direct labor to jobs

Which of the following items is debited to the​ Work-in-Process account?

allocated manufacturing overhead

Process costing​ ________.

allocates all product​ costs, including​ materials, and labor

Elite Stationary employs 20 full - time employees and 10 trainees. Direct and indirect costs are applied on a professional labor - hour basis that includes both employee and trainee hours. Following is information for​ 2018: When a normal costing system is​ used, clients using proportionately more fullminustime employees than trainees will​ ________.

be under billed for actual resources used

Allocating indirect costs to departments based on the relative revenue earned by those departments is done based on which of the following​ criterion?

benefits received

When using a normal costing​ system, manufacturing overhead is allocated using the​ ________ manufacturing overhead rate and the​ ________ quantity of the allocation base.

budgeted; actual

An example of a denominator reason for calculating annual​ indirect-cost rates includes​ ________.

higher levels of output demanded during the fall months

The advantage of using normal costing instead of actual costing is​ ________.

indirect costs are assigned to a job on a timely basis

In a normal costing​ system, the Manufacturing Overhead Control account​ ________.

is debited with actual overhead costs

Apple Valley Corporation uses a job cost system and has two production​ departments, A and B. Budgeted manufacturing costs for the year​ are: Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. For Department A, the manufacturing overhead allocation rate is ________.

manufacturing overhead / Direct Manufacturing Labor

In a​ job-costing system, a manufacturing firm typically uses an​ indirect-cost rate to estimate the​ ________ allocated to a job.

manufacturing overhead costs

Financial Planning Partners Inc., employs 12 full-time CPAs and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: When using a normal costing system, year-end accounting records will show that indirect costs are ________.

overallocated

If​ indirect-cost rates are calculated​ monthly, distortions might occur because of​ ________.

property tax payments made in July and December

Job costing​ ________.

records the flow of costs for each product or service

Which of the following are reasons for using longer​ periods, such as a​ year, to calculate indirect cost​ rates?

shorter the​ period, the greater is the influence of seasonal patterns on the amount of costs

The spreading of underallocated or overallocated overhead among ending​ work-in-process, finished​ goods, and cost of goods sold is called​ ________.

the proration approach