Chapter 2 Review

number 10 example

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number 8 example

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Purves Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to:

$12.10 (POHR=estimated total manufacturing overhead/estimated total allocation base) (POHR=121000/10000)

Which of the following would usually be found on a job cost sheet under a normal cost system? 1. YES - actual direct material cost YES - actual manufacturing overhead 2. YES - actual direct material cost NO - actual manufacturing overhead 3. NO - actual direct material cost YES - actual manufacturing overhead 4. NO - actual direct material cost NO - actual manufacturing overhead

2. YES - actual direct material cost NO - actual manufacturing overhead

Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 79,000 machine-hours. The estimated variable manufacturing overhead was $7.38 per machine-hour and the estimated total fixed manufacturing overhead was $2,347,090. The predetermined overhead rate for the recently completed year was closest to:

2347090 + 7.38(79000) = 2930110 / 79000 POHR = 37.09

number 9 example

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Which of the following statements is not correct concerning multiple overhead rate systems? 1. A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate 2. A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate 3. A company may choose to create a separate overhead rate for each of its production departments 4. In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours

In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours

Assigning manufacturing overhead to a specific job is complicated by all of the below except: 1. Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job 2. Manufacturing overhead is incurred only to support some jobs 3. Manufacturing overhead consists of both variable and fixed costs 4. The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period

Manufacturing overhead is incurred only to support some jobs

In a job-order costing system that is based on machine-hours, which of the following formulas is correct? (POHR = ?)

Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours