Chapter 3 Smartbook ACC 2020

The total cost of a job includes:

- applied manufacturing overhead - direct labor cost - direct materials cost

Typical cost drivers include:

- computer time - flight-hours - machine-hours

A job cost sheet contains:

Manufacturing overhead costs charged to the job Materials costs charged to the job Labor costs charged to the job

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing?

The salary of the manager at a hair salon

Underapplied or overapplied overhead is the:

difference between overhead applied to work in progress and actual overhead

Labor costs that are easily traced to a job are called ____________ labor costs.

direct

Categories of manufacturing costs include:

direct materials, direct labor, manufacturing overhead

Companies that make many different products each period use _________-___________.

job-order

Which of the following is only true in a multiple predetermined overhead rate system?

Each production department may have its own predetermined overhead rate.

True or False: The absorption approach to overhead charges products for resources they don't use.

True

Job-Order costing would most likely be used in a(n) ________________.

construction company

When all of a company's job cost sheets are viewed collectively they form what is known as a(n) ________.

subsidiary ledger

Cost-plus pricing occurs when:

A markup percentage is added to the cost of a job

When a company creates overhead rates based on the actions it performs, it is employing an approach called ________________-__________________ costing.

Activity-based

Why do companies use a predetermined overhead rate rather than an actual overhead rate?

An actual overhead rate is not known until the end of the period.

A factor that causes overhead costs is called a:

Cost driver

True or False: Activity based absorption costing only assigns variable manufacturing overhead costs to products.

False

Labor charges that cannot be easily traced to a job are considered:

Indirect labor Manufacturing overhead

Manufacturing overhead:

Is an indirect cost Contains fixed costs Consists of many different types of costs

Compared to a plant wide overhead rate system, a multiple predetermined overhead rate system is:

More complex, but more accurate.

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find:

Overhead applied to the job

Which of the following would be considered direct materials in a service firm that uses job-order costing?

Paperwork at a law firm

The formula for applying overhead to a specific job is:

Predetermined overhead rate x Amount of allocation base incurred by job

When predetermined overhead rates are based on budgeted activity:

Products are charged for resources they don't use Unit product costs fluctuate depending upon budgeted activity

A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because it:

Reflects differences in how overhead costs are incurred within departments.

Which of the following would not be considered a job in a service firm that uses job-order costing?

The tax department in an accounting firm

Which of the following statements are true?

Too much fixed overhead may be applied to products when the predetermined rate is based on estimated activity.

True or False: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

True

True or False: Underapplied or overapplied overhead occurs because overhead is applied to jobs using a predetermined rate based on estimates of costs and activity levels.

True

A bill of materials contains the:

Type of each direct material needed to complete a unit of product. Quantity of each direct material needed to complete a unit or product.

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and _______________________________________________.

applied manufacturing overhead cost

Activity-based absorption costing:

assigns overhead based on the events that consume overhead resources.

The type and quantity of each type of direct material needed to complete a unit of product is listed on the

bill of materials

In a system that uses multiple predetermined overhead rates, overhead is applied:

in each department as jobs proceed through the department.

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the:

job cost sheet

The manufacturing overhead account contains:

many different kinds of indirect costs