Managerial Accounting Ch. 2
A measure such as direct labor-hours or machine hours used to assign overhead costs to products and services is called a cost driver or a(n)
Allocation Base
Manufacturing overhead consists of ______.
Many different kinds of indirect costs
Which of the following is not a manufacturing cost category?
Selling and Administrative Costs
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
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
The adjustment for overapplied overhead ______
decreases cost of goods sold and increases net income
The adjustment for overapplied overhead ______.
decreases cost of goods sold and increases net operating income.
The adjustment for underapplied overhead ______.
increases cost of goods sold and decreases net income
An allocation base is a(n) ______.
measure of activity used to assign overhead costs to products and services
The formula for applying overhead to a specific job is ______.
predetermined overhead rate × amount of allocation base incurred by job
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.
The process used to assign overhead costs to products is called overhead ____________
Application
An essential quality of an overhead allocation base is that it must ______.
Be common to all the company's products and services
Manufacturing overhead ______
Consists of many different types of costs Is an indirect cost Contains fixed costs
Materials requisition forms are used for
Controlling the flow of materials into production and Making journal entries in accounting records
Labor costs that are easily traced to a job are called ____ labor costs
Direct
Categories of manufacturing costs include
Direct Materials, Direct Labor, and Manufacturing Overhead
The total cost of a job includes ______.
Direct labor cost Applied manufacturing overhead Direct materials cost
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: Job-order costing can only be used in manufacturing firms.
False; used in service industries
The document that records the materials, labor, and manufacturing overhead costs charged to a job is the
Job Cost Sheet
Companies that make many different products each period use
Job-Order Costing
A SERVICE firm that would most likely use job-order costing is a
Law Practice
Labor charges that cannot be easily traced to a job are considered
Manufacturing Overhead
Companies that use job-order costing make
Many different products
The type and quantity of materials to be drawn from the storeroom and the job that will be charged for the materials is specified on the ______
Materials Requisition Form
A job cost sheet contains ______.
Materials costs charged to the job Manufacturing overhead costs charged to the job Labor costs charged to the job.
The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find ______.
Overhead applied to job
A single predetermined overhead rate is called a(n) _________ overhead rate
Plantwide
When all overhead is assigned using direct-labor hours, the company has chosen to use a(n) __________ predetermined overhead rate.
Plantwide or Single
The formula for applying overhead to a specific job is ______
Predetermined overhead rate × amount of allocation base incurred by job
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
True or false: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.
True
The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and ______.
Applied manufacturing overhead cost
Overhead application is the process of ______.
Assigning manufacturing overhead cost to jobs