ACG4341 Chapter 4 Review

Question 1

Job-cost sheet

Answer 1

Used to record and accumulate all the costs assigned to a specific job, starting when work begins.

Question 2

Source document

Answer 2

An original record used to support journal entries in an accounting system.

Question 3

Materials-requisition record

Answer 3

Obtains information about the cost of direct materials on a specific job for each department.

Question 4

Labor-time sheet

Answer 4

Contains information about labor time used on a specific job and for each department.

Question 5

Calculate actual manufacturing overhead costs of a job with x direct labor hours

Answer 5

Actual annual manufacturing overhead costs / actual annual quantity of the cost-allocation base (labor hours) = actual manufacturing overhead rate
Actual manufacturing overhead rate * x direct labor hours

(allocated = budgeted; budgeted manufacturing overhead / x direct labor hours)

Question 6

Calculate budgeted direct-labor cost rate per direct-labor hour

Answer 6

Total direct-labor costs / total direct-labor hours

Question 7

Proration approach

Answer 7

Spreads under or overallocated overhead among ending WIP inventory, finished goods, and COGS.

Question 8

Adjusted allocation-rate approach

Answer 8

All overhead entries in the general ledger and subsidiary ledgers using actual overhead cost rates rather than budgeted overhead cost rates.

Question 9

Write-off approach

Answer 9

Total under/overallocated manufacturing overhead is included in current year COGS.

Question 10

Job-costing system

Answer 10

Cost object is a unit or multiple units of a distinct product or serviced called a job.

Question 11

Underallocated indirect costs

Answer 11

Occurs when the allocated amount of indirect costs is less than the actual or incurred amount.

Question 12

Journal entry under normal costing system for a job

Answer 12

Debit WIP control (direct materials), manufacturing overhead control (indirect materials)
Credit materials control

Question 13

Criterion for indirect costs assigned using cost drivers

Answer 13

Cause-and-effect relationship between a cost-allocation base and indirect costs; can use benefits received or ability to bear criterion if cost driver cannot be identified.

Question 14

Numerator reason for using longer periods to calculate indirect cost rates

Answer 14

The shorter the period, the greater the influence of seasonal patterns on the amount of costs in a cost pool.

Question 15

Denominator reason for using longer periods to calculate indirect cost rates

Answer 15

Longer periods avoid dissemination of monthly fixed indirect costs over fluctuating levels of monthly output and fluctuating quantities of the cost-allocation base.

Question 16

Material records

Answer 16

Records the quantity of materials received, issued to jobs, and the inventory balances for all materials on a continuous basis.

Question 17

Labor records

Answer 17

Traces costs of direct manufacturing labor to individual jobs and to accumulate the costs of indirect manufacturing labor in the manufacturing department overhead records.

Question 18

Manufacturing department overhead records

Answer 18

Allows managers to view specific details such as overhead costs of direct materials, indirect manufacturing labor, supervision and engineering, plant insurance and utilities, and plant depreciation.

Question 19

Finished goods inventory by jobs

Answer 19

Shows total cost of all jobs completed and transferred to finished goods.