Ch 3

Question 1

predetermined overhead rate formula

Answer 1

formula = (estimated OH / total estimated allocation or cost driver)

Question 2

A(n) ________ is an estimated manufacturing overhead rate computed during the year.

Answer 2

predetermined manufacturing overhead rate

Question 3

The end goal of process costing and job costing at a manufacturing company is the same: to find the cost of producing one unit of product.

Answer 3

true

Question 4

When used, raw materials

Answer 4

cannot be determined with the information provided

Question 5

The two basic types of costing systems are

Answer 5

job costing and process costing

Question 6

Job costing should only be used by manufacturers.

Answer 6

false

firms, anyone

Question 7

Which product costing system would be better for custom-order products?

Answer 7

Job costing system

distinct job

Question 8

Manufacturers follow four steps to implement a manufacturing overhead allocation system. Which step is not performed before the year begins?

Answer 8

Allocate some manufacturing overhead to each individual job

are performed:

• Select an allocation base and estimate the total amount that will be used during the year
• Calculate a predetermined manufacturing overhead rate
• Estimate total manufacturing overhead costs for the coming year

Question 9

A manufacturer of plywood would use what type of product costing system?

Answer 9

Process costing

// diet coke, to products that are homogenous in nature and can distinguish one from another

Question 10

Which product costing system would better account for a unique product?

Answer 10

Job costing system

Question 11

Job 365 has an ending balance of $28,500. The overhead rate is 80% of direct labor. It has been charged manufacturing overhead costs of $7,000. What was the amount of direct materials charged to the job?

Answer 11

$12,750

// 80% (X) = $7,000
X = $8,750
Then $28,500 - 7,000 - 8,750 = $12,750

Question 12

Manufacturing overhead has an underallocated balance of $12,000; raw materials inventory balance is $145,000; work in process inventory is $122,000; finished goods inventory is $140,000; and cost of goods sold is $170,000. After adjusting for the underallocated manufacturing overhead, what is cost of goods sold?

Answer 12

$182,000

/// $170,000 + 12,000 = $182,000

Question 13

Nemec Manufacturing uses job costing. In May, material requisitions were $44,000 ($39,000 of these were direct materials), and raw material purchases were $60,000. The end of month balance in raw materials inventory was $24,300. What was the beginning raw materials inventory balance?

Answer 13

$8,300

// RM BB + $60,000 - $44,000 = $24,300

$60,000 - $44,000 - $24,300 = -RM BB

-$8,300 = -RM BB

RM BB = $8,300