Chapter 2

Question 1

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable & fixed manufacturing overhead - in the cost of a product.

Answer 1

ABSORPTION COSTING

Question 2

A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects.

Answer 2

ALLOCATION BASE

Question 3

A document that shows the quantity of each type of direct material required to make a product.

Answer 3

BILL OF MATERIALS

Question 4

A factor, such as machine-hours, beds occupied, computer time or flight-hours, that causes overhead costs.

Answer 4

COST DRIVER

Question 5

Units of product that have been completed but not yet sold to customers.

Answer 5

FINISHED GOODS

Question 6

A form that records the materials, labor, and manufacturing overhead costs charged to a job.

Answer 6

JOB COST SHEET

Question 7

A costing system used in situations where many different products, jobs, or services are produced each period.

Answer 7

JOB-ORDER COSTING

Question 8

A document that specifies the type and quantity of materials to be drawn from the storeroom and that identifies the job that will be charged for the cost of those materials.

Answer 8

MATERIALS REQUISITION FORM

Question 9

A costing system with multiple overhead cost pools and a different predetermined overhead rate for each cost pool, rather than a single predetermined overhead rate for the entire company. Each production department may be treated as a separate overhead cost pool.

Answer 9

MULTIPLE PREDETERMINED OVERHEAD RATES

Question 10

A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.

Answer 10

NORMAL COST SYSTEM

Question 11

A credit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost applied to Work In Process exceeds the amount of overhead cost actually incurred during a period.

Answer 11

OVERAPPLIED OVERHEAD

Question 12

The process of charging manufacturing overhead cost to job cost sheets and to the Work in Process account.

Answer 12

OVERHEAD APPLICATION

Question 13

A single predetermined overhead rate used throughout a plant.

Answer 13

PLANTWIDE OVERHEAD RATE

Question 14

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period.

Answer 14

PREDETERMINED OVERHEAD RATE =

est. total manuf. O/H cost / est. total amt. of allocation base

Question 15

Any materials that go into the final product.

Answer 15

RAW MATERIALS

Question 16

A schedule that contains three elements of product cost - direct materials, direct labor, and manufacturing overhead - and that summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods.

Answer 16

SCHEDULE OF COST OF GOODS MANUFACTURED

Question 17

A schedule that contains three elements of product cost - direct materials, direct labor and manufacturing overhead - and that summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.

Answer 17

SCHEDULE OF COST OF GOODS SOLD

Question 18

A document that is used to record the amount of time an employee spends on various activities.

Answer 18

TIME TICKET

Question 19

A debit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost actually incurred exceeds the amount of overhead cost applied to Work in Process during a period.

Answer 19

UNDERAPPLIED OVERHEAD

Question 20

Units of product that are only partially complete and will require further work before they are ready for sale to the customer.

Answer 20

WORK IN PROCESS