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ACC 202 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Nonmanufacturing cost

A

administrative cost advertising cost also known as period cost.

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2
Q

The direct materials required to manufacture each unit of product are listed on a ________.

A

bill of materials

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3
Q

In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter “a” refers to the estimated ________.

A

total fixed manufacturing overhead cost

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4
Q

predetermined overhead rate =

A

Estimated total manufacturing overhead cost / estimated total amount of the allocation base.

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5
Q

Predetermined overhead rates

A
  • Depreciation - Utilities - Indirect labor. - Indirect materials.
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6
Q

Allocation base

A

-Direct labor - hours - Direct labor cost - machine hours - Units of product. - manufacturing overhead cost.

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7
Q

Predetermined overhead rates 4 steps :

A

Step 1: Estimate the total amount of the allocation base (the denominator) Step 2: Estimate the total fixed manufacturing overhead cost for the coming period and the variable manufacturing overhead cost per unit of the allocation base. Step 3: Use the cost formula (Y = a + bX) to estimate the total manufacturing overhead cost for the coming period. (the numerator) Step 4: Compute the predetermined overhead rate by diving the numerator by the monitor.

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8
Q

(Y = a + bX)

A

Y = estimated total manufacturing overhead cost. a = estimated total fixed manufacturing overhead cost. b = estimated Variable manufacturing overhead cost per unit of allocation base. X= Estimated Total amount of allocation base.

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9
Q

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?

A

$10.00 per machine hour. (Y = a + bX) a= $300,000 b= $4 X = 50,000 Y= 300,000 + 4(50,000) = 500,000 Estimated total manufacturing overhead cost / estimated total amount of the allocation base. 500,000 / 50,000 = 10

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10
Q

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?

A

$4,000 Predetermined overhead rate = $200,000 ÷ 10,000 DLHs = $20 per DLH For 200 DLHs, the manufacturing overhead that would be applied is = $20 per DLH × 200 DLHs = $4,000

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11
Q

Overhead applied to a particular job =

A

Predetermined Overhead Rate X Amount of the allocation base incurred by the job.

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12
Q

Overhead cost applied to jobs =

A

predetermined overhead rate X actual amount of the allocation base incurred by the jobs

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13
Q

A normal cost system applies overhead to jobs ________.

A

by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job

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14
Q

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?

A

$6,200 Total cost associated with the job = Direct material + Direct labor + Manufacturing overhead applied Total cost associated with the job = $4,000 + $1,200 + ($10 × 100 DLHs) = $6,200

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15
Q

Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job’s unit product cost (per audio controller)?

A

$124 total cost assigned / units = unit product cost (per audio controller). 6,200 / 50 = 124

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16
Q

Companies can improve job cost accuracy by using ________.

A

multiple predetermined overhead rates

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17
Q

What is the estimated total manufacturing overhead in the Assembly Department? Assembly Packaging Direct labor-hours 5,200 62,000 Machine-hours 68,400 11,900 Total fixed manufacturing overhead cost $ 390,000 $ 419,000 Variable manufacturing overhead per DLH $ 3.75 Variable manufacturing overhead per MH $ 3.00

A

$595,200 Estimated total manufacturing overhead = $390,000 + ($3.00 per DLH × 68,400 MHs) = $595,200

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18
Q

What is the predetermined overhead rate for the Packing Department? Assembly Packaging Direct labor-hours 5,200 62,000 Machine-hours 68,400 11,900 Total fixed manufacturing overhead cost $ 390,000 $ 419,000 Variable manufacturing overhead per DLH $ 3.75 Variable manufacturing overhead per MH $ 3.00

A

$10.51 per DLH Predetermined overhead rate = $651,500 ÷ 62,000 DLHs = $10.51 per DLH

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19
Q

What is the term used when a company applies less overhead to production than it actually incurs?

A

Underapplied

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20
Q

The adjustment for overapplied overhead ________.

A

decreases cost of goods sold and increases net operating income.

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21
Q

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

A

subsidiary ledger

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22
Q

Underapplied or overapplied overhead is the:

A

difference between overhead applied to work in process and actual overhead.

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23
Q

The adjustment for underapplied overhead :

A

increases cost of goods sold and decreases net income

24
Q

Costs assigned to units of product under absorption costing include:

A
  • fixed manufacturing - variable manufacturing
25
Q

Companies that make many different products each period use ____ - _____ costing.

A

job order

26
Q

True or false: Job-order costing can only be used in manfucaturing firms.

A

false

27
Q

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) _______ ________.

A

allocation base.

28
Q

Which of the following would not be a good allocation base for manufacturing overhead? - Direct labor hours -Machine hours - Units of product - Accounting hours

A

accounting hours.

29
Q

To calculate a predetermined overhead rate, divide estimated manufacturing overhead by:

A

estimated allocation base.

30
Q

The predetermined overhead rate is calculated:

A

before the period begins.

31
Q

Overhead application is the process of:

A

assigning manufacturing overhead to jobs.

32
Q

In the formula y=a+bX, b represents the estimated:

A

variable manufacturing overhead cost per unit.

33
Q

The formula for applying overhead to a specific job is:

A

Predetermined overhead rate x Amount of allocation base incurred by job.

34
Q
A

900.

450,000 / 150,000 = $3.00 per direct labor hour x 300 = $900.

35
Q

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

A

True

36
Q

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

A

applied manufacturing overhead cost.

37
Q

The process used to assign overhead costs to products is called overhead ______.

A

application (overhead allocation)

38
Q

The predetermiend overhead rate is multipled by the actual allocation base incurred by a job to find :

A

overhead applied to the job.

39
Q
A

$4000

Explanation:

The predetermined overhead rate = $100,000/5,000 direct labor hours = $20 per direct labor hour. The overhead applied to the job = $20 per direct labor hours x 200 direct labor hours = $4000

40
Q

Estimated manufacturing overhead = 450,000

Estimated direct labor hours = 150,000

Actual manufacturing overhead = $405,000

Actual direct labor hours = 180,000

Based on this information, the amount of overhead allocated to a job that used 300 direct labor hours is $______.

A

$450,000 / 150,000 = $3.00 per direct labor hour x 300 = $900.

41
Q
A
42
Q

Manufacturing overhead costs:

A
  • consists of many different items
  • are an indirect costs.
43
Q

Categories of manufacturing costs include:

A
  • manufacturing overhead
  • direct materials
  • direct labor.
44
Q

A bill of materials contains the

A
  • type of each direct material needed to complete a unit of product
  • quantity of each direct material needed to complete a unit of product.
45
Q

Materials requisitions forms are used for:

A
  • making journal entries in accounting records
  • controlling the flow of materials into production.
46
Q

A job cost sheet contains:

A
  • labor costs changed to the job
  • manufacturing overhead costs charged to the job
  • materials costs charged to the job.
47
Q

Direct materials costs are recorded on the job cost sheet when the:

A

materials are issued to the job.

48
Q

The document used to record the time workers spend on each job and task is called a:

A

time ticket

49
Q

To keep track of labor time and cost, many firms have replaced:

A

paper with computerized system

50
Q

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

A

bill of materials.

51
Q

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

A

materials requisition form.

52
Q

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

A

job cost sheet.

53
Q

Barcodes can be used to”:

A

automatically record and post direct labor costs to jobs.

54
Q

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

A

direct

55
Q

Manufacturing overhead:

A
  • consists of many different types of costs
  • is an indirect cost
  • contains fixed costs
56
Q

Typical cost drivers include:

A
  • flight hours
  • machine hours
  • computer time.
57
Q

Job XYZ has a total manufacturing cost of $600. If the markup percentage is 40%, the job will sell for $____.

A

840.

ACC 202 (11 decks)

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