Chapter 4 Flashcards
1
Q
Job costing information is used \_\_\_\_\_\_. A) to determine target customers B) to calculate the percentage of completion C) for internal financial reporting D) to enhance public relations
A
C) for internal financial reporting
2
Q
Product costing information will include _____.
A) to increase profits
B) to increase sales and image of the company
C) for cost management
D) for efficient human resource management
A
C) for cost management
3
Q
A \_\_\_\_\_\_\_ is a grouping of individual indirect cost items. A) cost allocation base B) cost assignment C) cost pool D) job-costing system
A
C) cost pool
4
Q
Each indirect-cost pool of a manufacturing firm ______.
A) Utilizes a separate cost-allocation rate
B) is a subset of total direct costs
C) relates to multiple cost centers
D) utilizes the same cost-allocation rate for all costs incurred
A
A) Utilizes a separate cost-allocation rate
5
Q
Directs costs ______.
A) are anything for which a measurement of costs is desired.
B) are costs related to a particular cost object that can be traced to that cost object in a cost-effective manner
C) focus specifically on the costing needs of the CFO
D) are costs related to a particular cost object that cannot be traced to that cost object in a cost-effective manner
A
B) are costs related to a particular cost object that can be traced to that cost object in a cost-effective manner
6
Q
In a costing system, _____.
A) cost tracing allocates indirect costs
B) cost allocation assigns direct costs
C) a cost-allocation base can be either financial or nonfinancial
D) a cost object should be a product and not a department or a geographic territory
A
C) a cost-allocation base can be either financial or nonfinancial
7
Q
Assigning direct costs to a cost object is called \_\_\_\_\_. A) cost allocation B) cost assignment C) cost pooling D) cost tracing
A
D) cost tracing
8
Q
\_\_\_\_\_\_ is the process of distributing indirect costs to products A) Cost allocation B) Job cost recording C) Cost pooling D) Cost tracing
A
A) Cost allocation
9
Q
A \_\_\_\_\_\_ links an indirect cost to a cost object A) cost- allocation base B) Cost Pool C) Cost assignment D) cost tracing
A
A) cost-allocation base
10
Q
Which of the following includes both traced direct costs and allocated indirect costs? A) cost tracing B) cost pools C) cost assignments D) cost allocations
A
C) cost assignments
11
Q
The cost allocation base ____.
A) is a grouping of individual indirect cost items
B) are costs related to a particular cost object that cannot be traced to that cost object in an economically feasible way.
C) is anything for which a measurement of costs is desired
D) is a systematic way to link an indirect cost or group of indirect costs to cost objects
A
D) is a systematic way to link an indirect cost or group of indirect costs to cost objects
12
Q
Direct costs are allocated to the cost object using a cost-allocation method
A
FALSE
13
Q
A cost object is anything for which a measurement of costs is desired.
A
True
14
Q
Direct costs of a cost object are costs related to a particular cost object that can be allocated to that cost object in an economically feasible (cost-effective) way.
A
False
15
Q
The cost-allocation base is a systematic way to link an indirect cost or group of indirect costs to cost objects.
A
True
16
Q
Cost objects maybe be jobs, products, or customers.
A
TRUE
17
Q
The cost driver of an indirect cost is often used as the cost-allocation base.
A
TRUE
18
Q
Process costing is ______.
A) used to enhance employees’ job satisfaction
B) used by businesses to price unique products or identical products produced in batches
C) used by businesses to price identical products
D) used by businesses when manufacturing goods above normal capacity
A
C) used by businesses to price identical products
19
Q
Process costing ________.
A) allocates all products costs, including materials, and labor
B) results in different costs for different units produced
C) is commonly used by general contractors who construct custom-built homes
D) is used exclusively in manufacturing
A
A) allocates all products costs, including materials, and labor
20
Q
Job costing is _______.
A) used by businesses to price identical products
B) used by businesses to price unique products for different jobs
C) used to calculate equivalent units
D) used to calculate the percentage of work completed
A
B) used by businesses to price unique products for different jobs
21
Q
Job costing _______.
A) cannot be used by the service industry.
B) records the flow of costs for each product or service
C) allocates an equal amount of cost to each unit made during a time period.
D) is used when each unit of output is identical
A
B) records the flow of costs for each product or service
22
Q
Job-costing is likely to be used by \_\_\_\_\_\_. A) oil refining companies B) advertising agencies C) postal service companies D) beverage production companies
A
B) advertising agencies
23
Q
Which of the following differentiates job costing from process costing?
A) Job costing is used when each unit of output is identical, and process costing deals with unique products.
B) Job costing is used when each unit of output is identical and not produced in batches, and process costing deals with unique products produced on large scale.
C) Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches.
D) Job costing is used by manufacturing industries, and process costing is used by service industries.
A
C) Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches.
24
Q
Which of the following companies will use a process costing system? A) an oil refining company B) a manufacturer of ships C) a custom watch manufacturer D) an advertising firm
A
A) an oil refining company
25
A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.
True
26
In each period, job costing divides the total cost of producing an identical or similar product produced in batches by the total number of units produced to obtain a per-unit cost.
True
27
Oil refining companies primarily use job costing to estimate costs.
False
28
In a job-costing system the cost object is an individual unit, batch, or lot of a distinct product or service.
True
29
Normal costing is a method of job costing that allocates an indirect cost based on the actual indirect-cost rate times the actual quantity of the cost-allocation base.
False
30
Process costing is used to assign manufacturing costs to unique batches of a product.
False
31
Using job costing in the shipping industry would be more appropriate than process costing.
True
32
Fox Studios, the movie production house, uses process costing to estimate costs.
False
33
Which of the following are reasons for using longer periods, such as a year, to calculate indirect cost rates?
A) shorter the period, the greater is the influence of seasonal patterns on the amount of costs
B) longer the periods, the greater the influence of seasonal patterns on the amount of costs
C) shorter the period, the smaller is the influence of seasonal patterns on the amount of opportunity costs.
D) longer the period, the smaller is the influence of seasonal patterns on the amount of opportunity costs
A) shorter the period, the greater is the influence of seasonal patterns on the amount of costs
34
The actual indirect-cost rate is calculated by __________.
A) dividing actual total indirect costs by the actual total quantity of the cost-allocation base.
B) multiplying actual total quantity indirect costs by the actual total quantity of the cost-allocation base.
C) dividing the actual total quantity of the cost allocation base by actual total indirect costs
D) multiplying the actual total quantity of the cost allocation base by actual total indirect costs
A) dividing actual total indirect costs by the actual total quantity of the cost-allocation base.
35
Actual costing is a costing system that traces direct costs to a cost object by ______.
A) using the budgeted direct cost rates times the budgeted quantities of direct-cost inputs
B) using the actual direct cost rates times the budgeted quantities of the direct-cost inputs
C) using the actual direct rates times the actual quantities of the direct-cost inputs
D) using the budgeted direct cost rates times the actual quantities of the direct cost inputs
C) using the actual direct rates times the actual quantities of the direct-cost inputs
36
An example of a numerator reason for calculating annual indirect-cost rates includes ______.
A) fewer production workdays in a month
B) cost of raw materials purchased
C) higher snow-removal costs during the winter
D) The number of units produced
D) The number of units produced
37
An example of a denominator reason for calculating annual indirect-cost rates includes _______.
A) higher heating bills in the winter
B) semi-annual insurance payments in March and September
C) higher levels of output demanded during the fall months
D) All of these answers are correct
C) higher levels of output demanded during the fall months
38
When calculating indirect cost rates, the longer the time period, the greater the influence of seasonal patterns on the amount of costs.
False
39
Actual prices paid for materials usually serve as actual direct-cost rates for charging material costs to jobs.
True
40
The actual indirect-cost rate is calculated by dividing actual total indirect costs by the budgeted total quantity of the cost-allocation base.
False
41
A job that shows low profitability may be the result of _____.
A) excessive usage of direct materials
B) inefficient direct manufacturing labor
C) overpricing the job
D) insurance claim of the damaged goods
B) inefficient direct manufacturing labor
42
```
For a given job the direct costs associated with the job are ______.
A) actual overhead
B) raw materials
C) sunk costs
D) fixed costs
```
B) raw materials
43
```
Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs:
A. Identify indirect costs
B. Compute the total cost of the job
C. Select cost-allocation bases
D. Compute the indirect cost rate
```
A) ACDB
B) CADB
C) BACD
D) DCAB
B) CADB
44
```
The basic source document for direct manufacturing labor is the _______.
A) job-cost record
B) materials-requisition record
C) labor-time record
D) labor-requisition record
```
C) labor-time record
45
Problems with costing occur when _____.
A) incorrect job numbers are recorded on source documents
B) bar coding is used to record materials used on the job
C) a computer screen requests an employee number before the employee is able to work on information related to a specific job
D) incorrect product delivery forms are entered into the system
A) incorrect job numbers are recorded on source documents
46
The budgeted indirect-cost rate for each cost pool is computed as _______.
A) budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base
B) budgeted annual quantity of cost allocation base divided by budgeted annual indirect costs
C) actual annual indirect costs divided by budgeted annual quantity of cost allocation base
D) budgeted annual indirect costs divided by budgeted actual quantity of cost allocation base.
A) budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base
47
If indirect-cost rates are calculated monthly, distortions might occur because of ________.
A) rental costs paid monthly
B) property tax payments made in July and December
C) routine monthly preventive-maintenance costs that benefit future months
D) salary hikes at the beginning of the financial year
B) property tax payments made in July and December
48
```
In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the _______ allocated to a job.
A) direct materials
B) direct labor
C) manufacturing overhead costs
D) total costs
```
C) manufacturing overhead costs
49
```
A job-cost sheet details the ______.
A) direct materials purchased and paid
B) direct labor costs incurred
C) indirect labor costs incurred
D) actual indirect overhead costs incurred.
```
B) direct labor costs incurred
50
A job-cost record uses information from ______.
A) a materials-requisition record to record raw materials purchases from suppliers
B) a materials-requisition report to record the type and quantity of item received in an order from a supplier
C) a labor-time card to record an employee's wage rate and hours spent on a particular job
D) the bill of materials to ensure the goods are of the prescribed quality
C) a labor-time card to record an employee's wage rate and hours spent on a particular job
51
```
Costs that are subject to short-run fluctuations for given jobs are ______.
A) Actual costs
B) budgeted direct costs
C) budgeted indirect costs
D) normal costs
```
A) actual costs
52
```
An increase in direct labor cost per unit _____.
A) increases the fixed cost
B) increases profits
C) increases the variable cost
D) increases overhead costs
```
C) increases the variable cost
53
If indirect-cost rates were based on actual short-term usage, periods of lower demand would result in lower costs per unit.
False
54
In job costing, only direct costs are used to determine the cost of a job.
False
55
Indirect manufacturing costs should be allocate equally to each job.
False
56
Each cost pool may have multiple cost allocation bases.
False
57
Normal costing is a costing that traces direct costs to a cost object by using the actual direct-cost rates times the actual quantities of the direct-cost inputs.
True
58
Companies often use multiple cost-allocation bases to allocate indirect costs because different indirect costs have different cost drivers.
True
59
A materials-requisition record is an example of a source document.
True
60
All costs other than direct materials and direct manufacturing labor classified as indirect costs.
True
61
To smooth fluctuating levels of output, separate indirect -cost rates should be calculated for each month.
False
62
Grounds-maintenance costs incurred during the summer months will distort indirect-cost rates that are computed monthly.
True
63
One reason for using longer time periods to calculate indirect-cost rates is seasonal cost fluctuations.
True
64
```
The budgeted indirect-cost rate is calculated ______.
A) at the beginning of the year
B) during the year
C) at the end of each quarter
D) at the end of the year
```
A) at the beginning of the year
65
The difference between actual costing and normal costing is ________.
A) normal costing uses actual quantities of direct-costs
B) actual costing uses actual quantities of direct-costs
C) normal costing uses budgeted indirect-costs
D) actual costing uses actual quantities of cost-allocation bases
C) normal costing uses budgeted indirect-costs
66
Which of the following statements about normal costing is true?
A) Direct costs and indirect costs are traced using an actual rate
B) Direct costs and indirect costs are traced using budgeted rates.
C) Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate.
D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.
D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.
67
```
When using a normal costing system, manufacturing overhead is allocated using the manufacturing overhead rate and the ______ quantity of the allocation base.
A) budgeted; actual
B) budgeted; budgeted
C) actual; budgeted
D) actual; actual
```
A) budgeted; actual
68
Which of the following statements about actual costing is true?
A) Manufacturing costs of job are available earlier under actual costing
B) Corrective actions can be implemented sooner under actual costing
C) Actual costing uses budgeted indirect-cost rates calculated annually
D) Actual costing uses actual indirect-cost rates calculated annually.
D) Actual costing uses actual indirect-cost rates calculated annually.
69
When a normal costing system is used, clients using proportionately more full-employees than trainees will _______.
A) be overbilled for actual resources used
B) be underbilled for actual resources used
C) be billed accurately for actual resources used
D) result in an underallocation of direct costs
B) be underbilled for actual resources used
70
Actual costing helps managers get information earlier and take corrective measures to improve labor efficiency.
False
71
The budgeted indirect cost rate is actual indirect costs divided by budgeted quantity of the cost allocation base.
False
72
Direct costs are traced the same way for actual costing and normal costing
True
73
Normal costing assigns indirect costs based on an actual indirect-cost rate.
False
74
A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.
True
75
For normal costing, even though the indirect-cost rate is based on actuals, indirect costs are allocated
to products based on the normal capacity of the cost-allocation base.
False
76
In a normal costing system, the Manufacturing Overhead Control account ________.
A) is increased by allocated manufacturing overhead
B) is credited with amounts transferred to Work-in-Process
C) is decreased by allocated manufacturing overhead
D) is debited with actual overhead costs
D) is debited with actual overhead costs
77
The Materials Control account is increased when ________.
A) direct materials are purchased
B) indirect materials are sold
C) materials are requisitioned for production
D) materials are converted to finished goods
A) direct materials are purchased
78
Which of the following is true of the Work-in-Process Control account?
A) It tracks all direct material purchases.
B) Its balance is the sum of amounts from all in-process individual job-cost records.
C) It is an expense account.
D) It tracks overhead costs in-process from beginning through completion.
B) Its balance is the sum of amounts from all in-process individual job-cost records.
79
Which of the following general ledger accounts will have a subsidiary ledger account?
A) Cost of Goods Sold account
B) Work-in-Process Control account
C) Joe's Accounts Receivable subsidiary account
D) Operating Expenses account
B) Work-in-Process Control account
80
```
Which of the following increases (are debited to) the Work-in-Process Control account?
A) actual plant insurance costs
B) customer services costs
C) marketing expenses
D) direct manufacturing labor costs
```
D) direct manufacturing labor costs
81
```
When direct materials are requisitioned the ________ account is increased.
A) Manufacturing Overhead Control
B) Work-in-Process Control
C) Materials Control
D) Accounts Payable Control
```
B) Work-in-Process Control
82
Payment of the factory rent increases the ________.
A) Work-in-Process Control account
B) Manufacturing Overhead Control account
C) Cost of Goods Sold account
D) Factory Depreciation account
B) Manufacturing Overhead Control account
83
Which of the following is true of plant utility costs?
A) It increases the Materials Control account.
B) It increases the Manufacturing Overhead Control account.
C) It increases the Work-in-Process Control account.
D) It is a direct cost.
B) It increases the Manufacturing Overhead Control account.
84
Actual (rather than allocated) manufacturing overhead costs are first recorded in the ________.
A) Work-in-Process Control account
B) Finished Goods Control account
C) Manufacturing Overhead Control account
D) Cost of Goods Sold account
C) Manufacturing Overhead Control account
85
10) The ending balance in the Work-in-Process Control account represents the costs of all jobs that
________.
A) have not been completed
B) have been completed but not sold
C) have been completed and sold to customers
D) are reported on the income statement
A) have not been completed
86
For externally reported inventory costs, the Work-in-Process Control account is increased (debited) by
________.
A) marketing costs
B) allocated plant utility costs
C) the purchase costs of direct and indirect materials
D) customer-service costs
B) allocated plant utility costs
87
```
Which account is debited if materials costing $100,000 are sold?
A) Revenues account
B) Work-in-Process Control account
C) Materials Control account
D) Cost of Goods Sold account
```
D) Cost of Goods Sold account
88
Which account is credited if direct materials of $20,000 and indirect materials of $3,000 are sent to the
manufacturing plant floor?
A) Manufacturing Overhead Control for $23,000
B) Work-in-Process Control for $23,000
C) Accounts Payable Control for $17,000
D) Materials Control for $23,000
D) Materials Control for $23,000
89
Which of the following items is debited to the Work-in-Process account?
A) allocated manufacturing overhead
B) completed goods transferred out of the plant
C) accumulated depreciation on fixed assets
D) accounts receivable
A) allocated manufacturing overhead
90
Which account would be credited if the following labor wages were incurred in a furniture
manufacturing company?
Assembly workers $20,000
Janitors $10,000
A) Work-in-Process Control, 30,000
B) Manufacturing Overhead Control, 30,000
C) Wages Payable Control, 30,000
D) Accounts Payable Control, 30,000
C) Wages Payable Control, 30,000
91
Manufacturing overhead costs incurred for the month are:
Utilities $30,000
Depreciation on equipment $25,000
Repairs $20,000
Which account is debited assuming utilities and repairs were on account?
A) Manufacturing Overhead Control, 75,000
B) Utilities Overhead Control, 30,000
C) Accumulated Depreciation Control, 25,000
D) Accounts Payable Control, 50,000
A) Manufacturing Overhead Control, 75,000
92
Which of the following statements regarding manufacturing overhead allocation is true?
A) It includes all manufacturing costs that cannot be directly traced to a product or service.
B) The costs can be grouped only as a single indirect-cost pool.
C) Total costs are unknown at the end of the accounting period.
D) Allocated amounts are debited to Manufacturing Overhead Control.
A) It includes all manufacturing costs that cannot be directly traced to a product or service.
93
When a job is complete ________.
A) actual indirect manufacturing labor is excluded from the total cost of the job
B) Finished Goods Control is debited
C) the cost of the job is transferred to Manufacturing Overhead Control
D) it is reduced from Manufacturing Overhead Control account
B) Finished Goods Control is debited
94
```
During an accounting period, job costs are computed on an ongoing basis by the use of ________.
A) actual allocation rates
B) budgeted indirect-cost rates
C) overallocated indirect-cost rates
D) underallocated indirect-cost rates
```
B) budgeted indirect-cost rates
95
The advantage of using normal costing instead of actual costing is ________.
A) indirect costs are assigned at the end of the year when they are known
B) the job cost is more accurate under normal costing
C) indirect costs are assigned to a job on a timely basis
D) normal costing provides a higher gross profit margin
C) indirect costs are assigned to a job on a timely basis
96
Work-in-Process Control will be decreased (credited) for the amount of direct-labor costs incurred.
FALSE
97
The Cost of Goods Sold account tracks job costs from the time jobs are started until they are
completed.
false
98
Purchases of materials are credited to materials control.
FALSE
99
The Salaries Payable Control account has underlying subsidiary ledgers.
TRUE
100
The sum of all entries in underlying subsidiary ledgers equals the total amount in the corresponding
general ledger control accounts.
TRUE
101
In a job-cost system, each indirect-cost pool is clubbed under one account in the general ledger.
FALSE
102
Indirect manufacturing costs are credited to Manufacturing Overhead Control.
FALSE
103
The Finished Goods Control account consists of actual manufacturing overhead costs rather than
allocated manufacturing overhead costs.
FALSE
104
The ending balance in Work-in-Process Control represents the total costs of all jobs that have NOT yet
been completed.
TRUE
105
Direct materials and direct manufacturing labor become a part of work-in-process inventory on the
balance sheet because the direct manufacturing labor transforms the direct materials to another asset,
work-in-process inventory.
TRUE
106
Goods are ready to be sold when their respective costs are debited to work-in-process inventory
FALSE
107
The spreading of underallocated or overallocated overhead among ending work-in-process, finished
goods, and cost of goods sold is called ________.
A) the adjusted allocation rate approach
B) the proration approach
C) the write-off of cost of goods sold approach
D) the weighted-average cost approach
B) the proration approach
108
The method that restates all overhead entries in the general ledger and subsidiary ledgers using actual
cost rates rather than budgeted cost rates is called ________.
A) the adjusted allocation rate approach
B) the proration approach
C) the write-off of cost of goods sold approach
D) the weighted-average cost approach
A) the adjusted allocation rate approach
109
```
When the allocated amount of indirect costs are less than the actual amount, indirect costs have been
________.
A) within budget
B) overallocated
C) underallocated
D) perfectly allocated
```
C) underallocated
110
One reason indirect costs may be overapplied is because ________.
A) the actual allocation base quantity exceeds the budgeted quantity
B) budgeted indirect costs exceed actual indirect costs
C) requisitioned direct materials exceed budgeted material costs
D) Both A and B are correct.
B) budgeted indirect costs exceed actual indirect costs
111
The ________ adjusts individual job-cost records to account for underallocated or overallocated
overhead.
A) adjusted allocation-rate
B) proration approach
C) write-off to cost of goods sold approach
D) weighted-average cost approach
A) adjusted allocation-rate
112
The adjusted allocation approach yields the benefits of ________.
A) timeliness and convenience of normal costing
B) allocating budgeted manufacturing overhead costs at the end of the year
C) write-off to the cost of goods sold approach
D) the proration approach
A) timeliness and convenience of normal costing
113
The approach often used when dealing with small amounts of underallocated or overallocated
overhead is the ________.
A) adjusted allocation-rate approach
B) proration approach
C) write-off to cost of goods sold approach
D) adjusted write-off approach
C) write-off to cost of goods sold approach
114
```
The ________ approach carries the underallocated or overallocated amounts to overhead accounts in
the following year.
A) adjusted allocation-rate
B) proration
C) write-off to cost of goods sold
D) None of these answers are correct.
```
D) None of these answers are correct.
115
A company would use multiple cost-allocation bases ________.
A) if managers believed the benefits exceeded the additional costs of that costing system
B) because there is more than one way to allocate overhead
C) because this is a simpler approach than using one cost allocation base
D) if managers believe that using multiple cost-allocation bases is the only acceptable method
A) if managers believed the benefits exceeded the additional costs of that costing system
116
```
Which account is credited to write off the difference between allocated and actual overhead using the
proration approach?
A) Work-in Process Control
B) Manufacturing Overhead Allocated
C) Finished Goods Control
D) Manufacturing Overhead Control
```
D) Manufacturing Overhead Control
117
Overhead costs allocated each month are expected to equal actual overhead costs incurred each
month.
FALSE
118
When actual indirect costs exceed allocated indirect costs, indirect costs have been underapplied.
TRUE
119
One reason indirect costs may be underapplied is if actual indirect costs are less than budgeted
FALSE
120
The proration approach to allocating overapplied or underapplied overhead adjusts individual jobcost records
FALSE
121
The manufacturing overhead control accounts are closed or become zero at the end of each year.
TRUE
122
Under the proration approach, the sum of the amounts shown in the subsidiary ledgers will not
match the amounts shown in the general ledger because no adjustments from budgeted to actual
manufacturing overhead rates are made in the individual job-cost records
TRUE
123
The actual costs of all individual overhead categories are recorded in the Manufacturing Overhead
Control account.
TRUE
124
Proration is the spreading of underallocated or overallocated overhead among ending work in
process, finished goods, and costs of goods sold.
TRUE
125
It is appropriate for service organizations such as public accounting firms to use job costing.
TRUE
126
In the service sector ________.
A) direct labor costs are always easy to trace to jobs
B) a budgeted direct-labor cost rate may be used to apply direct labor to jobs
C) normal costing may not be used
D) overhead is generally applied using an actual cost-allocation rate
B) a budgeted direct-labor cost rate may be used to apply direct labor to jobs
127
In the service sector, to achieve timely reporting on the profitability of an engagement, a company will
use ________.
A) budgeted rates for all direct costs
B) budgeted rates for indirect costs
C) actual costing
D) budgeted rates for some direct costs and indirect costs
D) budgeted rates for some direct costs and indirect costs
128
The budgeted direct-labor cost rate includes ________.
A) budgeted total costs in indirect cost pool
B) budgeted total direct-labor costs in the denominator
C) budgeted total direct-labor costs in the numerator
D) budgeted total direct-labor hours in the numerator
C) budgeted total direct-labor costs in the numerator
129
A company may choose to use budgeted rates to allocate direct labor accounts if direct labor costs are
difficult to trace to jobs as they are completed.
TRUE
130
In some variations of normal costing, organizations use budgeted rates to assign direct costs as well as
indirect costs to jobs.
TRUE
131
At the end of the year, the direct costs traced to jobs using the budgeted rates will equal actual direct
costs.
FALSE
