Exam 16: Cost Concepts and Cost Allocation

The costs of materials used in production are transferred from the Materials Inventory account directly to the Finished Goods Inventory account.

Which of the following is not a reason to classify costs as either product or period costs?

Materials costs flow from the Materials Inventory to the Work in Process Inventory to the Cost of Goods Sold account.

Total manufacturing costs are equal to

Job 29 consists of 300 units and has total manufacturing costs of direct materials,$4,500; direct labor,$7,500; and overhead,$3,600. a. What is the unit product cost? b. What are the prime costs per unit? c. What are the conversion costs per unit?

Factory employees' wages should be incorporated into the Work in Process Inventory account.

Complete the following chart by placing an "X" under the applicable column headings.Classify each cost as a fixed cost or a variable cost and as either a direct or indirect product cost or a period cost.

Standard costing is based on actual direct materials and direct labor plus estimated overhead.

At the end of an accounting period,the balance in the Finished Goods Inventory account is made up of the costs of products completed but not sold as of that date.

Depreciation expense could be

In a manufacturing environment,direct labor costs initially flow

A materials request form is prepared whenever the purchasing department orders materials.

Cost allocation requires pooling of overhead costs and the selection of a cost driver.

Normal costing is the sum of actual direct materials,actual direct labor,and actual overhead.

The following information has been made available to you.Assume that overhead is applied on the basis of direct labor hours. Actual overhead \ 47,400 Estimated overhead \ 48,300 Actual direct labor hours 8,900 Estimated direct labor hours 9,200 a. Compute the predetermined overhead rate. b. Compute overhead applied. c. Compute over- or underapplied overhead (indicate amount and direction). d. Indicate whether cost of goods sold should be increased or decreased to adjust the balance to actual costs.

When a company uses a single predetermined overhead rate to assign overhead to production,only one cost pool is used.

A cost is classified as an overhead cost if it is not directly traceable to an end product or a cost object.

Which of the following documents initiates the purchasing of materials?

Overhead can be traced to products once the products are completed.

Dale,Smith,and Associates,a CPA firm,is trying to determine the hourly cost of its junior accountants in the auditing department.The following data have been gathered. Monthly salaries for 4 juniors @ @3,000 each \ 12,000 Monthly auditing department overhead costs \ 83,160 Average number of hours worked each month 800 Assuming 40 percent of the monthly overhead costs for the auditing department are attributable to the junior accountants,compute the hourly cost of their services.