Exam 19: Cost Concepts and Cost Allocation

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

Total fixed costs remain constant within a defined time period or range of activity.

Which of the following is a source document for materials?

Product costs could be found on both the balance sheet and the income statement.

Both indirect materials and indirect labor are overhead costs.

Costs that are identified with and traced to one product or a batch of products are called

Fill in the missing data for Company B:

Applied overhead is equal to the overhead rate times the actual cost driver level.

Lopar Company uses a predetermined overhead rate based on direct labor dollars. Lopar Company estimated that its 2010 overhead would total $938,000 and that 2010 direct labor costs would be $670,000. During 2010, actual overhead costs were $960,000, and actual direct labor costs were $700,000. By how much was Lopar's overhead over- or underapplied?

A predetermined overhead rate allows managers to make more timely product pricing decisions.

Calculate the amount of overhead costs applied to production if the predetermined overhead rate is $4 per direct labor hour and 1,200 direct labor hours were worked.

Which of the following labor costs would be included in direct labor?

Overhead has been underapplied when the

A predetermined overhead rate times the amount of activity basis equals the overhead cost assigned to the product.

For a manufactured product, all costs incurred to get the product ready for sale are included in the inventory value of the product.

The three costs in every product are

Consider the following information: direct materials used totaled $134,600; direct labor amounted to $396,800; overhead was computed to be $789,600; Work in Process Inventory on January 1, 2010, was $378,200; and Work in Process Inventory on December 31, 2010, was $385,200. What was the cost of goods manufactured?

Taperno Manufacturing Company has made the following cost estimates for next year: Direct labor \ 90,000 Direct materials 72,000 Indirect labor 19,200 Indirect materials 8,400 Depreciation -factory building 8,200 Depreciation - factory machinery 4,200 Depreciation —office equipment 500 Factory utilities 4,900 Factory property taxes 3,100 Selling expenses 25,000 Miscellaneous overhead costs 5,600 General and administrative expenses 19,000 The company applies overhead based on direct labor hours. The estimated direct labor hours for next year are 16,000 hours. Compute the overhead application rate that will be used to apply overhead during the next year.

Which of the following represents the overhead applied to a product?

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