Exam 19: Cost Concepts and Cost Allocation

By using a predetermined overhead rate and an allocation base, such as direct labor dollars or hours, one can assign overhead costs by debiting the Overhead account and crediting the Work in Process Inventory account.

Product unit cost comprises only direct materials and direct labor costs.

Indirect costs can be conveniently traced to a cost object.

Total manufacturing costs increase which of the following accounts?

Period costs are not considered when costing products for inventory.

Cost allocation is the process of assigning which of the following costs to specific cost objects?

Yamishi Production had the following inventories for the first quarter of 20xx: Beginning Ending Materials \ 606,600 \ 522,100 Work in process 312,100 280,800 Finished goods 416,100 540,200 Purchases of materials during the quarter were $427,800. Total direct labor costs were incurred in the amount of $1,482,000. Actual overhead costs were incurred as follows: operating supplies used, $17,100; janitorial and maintenance, $87,300; employee benefits, $26,400; utilities, $162,000; depreciation of factory, $43,200; property taxes, $24,000; factory insurance, $29,000. Net sales for the quarter were $3,562,200. Selling and administrative expenses were $508,000. Income taxes should be computed at 40 percent. Prepare a statement of cost of goods manufactured for the first quarter of 20xx.

All labor costs can be directly traced to finished products.

The costs listed below are related to a manufacturer of all-natural ice cream. In the space provided, indicate whether the cost should be classified as direct materials (DM), direct labor (DL), or overhead (OH). _____ a. Maintenance on factory building _____ b. Cream _____ c. Mixing department wages _____ d. Vanilla _____ e. Factory supervisor's salary _____ _____ f. Machine oil for mixing machines _____ g. Sugar _____ h. Machine operator wages _____ i. Factory maintenance labor _____ j. Depreciation on factory equipment

Cost of goods manufactured appears on the income statement of a manufacturing company in a similar manner as purchases appear on the income statement of a merchandising company.

Variable costs per unit change in an inversely proportional rate to changes in volume.

As actual overhead costs are incurred, the Overhead account is debited.

Identify the document needed to support each of the following activities in a manufacturing organization: __________ a. Placing an order for direct materials with a supplier __________ b. Recording direct labor time at the beginning and end of each work shift __________ c. Issuing direct materials into production __________ d. Recording the costs of a specific job requiring direct materials, direct labor, and overhead __________ e. Billing a customer for a completed order __________ __________ f. Receiving direct materials at the dock

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. 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.

Which of the following represents normal cost measurement?

The product costs that appear in the financial statements are actual product costs.

From Jolier's year-end income statement, you observe that the finished goods inventory has doubled during the year. This would indicate that during the year Jolier

If the estimated cost driver level is overstated, the

The overhead rate is equal to the total estimated overhead costs divided by the actual cost driver level.

Which of the following accounts would be adjusted by the disposal of an immaterial amount of overapplied overhead?