Question 1

An overhead application rate is computed by dividing the actual overhead costs by the expected amount of units in the activity base.

Accepted Answer

A) True 
 B)False

Question 2

Accounting terminology
Listed below are nine technical accounting terms introduced or emphasized in this chapter:   Each of the following statements may (or may not)describe one of these technical terms.In the space provided below each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms.
_____ (a)The balance remaining in the Manufacturing Overhead account when the overhead application rate used during the period is too low.
_____ (b)The account credited as component parts are transferred into production.
_____ (c)A schedule used to accumulate manufacturing costs and to determine the unit costs associated with a specific customer's order.
_____ (d)The inventory account credited when the cost of goods sold is recorded.
_____ (e)The type of cost accounting system most likely used by an oil refinery engaged in the continuous production of petroleum products.
_____ (f)The inventory account debited when manufacturing cost accounts (such as Direct Labor or Materials Inventory)are credited.
_____ (g)The type of cost accounting system likely to be used by a machine shop that manufactures items to the specifications provided by its customers.

Accepted Answer

(a)Under-applied overhead (b)M

Question 3

The account Work in Process Inventory:

Accepted Answer

A) Consists of completed goods that have not yet been sold. 
B) Consists of goods being manufactured that are incomplete. 
C) Consists of materials to be used in the production process. 
D) Consists of the cost of new materials used,labor but not overhead. 
A) Consists of completed goods that have not yet been sold. 
B) Consists of goods being manufactured that are incomplete. 
C) Consists of materials to be used in the production process. 
D) Consists of the cost of new materials used,labor but not overhead.

Question 4

What are the total manufacturing overhead costs allocated to the Strollers for the current month?

Accepted Answer

A) $69,837. 
B) $102,873. 
C) $37,290. 
D) $210,000. 
A) $69,837. 
B) $102,873. 
C) $37,290. 
D) $210,000.

Question 5

The document that provides information for the cost of goods manufactured is:

Accepted Answer

A) The job cost sheet. 
B) Time cards. 
C) Material requisition. 
D) Payroll check. 
A) The job cost sheet. 
B) Time cards. 
C) Material requisition. 
D) Payroll check.

Question 6

A debit balance in the Manufacturing Overhead account at the end of the period indicates that overhead has been under-applied to jobs.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is true about activity-based costing?

Accepted Answer

A) Only one activity should be used for a company. 
B) Many different activity bases are used in applying overhead. 
C) There can only be one cost driver. 
D) Direct materials and direct labor are applied to work-in-process based upon cost drivers. 
A) Only one activity should be used for a company. 
B) Many different activity bases are used in applying overhead. 
C) There can only be one cost driver. 
D) Direct materials and direct labor are applied to work-in-process based upon cost drivers.

Question 8

Langdon Company manufactures custom designed toy sailboats.The company uses a job order costing system.Overhead is applied based on direct labor hours.Estimated overhead for 2015 is $11,840 and the company estimates it will use 7,400 direct labor hours.The following events occurred in March.
(a.)The company purchased materials for $800 on account.
(b.)The production supervisor requisitioned 15 sheets of fiberglass for constructing the boats.The fiberglass was in stock and originally cost $3 a sheet.
(c.)Direct labor on the boats cost $500.
(d.)More materials were purchased for $350 on account.
(e.)Indirect labor costs were $210.
(f.)A utility bill for the boat factory was $230 and was paid in cash.
(g.)A repair bill for the salesman's car was $75 and will be paid next month.
(h.)Additional materials were placed into production which cost $215.
(i.)Manufacturing overhead was applied (direct labor during March totaled 500 hours).
(j.)One sailboat was completed which cost $325.
(k.)The completed sailboat was sold for $750.Record the sale and the cost of sale.
Required:
(1.)Determine the overhead application rate.
(2.)Prepare journal entries for the above transactions.
(3.)What is the cost of the remaining Work in Process?

Accepted Answer

(1.)$1.60 (2.)Journa

Question 9

Management can compute the per-unit cost of finished goods accurately only when a job order cost system is in use.

Accepted Answer

A) True 
 B)False

Question 10

The advantage of using a predetermined overhead application rate is that:

Accepted Answer

A) Units produced are charged with a "normal" amount of manufacturing overhead regardless of whether they are produced in a high-volume month or a low-volume month. 
B) Overhead costs will be limited to the predetermined amount. 
C) Entries need not be made to record actual overhead costs incurred. 
D) The unit cost of production will be lower than it would be if actual overhead costs were assigned to units produced. 
A) Units produced are charged with a "normal" amount of manufacturing overhead regardless of whether they are produced in a high-volume month or a low-volume month. 
B) Overhead costs will be limited to the predetermined amount. 
C) Entries need not be made to record actual overhead costs incurred. 
D) The unit cost of production will be lower than it would be if actual overhead costs were assigned to units produced.

Question 11

Metalworks employs 3 assembly workers that,on average,each work 40 hours per week and earn $9 per hour.During the current accounting period,Job #543 consumed 77 hours of direct labor totaling $693.
77 direct labor hours × $9 = $693.

Accepted Answer

A) True 
 B)False

Question 12

Pepsi Cola would most likely use a job order costing system.

Accepted Answer

A) True 
 B)False

Question 13

Management uses a cost accounting system to evaluate and reward employee performance.

Accepted Answer

A) True 
 B)False

Question 14

What are the setup costs allocated to Strollers during the current month?

Accepted Answer

A) $9,036. 
B) $6,502. 
C) $14,458. 
D) Cannot be determineD.$30,000 setup costs/83 total production runs × 40 production runs attributed to Strollers = $14,458 rounded 
A) $9,036. 
B) $6,502. 
C) $14,458. 
D) Cannot be determineD.$30,000 setup costs/83 total production runs × 40 production runs attributed to Strollers = $14,458 rounded

An overhead application rate is computed by dividing the actual overhead costs by the expected amount of units in the activity base.

The account Work in Process Inventory:

What are the total manufacturing overhead costs allocated to the Strollers for the current month?

The document that provides information for the cost of goods manufactured is:

A debit balance in the Manufacturing Overhead account at the end of the period indicates that overhead has been under-applied to jobs.

Which of the following statements is true about activity-based costing?

Management can compute the per-unit cost of finished goods accurately only when a job order cost system is in use.

The advantage of using a predetermined overhead application rate is that:

Metalworks employs 3 assembly workers that,on average,each work 40 hours per week and earn $9 per hour.During the current accounting period,Job #543 consumed 77 hours of direct labor totaling $693. 77 direct labor hours × $9 = $693.

Pepsi Cola would most likely use a job order costing system.

Management uses a cost accounting system to evaluate and reward employee performance.

What are the setup costs allocated to Strollers during the current month?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

Filters

Exam 17: Job Order Cost Systems and Overhead Allocations

An overhead application rate is computed by dividing the actual overhead costs by the expected amount of units in the activity base.

The account Work in Process Inventory:

What are the total manufacturing overhead costs allocated to the Strollers for the current month?

The document that provides information for the cost of goods manufactured is:

A debit balance in the Manufacturing Overhead account at the end of the period indicates that overhead has been under-applied to jobs.

Which of the following statements is true about activity-based costing?

Management can compute the per-unit cost of finished goods accurately only when a job order cost system is in use.

The advantage of using a predetermined overhead application rate is that:

Metalworks employs 3 assembly workers that,on average,each work 40 hours per week and earn $9 per hour.During the current accounting period,Job #543 consumed 77 hours of direct labor totaling $693. 77 direct labor hours × $9 = $693.

Pepsi Cola would most likely use a job order costing system.

Management uses a cost accounting system to evaluate and reward employee performance.

What are the setup costs allocated to Strollers during the current month?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

Filters