Exam 17: Job Order Cost Systems and Overhead Allocations

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.

Activity-based costing systems always result in more accurate measurements of unit costs.

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

The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery.Payments made to Winter for last week's work should be:

[The following information applies to the questions displayed below.] Canfield Construction applies overhead to its projects at a rate of $65 per direct labor hour.Laborers are paid an average rate of $30 per hour.The Jefferson Apartments project was charged a total of $1,200,000 in direct materials and $450,000 in direct labor costs. -Overhead applied to the Jefferson Apartments project amounted to:

Debits to the Manufacturing Overhead account record:

A predetermined overhead application rate:

A credit balance in the manufacturing overhead account at month end indicates that the actual overhead costs were less than the amount of overhead costs applied to jobs.

Benefits of activity-based costing include all of the following except:

A principal objective of cost accounting systems is to ensure that cost reports to management are prepared in accordance with generally accepted accounting principles.

Manufacturing overhead is:

In a job order cost system,the costs of direct materials,direct labor,and manufacturing overhead are accumulated separately for each department for a given period of time.

Allocating activity cost pools to products Burgandy Corporation makes plastic and wooden picture frames.The company has assigned $107,000 in monthly manufacturing overhead costs to two cost pools as follows: $67,000 to power costs,and $40,000 to production set-up costs.Additional monthly data are provided below: Power costs are allocated to products using machine hours as an activity base.Set-up costs are allocated to products based on the number of production runs each product line requires. (a)Allocate manufacturing overhead from the activity cost pools to each product line. (b)Compare the total per-unit cost of manufacturing plastic frames and wooden frames. (c)On a per-unit basis,which product line appears to be most profitable?

If manufacturing overhead is materially over-applied,it is best to:

Doyle Co.uses a job order cost accounting system.At year-end the Work-in-Process Inventory controlling account showed a debit balance of $43,125.For the two jobs in process at year-end,one showed $6,000 in direct materials and $4,500 in direct labor.The job cost sheet for the second job showed $9,000 in direct materials and $6,750 in direct labor.If the company is using a predetermined overhead application rate based on direct labor cost,the rate is:

In an activity-based costing system,manufacturing overhead costs are divided into separate:

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

The cost of salaries paid to employees who work in a factory maintaining the heating system is considered:

Overhead application rate Define the term cost driver and explain the role of this item in the computation of an overhead application rate.

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