41.
The use of activity-based costing information to support the decision-making process is
known as:
42.
Which of the following best describes cost accounting?
43.
Cost management initiatives along an organization’s value chain functions begins with
__________ and concludes with __________.
44.
Indirect costs pertain to costs that:
45.
An example of a direct cost in the production of a computer is:
46.
ABC Company estimates total overhead costs to be $1,200,000 and will apply overhead to
units produced based on 200,000 estimated machine hours. During the year ABC Company
incurred actual overhead costs of $1,250,000 and achieved 250,000 machine hours. ABC
Company’s predetermined overhead rate is:
47.
Which of the following items would be reported on the Statement of Cost of Goods
Manufactured?
48.
The following information is from ABC Company’s general ledger: Beginning and ending
inventories, respectively, for raw materials were $16,000 and $20,000 and for work in
process were $40,000 and $44,000. Raw material purchases and direct labor costs
incurred were $72,000 each, and manufacturing overhead applied amounted to $40,000.
Determine the total cost of goods manufactured during the period.
13–25
49.
Activity-based costing minimizes the risk of cost distortion when applying overhead by:
Essay Questions
13–26
50.
For each of the following costs, check the columns that most likely apply.
Product
Direct
Indirect
Period
Variable
Fixed
Property
taxes on
factory
_____
_____
_____
_____
_____
Production
foreman’s
salary
_____
_____
_____
_____
_____
Sandpaper
_____
_____
_____
_____
_____
Outbound
shipping
costs
_____
_____
_____
_____
_____
Fire
insurance
on plant
equipment
_____
_____
_____
_____
_____
Salary of
public
relations
manager
_____
_____
_____
_____
_____
Production
run setup
costs
_____
_____
_____
_____
_____
Glue and
thread
_____
_____
_____
_____
_____
Distribution
costs
_____
_____
_____
_____
_____
Raw
materials
_____
_____
_____
_____
_____
Advertising
expense
_____
_____
_____
_____
_____
Wages of
production
workers
_____
_____
_____
_____
_____
13–27
51.
Webster World Products uses the following account titles:
13–28
A.
Accounts payable
F.
Depreciation
expense
B.
Raw materials
inventory
G.
Accumulated
depreciation
C.
Work in process
inventory
H.
Wages and salaries
payable
D.
Manufacturing
overhead
I.
Wages and salaries
expense
E.
Cost of goods sold
J.
Finished goods
inventory
For each transaction described below, indicate which accounts would be debited and
credited under a job order cost system:
Debit
Credit
1. Materials are purchased
on account
______
______
2. Materials are placed into
production
______
______
3. Direct labor cost is
incurred
______
______
4. Depreciation is recorded
on the factory equipment
______
______
5. Manufacturing overhead is
applied to units of product
______
______
6. Cost of goods
manufactured is recorded
______
______
7. Cost of goods sold is
recorded
______
______
Credit
13–29
52.
Erca, Inc. produces automobile bumpers. Overhead is applied on the basis of machine
hours required for cutting and fabricating. A predetermined overhead application rate of
$15.00 per machine hour was established for 2016.
(a.) If 9,000 machine hours were expected to be used during 2016, how much overhead
was expected to be incurred?
(b.) Actual overhead incurred during 2016 totaled $135,000, and 9,200 machine hours
were used during 2016. Calculate the amount of over– or underapplied overhead for 2016.
(c.) Explain the accounting necessary for the over– or underapplied overhead for the year.
53.
Eberlin Boats estimates the following for 2016:
Manufacturing overhead
$480,000
Direct labor hours
48,000
Machine hours
100,000
During 2016 Eberlin incurs the following costs and activity:
Manufacturing overhead
$508,000
Direct labor hours
52,000
Machine hours
108,000
Actual overhead incurred
Applied overhead
Overapplied overhead
Eberlin uses direct labor hours to calculate the predetermined overhead rate for the year.
(a.) Calculate the predetermined overhead rate for 2016.
(b.) Calculate the applied overhead for 2016.
(c.) Calculate the amount of overapplied or underapplied overhead for 2016.
13–32
54.
For each of the following costs, check the columns that most likely apply.
Product
Direct
Indirect
Period
Variable
Fixed
Direct labor
_____
_____
_____
_____
_____
Interest
Expense
_____
_____
_____
_____
_____
Sales
commissions
_____
_____
_____
_____
_____
Utility costs
_____
_____
_____
_____
_____
President’s
salary
_____
_____
_____
_____
_____
Wages of
assembly-line
workers
_____
_____
_____
_____
_____
Repairs and
maintenance
costs
_____
_____
_____
_____
_____
Materials-
handling
costs
_____
_____
_____
_____
_____
Executive
compensation
_____
_____
_____
_____
_____
Salesperson’s
salary
_____
_____
_____
_____
_____
13–33