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1. The use of predetermined overhead rates in a job-order cost system makes it possible to
estimate the total cost of a given job as soon as production is completed.
2. The formula for computing the predetermined overhead rate is:
Estimated total units in base ÷ Estimated total manufacturing costs
3. The process of assigning overhead cost to jobs is known as applying overhead.
4. The cost of a completed job in a job-order costing system typically consists of the actual
materials cost of the job, the actual labor cost of the job, and the actual amount of manufacturing
overhead cost of the job.
5. The cost of goods sold in a single product company is equal to the number of units sold
multiplied by their unit product cost, less any overapplied overhead or plus any underapplied
overhead.
6. If the amount charged to the Manufacturing Overhead Incurred account during a period is
less than the manufacturing overhead charged to jobs during the period, overhead was
underapplied.
7. The entire difference between the actual manufacturing overhead cost for a period and
the applied manufacturing overhead cost is typically closed to the Work In Process account.
8. Underapplied or overapplied overhead represents the difference between actual
manufacturing overhead costs and applied manufacturing overhead costs.
9. The unadjusted cost of goods sold (in other words, the cost of goods sold before
adjustment for any underapplied or overapplied overhead) in a single product company is equal
to the number of units sold multiplied by their unit product cost.
10. The cost of goods manufactured equals beginning work in process inventory, plus the total
manufacturing cost charged to jobs, plus ending work in process inventory.
11. Cost of goods sold equals beginning finished goods inventory, less cost of goods
manufactured, plus ending finished goods inventory.
12. Ending finished goods inventory in a single product company equals the number of units in
ending inventory multiplied by their unit product cost.
13. Period costs are expensed as incurred, rather than charged to jobs.
14. A job cost sheet is used to accumulate costs charged to a job.
15. Choice of allocation base should be made based on:
16. Emco Company uses direct labor cost as a basis for computing its predetermined
overhead rate. In computing the predetermined overhead rate for last year, the company
misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification
will be to:
17. When applying manufacturing overhead to jobs, the formula to calculate the amount is as
follows:
18. There are two acceptable methods for closing out any balance of underapplied or
overapplied overhead. One method involves allocation, whereas the other closes any balance
directly to:
19. The Cost of Goods Manufactured represents:
20. Which of the following documents is used to specify the type and quantity of materials
drawn from the storeroom, and identifies the job to which the costs of the materials are to be
charged?
21. In a job-order costing system, direct labor costs are ordinarily charged to:
22. In job-order costing, all of the following statements are correct with respect to labor time
and cost except:
23. Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the
beginning of the year, the total estimated manufacturing overhead was $224,580. At the end of
the year, actual direct labor-hours for the year were 18,200 hours, manufacturing overhead for
the year was underapplied by $12,100, and the actual manufacturing overhead was $219,580.
The predetermined overhead rate for the year must have been closest to:
24. Malcolm Company uses a predetermined overhead rate based on direct labor-hours to
apply manufacturing overhead to jobs.
The cost records for September will show:
25. Crinks Corporation uses direct labor-hours in its predetermined overhead rate. At the
beginning of the year, the estimated direct labor-hours were 11,200 hours and the total estimated
manufacturing overhead was $259,840. At the end of the year, actual direct labor-hours for the
year were 10,800 hours and the actual manufacturing overhead for the year was $254,840.
Overhead at the end of the year was:
26. Wert Corporation uses a predetermined overhead rate based on direct labor cost to apply
manufacturing overhead to jobs. Last year, the company's estimated manufacturing overhead
was $1,200,000 and its estimated level of activity was 50,000 direct labor-hours. The company's
direct labor wage rate is $12 per hour. Actual manufacturing overhead amounted to $1,240,000,
with actual direct labor cost of $650,000. For the year, manufacturing overhead was:
27. Brace Corporation uses direct labor-hours in its predetermined overhead rate. At the
beginning of the year, the estimated direct labor-hours were 21,600 hours. At the end of the year,
actual direct labor-hours for the year were 20,400 hours, the actual manufacturing overhead for
the year was $506,920, and manufacturing overhead for the year was underapplied by $23,440.
The estimated manufacturing overhead at the beginning of the year used in the predetermined
overhead rate must have been:
28. Yista Corporation uses a predetermined overhead rate based on direct labor-hours to
apply manufacturing overhead to jobs. The company estimated manufacturing overhead at
$510,000 for the year and direct labor-hours at 100,000 hours. Actual manufacturing overhead
costs incurred during the year totaled $540,000. Actual direct labor-hours were 105,000. What
was the overapplied or underapplied manufacturing overhead for the year?
29. At the beginning of the year, manufacturing overhead for the year was estimated to be
$267,500. At the end of the year, actual direct labor-hours for the year were 22,100 hours, the
actual manufacturing overhead for the year was $262,500, and manufacturing overhead for the
year was overapplied by $13,750. If the predetermined overhead rate is based on direct labor-
hours, then the estimated direct labor-hours at the beginning of the year used in the
predetermined overhead rate must have been:
30. Freeman Company uses a predetermined overhead rate based on direct labor-hours to
apply manufacturing overhead to jobs. At the beginning of the year, the company estimated
manufacturing overhead would be $150,000 and direct labor-hours would be 10,000. The actual
figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor-hours.
The cost records for the year will show:
31. The Work in Process inventory account of a manufacturing firm shows a balance of
$3,000 at the end of an accounting period. The job cost sheets of two uncompleted jobs show
charges of $500 and $300 for materials, and charges of $400 and $600 for direct labor. From this
information, it appears that the company is using a predetermined overhead rate, as a
percentage of direct labor costs, of:
32. Capalbo Corporation bases its predetermined overhead rate on the estimated labor-hours
for the upcoming year. At the beginning of the most recently completed year, the company
estimated the labor-hours for the upcoming year at 52,000 labor-hours. The estimated variable
manufacturing overhead was $2.78 per labor-hour and the estimated total fixed manufacturing
overhead was $1,192,360. The actual labor-hours for the year turned out to be 52,600 labor-
hours. The predetermined overhead rate for the recently completed year was closest to:
33. Washtenaw Corporation uses a job-order costing system. The following data are for last
year:
Washtenaw applies overhead using a predetermined rate based on direct labor-hours. What
predetermined overhead rate was used last year?
