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43. A source document by which direct labor costs are assigned to individual jobs is known as a _______________.
44. The cost of goods sold before an adjustment for an overhead variance is called ____________________.
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45. _________________________ is the amount that appears as an expense on the income statement after the adjustment
for the period’s overhead variance is recorded.
46. When materials are requested for production the cost is removed from ____________ and added to ____________.
47. Applied overhead costs are charged to ________________.
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48. When units are sold, their total cost is debited to _______________ and credited to ____________.
49. ________________________ are directly responsible for creating the products or services sold to customers.
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50. The ____________________ of allocation recognizes all interactions among support departments.
51. Which of the following is not a characteristic of job-order costing?
a. Wide variety of distinct products.
b. Unit cost is computed by dividing process costs of the period by the units produced in the period.
c. Unit cost is computed by dividing total job costs by units produced on that job.
d. Costs accumulated by job.
e. Typically, the cost of one job is different from that of another job.
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52. Unit costs are calculated by:
a. dividing the total costs associated with the units produced by the overhead cost.
b. adding all the variable costs per unit associated with the units produced.
c. subtracting total fixed costs from the applied overhead.
d. dividing the process costs for the given period by the output of the period.
e. multiplying unit variable costs and estimated overhead.
53. Production costs do not include
a. direct materials.
b. direct labor.
c. variable overhead.
d. fixed overhead.
e. All of these are production costs.
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54. Which of the following are fairly easy to trace to individual jobs?
a. Direct materials and maintenance
b. Direct materials and direct labor
c. Direct labor and overhead
d. Overhead and indirect labor
e. Depreciation on machinery and overhead
55. Which of the following businesses uses a process costing system?
a. A printing business
b. A dental clinic
c. An interior designing firm
d. An automobile service center
e. A refinery
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56. Which of the following is not true about job-order costing?
a. It is used in firms that produce homogeneous products.
b. The cost of each job is accumulated on the job-order cost sheet.
c. The key document for accumulating manufacturing costs is the job-order cost sheet.
d. All of these are correct.
e. None of these are correct.
57. Which of the following is the assignment process used with normal costing?
a. Actual direct materials, actual direct labor and actual overhead cost are assigned to products.
b. Actual direct materials cost is assigned to products, but direct labor and overhead costs are assigned using
predetermined rates.
c. Actual direct labor cost is assigned to products, but direct material and overhead costs are assigned using
predetermined rates.
d. Actual direct material and direct labor costs are assigned to products, but overhead costs are assigned using
predetermined rates.
e. All manufacturing costs are assigned using predetermined rates.
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58. Which method of measuring costs associated with production is more widely used in practice?
a. normal costing
b. actual costing
c. both are used equally.
d. neither one is used.
e. cannot be determined.
59. In an actual cost system, it is difficult to determine the _____ per unit.
a. direct labor cost
b. overhead cost
c. cost of direct material consumed
d. All of these are correct.
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e. None of these are correct.
60. Which of the following statements describes a characteristic of overhead costs?
a. Overhead costs are distorted due to uneven production from period to period.
b. Overhead costs have a direct relationship with units produced like direct materials.
c. High production in a month leads to high unit overhead costs.
d. All of these are correct.
e. None of these are correct.
61. Trust Company applies overhead based on direct labor hours. At the beginning of the year, Trust estimates overhead
to be $700,000, machine hours to be 200,000, and direct labor hours to be 35,000. During February, Trust has 5,000 direct
labor hours and 10,000 machine hours.
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What is the predetermined overhead rate?
a. $15.00 per machine hour
b. $14.00 per direct labor hour
c. $20.00 per direct labor hour
d. $18.00 per machine hour
e. None of these are correct.
62. Trust Company applies overhead based on direct labor hours. At the beginning of the year, Trust estimates overhead
to be $700,000, machine hours to be 200,000, and direct labor hours to be 35,000. During February, Trust has 5,000 direct
labor hours and 10,000 machine hours.
What is the amount of overhead applied for February?
a. $69,500
b. $22,000
c. $124,000
d. $185,200
e. $100,000
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63. Victryl Company applies overhead based on direct labor hours. At the beginning of the year, Victryl estimates
overhead to be $700,000, machine hours to be 200,000, and direct labor hours to be 35,000. During February, Victryl has
5,000 direct labor hours and 10,000 machine hours.
If the actual overhead for February is $98,300, what is the overhead variance, and is it overapplied or underapplied?
a. $1200 underapplied
b. $800 overapplied
c. $1,000 underapplied
d. $1,700 overapplied
e. $600 overapplied
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64. At the beginning of the year, Zinc Inc. estimated that overhead would be $115,000 and direct labor hours would be
23,000. At the end of the year, actual overhead was $175,900 and there were actually 35,000 direct labor hours.
What is the overhead variance?
a. $600 overapplied
b. $900 underapplied
c. $300 underapplied
d. $700 overapplied
e. $800 underapplied
65. At the beginning of the year, Titanium Inc. estimated that overhead would be $100,000 and direct labor hours would
be 20,000. At the end of the year, actual overhead was $175,900 and there were actually 35,000 direct labor hours.
What is the predetermined overhead rate?
a. $5 per direct labor hour
b. $3 per direct labor hour
c. $4 per direct labor hour
d. $6 per direct labor hour
e. None of these are correct.
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66. Bronzit Company estimated the following at the beginning of the year:
Assembly Department Testing Department Total
Overhead $700,000 $100,000 $800,000
Direct Labor Hours 150,500 40,500 191,000
Machine Hours 37,000 72,000 109,000
Bronzit uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead.
Machine hours are used to apply overhead in the testing department.
Actual data for the month of May is as follows:
Assembly Department Testing Department Total
Overhead $50,000 $11,000 $61,000
Direct Labor Hours 20,000 2,500 22,500
Machine Hours 3,500 14,000 17,500
If Bronzit uses a plant wide overhead rate based on direct labor hours, instead of departmental rates, what is the
predetermined overhead rate rounded to the nearest cent?
a. $5 per direct labor hour
b. $8.65 per direct labor hour
c. $4.19 per direct labor hour
d. $4.50 per direct labor hour
e. $0.33 per direct labor hour
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67. Mitchell’s Softball Gloves Company estimated the following at the beginning of the year:
Assembly Department Testing Department Total
Overhead $570,000 $130,000 $700,000
Direct Labor Hours 142,500 hrs. 32,500hrs. 175,000hrs.
Machine Hours 32,000hrs. 65,000hrs. 97,000hrs.
Mitchell uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead.
Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:
Assembly Department Testing Department Total
Overhead $42,000 $12,000 $54,000
Direct Labor Hours 13,500hrs. 2,430hrs. 15,930hrs.
Machine Hours 4,020hrs. 11,000hrs. 15,020hrs.
Using departmental overhead rates, which of the following is correct?
a. Applied overhead for the assembly department is $54,000.
b. Applied overhead for the testing department is $4,860.
c. Applied overhead for both departments combined is $63,720.
d. Overhead for the assembly department is underapplied.
e. None of these are correct.
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68. Bronzit Company estimated the following at the beginning of the year:
Assembly Department Testing Department Total
Overhead $700,000 $100,000 $800,000
Direct Labor Hours 150,500 40,500 191,000
Machine Hours 37,000 72,000 109,000
Bronzit uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead.
Machine hours are used to apply overhead in the testing department.
Actual data for the month of May is as follows:
Assembly Department Testing Department Total
Overhead $50,000 $11,000 $61,000
Direct Labor Hours 20,000 2,500 22,500
Machine Hours 3,500 14,000 17,500
Bronzit decides to continue using departmental overhead rates. What are the predetermined rates for the Assembly and
Testing departments respectively? (Note: Round to two decimal places.)
a. Assembly: $5.25 per direct labor hour; Testing: $7.33 per machine hour
b. Assembly: $4.65 per direct labor hour; Testing: $1.39 per machine hour
c. Assembly: $2.23 per direct labor hour; Testing: $6.15 per direct labor hour
d. Assembly: $5.12 per machine hour; Testing: $7.22 per machine hour
e. None of these.
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69. Mitchell’s Softball Gloves Company estimated the following at the beginning of the year:
Assembly Department Testing Department Total
Overhead $570,000 $130,000 $700,000
Direct Labor Hours 142,500 hrs. 32,500hrs. 175,000hrs.
Machine Hours 32,000hrs. 65,000hrs. 97,000hrs.
Mitchell uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead.
Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:
Assembly Department Testing Department Total
Overhead $42,000 $12,000 $54,000
Direct Labor Hours 13,500hrs. 2,430hrs. 15,930hrs.
Machine Hours 4,020hrs. 11,000hrs. 15,020hrs.
Mitchell decides to continue using departmental overhead rates. If a job spends 4 hours in assembly and 3 hours in testing,
what is the amount of overhead charged to the job?
a. $22
b. $20
c. $28
d. $50.54
e. None of these.
70. Which of the following mathematical equations is used to calculate a predetermined overhead rate?
a. Predetermined Overhead Rate = Estimated Annual Manufacturing Cost / Estimated Quarterly Activity Level
b. Predetermined Overhead Rate = Actual Annual Cost of Goods Sold / Estimated Semi-annual Labor Hours
c. Predetermined Overhead Rate = Estimated Annual Overhead / Actual Annual Activity Level
d. Predetermined Overhead Rate = Actual Annual Overhead / Actual Annual Activity Level
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e. Predetermined Overhead Rate = Estimated Annual Overhead / Estimated Annual Activity Level
71. The overhead variance is least likely to be
a. zero (actual overhead equals applied overhead).
b. underapplied.
c. overapplied.
d. immaterial.
e. underapplied and material.
72. The unit cost of a job consists of the total costs of
a. materials used on the job.
b. labor worked on the job.
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c. applied overhead.
d. All of these are correct.
e. None of these are correct.
73. John has applied overhead of $80,000 and actual overhead of $70,600 for the month of November. He applies
overhead based on direct labor hours, and that amounts to 10,000 hours for the month of November. The overhead for the
year was estimated to be $1,120,000. How many direct labor hours were estimated for the year?
a. 225,200
b. 140,000
c. 500,000
d. 150,000
e. 650,700
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74. At the beginning of the year, Wilson Company estimated the following:
Overhead $360,000
Direct labor hours 60,000 hrs.
Wilson used normal costing and applies overhead on the basis of direct labor hours. For the month of September, direct
labor hours equaled 9,350 and actual overhead equaled $46,750.
Calculate the overhead applied to production in September.
a. $56,100
b. $30,000
c. $46,750
d. $5 per direct labor hour
e. None of these.
75. On March 1, Job 10 had a beginning balance of $500. During March, direct materials of $800 and direct labor of $300
were added to the job. Overhead is applied to production at a rate of 40% of direct labor. There are 4 units in Job 10.
What is the unit cost?
a. $312
b. $430
c. $492
d. $850
e. None of these.
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76. Manufacturing overhead
a. consists of all costs other than direct materials.
b. consists of all manufacturing costs other than direct materials.
c. consists of all costs other than direct materials and direct labor.
d. consists of all manufacturing costs other than direct materials and direct labor.