Question 1

________ is used to record and accumulate all the costs assigned to a specific job.

Accepted Answer

A job-cost record is used to record and accumulate all the costs assigned to a specific job. This includes direct materials, direct labor, and any manufacturing overhead costs that are allocated to the job. The job-cost record is an important tool for tracking the costs of each job and ensuring that they are completed within budget.

Question 2

A job-cost record uses information from ________.

Accepted Answer

A job-cost record uses information from a labor-time card to record an employee's wage rate and hours spent on a particular job, which is essential for tracking labor costs associated with specific jobs.

Question 3

Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?

Accepted Answer

$5,400,000 / 30,000 hours = $180.00

Question 4

If indirect-cost rates are calculated monthly, distortions might occur because of ________.

Accepted Answer

Property tax payments made in July and December are not spread evenly throughout the year, which can cause distortions in monthly indirect-cost rates.

Question 5

In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.

Accepted Answer

In a job-costing system, manufacturing overhead costs are indirect costs that cannot be directly traced to a particular job. Therefore, a predetermined indirect-cost rate is used to estimate the manufacturing overhead costs allocated to each job. Direct materials and direct labor costs are traced directly to the specific job, while total costs are the sum of direct materials, direct labor, and manufacturing overhead costs.

Question 6

The basic source document for direct manufacturing labor is the ________.

Accepted Answer

The labor-time record is the basic source document for direct manufacturing labor as it records the amount of time direct labor employees spend working on specific jobs or tasks. The job-cost record tracks all costs associated with a specific job and the materials-requisition record tracks the amount of materials used on a specific job. The labor-requisition record does not exist as a common source document for direct manufacturing labor.

Question 7

The budgeted indirect-cost rate for each cost pool is computed as ________.

Accepted Answer

The budgeted indirect-cost rate for each cost pool is computed as budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base. This calculation helps to determine the indirect cost that can be allocated to the cost objects depending on the level of activity. Option B is the inverse of this calculation and is incorrect. Option C uses actual annual indirect costs, which is not relevant when computing the budgeted indirect-cost rate. Option D involves dividing the budgeted indirect costs by the budgeted actual quantity of cost allocation base, which is also not a relevant calculation.

Question 8

For 2018, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $6.00 per unit. The selling price of the product is $21.00. The estimated manufacturing overhead costs are $275,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $350,000 and actual machine hours are 50,000.
Using job costing, the 2018 actual indirect-cost rate is ________.

Accepted Answer

$350,000 / 50,000 mh = $7.00

Question 9

The actual indirect-cost rate is calculated by dividing actual total indirect costs by the budgeted total quantity of the cost-allocation base.

Accepted Answer

Actual indirect cost rate = Actual annual indirect costs / Actual annual quantity of the cost-allocation base.

Question 10

An increase in direct labor cost per unit ________.

Accepted Answer

Direct labor cost is a component of variable cost, which is the cost that varies with production volume. Therefore, an increase in direct labor cost per unit will lead to an increase in variable cost per unit.

Question 11

Problems with costing occur when ________.

Accepted Answer

Incorrect job numbers recorded on source documents can lead to inaccurate costing because the costs will be assigned to the wrong job. The other options do not necessarily lead to problems with costing.

Question 12

A job that shows low profitability may be the result of ________.

Accepted Answer

The answer of A job that shows low profitability may...

Question 13

Managers and accountants collect most of the cost information that goes into their systems through ________.

Accepted Answer

Source documents such as invoices, receipts, and purchase orders provide the necessary information for managers and accountants to collect cost information. While information data banks and computer programs may also be used, source documents are the primary method of collecting cost data. Time surveys, on the other hand, are used to collect information about the amount of time employees spend on specific tasks, not cost data.

Question 14

Fixed costs remain constant at $450,000 per month. During high-output months variable costs are $300,000, and during low-output months variable costs are $125,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 24,000 for high-output months and 5,000 for low-output months?

Accepted Answer

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Question 15

Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs:
A.Identify indirect costs
B.Compute the total cost of the job
C.Select cost-allocation bases
D.Compute the indirect cost rate

Accepted Answer

The answer of Place the following steps in the order...

Question 16

A manufacturer estimates that it will incur variable indirect costs for the month of October of $70,000 and $30,000 of fixed costs. The company uses direct labor hours to calculate the predetermined overhead rate and predicted that 3,000 direct labor hours would be used in October. Actual direct labor hours amounted to 3,200.
Required:
A) What is the variable predetermined indirect rate for October?
B) What is the fixed predetermined indirect cost rate for October?
C) What is the total allocation rate per direct labor hour for October?

Accepted Answer

The answer of A manufacturer estimates that it will incur...

Question 17

For a given job the direct costs associated with the job are ________.

Accepted Answer

Direct costs are costs that can be easily traced directly to a product or service, in an economically feasible way. Raw materials are a common example of direct costs because they can be easily traced to a specific job or product. Actual overhead, sunk costs, and fixed costs are not necessarily considered direct costs.

Question 18

X-Industries manufactures 3-D printers. For each unit, $3,400 of direct material is used and there is $2,600 of direct manufacturing labor at $16 per hour. Manufacturing overhead is applied at $20 per direct manufacturing labor hour. Calculate the profit earned on 46 units if each unit sells for $9,500.

Accepted Answer

$3,400 + $2,600 + (($2,600 / $16) × $20) = $9,250
Profit earned on 46 units = ($9,500 - $9,250) × 46 units = $11,500

Question 19

A job-cost sheet details the ________.

Accepted Answer

A job-cost sheet includes the direct labor costs incurred for a specific job, detailing the amount of labor directly traceable to that job.

Question 20

The formula for the predetermined indirect cost rate is:

Accepted Answer

The answer of The formula for the predetermined indirect cost...

Quiz 4: Job Costing