Question 1

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

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

Question 2

Using job costing,the 2014 actual indirect-cost rate is ________.

Accepted Answer

The actual indirect-cost rate is calculated by dividing the total actual indirect costs by the total actual machine-hours.

Question 3

When calculating indirect cost rates,the longer the time period,the greater the
influence of seasonal patterns on the amount of costs.

Accepted Answer

The shorter the time period, the greater the influence of seasonal patterns on the amount of costs.

Question 4

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, direct materials and direct labor costs are directly assigned to a specific job. Manufacturing overhead costs, on the other hand, are indirect costs that cannot be directly traced to a specific job. Therefore, an indirect-cost rate is used to estimate the manufacturing overhead costs allocated to a job.

Question 5

A job-cost sheet details the ________.

Accepted Answer

A job-cost sheet details the direct labor costs incurred for a particular job. While it may also include information on direct materials and indirect costs, the primary focus is on direct labor.

Question 6

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

Accepted Answer

Direct costs are costs that can be directly attributed to a particular job or product, and typically include raw materials, labor and other expenses directly related to producing the product or service. Therefore, option B is the best choice as raw materials are a direct cost associated with a job. Option A is incorrect as actual overhead is an indirect cost. Option C is incorrect as sunk costs are costs that have already been incurred and cannot be recovered. Option D is incorrect as fixed costs are costs that remain constant regardless of the level of output in the short run.

Question 7

A job-cost record uses information from ________.

Accepted Answer

The answer of A job-cost record uses information from ________.
...

Question 8

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

Accepted Answer

The most common way for managers and accountants to collect cost information for their systems is through source documents, such as invoices and receipts, which provide a record of the actual costs incurred by the organization. While information databanks and computer programs can also be used to collect cost information, they are typically built upon or supplemented by data from source documents. Time surveys are used to measure the amount of time spent on certain tasks, and may not necessarily provide cost information.

Question 9

Actual prices paid for materials usually serve as actual direct-cost rates for charging material costs to jobs.

Accepted Answer

Actual prices paid for materials are used to calculate actual direct costs and are charged to jobs accordingly. This ensures accurate and effective job costing.

Question 10

Costs that are subject to short-run fluctuations for given jobs are ________.

Accepted Answer

Actual costs can vary from job to job depending on various factors such as raw material costs, labor costs, and other variable expenses. Budgeted direct costs and budgeted indirect costs are based on estimates and are less likely to vary in the short run. Normal costs represent the expected costs over the long run rather than short-term fluctuations.

Question 11

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

Accepted Answer

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

Question 12

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 13

Problems with costing occur when ________.

Accepted Answer

Incorrect job numbers recorded on source documents can lead to incorrect costing as the costs may be allocated to the wrong job. The other options do not directly relate to problems with costing.

Question 14

An increase in direct labor cost per unit ________.

Accepted Answer

Direct labor cost is a component of variable cost, which means that an increase in direct labor cost per unit will increase the variable cost of producing each unit. This will result in a higher total cost of production, which may ultimately lead to lower profits if sales prices do not increase proportionately. It does not affect fixed cost or overhead costs.

Question 15

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

Accepted Answer

The labor-time record is the source document for direct manufacturing labor. It shows the amount of time that each employee spent working on a specific job, which is necessary for calculating the cost of direct labor for that job. Option A, job-cost record, summarizes all costs associated with a particular job, including direct labor, direct materials, and overhead costs. Option B, materials-requisition record, is the source document for direct materials, not direct labor. Option D, labor-requisition record, is not a commonly used source document in manufacturing accounting.

Question 16

Bernard Company's budgeted manufacturing overhead is $3,300,000.Overhead is allocated on the basis of direct labor hours.The budgeted direct labor hours for the period are 60,000.What is the manufacturing overhead rate?

Accepted Answer

The manufacturing overhead rate is calculated by dividing the total budgeted manufacturing overhead by the budgeted direct labor hours: $3,300,000 / 60,000 hours = $55.00 per direct labor hour.

Question 17

Vision Enterprises manufactures digital video equipment.For each unit,$3,000 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour.Manufacturing overhead is applied at $25 per direct manufacturing labor hour.Calculate the profit earned on 50 units if each unit sells for $9,000.

Accepted Answer

Calculation of total cost per unit:
Direct materials: $3,000
Direct labor: $2,000 ($20 per hour * 100 hours)
Manufacturing overhead: $2,500 ($25 per direct manufacturing labor hour * 100 hours)

Total cost per unit: $7,500

Profit per unit: $9,000 - $7,500 = $1,500

Total profit for 50 units: $1,500/ unit * 50 units = $75,000

Therefore, the best choice is C.

Question 18

Fixed costs remain constant at $400,000 per month.During high-output months variable costs are $320,000,and during low-output months variable costs are $80,000.What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 16,000 for high-output months and 4,000 for low-output months?

Accepted Answer

For high-output months: Total costs = Fixed costs + Variable costs = $400,000 + $320,000 = $720,000. Indirect-cost rate = $720,000 / 16,000 hours = $45.00 per hour.  For low-output months: Total costs = Fixed costs + Variable costs = $400,000 + $80,000 = $480,000. Indirect-cost rate = $480,000 / 4,000 hours = $120.00 per hour.

Question 19

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

Accepted Answer

The budgeted indirect-cost rate for each cost pool is calculated by dividing the budgeted annual indirect costs by the budgeted annual quantity of cost allocation base.

Question 20

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

Accepted Answer

Property tax payments made in July and December can distort monthly indirect-cost rates because they are not evenly spread throughout the year. This can result in higher indirect-cost rates for those months and lower rates for the other months.

Quiz 4: Job Costing