Q: Which of the following is the correct formula for allocating manufacturing overhead to a job?

$$ \text{MOH allocated} = \text{Predetermined MOH rate} \times \text{Actual amount of allocation base used by the job} $$

Question 1

Which of the following best describes the main difference between job costing and process costing?

Accepted Answer

Job costing is used for unique, custom-ordered products, while process costing is used for mass production of identical units.

Question 2

A company manufactures custom furniture in small batches. Which costing system should it use and why?

Accepted Answer

Job costing, because each batch is unique and costs are tracked separately.

Question 3

Which document lists all raw materials needed to manufacture a specific job?

Accepted Answer

Bill of materials

Question 4

A company estimates its total manufacturing overhead for the year to be $$1,200,000 and expects to use 60,000 direct labor hours. What is the predetermined manufacturing overhead rate per direct labor hour?

$$ 	ext{Predetermined MOH Rate} = \frac{\$$1,200,000}{60,000\ 	ext{DLH}} $$

Accepted Answer

$$\15$ per direct labor hour

Question 5

If actual manufacturing overhead costs are $$25,000 and allocated manufacturing overhead is 24$$,000, what is the result and what should be done to Cost of Goods Sold?

Accepted Answer

Underallocated by $$1,000; increase Cost of Goods Sold by 1$$,000

Question 6

Which of the following is NOT a typical example of manufacturing overhead?

Accepted Answer

Direct labor wages

Question 7

A job cost record is used to:

Accepted Answer

Track all direct materials, direct labor, and manufacturing overhead allocated to a job

Question 8

A law firm uses job costing to bill clients. Which of the following would be considered a direct cost for a client job?

Accepted Answer

Professional labor hours spent on the client’s case

Question 9

A company completed Job 603 with the following costs: Direct Materials $$40,000, Direct Labor 10$$,000, Manufacturing Overhead $$8,000. If 50 units were produced, what is the cost per unit?

$$ 	ext{Cost per unit} = \frac{\$$40,000 + \10$$,000 + \$$8,000}{50} $$

Accepted Answer

$1,160

Question 10

Which of the following best describes the flow of inventory through a manufacturing system?

Accepted Answer

Raw Materials Inventory → Work in Process Inventory → Finished Goods Inventory → Cost of Goods Sold

Question 11

A company estimated $$1,053,000 of manufacturing overhead and 58,500 direct labor hours, resulting in a predetermined overhead rate of 18 $$per DL hour. If actual overhead was $$1,005,000 and actual DL hours were 57,000, by how much was overhead over- or underallocated?

$$ 	ext{Allocated MOH} = 57,000 	imes 18 = 1,026,000 $

Accepted Answer

Overallocated by $21,000

Question 12

Which of the following is the correct formula for allocating manufacturing overhead to a job?

Accepted Answer

$$ 	ext{MOH allocated} = 	ext{Predetermined MOH rate} 	imes 	ext{Actual amount of allocation base used by the job} $$

Question 13

Which of the following would most likely use process costing?

Accepted Answer

A cereal manufacturer

Question 14

If a company’s jobs have been undercosted due to underallocation of manufacturing overhead, what adjustment should be made?

Accepted Answer

Increase Cost of Goods Sold

Question 15

A company’s predetermined indirect cost allocation rate for a service firm is calculated as:

$$ 	ext{Predetermined indirect cost allocation rate} = \frac{	ext{Total estimated indirect costs}}{	ext{Total estimated amount of the allocation base}}

If $$total estimated indirect costs are $120,000 and the estimated allocation base is 6,000 professional labor hours, what is the rate?

Accepted Answer

$20 per professional labor hour

Question 16

Which of the following is a reason management would use job cost records?

Accepted Answer

To assess profitability, reduce future job costs, and bid for custom orders

Job Costing: Concepts, Procedures, and Applications in Managerial Accounting

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