Assigning manufacturing overhead to a specific job is complicated by all of the below except: Manufacturing overhead consists of both variable and fixed costs. Manufacturing overhead is incurred only to support some jobs. Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job. The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period.

Assigning manufacturing overhead to a specific job is complicated by all of the below except: Manufacturing overhead consists of both variable and fixed costs. Manufacturing overhead is incurred only to support some jobs. Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job. The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 3MC: Which is not a step in analyzing the cost driver for manufacturing overhead? A. Identify the cost B....

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Classify each of the following items of factory overhead as either a fixed or a variable cost. (Include any costs that you consider to be semivariable within the variable category. Remember that variable costs change in total as the volume of production changes.) Indirect labor Indirect materials Insurance on building Overtime premium pay Depreciation of building (straight-line method) Polishing compounds Depreciation of machinery (units-of-production method) Employer’s payroll taxes Property taxes Machine lubricants Employees’ hospital insurance (paid by employer) Labor for machine repairs Vacation pay Janitor’s wages Rent Small tools Plant manager’s salary Factory electricity Product inspector’s wages
A company has traditionally allocated its overhead based on machine hours but had collected this information to change to activity-based costing: A. How much overhead would be allocated to each unit under the traditional allocation method? B. How much overhead would be allocated to each unit under activity-based costing?
Which is not a step in analyzing the cost driver for manufacturing overhead? A. Identify the cost B. identify non-value-added costs C. analyze the effect on manufacturing overhead D. identify the correlation between the potential driver and manufacturing overhead
A company has traditionally allocated its overhead based on machine hours but collected this information to change to activity based costing: A. How much overhead would be assigned to each unit under the traditional allocation method? B. How much overhead would be assigned to each unit under activity-based costing?
Assigning manufacturing overhead to a specific job is complicated by all of the below except: A) Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job. B) Manufacturing overhead is incurred only to support some jobs. C) Manufacturing overhead consists of both variable and fixed costs. D) The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period.
Which of the following is not a reason to allocate overhead? Some overhead costs are seasonal and should be spread over production for the entire year. Unlike direct materials and direct labor, the amount of overhead actually incurred may not be known at the time a job is being worked on. Allocation is more accurate than tracing items directly to jobs. Manufacturing overhead is an indirect cost that cannot be physically or economically traced back to a specific item.
Assigning manufacturing overhead to a specific job is complicated by all of the following except: Multiple Choice Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job. Manufacturing overhead is incurred only to support some jobs. Manufacturing overhead consists of both variable and fixed costs. The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a perio
Explain why the fixed manufacturing overhead cost per unit changes when there is a change in the number of units produced.
Which of the following statements is true? a) Using either direct labor hours or direct labor costs to calculate a plantwide overhead rate will generally ensure that direct labor costs are accurately traced to jobs. b) An assumption that the only cost driver of an organization is direct labor hours is generally not accurate. c) A manufacturing overhead rate is only determined and used for fixed manufacturing overhead. d) Manufacturing overhead is directly traced to jobs using an overhead application rate(s).
Manufacturing overhead: Select one: a. includes all selling costs. O b. should not be assigned to individual jobs because it bears no obvious relationship to them. O c includes direct materials, indirect materials, indirect labor, and factory depreciation. O d. is easily traced to jobs. O e. is a pool of indirect production costs that must somehow be attached to each unit manufactured.
Accounting Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways. Assembling Payroll Billing Plant supervision Digging trenches Product design Janitorial Purchasing materials Machine maintenance Selling Machine setups Testing Molding Welding Packaging Using the following information, determine the overhead rates and the actual cost assigned for each of the…
Classify each of the following items of factory overhead as either a fixed or a variable cost. (Include any costs that you consider to be semivariable within the variable category. Remember that variable costs change in total as the volume of production changes.