Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Chapter 2, Problem 8Q
“Entries to Manufacturing
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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.
Why are some manufacturing firms switching from direct-labor hours to machine hours or throughput time as the basis for overhead application?
The question at hand is (b) below. The images attached are to help anmswer (b). Thank you. :)
(b) Why is the amount of underapplied (overapplied) manufacturing overhead different from Requirement 2 above? (You may select more than one answer.)
check all that apply
The predetermined overhead rate changed.unanswered
The change in the actual manufacturing overhead cost directly resulted in a comparable change in the amount of underapplied (overapplied) manufacturing overhead.unanswered
The change in the estimated total amount of the allocation base affected the amount of manufacturing overhead applied.
Chapter 2 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 2 - (a) Mary Barett is not sure about the difference...Ch. 2 - Prob. 2QCh. 2 - What type of industry is likely to use a job order...Ch. 2 - What type of industry is likely to use a process...Ch. 2 - Your roommate asks your help in understanding the...Ch. 2 - Prob. 6QCh. 2 - What source documents are used in accumulating...Ch. 2 - Entries to Manufacturing Overhead normally are...Ch. 2 - Stan Kaiser is confused about the source documents...Ch. 2 - What is the purpose of a job cost sheet?
Ch. 2 - Indicate the source documents that are used in...Ch. 2 - Explain the purpose and use of a materials...Ch. 2 - Sam Bowden believes actual manufacturing overhead...Ch. 2 - What elements are involved in computing a...Ch. 2 - Prob. 15QCh. 2 - Jane Neff believes that the cost of goods...Ch. 2 - Matt Litkee is confused about under- and...Ch. 2 - At the end of the year, under- or overapplied...Ch. 2 - Dicker Company begins operations on January 1....Ch. 2 - During January, its first month of operations,...Ch. 2 - In January, Dicker Company requisitions raw...Ch. 2 - Factory labor data for Dieker Company is given in...Ch. 2 - Data pertaining to job cost sheets for Dieker...Ch. 2 - Marquis Company estimates that annual...Ch. 2 - Assign manufacturing overhead to production.(LO...Ch. 2 - In March, Stinson Company completes Jobs 10 and...Ch. 2 - Prepare entries for service salaries and wages and...Ch. 2 - At December 31, balances in Manufacturing Overhead...Ch. 2 - During the current month, Wacholz Company incurs...Ch. 2 - Milner Company is working on two job orders. The...Ch. 2 - Washburn Company produces earbuds. During the...Ch. 2 - During the current month, Standard Corporation...Ch. 2 - For Eckstein Company, the predetermined overhead...Ch. 2 - The gross earnings of the factory workers for...Ch. 2 - Stine Company uses a job order cost system. On May...Ch. 2 - A job order cost sheet for Ryan Company is shown...Ch. 2 - Manufacturing cost data for Orlando Company, which...Ch. 2 - Ikerd Company applies manufacturing overhead to...Ch. 2 - Analyze job cost sheet aid prepare entry for...Ch. 2 - Crawford Corporation incurred the following...Ch. 2 - Enos Printing Corp. uses a job order cost system....Ch. 2 - At May 31, 2017, the accounts of Lopez Company...Ch. 2 - Tierney Company begins operations on April 1,...Ch. 2 - The following are the job cost related accounts...Ch. 2 - Determine cost of jobs end ending balance in work...Ch. 2 - Tombert Decorating uses a job order cost system to...Ch. 2 - Lott Company uses a job order cost system and...Ch. 2 - For the year ended December 31, 2017, the job cost...Ch. 2 - Prepare entries in a job order cost system and...Ch. 2 - Agassi Company uses a job order cost system in...Ch. 2 - Phillips Corporations fiscal year ends on November...Ch. 2 - Huegel Hollow Resort has ordered 20 rotomolded...Ch. 2 - Khan Products Company uses a job order cost...Ch. 2 - In the course of routine checking of all journal...Ch. 2 - Communication Activity You are the management...Ch. 2 - Prob. 2.5BYPCh. 2 - Prob. 2.6BYPCh. 2 - Prob. 2.7BYP
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- Explain why the fixed manufacturing overhead cost per unit changes when there is a change in the number of units produced.arrow_forwardDiscuss why businesses apply overhead to projects using predefined (factory) rates rather than real manufacturing overhead expenses. What is the point of that?arrow_forward21. Which method of determined operating income is used internally for decision making and considers fixed factory overhead a period expense?arrow_forward
- What are the shortcomings of waiting untilthe actual factory overhead expenses areknown before recording such costs on thejob cost sheets?arrow_forward2. Which of the following is a possible cost driver that may be used in calculating a company's predetermined overhead rate? A) Direct labour hours B) Direct labour dollars C) Machine hours D) All of the abovearrow_forwardWhich 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).arrow_forward
- What are the shortcomings of waiting until the actual factory overhead expenses are known before recording such costs on the job cost sheets?arrow_forwardWhy is it usually reasonable to assume that labor and factory overhead are added evenly throughout the production process?arrow_forwardWhy would a manufacturing firm switch from direct labor hours to machine hours as the cost driverfor factory overhead application?arrow_forward
- At the end of the accounting period manufacturing overhead will be either over- applied or under- applied. Explain how each of these may happen.arrow_forwardIf the predetermined overhead rate is based on the estimated level of activity for the current period, then products will be charged only for the capacity that they use and will not be charged for the capacity they don't use. True or False True Falsearrow_forward3) Why do companies use a predetermined overhead rate to assign overhead to products rather than using actual overhead costs? O Because actual overhead costs are paid sporadically, whereas products flow through the production process regularly. Because actual overhead costs are known at the beginning of a period, whereas the predetermined overhead rate is not known until the end of the period. Because actual overhead costs are paid regularly, whereas products flow through the production process only sporadically. Because actual overhead costs are estimates, whereas predetermined rate is exact.arrow_forward
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