Question

16) 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.

17) Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

A) Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.

B) Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs

C) It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

D) The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.

18) Which of the following would usually be found on a job cost sheet under a normal cost system?

	Actual direct material cost	Actual manufacturing overhead cost
A)	Yes	Yes
B)	Yes	No
C)	No	Yes
D)	No	No

A) Choice A

B) Choice B

C) Choice C

D) Choice D

19) Which of the following statements is not correct concerning multiple overhead rate systems?

A) A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate.

B) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate.

C) A company may choose to create a separate overhead rate for each of its production departments

D) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

20) Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year:

Direct materials	$	6,000
Direct labor	$	20,000
Rent on factory building	$	15,000
Sales salaries	$	25,000
Depreciation on factory equipment	$	8,000
Indirect labor	$	12,000
Production supervisor's salary	$	15,000

Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

A) $2.50 per direct labor-hour

B) $2.79 per direct labor-hour

C) $3.00 per direct labor-hour

D) $4.00 per direct labor-hour

21) Purves Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to:

A) $10.37

B) $12.10

C) $11.10

D) $11.30

Answer 1

Answer 16

C) Manufacturing overhead consists of both variable and fixed costs.

Answer 17

D) The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs

Answer 18

Choice A

Answer 19

B) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate.

Answer 20

A) $2.50 per direct labor-hour

Answer 21

A) $10.37