Flashcards in Final 1 Deck (19):
Predetermined overhead rates are computed based on:
Both estimated overhead costs and estimated level of activity
The formula to compute cost of goods manufactured is:
beginning Work in Process Inventory plus direct labor plus direct material used plus overhead incurred minus ending Work in Process Inventory.
Weaknesses of the high-low method include all of the following except: the mathematical calculations are relatively complex.
If actual overhead exceeds applied overhead, factory overhead is said to be underapplied.
If the cost of an additive is $5,000 + $0.50 for every unit of solvent produced, the cost is classified as a mixed cost.
Texoma Trucking Company is exploring different prediction models that can be used to forecast indirect labor costs. One independent variable under consideration is machine hours. Following are matching observations on indirect labor costs and machine hours for the past six months:
Month Machine hours Indirect labor costs
1 300 $20,000
2 400 $24,000
3 240 $17,000
4 370 $22,000
5 200 $13,000
6 225 $14,000
In a high-low model, which months' observations would be used to compute the model's parameters?
2 and 5
The following information has been taken from the cost records of Bridges Corporation for the past year:
Raw material used in production $336
Total manufacturing costs charged to production during the year (includes direct material, direct labor, and overhead equal to 50% of direct labor cost) 711
Cost of goods available for sale 851
Selling and Administrative expenses 35
Inventories Beginning Ending
Raw Material $80 $ 90
Work in Process 85 25
Finished Goods 80 105
Refer to Bridges Company. Cost of Goods Sold was:
A variable cost remains constant on a per-unit basis as production increases.
Another name for absorption costing is:
The three primary inventory accounts in a manufacturing company are:
Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory.
An indirect cost can be easily traced to a cost object
Which of the following would generally be considered a fixed factory overhead cost?
Straight-line Factory Units-of-production
depreciation insurance depreciation
Y Y N
Petrie Company manufactures chairs. If raw material used was $100,000 and Raw Material Inventory at the beginning and end of the period, respectively, was $27,000 and $31,000, what was amount of raw material was purchased?
Product costs are deducted from revenue:
as goods are sold
If overapplied factory overhead is material, the account is closed by a credit to Cost of Goods Sold.
A credit to the Factory Overhead account represents actual overhead costs.
Ryan Corporation is relocating its facilities. The company estimates that it will take three trucks to move office contents. If the per truck rental charge is $1,000 plus 25 cents per mile, what is the expected cost to move 800 miles?
The following information has been taken from the cost records of Richards Company for the past year:
Raw material used in production $326
Total manufacturing costs charged to production during the year (includes direct material, direct labor, and overhead equal to 60% of direct labor cost) 686
Cost of goods available for sale 826
Selling and Administrative expenses 25
Inventories Beginning Ending
Raw Material $75 $ 85
Work in Process 80 30
Finished Goods 90 110
Refer to Richards Company. The cost of raw material purchased during the year was:
A mixed cost has which of the following components?
Variable component Fixed component