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Exam Study Questions

Solutions found at http://ruby.fgcu.edu/courses/jconreco/core2

1. | Why aren’t actual overhead costs traced to jobs just as direct materials and direct labor costs are traced to jobs? |

2. | What is the purpose of the job cost sheet in a job-order costing system? |

3. | What is a predetermined overhead rate, and how is it computed? |

4. | Why do companies use predetermined overhead rates rather than actual manufacturing overhead costs to apply overhead to jobs? |

5. | What factors should be considered in selecting a base to be used in computing the predetermined overhead rate? |

6. | What account is credited when overhead cost is applied to WIP? Would you expect the amount applied for a period to equal the actual overhead cost of the period? Why or why not? |

7. | What is underapplied overhead? Overapplied overhead? What disposition is made of these amounts at the end of the period? |

8. | What adjustment is made for underapplied overhead on the schedule of cost of goods sold (COGS)? What adjustment is made for overapplied overhead? |

9. | A company assigns overhead cost to completed jobs on the basis of 125% of direct labor cost. The job cost sheet for Job 313 show that $10,000 in direct material has been used on the job and that $12,000 in direct labor cost has been incurred. If 1,000 units were produced in Job 313, what is the unit product cost? |

10. | Which of the following statements is true? I. Overhead application may be made slowly as a job is worked on. II. Overhead application may be made in a single application at the time of completion of the job. III. Overhead application should be made to any job not completed at year-end in order to properly value the work in process inventory. A. Only statement I is true. B. Only statement II is true. C. Both statements I and II are true. D. Statements I, II, and III are all true. |

11. | On the Schedule of Cost of Goods...