Kasancan

3–1 Why aren‘t actual manufacturing overhead costs traced to jobs just as direct materials

and direct labor costs are traced to jobs?

3–2 Explain the four-step process used to compute a predetermined overhead rate.

3–3 What is the purpose of the job cost sheet in a job-order costing system?

3–4 Explain how a sales order, a production order, a materials requisition form, and a labor

time ticket are involved in producing and costing products.

3–5 Explain why some production costs must be assigned to products through an allocation

process.

3–6 Why do companies use predetermined overhead rates rather than actual manufacturing

overhead costs to apply overhead to jobs?

3–7 What factors should be considered in selecting a base to be used in computing the

predetermined overhead rate?

3–8 If a company fully allocates all of its overhead costs to jobs, does this guarantee that a

profit will be earned for the period?

3–9 What account is credited when overhead cost is applied to Work in Process? Would

you expect the amount applied for a period to equal the actual overhead costs of the

period? Why or why not?

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3–10 What is underapplied overhead? Overapplied overhead? What disposition is made of

these amounts at the end of the period?

3–11 Provide two reasons why overhead might be underapplied in a given year.

3–12 What adjustment is made for underapplied overhead on the schedule of cost of goods

sold? What adjustment is made for overapplied overhead?

3–13 What is a plantwide overhead rate? Why are multiple overhead rates, rather than a

plant-wide overhead rate, used in some companies?

3–14 What happens to overhead rates based on direct labor when automated equipment

replaces direct labor?

Absorption costing A costing method that includes all manufacturing costs—direct

materials, direct labor, and both variable and fixed manufacturing overhead—in the

cost of a product. (p. 84)

Allocation base A measure of activity such as direct labor-hours...