Multiple Choice Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job. Using multiple predetermined overhead rates rather than a single predetermined plant-wide overhead rate improves the job cost accurancy. When estimated activity used for overheod application is less than the level of activity at capacity, the use of capacity-based overhead rate decreases net operating income due to the cost of idle capacity. If a job is not completed at the end of the period, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used. Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to Jobs,
Multiple Choice Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job. Using multiple predetermined overhead rates rather than a single predetermined plant-wide overhead rate improves the job cost accurancy. When estimated activity used for overheod application is less than the level of activity at capacity, the use of capacity-based overhead rate decreases net operating income due to the cost of idle capacity. If a job is not completed at the end of the period, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used. Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to Jobs,
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 3MCQ: In a normal costing system, the cost of a job includes a. actual direct materials, actual direct...
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