What costs associated with a job are allocated to manufacturing overhead. I always get this question wrong when I look at a sheet of expenses in my managerial accounting class. Does insurance and utilities always count as overhead, for example.

What costs associated with a job are allocated to manufacturing overhead. I always get this question wrong when I look at a sheet of expenses in my managerial accounting class. Does insurance and utilities always count as overhead, for example.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter2: Job Order Costing

Section: Chapter Questions

Problem 7DQ: Discuss how the predetermined factory overhead rate can be used in job order cost accounting to...

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Definition Definition Process by which financial information is analyzed, interpreted, and communicated to managers to support the achievement of an organization's goals. The main objective of managerial accounting is to maximize profits and minimize losses.

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Which of the following statements is true? a. Job-order costing is used only in manufacturing firms. b. Process costing is used only for services. c. Job-order costing is simpler to use than process costing because the recordkeeping requirements are less. d. The job cost sheet is subsidiary to the work-in-process account. e. All of these.
Discuss how the predetermined factory overhead rate can be used in job order cost accounting to assist management in pricing jobs.
In a job order cost system, which account shows the overhead used by the company? A. work in process inventory B. finished goods inventory C. cost of goods sold D. manufacturing overhead
If a job order cost system tracks the direct materials and direct labor, why doesn't It track the actual overhead used for a specific job?
When using job order costing for a professional service business, the primary product (service) costs are: A.Direct Materials and Overhead B.Direct Materials and Direct Labor C.Direct Materials. Direct Labor, and Overhead D. Direct Labor and Overhead
Why are the accounting requirements for job-order costing more demanding than those for process costing?
A job order costing system is most likely used by which of the following? a pet food manufacturer a paper manufacturing company an accounting firm specializing in tax returns a stereo manufacturing company
In a job order cost system, factory wage expense is debited to which account? A. raw materials inventory B. work in process inventory C. finished goods inventory D. cost of goods sold
In a normal costing system, the cost of a job includes a. actual direct materials, actual direct labor, and estimated (applied) overhead. b. estimated direct materials, estimated direct labor, and estimated overhead. c. actual direct materials, actual direct labor, actual overhead, and actual selling cost. d. actual direct materials, actual direct labor, and actual overhead. e. None of these. Job-order costing requires the use of actual, not normal, costing.
What are the sources for posting direct labor cost to (a) individual jobs in the job cost ledger and (b) the work in process account in the general ledger?
Darnell Poston, owner of Poston Manufacturing, Inc., wants to determine the cost behavior of labor and overhead. Darnell pays his workers a salary; during busy times, everyone works to get the orders out. Temps (temporary workers hired through an agency) may be hired to pack and prepare completed orders for shipment. During slower times, Darnell catches up on bookkeeping and administrative tasks while the salaried workers do preventive maintenance, clean the lines and building, etc. Temps are not hired during slow times. Darnell found that workers salaries, temp agency payments, rentals, utilities, and plant and equipment depreciation are the largest dollar accounts. He believes that workers salaries and plant and equipment depreciation are fixed, temp agency payments are associated with the number of orders (since temp workers are used to pack and prepare completed orders for shipment), and electricity is associated with the number of machine hours. When the number of different parts stored by Poston exceeds the space in the materials storeroom, Darnell rents nearby warehouse space. He can rent as much or as little space as he wants on a month-to-month basis. Therefore, he believes warehouse rental payments are variable with the number of parts purchased and stored. The account balances for the past six months as well as the six-month total are as follows: Information on number of machine hours, orders, and parts for the six-month period follows: Required: 1. Calculate the monthly average account balance for each account. Calculate the average monthly amount for each of the three drivers. 2. Calculate fixed monthly cost and the variable rates for temp agency payments, warehouse rent, and electricity. Express the results in the form of an equation for total cost. 3. In July, Darnell predicts there will be 420 orders, 250 parts, and 5,900 machine hours. What is the total labor and overhead cost for July? 4. What if Darnell buys a new machine in July for 24,000? The machine is expected to last 10 years and will have no salvage value at the end of that time. What part of the cost equation will be affected? How? What is the new expected cost in July?