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Concept introduction:
Predetermined overhead allocation:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product.
To indicate:
The allocation base other than direct labor cost for allocation of Overhead cost.
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Chapter 2 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- Which of the following is a prime cost? A. direct labor B. work in process inventory C. administrative labor D. factory maintenance expensesarrow_forwardWhich is the correct formula for computing the overhead rate? A. estimated use of the cost driver for production/estimated overhead for the activity B. estimated overhead for the product/estimated use of the cost driver for the activity C. estimated use of the cost driver for production/estimated overhead for the activity D. estimated overhead for the activity/estimated use of the cost driver for the activityarrow_forwardAssigning indirect costs to specific jobs is completed by which of the following? applying the costs to manufacturing overhead using the predetermined overhead rate using the manufacturing costs incurred applying the indirect labor to the work in process inventoryarrow_forward
- Freeman Furnishings has summarized its data as shown: Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hoursarrow_forwardOverhead costs are assigned to each product based on __________________. A. the proportion of that products use of the cost driver B. a predetermined overhead rate for a single cost driver C. price of the product D. machine hours per productarrow_forwardA. How is a predetermined factory overhead rate computed? B. Name three common bases used in computing the rate.arrow_forward
- During production, to what are the costs in job order costing applied? A. manufacturing overhead B. cost of goods sold C. each individual product D. each individual departmentarrow_forwardFrenchys has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?arrow_forwardWhat are the sources for posting indirect labor cost to the indirect labor account in the factory overhead ledger?arrow_forward
- The activity base for service industries is most likely to be _________________. A. machine hours B. administrative salaries C. direct labor cost D. direct labor hoursarrow_forwardIn a job order cost system, indirect labor incurred is debited to which account? A. work in process inventory B. finished goods inventory C. manufacturing overhead D. cost of goods soldarrow_forwardFreeman Furnishings has summarized its data as shown. Direct labor hours will be used as the activity base to allocate overhead: Compute the cost of goods manufactured.arrow_forward
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