Exam 13: Accounting for Overhead Costs

Variable costing is more important for external reporting than for internal decision making.

Padres Company had the following information: Budgeted factory overhead \ 78,000 Actual factory overhead \ 80,000 Budgeted: Production setups 12,000 Actual: Production setups 12,500 The journal entry to apply overhead to a job requiring 4,500 setups includes a _____.

The accounts that are affected under the proration method

The difference between applied and budgeted fixed overhead is the_____.

Gross margin appears in a variable-costing income statement.

The proration method of disposing of overhead variances prorates the variance among three accounts including Direct?Materials Inventory, WIP Inventory, and Finished Goods Inventory.

If a company uses the variable-costing approach, a manager might be tempted to produce unneeded units just to increase reported operating income.

The cost system which computes the cost of a manufactured product as the sum of actual direct materials, actual direct labor, and normal applied overhead

The excess of actual overhead over the overhead applied to products

Chester Company reported the following information about the production and sales of its only product during its first month of operations: Sales \ 225 per unit) \ 360,000 Direct materials used \ 176,000 Direct labor \ 100,000 Variable factory overhead \ 44,000 Fixed factory overhead \ 80,000 Variable selling and administrative expenses \ 20,000 Fixed selling and administrative expenses \ 10,000 Ending inventories: Direct materials -0- WIP -0- Finished goods 400 units The operating income loss) under absorption costing is_____.

The most common treatment of an end-of-year immaterial overhead variance is to _____.

When the variable costing method is used, fixed factory overhead appears on the income statement as a_____.

When actual volume is more than expected volume, fixed overhead is underapplied.

A variable-costing income statement separates costs into the major categories of _______________ and _______________

USC Company had the following information: Budgeted factory overhead \ 90,000 Actual factory overhead \ 80,000 Budgeted: Direct-labor hours 20,000 Actual: Direct-labor hours 21,000 The budgeted factory-overhead rate using direct-labor hours as the cost driver is _____.

Suns Company incurred actual overhead costs of $305,000 for the year.A budgeted factory-overhead rate of 150% of direct-labor cost was determined at the beginning of the year.Budgeted factory overhead was $300,000, and budgeted direct-labor cost was $200,000.Actual direct-labor cost was $205,000 for the year.The disposition of the variance assuming a material amount) would include a_____.

_____ is not an inventoriable cost under variable costing.

_____ is are) computed for variable overhead.

What is the best theoretical method of allocating underapplied or overapplied overhead, assuming that the objective is to obtain as accurate a cost application as possible?

A company has the following information for its first month of operations: Raw materials used \ 25,000 Sales \ 65 per unit) \ 78,000 Direct labor \ 42,000 Variable factory overhead \ 17,000 Fixed factory overhead unknown Variable selling and administrative \ 3,000 Fixed selling and administrative \ 5,000 Gross profit \ 30,000 Contribution margin unknown Ending inventories: Raw materials \ 7,000 WIP none Finished goods 1,200 units The total contribution margin under variable costing is_____.