Exam 13: Job-Costing

Fixed manufacturing overhead is excluded from the cost of products under absorption costing.

Huskies Company had the following information: Budgeted factory overhead \ 85,000 Actual factory overhead \ 105,000 Budgeted: Direct- labor costs \ 100,000 Actual: Direct-labor costs \ 105,000 The budgeted factory- overhead rate using direct- labor costs as the cost driver is:

An unfavorable production- volume variance decreases the manufacturing costs shown on the income statement.

Red Raiders Company had the following information: Budgeted variable factory overhead \6 6,000 Budgeted fixed factory overhead \4 6,500 Actual variable factory overhead \6 7,500 Actual fixed factory overhead \5 2,500 Budgeted cost driver activity levels: Direct- labor hours 30,000 Direct- labor costs \ 150,000 Machine hours 60,000 Productionsetups 15,000 Actual cost driver activity levels: Direct- labor hours 31,500 Direct-labor costs \ 165,600 Machine hours 56,190 Productionsetups 14,280 The budgeted factory- overhead rate using machine hours as the cost driver is:

The fixed- overhead rate is determined by dividing the budgeted fixed manufacturing overhead by:

Fighting Irish 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 s elling and administrative \ 20,000 expenses Fixed selling and adminis trative expenses \1 0,000 Ending inventories: Direct materials -0- WIP -0- Finished goods units were produced.

The immediate write- off method subtracts the underapplied overhead amount from Cost of Goods Sold.

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

The format for the absorption- costing income statement separates costs into major categories of _ _ and _

The variable- costing income statement uses the contribution- approach format.

When actual volume is less than expected volume, fixed overhead is:

Total overhead applied is the result of multiplying the actual amount of the cost driver by the budgeted overhead rate.

is not an inventoriable cost under variable costing.

The proration method of disposing of overhead variances assigns the variance in proportion to the sizes of the ending account balances to:

is (are) computed for fixed overhead.

A company has the following information for its first month of operations: R aw materials used \ 25,000 S ales (\ 65 per unit) \ 78,000 Direct lab or \ 42,000 V ariable 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 The company sold half of the units it produced. _ is the cost of goods sold under absorption costing.

Underapplied and overapplied fixed overhead has two components: (1) a production- volume variance, and (2) a fixed- overhead flexible- budget variance.

Choosing direct- labor cost rather than direct- labor hours as a cost driver for overhead implies that:

Wilson 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 \ 20,000 expenses Fixed s elling and administrative expenses \ 10,000 Endinginventories: Direct materials -0- WIP -0- Finished goods 400 units The gross profit under absorption costing is:

In determining the budgeted overhead application rate, the actual amount of the cost driver is used as the numerator.