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Exam 13: Accounting for Overhead Costs

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Question 61

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

A) True
B) False

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Question 62

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Illinois Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array}{lr}\text { Sales } \$ 225 \text { per unit) } & \$ 405,000 \\\text { Direct materi als used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative expenses } & \$ 20,000 \\\text { Fixed selling and administrative expenses } & \$ 10,000\\\\\text { Ending inventories: }\\\\\text { Direct materials } & -0- \\\text { WIP } & -0- \\\text { Finished goods } & 400 \text { units }\end{array}$ The cost of goods sold under variable costing is_____.

A) $320,000
B) $360,000
C) $288,000
D) $272,000

E) A) and C)
F) B) and C)

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Question 63

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Carey Company had the following data available: $\begin{array} { l r } \text { B eginring direct-materials inventory } & \$ 26,000 \\\text { B eginning WIP Inventory } & 64,000 \\\text { B eginning finished-goods inventory } & 58,000 \\\text { Direct materials purchased on account } & 148,000 \\\text { Direct materials requisiti oned } & 82,000 \\\text { Direct-labor cost incurred } & 130,000 \\\text { Factory overhead incurred } & 146,000 \\\text { Cost of goods completed } & 292,000 \\\text { Cost of goods sold } & 300,000 \\\text { Overhead applicati on rate } & 150 \% \\\quad \text { as a percent of direct-labor cost) } &\end{array}$ The ending inventory of finished goods is _____.

Roth Company had the following data available: $\begin{array} { l r } \text { B eginring direct-materials inventory } & \$ 26,000 \\\text { Beginning WIP Inventory } & 64,000 \\\text { Beginning finished-goods inventory } & 58,000 \\\text { Direct materials purchased on account } & 148,000 \\\text { Direct materials requisitioned } & 82,000 \\\text { Direct-labor cost incurred } & 130,000 \\\text { Factory overhead incurred } & 146,000 \\\text { Cost of goods completed } & 292,000 \\\text { Cost of goods sold } & 256,000 \\\text { Overhead applicati on rate } & 150 \% \\\quad \text { as a percent of direct-labor cost) } &\end{array}$ The ending inventory of work in process is _____.

The amount of fixed manufacturing overhead applied to each unit of production.It is determined by dividing the budgeted fixed overhead by the expected volume of production for the budget period

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

Tigers Company had the following information: $\begin{array}{l}\text { Budgeted variable factory overhead } & \$ 66,000 \\\text { Budgeted fixed factory overhead } & \$ 46,500 \\& \\\text { Actual variable factory overhead } & \$ 77,500 \\\text { Actual fixed factory overhead } & \$ 62,500\\\\\text { Budgeted cost-driver activity levels: }\\\text { Direct-labor hours } & 30,000 \\\text { Direct-labor costs } & \$ 160,000 \\\text { Machine hours } & 60,000 \\\text { Production setups } & 15,000\\\\\text { Actual cost-driver activity levels: }\\\\\text { Direct-labor hours } & 31,500 \\\text { Direct-labor costs } & \$ 165,600 \\\text { Machine hours } & 56,190 \\\text { Production setups } & 14,280\end{array}$ The budgeted factory-overhead rate using machine hours as the cost driver is _____.

_____ assigns both fixed and variable manufacturing costs to the product.

Ducks Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array}{l}\begin{array} { l r } \text { Sales } \$ 225 \text { per unit) } & \$ 405,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative expenses } & \$ 20,000 \\\text { Fixed selling and administrative expenses } & \$ 10,000\end{array}\\\text { Ending inventories: }\\\begin{array} { l c } \text { Direct materials } & - 0 - \\\text { WIP } & - 0 - \\\text { Finished goods } & 400 \text { units }\end{array}\end{array}$ _____ units were produced.

A production-volume variance is calculated as the applied volume minus the actual volume multiplied by the actual overhead rate.

A normal costing system uses the following _____.

Absorption-costing income is not affected by production volume.

Stars Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array}{lr}\text { Sales } \$ 225 \text { per unit) } & \$ 315,000 \\\text { Direct materials used } & \$ 160,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 60,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and admiristrative expenses } & \$ 20,000 \\\text { Fixed selling and administrative expenses } & \$ 30,000\\\\\text { Ending inventories: }\\\\\text { Direct materials } & -0- \\\text { WIP } & -0- \\\text { Finished goods } & 600 \text { units }\end{array}$ The cost of producing one unit of product using absorption costing is_____.

The most widely used approach in disposing of an overhead variance is proration.

When actual volume is less than expected volume, the production?volume variance is_____.

If a department identifies more than one cost driver for overhead costs, the department ideally should _____.

To apply the budgeted overhead to a job, the budgeted overhead rate is multiplied by the _____.

Any difference in variable-costing and absorption-costing operating income can be explained by multiplying the fixed-overhead product-costing rate by the change in the total units in the beginning and ending inventories.

The production-volume variance serves primarily a product costing purpose.

In absorption costing, costs are separated into the major categories of_____.