ACC406 Midterm 2 Exam UPDATED
ACTUAL QUESTIONS AND CORRECT
ANSWERS
CHAPTER 5 - CORRECT ANSWER Job Order Costing
To estimate overhead and apply to output - CORRECT ANSWER 1.Calculate Predetermined
Overhead Rate
2.Apply to Overhead Production
3.Reconcile applied overhead with actual overhead and allocate difference to COGS, WIP, and
finished goods ending inventories
To Calculate Predetermined Overhead Rate - CORRECT ANSWER Estimated Annual
Overhead / Estimated Annual Activity Level
To Apply Overhead to Production Throughout the Year - CORRECT ANSWER Predetermined
Overhead Rate x Actual Activity Level
Total Cost of Product - CORRECT ANSWER Actual DM + Actual DL + Applied Overhead
To reconcile applied overhead with actual overhead - CORRECT ANSWER Actual Overhead -
Applied Overhead
If Actual Overhead > Applied Overhead = Underapplied Overhead meaning, ADD to COGS
If Actual Overhead < Applied Overhead = Overapplied Overhead meaning, SUBTRACT from COGS
What is Activity Level - CORRECT ANSWER same as Direct Labour
Define Plantwide Overhead Rate - CORRECT ANSWER single overhead rate calculated using
estimated overhead for a factory and dividing by estimated activity for entire plant
Plantwide Overhead Rate - CORRECT ANSWER Total Overhead / Direct Labour Hours
, -take total overhead from the beginning/estimated
Define Departmental Overhead Rate - CORRECT ANSWER estimated overhead for a
department divided by estimated activity level for that same department
Departmental OH Rate - CORRECT ANSWER Estimated Overhead / Estimated Machine/DL
Hrs
Unit Cost - CORRECT ANSWER Total Cost / Number of Units OR
DM + DL + OH
How To Do Job Order Cost Sheet - CORRECT ANSWER Should be in this order, with Job #
across
Begin Balance Month 1
Direct Material
Direct Labor
Applied Overhead --> DL x Overhead Rate
Total, Month 30/31
To calculate WIP and Finished Goods - CORRECT ANSWER In the question, it will say which
jobs were done and which are still continuing
To Find WIP - CORRECT ANSWER 1.Find the total cost using the job cost sheet by doing
Begin Balance + Direct Material + Direct Labor + Applied Overhead
2. If there is more than one job that is WIP then just add it together
To Find Finished Goods - CORRECT ANSWER these are jobs that are done but not sold yet.
To find this: we first add together the beginning balance of finished goods if we have anything and
any jobs that were completed
Cost of Goods Sold - CORRECT ANSWER these are jobs that are done and sold, so again if
there is more than one, we add the totals together
ACTUAL QUESTIONS AND CORRECT
ANSWERS
CHAPTER 5 - CORRECT ANSWER Job Order Costing
To estimate overhead and apply to output - CORRECT ANSWER 1.Calculate Predetermined
Overhead Rate
2.Apply to Overhead Production
3.Reconcile applied overhead with actual overhead and allocate difference to COGS, WIP, and
finished goods ending inventories
To Calculate Predetermined Overhead Rate - CORRECT ANSWER Estimated Annual
Overhead / Estimated Annual Activity Level
To Apply Overhead to Production Throughout the Year - CORRECT ANSWER Predetermined
Overhead Rate x Actual Activity Level
Total Cost of Product - CORRECT ANSWER Actual DM + Actual DL + Applied Overhead
To reconcile applied overhead with actual overhead - CORRECT ANSWER Actual Overhead -
Applied Overhead
If Actual Overhead > Applied Overhead = Underapplied Overhead meaning, ADD to COGS
If Actual Overhead < Applied Overhead = Overapplied Overhead meaning, SUBTRACT from COGS
What is Activity Level - CORRECT ANSWER same as Direct Labour
Define Plantwide Overhead Rate - CORRECT ANSWER single overhead rate calculated using
estimated overhead for a factory and dividing by estimated activity for entire plant
Plantwide Overhead Rate - CORRECT ANSWER Total Overhead / Direct Labour Hours
, -take total overhead from the beginning/estimated
Define Departmental Overhead Rate - CORRECT ANSWER estimated overhead for a
department divided by estimated activity level for that same department
Departmental OH Rate - CORRECT ANSWER Estimated Overhead / Estimated Machine/DL
Hrs
Unit Cost - CORRECT ANSWER Total Cost / Number of Units OR
DM + DL + OH
How To Do Job Order Cost Sheet - CORRECT ANSWER Should be in this order, with Job #
across
Begin Balance Month 1
Direct Material
Direct Labor
Applied Overhead --> DL x Overhead Rate
Total, Month 30/31
To calculate WIP and Finished Goods - CORRECT ANSWER In the question, it will say which
jobs were done and which are still continuing
To Find WIP - CORRECT ANSWER 1.Find the total cost using the job cost sheet by doing
Begin Balance + Direct Material + Direct Labor + Applied Overhead
2. If there is more than one job that is WIP then just add it together
To Find Finished Goods - CORRECT ANSWER these are jobs that are done but not sold yet.
To find this: we first add together the beginning balance of finished goods if we have anything and
any jobs that were completed
Cost of Goods Sold - CORRECT ANSWER these are jobs that are done and sold, so again if
there is more than one, we add the totals together
