Test-Bank-for-Introduction-to-Managerial-Accounting-5th-Edition-Brewer,-Garrison,-Noreen
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,Test-Bank-for-Introduction-to-Managerial-Accounting-5th-Edition-Brewer,-Garrison,-Noreen
Chapter 02
Systems Design: Job-Order Costing
True / False Questions
1. Joborder!!costing!!would!!be more likely to be used than process costing in situations where F F F F F F F F F F F F
many different products or services are produced each period to customer specifications. True
F F F F F F F F F F F F
False
2. In a joborder costing system, costs are traced to departments and then allocated to units of
F F F F F F F F F F F F F F F F
product using an average process.
F F F F
True False
3. Joborder costing is used in those situations where units of a product are homogeneous,
F F F F F F F F F F F F F F
such as in the manufacture of sugar.
F F F F F F
True False
4. Joborder costing is usually not used in service organizations such as hospitals and law
F F F F F F F F F F F F F F
firms.
True False
5. The three cost categories appearing on a job cost sheet are: selling expense, manufacturing
F F F F F F F F F F F F F F
expense, and administrative expense.
F F F
True False
6. The labor time ticket contains the details of how much time an employee takes on each task
F F F F F F F F F F F F F F F F F
throughout the day. F F
True False
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7. In order to improve the accuracy of unit costs, most companies recompute the
F F F F F F F F F F F F F
predetermined overhead rate each month. F F F F
True False
8. Use of a single, plantwide overhead rate is generally appropriate only for very large
F F F F F F F F F F F F F F
manufacturing companies. F
True False
9. Predetermined overhead rates are based on actual cost and activity data.
F F F F F F F F F F F
True False
10. The following journal entry would be made to apply overhead cost to jobs in a job-order
F F F F F F F F F F F F F F F F
costing system:
F
True False
11. When completed goods are sold, the transaction is recorded as a debit to Cost of Goods
F F F F F F F F F F F F F F F F
Sold and a credit to Work in Process.
F F F F F F F
True False
12. When the predetermined overhead rate is based on direct labor-hours, the amount of
F F F F F F F F F F F F F
overhead applied to a job is proportional to the amount of actual direct labor-hours incurred
F F F F F F F F F F F F F F F
on the job.
F F
True False
13. Actual manufacturing overhead costs are traced to specific jobs.
F F F F F F F F F
True False
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,Test-Bank-for-Introduction-to-Managerial-Accounting-5th-Edition-Brewer,-Garrison,-Noreen
14. A credit balance in the Manufacturing Overhead account at the end of the year means that
F F F F F F F F F F F F F F F F
overhead was underapplied.
F F
True False
15. The sum of all amounts transferred from the Work in Process account and into the
F F F F F F F F F F F F F F F
Finished Goods account represents the Cost of Goods Manufactured for the period.
F F F F F F F F F F F F
True False
16. The most common accounting treatment of underapplied manufacturing overhead is to
F F F F F F F F F F F
transfer it to the Manufacturing Overhead control account.
F F F F F F F
True False
Multiple Choice Questions
F F
17. Which of the following companies would be most likely to use a job-order costing system
F F F F F F F F F F F F F F F
rather than a process costing system?
F F F F F
A. fast food restaurant
F F
B. shipbuilding
C. crude oil refining
F F
D. candy making F
18. Computing unit product costs involves averaging in:
F F F F F F
A. A
B. B
C. C
D. D
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,Test-Bank-for-Introduction-to-Managerial-Accounting-5th-Edition-Brewer,-Garrison,-Noreen
19. For which situation(s) below would an organization be more likely to use a job-order
F F F F F F F F F F F F F F
costing system of accumulating product costs rather than a process costing system?
F F F F F F F F F F F
A. a steel factory that processes iron ore into steel bars
F F F F F F F F F
B. a factory that processes sugar and other ingredients into black licorice
F F F F F F F F F F
C. a costume maker that makes specialty costumes for figure skaters
F F F F F F F F F
D. all of the above
F F F
20. In job-order costing, all of the following statements are correct with respect to labor time
F F F F F F F F F F F F F F F
and cost except:
F F
A. time tickets are kept by employees showing the amount of work on specific jobs.
F F F F F F F F F F F F F
B. the job cost sheet for a job will contain all direct labor charges to that particular job.
F F F F F F F F F F F F F F F F
C. labor cost that can be traced to a job only with a great deal of effort is treated as part of
F F F F F F F F F F F F F F F F F F F F F
manufacturing overhead. F
D. a machine operator performing routine annual maintenance work on a piece of equipment
F F F F F F F F F F F F F
would charge the maintenance time to a specific job.
F F F F F F F F
21. Which of the following documents is used to specify the type and quantity of materials
F F F F F F F F F F F F F F F
drawn from the storeroom, and identifies the job to which the costs of the materials are to be
F F F F F F F F F F F F F F F F F F
charged?
A. Job Cost Sheet F F
B. Bill of Materials
F F
C. Material Requisition Form F F
D. Purchase Order F
22. Choice of allocation base should be made based on:
F F F F F F F F
A. the relative size of the base.
F F F F F
B. the base's relation to direct labor.
F F F F F
C. the base's activity.
F F
D. whether the base actually drives the cost being allocated.
F F F F F F F F
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23. In a job-order costing system, the journal entry to record the application of overhead cost
F F F F F F F F F F F F F F F
to jobs would include:
F F F
A. a credit to the Manufacturing Overhead account.
F F F F F F
B. a credit to the Work in Process inventory account.
F F F F F F F F
C. a debit to Cost of Goods Sold.
F F F F F F
D. a debit to the Manufacturing Overhead account.
F F F F F F
24. Ivory Company uses a job-order costing system. What year-end journal entry could Ivory
F F F F F F F F F F F F F
make to dispose of (close out) $4,150 of overapplied manufacturing overhead cost?
F F F F F F F F F F F
A. A
B. B
C. C
D. D
25. In a job-order costing system, the use of indirect materials would usually be recorded as a
F F F F F F F F F F F F F F F F
debit to: F
A. Raw Materials. F
B. Work in Process. F F
C. Manufacturing Overhead. F
D. Finished Goods. F
26. In a job-order costing system, direct labor costs usually are recorded initially with a debit
F F F F F F F F F F F F F F F
to:
A. Manufacturing Overhead. F
B. Finished Goods inventory. F F
C. Direct Labor Expense. F F
D. Work in Process. F F
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27. In a job-order costing system, the entry to record depreciation on manufacturing
F F F F F F F F F F F F
equipment would include: F F
A. a debit to the Work in Process inventory account.
F F F F F F F F
B. a debit to the Depreciation Expense account.
F F F F F F
C. a debit to the Manufacturing Overhead account.
F F F F F F
D. a credit to the Work in Process inventory account.
F F F F F F F F
28. Which of the following accounts is debited when indirect labor is recorded?
F F F F F F F F F F F
A. Work in Process F F
B. Salaries and Wages Expense F F F
C. Salaries and Wages Payable F F F
D. Manufacturing Overhead F
29. When applying manufacturing overhead to jobs, the formula to calculate the amount is as
F F F F F F F F F F F F F F
follows:
A. Predetermined overhead rate divided by the actual manufacturing overhead incurred on the
F F F F F F F F F F F F
particular job. F
B. Predetermined overhead rate times the actual manufacturing overhead incurred on the
F F F F F F F F F F F
particular job. F
C. Predetermined overhead rate divided by the actual units of allocation base charged to the
F F F F F F F F F F F F F F
particular job. F
D. Predetermined overhead rate times the actual units of allocation base charged to the
F F F F F F F F F F F F F
particular job. F
30. In a job-order costing system, the amount of overhead cost that has been applied to a job
F F F F F F F F F F F F F F F F F
that remains incomplete at the end of a period:
F F F F F F F F
A. is deducted on the Income Statement as overapplied overhead.
F F F F F F F F
B. is closed to Cost of Goods Sold.
F F F F F F
C. is transferred to Finished Goods at the end of the period.
F F F F F F F F F F
D. is part of the ending balance of the Work in Process inventory account.
F F F F F F F F F F F F
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31. If a company applies overhead to jobs on the basis of a predetermined overhead rate, a
F F F F F F F F F F F F F F F F
credit balance in the Manufacturing Overhead account at the end of any period means that:
F F F F F F F F F F F F F F
A. more overhead cost has been charged to jobs than has been incurred during the period.
F F F F F F F F F F F F F F
B. more overhead cost has been incurred during the period than has been charged to jobs.
F F F F F F F F F F F F F F
C. the amount of overhead cost charged to jobs is greater than the estimated cost for the
F F F F F F F F F F F F F F F F
period.
D. the amount of overhead cost charged to jobs is less than the estimated overhead cost for the
F F F F F F F F F F F F F F F F F
period.
32. Which of the following situations always results in underapplied overhead?
F F F F F F F F F
A. actual overhead is greater than applied overhead
F F F F F F
B. actual overhead is less than applied overhead
F F F F F F
C. estimated overhead is greater than actual overhead F F F F F F
D. estimated overhead is less than actual overhead F F F F F F
33. When closing overapplied manufacturing overhead to cost of goods sold, which of the
F F F F F F F F F F F F F
following would be true? F F F
A. Work in process will decrease. F F F F
B. Cost of goods sold will increase.
F F F F F
C. Net income will decrease.
F F F
D. Gross margin will increase. F F F
34. The Work in Process inventory account of a manufacturing company shows a balance of
F F F F F F F F F F F F F
$2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs
F F F F F F F F F F F F F F F F F
show charges of $400 and $200 for direct materials, and charges of $300 and $500 for direct
F F F F F F F F F F F F F F F F F
labor. From this information, it appears that the company is using a predetermined overhead
F F F F F F F F F F F F F F
rate, as a percentage of direct labor costs, of:
F F F F F F F F
A. 80%
F
B. 125%
F
C. 300%
F
D. 240%
F
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35. Job 607 was recently completed. The following data have been recorded on its job cost
F F F F F F F F F F F F F F F
sheet:
The company applies manufacturing overhead on the basis of machine-hours. The
F F F F F F F F F F F
predetermined overhead rate is $14 per machine-hour. The total cost that would be recordedon
F F F F F F F F F F F F F F F
the job cost sheet for Job 607 would be:
F F F F F F F F
A. $4,107
F
B. $6,319
F
C. $3,432
F
D. $4,863
F
36. The following data have been recorded for recently completed Job 501 on its job cost
F F F F F F F F F F F F F F F
sheet. Direct materials cost was $3,067. A total of 30 direct labor-hours and 104 machine-
F F F F F F F F F F F F F F F
hours were worked on the job. The direct labor wage rate is $12 per labor-hour. The company
F F F F F F F F F F F F F F F F F
applies manufacturing overhead on the basis of machine-hours. The predetermined overhead
F F F F F F F F F F F
rate is $11 per machine-hour. The total cost for the job on its job cost sheet would be:
F F F F F F F F F F F F F F F F F
A. $4,571
F
B. $3,757
F
C. $3,090
F
D. $3,427
F
37. Freeman Company uses a predetermined overhead rate based on direct labor-hours to apply
F F F F F F F F F F F F F
manufacturing overhead to jobs. At the beginning of the year, the company estimated
F F F F F F F F F F F F F
manufacturing overhead would be $150,000 and direct labor-hours would be 10,000. The
F F F F F F F F F F F F
actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor-
F F F F F F F F F F F F F F
hours. The cost records for the year will show:
F F F F F F F F
A. overapplied overhead of $30,000 F F F
B. underapplied overhead of $30,000 F F F
C. underapplied overhead of $6,000 F F F
D. overapplied overhead of $6,000 F F F
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38. Harrell Company uses a predetermined overhead rate based on direct labor-hours to apply
F F F F F F F F F F F F F
manufacturing overhead to jobs. At the beginning of the year the company estimated its total
F F F F F F F F F F F F F F F
manufacturing overhead cost at $400,000 and its direct labor-hours at 100,000 hours. The
F F F F F F F F F F F F F
actual overhead cost incurred during the year was $350,000 and the actual direct labor-hours
F F F F F F F F F F F F F F
incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year
F F F F F F F F F F F F F F F
would be: F
A. $10,000 underapplied F
B. $10,000 overapplied F
C. $50,000 underapplied F
D. $50,000 overapplied F
39. For the current year, Paxman Company incurred $150,000 in actual manufacturing
F F F F F F F F F F F
overhead cost. The Manufacturing Overhead account showed that overhead was overapplied
F F F F F F F F F F F
in the amount of $6,000 for the year. If the predetermined overhead rate was $8.00 per direct
F F F F F F F F F F F F F F F F F
labor-hour, how many hours were worked during the year?
F F F F F F F F
A. 19,500 hours F
B. 18,000 hours F
C. 18,750 hours F
D. 17,750 hours F
40. At the beginning of the year, manufacturing overhead for the year was estimated to be
F F F F F F F F F F F F F F
$702,450. At the end of the year, actual direct labor-hours for the year were 33,100 hours, the
F F F F F F F F F F F F F F F F F
actual manufacturing overhead for the year was $697,450, and manufacturing overhead for
F F F F F F F F F F F F
the year was overapplied by $40,680. If the predetermined overhead rate is based on direct
F F F F F F F F F F F F F F F
labor-hours, then the estimated direct labor-hours at the beginning of the year used in the
F F F F F F F F F F F F F F F
predetermined overhead rate must have been: F F F F F
A. 31,500 direct labor-hours F F
B. 29,452 direct labor-hours F F
C. 31,276 direct labor-hours F F
D. 33,100 direct labor-hours F F
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,Test-Bank-for-Introduction-to-Managerial-Accounting-5th-Edition-Brewer,-Garrison,-Noreen
Chapter 02
Systems Design: Job-Order Costing
True / False Questions
1. Joborder!!costing!!would!!be more likely to be used than process costing in situations where F F F F F F F F F F F F
many different products or services are produced each period to customer specifications. True
F F F F F F F F F F F F
False
2. In a joborder costing system, costs are traced to departments and then allocated to units of
F F F F F F F F F F F F F F F F
product using an average process.
F F F F
True False
3. Joborder costing is used in those situations where units of a product are homogeneous,
F F F F F F F F F F F F F F
such as in the manufacture of sugar.
F F F F F F
True False
4. Joborder costing is usually not used in service organizations such as hospitals and law
F F F F F F F F F F F F F F
firms.
True False
5. The three cost categories appearing on a job cost sheet are: selling expense, manufacturing
F F F F F F F F F F F F F F
expense, and administrative expense.
F F F
True False
6. The labor time ticket contains the details of how much time an employee takes on each task
F F F F F F F F F F F F F F F F F
throughout the day. F F
True False
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7. In order to improve the accuracy of unit costs, most companies recompute the
F F F F F F F F F F F F F
predetermined overhead rate each month. F F F F
True False
8. Use of a single, plantwide overhead rate is generally appropriate only for very large
F F F F F F F F F F F F F F
manufacturing companies. F
True False
9. Predetermined overhead rates are based on actual cost and activity data.
F F F F F F F F F F F
True False
10. The following journal entry would be made to apply overhead cost to jobs in a job-order
F F F F F F F F F F F F F F F F
costing system:
F
True False
11. When completed goods are sold, the transaction is recorded as a debit to Cost of Goods
F F F F F F F F F F F F F F F F
Sold and a credit to Work in Process.
F F F F F F F
True False
12. When the predetermined overhead rate is based on direct labor-hours, the amount of
F F F F F F F F F F F F F
overhead applied to a job is proportional to the amount of actual direct labor-hours incurred
F F F F F F F F F F F F F F F
on the job.
F F
True False
13. Actual manufacturing overhead costs are traced to specific jobs.
F F F F F F F F F
True False
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14. A credit balance in the Manufacturing Overhead account at the end of the year means that
F F F F F F F F F F F F F F F F
overhead was underapplied.
F F
True False
15. The sum of all amounts transferred from the Work in Process account and into the
F F F F F F F F F F F F F F F
Finished Goods account represents the Cost of Goods Manufactured for the period.
F F F F F F F F F F F F
True False
16. The most common accounting treatment of underapplied manufacturing overhead is to
F F F F F F F F F F F
transfer it to the Manufacturing Overhead control account.
F F F F F F F
True False
Multiple Choice Questions
F F
17. Which of the following companies would be most likely to use a job-order costing system
F F F F F F F F F F F F F F F
rather than a process costing system?
F F F F F
A. fast food restaurant
F F
B. shipbuilding
C. crude oil refining
F F
D. candy making F
18. Computing unit product costs involves averaging in:
F F F F F F
A. A
B. B
C. C
D. D
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19. For which situation(s) below would an organization be more likely to use a job-order
F F F F F F F F F F F F F F
costing system of accumulating product costs rather than a process costing system?
F F F F F F F F F F F
A. a steel factory that processes iron ore into steel bars
F F F F F F F F F
B. a factory that processes sugar and other ingredients into black licorice
F F F F F F F F F F
C. a costume maker that makes specialty costumes for figure skaters
F F F F F F F F F
D. all of the above
F F F
20. In job-order costing, all of the following statements are correct with respect to labor time
F F F F F F F F F F F F F F F
and cost except:
F F
A. time tickets are kept by employees showing the amount of work on specific jobs.
F F F F F F F F F F F F F
B. the job cost sheet for a job will contain all direct labor charges to that particular job.
F F F F F F F F F F F F F F F F
C. labor cost that can be traced to a job only with a great deal of effort is treated as part of
F F F F F F F F F F F F F F F F F F F F F
manufacturing overhead. F
D. a machine operator performing routine annual maintenance work on a piece of equipment
F F F F F F F F F F F F F
would charge the maintenance time to a specific job.
F F F F F F F F
21. Which of the following documents is used to specify the type and quantity of materials
F F F F F F F F F F F F F F F
drawn from the storeroom, and identifies the job to which the costs of the materials are to be
F F F F F F F F F F F F F F F F F F
charged?
A. Job Cost Sheet F F
B. Bill of Materials
F F
C. Material Requisition Form F F
D. Purchase Order F
22. Choice of allocation base should be made based on:
F F F F F F F F
A. the relative size of the base.
F F F F F
B. the base's relation to direct labor.
F F F F F
C. the base's activity.
F F
D. whether the base actually drives the cost being allocated.
F F F F F F F F
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23. In a job-order costing system, the journal entry to record the application of overhead cost
F F F F F F F F F F F F F F F
to jobs would include:
F F F
A. a credit to the Manufacturing Overhead account.
F F F F F F
B. a credit to the Work in Process inventory account.
F F F F F F F F
C. a debit to Cost of Goods Sold.
F F F F F F
D. a debit to the Manufacturing Overhead account.
F F F F F F
24. Ivory Company uses a job-order costing system. What year-end journal entry could Ivory
F F F F F F F F F F F F F
make to dispose of (close out) $4,150 of overapplied manufacturing overhead cost?
F F F F F F F F F F F
A. A
B. B
C. C
D. D
25. In a job-order costing system, the use of indirect materials would usually be recorded as a
F F F F F F F F F F F F F F F F
debit to: F
A. Raw Materials. F
B. Work in Process. F F
C. Manufacturing Overhead. F
D. Finished Goods. F
26. In a job-order costing system, direct labor costs usually are recorded initially with a debit
F F F F F F F F F F F F F F F
to:
A. Manufacturing Overhead. F
B. Finished Goods inventory. F F
C. Direct Labor Expense. F F
D. Work in Process. F F
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27. In a job-order costing system, the entry to record depreciation on manufacturing
F F F F F F F F F F F F
equipment would include: F F
A. a debit to the Work in Process inventory account.
F F F F F F F F
B. a debit to the Depreciation Expense account.
F F F F F F
C. a debit to the Manufacturing Overhead account.
F F F F F F
D. a credit to the Work in Process inventory account.
F F F F F F F F
28. Which of the following accounts is debited when indirect labor is recorded?
F F F F F F F F F F F
A. Work in Process F F
B. Salaries and Wages Expense F F F
C. Salaries and Wages Payable F F F
D. Manufacturing Overhead F
29. When applying manufacturing overhead to jobs, the formula to calculate the amount is as
F F F F F F F F F F F F F F
follows:
A. Predetermined overhead rate divided by the actual manufacturing overhead incurred on the
F F F F F F F F F F F F
particular job. F
B. Predetermined overhead rate times the actual manufacturing overhead incurred on the
F F F F F F F F F F F
particular job. F
C. Predetermined overhead rate divided by the actual units of allocation base charged to the
F F F F F F F F F F F F F F
particular job. F
D. Predetermined overhead rate times the actual units of allocation base charged to the
F F F F F F F F F F F F F
particular job. F
30. In a job-order costing system, the amount of overhead cost that has been applied to a job
F F F F F F F F F F F F F F F F F
that remains incomplete at the end of a period:
F F F F F F F F
A. is deducted on the Income Statement as overapplied overhead.
F F F F F F F F
B. is closed to Cost of Goods Sold.
F F F F F F
C. is transferred to Finished Goods at the end of the period.
F F F F F F F F F F
D. is part of the ending balance of the Work in Process inventory account.
F F F F F F F F F F F F
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31. If a company applies overhead to jobs on the basis of a predetermined overhead rate, a
F F F F F F F F F F F F F F F F
credit balance in the Manufacturing Overhead account at the end of any period means that:
F F F F F F F F F F F F F F
A. more overhead cost has been charged to jobs than has been incurred during the period.
F F F F F F F F F F F F F F
B. more overhead cost has been incurred during the period than has been charged to jobs.
F F F F F F F F F F F F F F
C. the amount of overhead cost charged to jobs is greater than the estimated cost for the
F F F F F F F F F F F F F F F F
period.
D. the amount of overhead cost charged to jobs is less than the estimated overhead cost for the
F F F F F F F F F F F F F F F F F
period.
32. Which of the following situations always results in underapplied overhead?
F F F F F F F F F
A. actual overhead is greater than applied overhead
F F F F F F
B. actual overhead is less than applied overhead
F F F F F F
C. estimated overhead is greater than actual overhead F F F F F F
D. estimated overhead is less than actual overhead F F F F F F
33. When closing overapplied manufacturing overhead to cost of goods sold, which of the
F F F F F F F F F F F F F
following would be true? F F F
A. Work in process will decrease. F F F F
B. Cost of goods sold will increase.
F F F F F
C. Net income will decrease.
F F F
D. Gross margin will increase. F F F
34. The Work in Process inventory account of a manufacturing company shows a balance of
F F F F F F F F F F F F F
$2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs
F F F F F F F F F F F F F F F F F
show charges of $400 and $200 for direct materials, and charges of $300 and $500 for direct
F F F F F F F F F F F F F F F F F
labor. From this information, it appears that the company is using a predetermined overhead
F F F F F F F F F F F F F F
rate, as a percentage of direct labor costs, of:
F F F F F F F F
A. 80%
F
B. 125%
F
C. 300%
F
D. 240%
F
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,Test-Bank-for-Introduction-to-Managerial-Accounting-5th-Edition-Brewer,-Garrison,-Noreen
35. Job 607 was recently completed. The following data have been recorded on its job cost
F F F F F F F F F F F F F F F
sheet:
The company applies manufacturing overhead on the basis of machine-hours. The
F F F F F F F F F F F
predetermined overhead rate is $14 per machine-hour. The total cost that would be recordedon
F F F F F F F F F F F F F F F
the job cost sheet for Job 607 would be:
F F F F F F F F
A. $4,107
F
B. $6,319
F
C. $3,432
F
D. $4,863
F
36. The following data have been recorded for recently completed Job 501 on its job cost
F F F F F F F F F F F F F F F
sheet. Direct materials cost was $3,067. A total of 30 direct labor-hours and 104 machine-
F F F F F F F F F F F F F F F
hours were worked on the job. The direct labor wage rate is $12 per labor-hour. The company
F F F F F F F F F F F F F F F F F
applies manufacturing overhead on the basis of machine-hours. The predetermined overhead
F F F F F F F F F F F
rate is $11 per machine-hour. The total cost for the job on its job cost sheet would be:
F F F F F F F F F F F F F F F F F
A. $4,571
F
B. $3,757
F
C. $3,090
F
D. $3,427
F
37. Freeman Company uses a predetermined overhead rate based on direct labor-hours to apply
F F F F F F F F F F F F F
manufacturing overhead to jobs. At the beginning of the year, the company estimated
F F F F F F F F F F F F F
manufacturing overhead would be $150,000 and direct labor-hours would be 10,000. The
F F F F F F F F F F F F
actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor-
F F F F F F F F F F F F F F
hours. The cost records for the year will show:
F F F F F F F F
A. overapplied overhead of $30,000 F F F
B. underapplied overhead of $30,000 F F F
C. underapplied overhead of $6,000 F F F
D. overapplied overhead of $6,000 F F F
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38. Harrell Company uses a predetermined overhead rate based on direct labor-hours to apply
F F F F F F F F F F F F F
manufacturing overhead to jobs. At the beginning of the year the company estimated its total
F F F F F F F F F F F F F F F
manufacturing overhead cost at $400,000 and its direct labor-hours at 100,000 hours. The
F F F F F F F F F F F F F
actual overhead cost incurred during the year was $350,000 and the actual direct labor-hours
F F F F F F F F F F F F F F
incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year
F F F F F F F F F F F F F F F
would be: F
A. $10,000 underapplied F
B. $10,000 overapplied F
C. $50,000 underapplied F
D. $50,000 overapplied F
39. For the current year, Paxman Company incurred $150,000 in actual manufacturing
F F F F F F F F F F F
overhead cost. The Manufacturing Overhead account showed that overhead was overapplied
F F F F F F F F F F F
in the amount of $6,000 for the year. If the predetermined overhead rate was $8.00 per direct
F F F F F F F F F F F F F F F F F
labor-hour, how many hours were worked during the year?
F F F F F F F F
A. 19,500 hours F
B. 18,000 hours F
C. 18,750 hours F
D. 17,750 hours F
40. At the beginning of the year, manufacturing overhead for the year was estimated to be
F F F F F F F F F F F F F F
$702,450. At the end of the year, actual direct labor-hours for the year were 33,100 hours, the
F F F F F F F F F F F F F F F F F
actual manufacturing overhead for the year was $697,450, and manufacturing overhead for
F F F F F F F F F F F F
the year was overapplied by $40,680. If the predetermined overhead rate is based on direct
F F F F F F F F F F F F F F F
labor-hours, then the estimated direct labor-hours at the beginning of the year used in the
F F F F F F F F F F F F F F F
predetermined overhead rate must have been: F F F F F
A. 31,500 direct labor-hours F F
B. 29,452 direct labor-hours F F
C. 31,276 direct labor-hours F F
D. 33,100 direct labor-hours F F
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