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WorksheetsChapter 5 : Manufacturing Overhead
Total questions: 15
Worksheet time: 8mins
A major purpose of cost accounting is to..
classify all costs as operating or non-operating
measure, record, and report period costs.
provide information to stockholders for investment decisions.
measure, record, and report product costs.
Which of the following is true about cost accounting?
It involves the determination of company profits.
It involves measuring product costs.
It requires GAAP to be applied.
It requires cost minimizing principles.
Cost accounting or 'costing' is primarily concerned with accumulating information about product costs
TRUE
FALSE
In normal costing; total product cost taking into account are the actual cost of direct materials used, the actual cost of direct labour incurred and the cost of manufacturing overhead applied.
TRUE
FALSE
Why normal costing is better than actual costing (more than 1 answer)
In actual costing, all costs are actual costs including the overhead cost that will likely vary from month to month because it relies on actual production and situations that often face uncertainties
In actual costing, all costs are actual costs including the overhead cost where the information about it will only can be known at the end of the month or at the end of the accounting year.
In normal costing, the predetermined overhead rate that used to assign manufacturing overhead cost to products is more constant and realistic.
In normal costing, production cost can be determined before the production begins so it is more suitable for product pricing
Actual costing is used for reporting purposes only
In actual costing; total product cost taking into account are the actual cost of direct materials used, the actual cost of direct labour and the actual cost of manufacturing overhead incurred.
TRUE
FALSE
predetermined overhead rate (based on direct labour cost) = ....
(budgeted manufacturing cost/budgeted production) x 100%
(budgeted manufacturing overhead cost/budgeted direct labour hours) x 100%
(budgeted manufacturing overhead cost/budgeted direct labour cost) x 100%
(budgeted manufacturing cost/budgeted direct labour cost) x 100%
Which elements need to be journalized? (more than 1 answer)
predetermined overhead rate
actual manufacturing overhead cost
budgeted manufacturing overhead cost
applied manufacturing overhead cost
standard manufacturing overhead cost per unit
predetermined overhead rate (based on direct labour hours) x actual direct labour hours = ....
actual manufacturing cost
budgeted manufacturing overhead cost
actual direct labour cost
applied manufacturing overhead cost
Which is not true about predetermined overhead rate?
It is the rate used to apply manufacturing overhead to work-in-process inventory
It is calculated before the production begins.
It is calculated based on either direct labour cost, direct material cost, direct labour hours, machine hours or production units.
It always fluctuates from time to time.
When do we declare manufacturing overhead is over-applied?
when applied manufacturing overhead cost is more than budgeted manufacturing overhead cost
when applied manufacturing overhead cost is more than actual manufacturing overhead cost
when applied manufacturing overhead cost is less than budgeted manufacturing overhead cost
when applied manufacturing overhead cost is less than actual manufacturing overhead cost
Which element will be debited in manufacturing overhead cost account?
predetermined overhead rate
actual manufacturing overhead cost
budgeted manufacturing overhead cost
applied manufacturing overhead cost
standard manufacturing overhead cost per unit
Manufacturing overhead cost is the most critical element (compared to direct materials and direct labour cost) in determining whether the costing process is normal costing or actual costing
TRUE
FALSE
Normal costing only applicable to manufacturing company.
TRUE
FALSE
When do we declare manufacturing overhead is under-applied?
when actual manufacturing overhead cost is less than budgeted manufacturing overhead cost
when applied manufacturing overhead cost is less than actual manufacturing overhead cost
when applied manufacturing overhead cost is less than budgeted manufacturing overhead cost
when budgeted manufacturing overhead cost is less than applied manufacturing overhead cost
