each of the following statement may (or may not) describe these technical terms.
ID: 2353209 • Letter: E
Question
each of the following statement may (or may not) describe these technical terms. for each statement indicate the term described or answer "none" if the statement does not correctly describe any of the terms.
A-an activity base that can be traced directly to units produced and can be used as a denominator in computing an overhead application rate.
B-the total of all direct labor, direct materials, and manufacturing overhead transferred from work in process to finished goods.
C-a means of assigning indirect product costs to work in process during the period.
D-a debit balance remaining in the Manufacturing Overhead account at the end of the period.
E-the type of cost accounting system likely to be used by a construction company.
F- the type of cost accounting method likely to be used for overhead costs.
(these are the technical terms I need to match with the above questions:
job order costing
overhead application rate
overapplied overhead
activity based costing
cost driver
cost of finished good manufactured
job cost sheet
Explanation / Answer
An activity base is a measurable component of the manufacturing process (such as machine hours, direct labor hours, etc.) used as a basis in applying manufacturing overhead costs to products. For instance, if machine hours is used as an activity base, unit manufacturing overhead costs will be measured and expressed in terms of dollars per machine hour. To be reliable, an activity base must be a significant cost driver. To be a cost driver means that changes in the activity base cause proportional changes in manufacturing overhead costs incurred. Three elements of cost are entered on the job cost sheet. The cost of material used on the job is determined from material requisitions drawn on the stores department. Labor is determined from timekeeping and payroll records; it is the total wages for all employees who worked directly on a given job. Overhead cost is computed as a function of some other variable such as direct labor cost or machine-hours. The overhead rate is predetermined at the beginning of an accounting period. Job cost sheets are subsidiary records in support of the Work in Process account An overhead cost driver is a measurement that (1) can be traced directly to units of manufactured product, and (2) is a causal factor in the incurrence of overhead costs. The cost driver is used as the activity base (or the denominator) in computing the overhead application rate
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