The basis used for allocating manufacturing overhead (such as machine hours or direct labor hours) should closely align with O a. estimation techniques used in other areas of financial reporting. O b. the GAAP rules for allocating overhead. O c. the incurrence of overhead costs. d. the way that competitors allocate overhead.

The basis used for allocating manufacturing overhead (such as machine hours or direct labor hours) should closely align with O a. estimation techniques used in other areas of financial reporting. O b. the GAAP rules for allocating overhead. O c. the incurrence of overhead costs. d. the way that competitors allocate overhead.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Brown Brothers is debating the use of direct labour cost or direct labour hours as the cost allocation base for allocating manufacturing overhead. The following information is available for the year ended December 31, 20x7. Estimated manufacturing overheads Actual manufacturing overhead costs Estimated direct labour cost Actual direct labour cost $359,600 $340,000 $449,500 $441,000 248,000 242,000 Estimated direct labour hours Actual direct labour hours Manufacturing overhead applied based on direct labour cost is? O a. $352,800 O b. $359,600 O c. $360,000 O d. $348,480
Explain how the analysis of fixed manufacturing overhead costs differs for (a) planning and control and (b) inventory costing for financial reporting.
How do accounting books handle overhead overabsorption and underabsorption?
When used as the denominator in the calculation of an overhead rate, which of the following will cause the least amount of overhead to be applied? a. Theoretical activity level b. Expected activity level c. Practical activity level d. Normal activity level
Describe ways the production cost report can be used by management.
3. What accounts are debited / credited for overhead cost incurred vs overhead cost applied?
How is the predetermined overhead allocation rate used by service companies?
1.An accounting system used to forecast earnings. 2.A costing method that determines the overhead and indirect costs of related products and services. Identify and explain the costing methods ..Explain the pros and cons of both methods.
Explain the difference between period cost and product cost , provide one example for each type. The subject is Managerial Accounting.
The journal entry for adjustment of underallocated manufacturing overhead includes a: A) credit to Finished Goods Inventory. B) credit to Manufacturing Overhead. C) debit to Work-in-Process Inventory. D) credit to Cost of Goods Sold.
Manufacturing overhead consists of all Manufacturing overhead consists of all a.costs other than direct materials and direct labor. b.manufacturing costs other than direct materials. c.manufacturing costs other than direct materials and direct labor. d.costs other than direct materials.
Standard cost are used primarily for: Estimating future costs. To produce financial statements for external users. To judge the performance of accounting managers. To judge the performance of managers involved in the manufacturing process.