Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 7, Problem 2RQ
Direct labor-hours and direct labor dollars are the most common allocation bases used in the United States (indeed, throughout the world). Why do you suppose they are used more than others?
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Students have asked these similar questions
iv. How else might FCA use the information available from its department-by-departmentanalysis of manufacturing overhead costs?
v. FCA’s managers are wondering if they should further refine the department-by department costing system into an ABC system by identifying different activities within each department. Discuss the two (2) advantages and two (2) disadvantages of an ABC system, if it is to be implemented in this context?
All the following can be used as an allocation base,
EXCEPT:
a.
direct labor cost
b. direct machine hours
Oc.
units of output if the company has multiple
products
O d. direct labor hours
O e.
All of the given answers can be used.
All the following can be used as an allocation base , EXCEPT :
a All of the given answers can be used .
b. direct labor hours
c. direct labor cost
d. ddirect machine hours
e. units of output if the company has multiple products
Chapter 7 Solutions
Fundamentals of Cost Accounting
Ch. 7 - What are characteristics of companies that are...Ch. 7 - Direct labor-hours and direct labor dollars are...Ch. 7 - What is the purpose of having two manufacturing...Ch. 7 - How does the accountant know what to record for...Ch. 7 - How is job costing in service organizations (for...Ch. 7 - What are the costs of a product using normal...Ch. 7 - Prob. 7RQCh. 7 - What are three common sources of improprieties in...Ch. 7 - In the context of job costing, what are projects?...Ch. 7 - Why do most companies use normal or standard...
Ch. 7 - Why is control of materials important from a...Ch. 7 - Worrying about the choice of an overhead...Ch. 7 - Prob. 13CADQCh. 7 - Interview the manager of a campus print shop or a...Ch. 7 - Would a dentist, an architect, a landscaper, and a...Ch. 7 - Consider two firms in the same industry. Is it...Ch. 7 - Prob. 17CADQCh. 7 - Assume that you have been asked to paint the...Ch. 7 - Prob. 19CADQCh. 7 - ABC Consultants works for only two clients: a...Ch. 7 - Prob. 21CADQCh. 7 - Assigning Costs to Jobs The following transactions...Ch. 7 - Assigning Costs to Jobs Sunset Products...Ch. 7 - Assigning Costs to Jobs Forest Components makes...Ch. 7 - Assigning Costs to Jobs Partially completed...Ch. 7 - Assigning Costs to Jobs Selected information from...Ch. 7 - Assigning Costs to Jobs Partially completed...Ch. 7 - Predetermined Overhead Rates Dixboro Company...Ch. 7 - Predetermined Overhead Rates Southern Rim Parts...Ch. 7 - Refer to the information in Exercise 7-29. Prepare...Ch. 7 - How much overhead was applied to each of the four...Ch. 7 - Refer to the information in Exercise 7-31. Prepare...Ch. 7 - Predetermined Overhead Rates Aspen Company...Ch. 7 - Prob. 34ECh. 7 - Applying Overhead Using a Predetermined Rate Marys...Ch. 7 - Applying Overhead Using a Predetermined Rate Turco...Ch. 7 - Calculating Over- or Underapplied Overhead Toms...Ch. 7 - Predetermined Overhead Rates: Ethical Issues...Ch. 7 - Compute the predetermined rate assuming that...Ch. 7 - Job Costing in a Service Organization At the...Ch. 7 - Job Costing in a Service Organization For August,...Ch. 7 - Job Costing in a Service Organization Allocation...Ch. 7 - Job Costing in a Service Organization TechMaster...Ch. 7 - Prob. 44ECh. 7 - Prob. 45ECh. 7 - Prob. 46PCh. 7 - Estimate Machine-Hours Worked from Overhead Data...Ch. 7 - Estimate Hours Worked from Overhead Data Capitol,...Ch. 7 - What will Wabash report as Cost of Goods Sold for...Ch. 7 - Assigning CostsMissing Data The following...Ch. 7 - Assigning Costs: Missing Data The following...Ch. 7 - Analysis of Overhead Using a Predetermined Rate...Ch. 7 - Analysis of Overhead Using a Predetermined Rate...Ch. 7 - Finding Missing Data A new computer virus...Ch. 7 - Cost Accumulation: Service Youth Athletic Services...Ch. 7 - Job Costs: Service Company For the month of July,...Ch. 7 - Job Costs in a Service Company On September 1, two...Ch. 7 - Tracing Costs in a Job Company The following...Ch. 7 - Cost Flows through Accounts Brighton Services...Ch. 7 - Show Flow of Costs to Jobs Kims Asphalt does...Ch. 7 - Reconstruct Missing Data A tornado struck the only...Ch. 7 - Find Missing Data IYF Corporation manufactures...Ch. 7 - Find Missing Data Accounting records for NIC...Ch. 7 - Incomplete Data: Job Costing Chelsea Household...Ch. 7 - Job Costing and Ethics Old Port Shipyards does...Ch. 7 - Job Costing and Ethics Chuck Moore supervises two...Ch. 7 - Job Costing and Ethics Global Partners is a...Ch. 7 - Prob. 68ICCh. 7 - What is the predetermined overhead rate for...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What accounts in the income statement are used to determine labor cost per man hour? Wages would be a major cost but what others need to be included?arrow_forwardWhich of the following statements is incorrect? O A. If MOH is overallocated to a job that has been sold, and the company calculates sales price by marking up job costs, the job will likely be underpriced. O B. The formula to arrive at the POHR is total budgeted manufacturing overhead divided by total estimated allocation base. O C. To calculate the increase to WIP for allocated MOH costs, the POHR is multiplied by the actual amount of the allocation based used by the cost object. D. "Number of units" is typically not an appropriate allocation base for MOH because the company's products do not consume equal overhead resources. If the over/underallocated MOH is fairly large and the majority of the units have not been sold, the balance in MOH should be prorated between WIP, FG, and COGS. O E.arrow_forwardWhich among the following is not a direct cost? a. Labour b. Raw material c. Factory wages d. Selling overheads fastarrow_forward
- Which of the following correctly describes the term cost driver? a. The inflation rate which causes costs to rise b. The primary factor which is correlated with the amount of cost incurred to produce a product c. The initial purchase price of direct materials d. The total material, labor, and overhead cost of a completed jobarrow_forward2. Which of the following is a possible cost driver that may be used in calculating a company's predetermined overhead rate? A) Direct labour hours B) Direct labour dollars C) Machine hours D) All of the abovearrow_forwardThese are tue/false questions. ____ 21. Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative. ____ 22. Equivalent units of production are the number of units that could have been manufactured from start to finish during an accounting period. ____ 23. One of the differences in accounting for a process costing system compared to a job order system is that the amounts used to transfer goods from one department to the next comes from the cost of production report instead of job cost cards. ____ 24. The primary accounting tool for controlling and reporting for cost centers is a budget performance report. ____ 25. The dollars available from each unit of sales to cover fixed cost and profit is the unit variable cost.arrow_forward
- Listed below are costs found In varlous organizations. Requlred: For each cost item, Indicate whether It would be varlable or fixed with respect to the number of units produced and sold; and then whether It would be a selling cost, an administrative cost, or a manufacturing cost. If It Is a manufacturing cost, Indicate whether It is a direct cost or an Indirect cost with respect to units of product. Variable or Fixed Administrative Cost Manufacturing Manufacturin (Product) Cost (Product) Co Cost Item Selling Cost Direct InDirect Example: Direct labor Example: Executive salaries Example: Factory rent 1. Property taxes, factory. 2. Boxes used for packaging detergent produced by the company. 3. Salespersons' commissions. 4. Supervisor's salary, factory. 5. Depreciation, executive autos. 6. Wages of workers assembling computers. 7. Insurance, finished goods warehouses. 8. Lubricants for production equipment. 9. Advertising costs. 10. Microchips used in producing calculators. 11. Shipping…arrow_forwardPlease answer parts 4 and 5.arrow_forwardBefore automation became more prevalent, overhead was often calculated and allocated as a function of direct labor costs or direct labor hours. Why was this the case, and has this pattern changed?arrow_forward
- Why have companies such as Harley-Davidson stopped tracking direct labor cost as a separate cost category?arrow_forwardRequired: For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product. Three sample answers are provided for illustration. Cost Item Example: Direct labor Example: Executive salaries Example: Factory rent 1. Property taxes, factory. 2. Boxes used for packaging detergent produced by the company. 3. Salespersons' commissions. 4. Supervisor's salary, factory. 5. Depreciation, executive autos. 6. Wages of workers assembling computers. 7. Insurance, finished goods warehouses. 8. Lubricants for production equipment. 9. Advertising costs. 10. Microchips used in producing calculators. 11. Shipping costs on merchandise sold. 12. Magazine subscriptions, factory lunchroom. 13. Thread in a garment factory. 14. Executive life…arrow_forwardWhy is it better to use separate overhead rates? * A. Some departments are labor-intensive, some are machine-intensive.B. Labor rates vary considerably among departments.C. The resulting overhead rates are all about the same.D. All jobs require about the same percentage of time in all departments.arrow_forward
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