ACNT 2402Chapter 02 - Study GuideQuestions and Answers(2022/2023)

Chapter 02 Job-Order Costing 1. The use of a predetermined overhead rate in a job-order cost system makes it possible to compute the total cost of a job before production is begun. FALSE 2. If direct labor-hours is used as the allocation base in a job-order costing system, but overhead costs are not caused by direct-labor hours, then jobs with high direct labor requirements will tend to be undercosted relative to jobs with low direct labor requirements. FALSE 3. The formula for computing the predetermined overhead rate is: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base TRUE 4. When the predetermined overhead rate is based on direct labor-hours, the amount of overhead applied to a job is proportional to the estimated amount of direct labor-hours for the job. FALSE 5. The cost of a completed job in a job-order costing system typically consists of the actual direct materials cost of the job, the actual direct labor cost of the job, and the manufacturing overhead cost applied to the job. TRUE 6. Job cost sheets are used to record the costs of preparing routine accounting reports. FALSE 7. In a job-order cost system, direct labor is assigned to a job using information from the employee time ticket. TRUE