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Chapters 1, 2, 3

In a job-order costing system, direct labor cost is ordinarily debited to:

Work in process

In a job-order costing system, indirect materials that have been previously purchased and that are used in production are recorded as a debit to:

Manufacturing Overhead

Simoneaux Corporation bases its predetermined rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the company established the machine-hours for the upcoming year at 22,000 machine-hours. The estimated variable manufacturing overhead was $8.65 per machine-hour and the estimated total fixed manufacturing overhead was $609,400. The predetermined overhead rate for the recently completed year was closest to:


During October, Crusan Corporation incurred $62,000 of direct labor costs and $4,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

debit to Work in Process of $62,000

Dowan Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year Dowan Company incurred $156,600 in actual manufacturing overhead cost. The manufacturing Overhead account showed that manufacturing overhead was underapplied by $12,600 for the year. If the predetermined overhead rate if $6.00 per direct labor-hour, how many hours did the company work during the year?

24,000 hours

Under Lamprey Company's job-order costing system, manufacturing overhead is applied to Work in Process inventory using a predetermined overhead rate. During January, Lamprey's transactions include the following:
Direct materials issued to production... $90,000
Indirect materials issued to production... $8,000
Manufacturing overhead cost incurred... $125,000
Manufacturing overhead cost applied... $113,000
Direct Labor cost incurred... $107,000
Lamprey Company had no beginning or ending inventories. What was the cost of goods manufactured for January?


Bakker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $77,250 and 2,500 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $79,000 and actual direct labor-hours were 2,400. The overhead for the year was (overapplied/underapplied by $):

$4,840 underapplied

Snappy Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $100,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $5,000 in direct materials and $2,400 in direct labor. The labor rate is $6 per hour. By the end of the year, Snappy had worked a total of 45,000 direct labor-hours and had incurred $110,250 actual manufacturing overhead cost.

Snappy's manufacturing overhead for the year was (over/underapplied by $):

$2,250 overapplied

In activity-based costing, unit product costs computed for external financial reports include manufacturing overhead computed by:

multiplying the activity rate for each cost pool by the corresponding amount of activity required per unit of the product.

Conversion cost consists of which of the following?
A. Manufacturing overhead cost.
B. Direct materials and direct labor cost.
C. Direct labor cost.
D. Direct labor and manufacturing overhead cost.

D. Direct labor and manufacturing overhead cost

Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behavior patterns remain unchanged the:

total cost per unit will decrease

Aberge Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $38,000 and if direct materials are $21,000, the manufacturing overhead is:


Slappy Corporation leases its corporate headquarters building. This lease cost is fixed with respect to the company's sales volume. In a recent month in which the sales volume was 20,000 units, the lease cost was $482,000.

To the nearest whole cent, what should be the average lease cost per unit at a sales volume of 19,200 units in a month? (Assume that this sales volume is within the relevant range.)


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