D101 Cost and Managerial Accounting - Set 4 - Part 1

Correct Answer: Direct materials

Variable costs change with the level of production, and direct materials are an example of such costs because they vary depending on how many products are produced.

Correct Answer: Estimated total manufacturing overhead and estimated activity level

The predetermined overhead rate is calculated before the period begins, using estimated manufacturing overhead and the estimated activity level (e.g., machine hours or labor hours).

Correct Answer: The completion of a job

When a job is completed, the accumulated costs in the work-in-process account are transferred to the finished goods account.

Correct Answer: To document the use of direct materials in production

A materials requisition form is used to request and document the use of direct materials in the production process.

Correct Answer: A candy manufacturer

Process costing is used by companies that produce large quantities of similar or identical products, like a candy manufacturer.

Correct Answer: Factory supervisor's salary

Manufacturing overhead includes indirect costs associated with production, such as the factory supervisor's salary.

Correct Answer: The sum of the work done on both completed and partially completed units

Equivalent units of production account for both completed units and partially completed units, reflecting the amount of work done during the period.

Correct Answer: More overhead is allocated to jobs than was actually incurred

Overapplied overhead occurs when the overhead allocated to jobs exceeds the actual overhead costs incurred.

Correct Answer: Direct labor

Direct labor is classified as a direct cost of production and is not included in manufacturing overhead, which consists of indirect costs.

Correct Answer: The point where total revenue equals total costs

The break-even point in sales dollars is the point at which total revenue equals total costs, meaning the company makes no profit or loss.

Correct Answer: They are included in manufacturing overhead

Indirect labor costs cannot be directly traced to specific jobs, so they are included in manufacturing overhead and allocated to jobs using a predetermined overhead rate.

Correct Answer: A factor that causes changes in activity costs

In ABC, cost drivers are the factors that cause the cost of an activity to increase or decrease, such as the number of machine setups or production runs.

Correct Answer: When producing unique, customized products

Job order costing is used when each job or batch of products is unique and requires individual cost tracking.

Correct Answer: As debits to the manufacturing overhead account

Actual manufacturing overhead costs are recorded as debits to the manufacturing overhead account throughout the period.

Correct Answer: Variable costs change with the level of production, while fixed costs remain constant

Variable costs fluctuate with production levels, while fixed costs remain constant regardless of the number of units produced.

Correct Answer: The difference between actual sales and break-even sales

The margin of safety measures how much sales can drop before the company reaches its break-even point, providing a cushion against losses.

Correct Answer: To allocate indirect costs to jobs

The predetermined overhead rate is used to allocate indirect manufacturing costs (such as overhead) to individual jobs based on an activity base like direct labor hours or machine hours.

Correct Answer: Direct labor and manufacturing overhead

Conversion costs are the costs incurred to convert raw materials into finished goods, and they include direct labor and manufacturing overhead.

Correct Answer: When products are made in large, continuous batches

Process costing is used for mass production of identical or very similar products, where costs are averaged over large quantities.

Correct Answer: It increases the cost of goods sold

Underapplied overhead means that the amount of overhead applied to jobs is less than the actual overhead incurred, so the difference is added to the cost of goods sold at the end of the period.