1. Which of the following statements is true ofa normal costing system?
In a normal costing system, only the costs incurred for directmaterials are used to determine unit cost.
In a normal costing system, only actual costs of directmaterials, direct labor, and overhead are used to determine unitcost.
In a normal costing system, unit costs are determined by addingestimated direct materials, estimated direct labor, and actualoverhead.
In a normal costing system, unit costs are determined by addingactual direct materials, actual direct labor, and estimatedoverhead.
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2. Which of the following is a differencebetween the actual cost system and the normal cost system?
The actual cost system determines unit cost by adding actualcosts of direct materials and actual direct labor, whereas thenormal cost system determines unit cost by adding actual directmaterials, actual direct labor, and estimated overhead.
The actual cost system determines unit cost by adding actualdirect materials, actual direct labor, and actual overhead, whereasthe normal cost system determines unit cost by adding actual directmaterials, actual direct labor, and estimated overhead.
The actual cost system determines unit cost by adding actualcosts of direct materials and actual direct labor, whereas thenormal cost system determines unit cost by adding actual directlabor and estimated overhead.
The actual cost system determines unit cost by approximating theyear’s actual total cost at the beginning of the year, whereas thenormal cost system determines unit cost by approximating the year’sactual total cost based on the total cost of the prior year.
3. Using the normal costing method, how can theoverhead costs be estimated or calculated?
Overhead costs can be calculated by approximating the year’sactual overhead at the end of the year and then using the actualrate to obtain the needed unit cost information.
Overhead costs are estimated by approximating the year’sestimated overhead at the beginning of the year and then using theactual rates from the most recent year to obtain the needed unitcost information.
Overhead costs can be estimated by approximating the year’sactual overhead at the beginning of the year and then using apredetermined rate throughout the year to obtain the needed unitcost information.
Overhead costs can be calculated by approximating the year’sactual overhead at the end of the first six months of the year andthen using the actual rate of this period to obtain the needed unitcost information.
1. Nile Machinery Inc. estimated an annualoverhead cost of $200,000 for the year 20X1. It also estimated anannual activity level of 4,000 units for the year. The actualoverhead cost was $240,000. Calculate the predetermined overheadrate per unit for Nile Machinery for the year 20X1.
$60 per unit
$10 per unit
$50 per unit
$100 per unit
2. For the year 20X1, Argon Systems Inc.’spredetermined overhead rate was 40% of direct labor costs. By theend of the year, the total costs for direct labor was $100,000. Theactual overhead for the year 20X1 was $38,000. Calculate theoverhead variance for the year 20X1.
Underapplied variance of $2,000
Overapplied variance of $2,000
Underapplied variance of $4,000
Overapplied variance of $4,000
3. Which of the following is the mathematicalexpression to calculate the predetermined overhead rate for adepartment?
Predetermined Departmental Overhead Rate = Actual DepartmentOverhead ÷ Estimated Departmental Activity Level
Predetermined Departmental Overhead Rate = Estimated DepartmentOverhead ÷ Actual Departmental Activity Level
Predetermined Departmental Overhead Rate = Estimated DepartmentOverhead ÷ Estimated Departmental Activity Level
Predetermined Departmental Overhead Rate = Actual DepartmentOverhead ÷ Actual Departmental Activity Level
4. Regal Manufacturing Corp., manufacturers ofcustom-made motor engines, has an estimated overhead of $109,500and estimated direct labor hours of 21,900 at the beginning of thecurrent year. It applies overhead based on direct labor hours.Actual direct labor hours for the current year are 22,500.Calculate the overhead applied to production for the year.
$106,580
$112,500
$3,000
$5,920
1. Which of the following documents lists thetotal cost for a single job?
Sales order
Job-order cost sheet
Bill of materials
Goods receipt note
2. Which of the following is true of a materialrequisition form?
It includes the data like type, quantity, and unit price of thedirect materials issued to a job.
It lists the total material cost for a single job.
It is filled out by each employee every day to identify totalmaterial cost and abnormal wastage of material.
It is prepared using the information of material cost entered inthe job-order cost sheet.
3. Vector Paperwork's Inc. produceshigh-quality paper and other stationery items. It uses thejob-order costing system in its manufacturing process. In thefactory, 100 employees work in the production process, 20 assupervisors, 30 in the sales department, and 5 in the accountingdepartment. For which of the following employees must time ticketbe filled out for at the end of each job?
Employees in the accounting department
Employees in the sales department
Supervisors
Employees in the production process
