Multiple Choice Quiz
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Out of 10 questions, you answered 10 correctly with a final grade of 100%
10 correct (100%)
0 incorrect (0%)
0 unanswered (0%)
The correct answer for each question is indicated by a
Illini Company has the following estimated costs for next year:
The company estimates that 16,000 direct labor and 106,000 machine hours will be worked during the year. If overhead is applied
on the basis of direct labor hours, the predetermined overhead rate per direct labor hour will be:
The correct answer is A (Learning Objective 3):
The predetermined overhead rate per hour is determined as follows:
The Hoffman Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead
rate is based on machine hours in the Mixing Department and direct labor cost in the Assembly Department. At the beginning of the
year, the company made the following estimates:
What predetermined overhead rates would be used in the Mixing and Assembly Departments, respectively?
110% and $15
$5.00 and 50%
$8.00 and 50%
$5.00 and 200%
The correct answer is D (Learning Objective 3):
The predetermined overhead rates are determined as follows.
Predetermined overhead rate = Estimated overhead cost ÷ Estimated machine hours
Predetermined overhead rate = $25,000 ÷ 5,000 MHs = $5.00 per MH
Predetermined overhead rate = Estimated overhead cost ÷ Estimated direct labor cost
Predetermined overhead rate = $30,000 ÷ $15,000 = 200%
Which of the following statements is (are) true?
Companies that produce many different products or services are more likely to use job-order costing systems than process
Job-order costing systems are used by service firms and process costing systems are used by manufacturing firms.
Costs are traced to departments and then allocated to units of product when job-order costing is used.
All of the above.
The correct answer is A (Learning Objective 1):
A job-order costing system is typically used in situations where many different products are produced each period.
Generally, a process costing system is used in situations where the company produces many units of a single product for