Underapplied knowledge check 02 the adjustment for

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Underapplied
Knowledge Check 02 The adjustment for overapplied overhead ________.
Knowledge Check 03 When all of a company’s job cost sheets are viewed collectively they form what is known as a ________. Explanation Knowledge Check 01 When a company applies less overhead to production than it actually incurs, it creates what is known as underapplied overhead. When it applies more overhead to production than it actually incurs, it results in overapplied overhead. Knowledge Check 02 When a company applies more overhead to production than it actually incurs, it results in overapplied overhead. In other words, too much overhead has been applied to production. The adjustment for overapplied overhead decreases cost of goods sold (since it has too much overhead in it). A decrease to cost of goods sold increases net operating income. Knowledge Check 03
A job cost sheet accumulates the total direct materials, direct labor, and manufacturing overhead costs assigned to a job. When all of a company’s job cost sheets are viewed collectively they form what is known as a subsidiary ledger. Required information In this learning objective we contrast traditional absorption costing with an alternative approach called activity-based absorption costing. Activity-based absorption costing assigns all manufacturing overhead costs to products based on the activities performed to make those products. We explain how this approach is used to allocate the company’s manufacturing overhead across the two products Knowledge Check 01 What type of predetermined overhead rate is used in activity-based absorption costing? Multiple Knowledge Check 02 An activity measure is like a(n) ________. allocation base Knowledge Check 03 Design work and engineering changes are examples of ________. product-level activities Explanation Knowledge Check 01 The traditional costing approach assigns manufacturing overhead costs to products using a single plantwide predetermined overhead rate whereas the activity-based approach uses multiple activity rates. Knowledge Check 02 An activity measure is an allocation base in an activity-based costing system.
Knowledge Check 03 A product-level activity relates to specific products and typically must be carried out regardless of how many batches are run or units of product are produced and sold. Required information In this learning objective we contrast traditional absorption costing with an alternative approach called activity-based absorption costing. Activity-based absorption costing assigns all manufacturing overhead costs to products based on the activities performed to make those products. We explain how this approach is used to allocate the company’s manufacturing overhead across the two products. Simmons, Inc.’s traditional costing system uses a plantwide predetermined overhead rate based on direct labor-hours (DLHs). The company’s estimated total manufacturing overhead is $1,632,986 and estimated total direct labor-hours for the year is 30,220. Data about its only two

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