Question :
7) The approach often used when dealing with small amounts : 1217181
7) The approach often used when dealing with small amounts of underallocated or overallocated overhead is the ________ approach.
A) adjusted allocation-rate
B) proration
C) write-off to cost of goods sold
D) Both A and B are correct.
8) The ________ approach carries the underallocated or overallocated amounts to overhead accounts in the following year.
A) adjusted allocation-rate
B) proration
C) write-off to cost of goods sold
D) None of these answers are correct.
9) A company would use multiple cost-allocation bases:
A) if managers believed the benefits exceeded the additional costs of that costing system
B) because there is more than one way to allocate overhead
C) because this is a simpler approach than using one cost allocation base
D) if managers believe that using multiple cost-allocation bases is the only acceptable method
Answer the following questions using the information below:
Because the Abernathy Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) was different from the actual amount incurred ($225,000).
Ending balances in the relevant accounts are:
Work-in-Process $ 10,000
Finished Goods 20,000
Cost of Goods Sold 170,000
10) What is the journal entry used to write off the difference between allocated and actual overhead directly to cost of goods sold?
A) Manufacturing Overhead Allocated 200,000
Cost of Goods Sold 25,000
Manufacturing Overhead Control 225,000
B) Manufacturing Overhead Control 200,000
Cost of Goods Sold 25,000
Manufacturing Overhead Allocated 225,000
C) Manufacturing Overhead Allocated 200,000
Work-in-Process Control 30,000
Cost of Goods Sold 170,000
D) Manufacturing Overhead Control 225,000
Work-in-Process Control 55,000
Cost of Goods Sold 170,000
11) What is the journal entry used to write off the difference between allocated and actual overhead using the proration approach?
A) Manufacturing Overhead Allocated 200,000
Work-in-Process Control 10,000
Finished Goods Control 20,000
Manufacturing Overhead Control 230,000
B) Manufacturing Overhead Allocated 225,000
Work-in-Process Control 1,250
Finished Goods Control 2,500
Cost of Goods Sold 21,250
Manufacturing Overhead Control 200,000
C) Manufacturing Overhead Control 225,000
Work-in-Process Control 1,250
Finished Goods Control 2,500
Cost of Goods Sold 21,250
Manufacturing Overhead Allocated 200,000
D) Manufacturing Overhead Allocated 200,000
Work-in-Process Control 1,250
Finished Goods Control 2,500
Cost of Goods Sold 21,250
Manufacturing Overhead Control 225,000
Answer the following questions using the information below:
Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 20X3:
BudgetActual
Indirect costs $270,000 $300,000
Annual salary of each attorney $100,000 $110,000
Annual salary of each paraprofessional $ 29,000 $ 30,000
Total professional labor-hours 50,000 dlh 60,000dlh
12) When using a normal costing system, year-end accounting records will show that indirect costs are:
A) applied improperly
B) underallocated
C) overbudgeted
D) overallocated
13) Overhead costs allocated each month are expected to equal actual overhead costs incurred each month.
14) When actual indirect costs exceed allocated indirect costs, indirect costs have been underapplied.
15) One reason indirect costs may be underapplied is if actual indirect costs are less than budgeted indirect costs.
16) The proration approach to allocating overapplied or underapplied overhead adjusts individual job-cost records.
