Question

Part 2: True or False Questions 1.

A job costing system uses budgeted financial information to apply overhead to large numbers of identical units. ( T / F )

2. Manufacturing overhead is a direct cost. ( T / F )

3. A predetermined overhead rate is based on estimates, not actual amounts. ( T / F )

4. In the Manufacturing Overhead Account, applied overhead accumulated on the credit side throughout the accounting period. ( T / F )

5. Actual overhead costs appear are used to calculate Cost of Goods Manufactured. ( T / F )

6. Disposing of immaterial under or over allocated Manufacturing Overhead is usually done by adjusting the Cost of Goods Sold account. ( T / F )

Answer 1

Part 1

False

In process costing, the budgeted financial information is used to apply overhead to large numbers of identical units.

Part 2

False

Manufacturing overhead is indirect cost as it cannot be traced to particular unit.

Part 3

True

Predetermined overhead rate is calculated by dividing total estimated manufacturing overhead costs by estimated allocation base

Part 4

True

Manufacturing Overhead Account is credited to reflect the application of overhead. Actual overhead costs are recorded on the debit side of the manufacturing overhead account.

Part 5

False

Applied overhead costs are used to calculate Cost of Goods Manufactured.

Part 6

True

when it is material, the proration approach is used to allocate under or over allocated Manufacturing Overhead to Work in Process, Finished Goods, and Cost of Goods Sold.