Question

Question 21 5 pts In a job order costing system manufacturing overhead is applied to jobs using actual and not estimated costs. True O False Question 22 5 pts Which of the following statements about using a plantwide overhead rate based on direct laboris correct? Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs. The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs. Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver. Question 23 5 pts In job order costing, the predetermined overhead rate multiplied by a job's actual usage of the allocation base equals:

Answer 1

Ans 21. Job order costing system is one of the type of costing system that provides costs to company's product or services.

Job order costing system is used when company provides different product or services to the customers as per their needs. Each custom product or service is considered a job and costs like manufacturing overheads costs, direct labour and direct materials are traced by company to determine the costs of goods manufactured.

In job order costing system, manufacturing overhead is applied to job using a predetermined overhead rate and that rate is calculated by estimating the total factory overhead costs further divided by direct labour hours.

As these are not actual cost but estimated cost, the answer is false.

In a job order costing system manufacturing overhead is applied to jobs using a predetermined overhead cost ( estimated cost ).

Ans 22. A plantwide overhead rate is used when a company allocates all of its manufacturing overhead costs to its production output.

Plantwide overhead rate is an amount per labour hours, an amount per machine-hours or a percentage of direct costs of product.

So the plantwide overhead rate is based on labour costs and labour hours.

So the first three options are not correct as it is not based on only one.

So the correct option is : it is often overly simplistic and incorrect to assume that direct labour-hours is a company's only manufacturing overhead cost driver.