D101 Cost and Managerial Accounting - Set 4 - Part 3

Correct Answer: As debits to the manufacturing overhead account

Actual overhead costs are recorded as debits to the manufacturing overhead account, and they are later allocated to jobs using the predetermined overhead rate.

Correct Answer: They are transferred from work-in-process to finished goods

When a job is completed, the total costs associated with that job are transferred from the work-in-process account to the finished goods account.

Correct Answer: Direct materials used in production

Direct materials are considered a direct cost because they can be directly traced to the production of specific goods or services.

Correct Answer: Number of machine hours

In activity-based costing, machine hours are commonly used as a cost driver to allocate manufacturing overhead to products that use more machine time.

Correct Answer: Fixed costs are constant in total, while variable costs change with production

Fixed costs remain constant in total regardless of production levels, while variable costs change in total based on production activity.

Correct Answer: To analyze the impact of changes in costs and volume on profits

Cost-volume-profit (CVP) analysis helps managers understand how changes in costs, sales volume, and price affect profits, allowing for better decision-making.

Correct Answer: To account for partially completed units

Equivalent units of production allow companies to calculate the cost of partially completed units and assign a proportionate amount of costs to them.

Correct Answer: Total fixed costs divided by the contribution margin ratio

The break-even point in dollars is calculated by dividing total fixed costs by the contribution margin ratio, which shows how much of each sales dollar contributes to covering fixed costs.

Correct Answer: Process costing is used for mass production, while job order costing is used for unique products

Process costing is typically used for industries with continuous, mass production of similar products, while job order costing is used for industries that produce unique, custom products.

Correct Answer: It is debited to cost of goods sold

Underapplied overhead occurs when the actual overhead is greater than the applied overhead. To close it, the difference is debited to cost of goods sold, increasing the expense.