Page 1 1. Indirect labor is a part of:
B. Conversion cost. Labor that cannot be physically traced to particular product is treated as indirect labor and as manufacturing overhead. Conversion cost is the sum of direct labor and manufacturing overhead. These costs are incurred to convert materials into the finished product. Indirect labor is treated as part of manufacturing overhead.
2. Prime cost and conversion cost share what …show more content…
Page 2 1. Overapplied overhead means that: B. The applied overhead cost was greater than the actual overhead cost. Manufacturing overhead cost is applied according to the amount of the allocation base that is incurred in the department. Because the predetermined overhead rate is established before the period begins and is based entirely on estimated data, the overhead cost applied to work in process will differ from the amount of overhead cost actually incurred.
2. Departmental overhead rates are generally preferred to plant-wide overhead rates when: A. The activities of the various departments in the plant are not homogeneous. Plant-wide overhead rate is the traditional system means the amount of overhead funds per direct labor hour. Whereas Departmental overhead rate is the individual amount of overhead funds per direct labor hour.
3. Discretionary fixed costs:
E. None of these. Discretionary fixed costs are fixed costs that are decided by management staff to allocate determined areas to include advertisement and experimentation.
4. An example of committed fixed cost is: B. A long-term equipment lease. Committed fixed costs are fixed costs that are not easy to alter and that have connection with the investment in facilities, materials, and the primary business structure of