1. Why aren't actual overhead costs traced to jobs just as direct materials and direct labour costs are traced to jobs?

2. When would job-order costing be used instead of process costing?

3. What is the purpose of the job cost sheet in a job-order costing system?

4. What is a predetermined overhead rate, and how is it computed?

5. Explain how a sales order, a production order, a job cost sheet, a materials requisition form, and a labour time ticket are involved in producing and costing products.

6. What factors should be considered in selecting a base to be used in computing the pre- determined overhead rate?

7. Define the term cost driver and indicate how it is used in job-order costing.

8. If a company fully allocates all of its overhead costs to jobs, does this guarantee that a profit will be earned for the period?

9. What account is credited when overhead cost is applied to work in process? Would you expect the amount applied for a period to equal the actual overhead costs of the period? Why or why not?

10. What is underapplied overhead? Overapplied overhead? What disposition is made of these amounts at the end of the period?

11. Provide two reasons why overhead might be underapplied in a given year.

12. What adjustment is made for underapplied overhead on the schedule of cost of goods sold? What adjustment is made for overapplied overhead?

13. Gorman Company applies overhead cost to jobs on the basis of direct labour cost. Job A, which was started and completed during the current period, shows charges of $6,000 for direct materials, $15,000 for direct labour, and $7,500 for overhead on its job cost sheet. Job B, which is still in process at year-end, shows charges of $2,500 for direct materials and $4,000 for direct labour. Should any overhead cost be added to Job B at year-end? Explain and calculate the amount, if necessary.

14. A company assigns overhead cost to completed jobs on the basis of 150% of direct labour cost. The job cost sheet for Job 313 shows that $12,000 in direct materials was used on the job and that $16,000 in direct labour cost was incurred. If 750 units were produced in Job 313, what is the unit product cost?

15. What is a plantwide overhead rate? Why are multiple overhead rates, rather than a plantwide overhead rate, used in some companies?

16. Under what conditions would direct labour be a poor allocation base to use in allocat- ing manufacturing overhead?

17. "Predetermined overhead rates smooth product costs." Do you agree? Why?

18. Explain clearly why a portion of overapplied overhead for an interim period should be carried to the balance sheet. What conceptual factor is assumed in the argument?

19. Why does the calculation of the percentages for overapplied overhead reduce the costs of goods sold by the opening inventories? What would happen if such a deduction were not made?