Nonmanufacturing costs are classified into two categories: selling and administr

Question

Nonmanufacturing costs are classified into two categories: selling and administrative. Conversion costs consist of product costs and period costs. The materials requisition serves as the source document for debiting the accounts in the materials ledger. If the underapplied factory overhead amount is immaterial, it is transferred to Cost of Goods f Sold at the end of the fiscal year. As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the balance sheet as inventory. Job order cost accounting systems may be used for planning and controlling a service business. Zom Co. budgeted $600,000 of factory overhead cost for the coming year. Its plantwide , allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Zorn's plantwide factory overhead rate is $6.00 per unit. Multiple production department factory overhead rates are less accurate and less costly than are plantwide factory overhead rates.

Explanation / Answer

9. false (conversion cost consist of labour cost and overheads)

10. true

11.false

12. true

13. true

14. false it is 3 per unit (600000/200000)

15. false , they are more accurate

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