23.

The formula for the predetermined overhead rate is estimated annual overhead costs divided by
an estimated activity base.

24. Actual manufacturing overhead costs should be charged to the Work in Process Inventory
account as they are incurred.

25. A good system of internal control requires that the job order cost sheet be destroyed as soon as
the job is complete.

26. Finished Goods Inventory is charged for the cost of jobs completed during a period.

27. When goods are sold, the Cost of Goods Sold account is debited and the Work in Process
Inventory account is credited.

28. Total manufacturing costs for a period consists of the costs of direct material used, the cost of
direct labor incurred, and the manufacturing overhead applied during the period.

29. Overapplied overhead means that actual manufacturing overhead costs were greater than the
manufacturing overhead costs applied to jobs.

30. If monthly financial statements are prepared, underapplied overhead is shown as a prepaid
expense on the balance sheet.

Answers to True-False Statements

Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.

1. T 6. T 11. F 16. T 21. T 26. T

2. F 7. F 12. F 17. T 22. F 27. F
3. T 8. F 13. T 18. T 23. T 28. T
4. F 9. T 14. F 19. T 24. F 29. F
5. T 10. T 15. F 20. F 25. F 30. T