Accounting Test

The balance in the Work in Process Inventory account on April 1 was $26,800, and the balance on April 30 was $22,600. Costs incurred during the month were as follows: direct materials, $41,250; direct labor, $21,300; and overhead, $32,600. What amount was transferred to the Finished Goods Inventory account for April? Select one: A. $ 99,350 B. $ 4,200 C. $ 90,350 D. $121,950

A. $ 99,350

The beginning inventory consisted of 10,000 units, 30 percent complete and the ending inventory consisted of 8,000 units, 40 percent complete. There were 22,000 units started during the period.Determine the equivalent unit of conversation in process: Select one: A. 27,200 units B. 20,800 units C. 25,200 units D. 17,800 units

A. 27,200 units

Which of the following product costing methods produces the most precise product costing information? Select one: A. Activity-based costing B. Departmental overhead rate methods C. Organization-based costing D. Plantwide overhead rates

A. Activity-based costing

Which of the following is not a benefit of just-in-time processing? Select one: A. Control of significant inventory balances B. Enhanced product quality C. Reduction of rework costs D. Production cost savings

A. Control of significant inventory balances

When finished goods are sold, there is an increase in which of the following accounts? Select one: A. Cost of Goods Sold B. Cost of Goods Manufactured C. Finished Goods Inventory D. Work-in-Process

A. Cost of Goods Sold

Which of the following views of product costs is consistent with financial reporting requirements? Select one: A. Product costs are all costs incurred in the process of manufacturing products, even if they are only indirectly related to the production process. B. Product costs are all labor and materials costs that are incurred in the process of manufacturing products. C. Product costs are all costs directly incurred in the manufacturing and selling of the product. D. Product costs include all costs incurred throughout the value chain.

A. Product costs are all costs incurred in the process of manufacturing products, even if they are only indirectly related to the production process.

______________ is the time a product exists--from conception to abandonment. Select one: A. Product life cycle B. Revenue producing life C. Consumable life D. Introduction stage

A. Product life cycle

An activity is Select one: A. a unit of work. B. typically not part of a process. C. made up of several units of work. D. unrelated to a process.

A. a unit of work.

The second stage of an activity-based costing two-stage product costing model includes Select one: A. assignment of cost pools to products. B. assignment of cost pools to cost centers. C. assignment of resource costs to cost pools. D. all of the above.

A. assignment of cost pools to products.

The purpose of the statement of cost of goods manufactured is to Select one: A. calculate the cost of goods transferred to finished goods inventory during the period. B. calculate cost of goods sold. C. calculate net income. D. both A and B.

A. calculate the cost of goods transferred to finished goods inventory during the period.

When cost-based pricing is employed and markup is based on manufacturing costs, the markup must be sufficiently large enough to Select one: A. cover selling expenses, administrative expenses, and provide for the desired profit. B. cover selling and administrative expenses. C. provide for the desired profit. D. cover selling expenses and provide for the desired profit.

A. cover selling expenses, administrative expenses, and provide for the desired profit.

The practical capacity for a particular production facility is best described as Select one: A. the highest level of activity possible allowing for normal repairs and maintenance. B. the highest level of activity possible under any circumstance. C. the highest level of activity at which average costs are minimized. D. the level of activity that makes the most practical sense within the framework of a given situation.

A. the highest level of activity possible allowing for normal repairs and maintenance.

The Kanban system developed by the Japanese is also known as Select one: A. the material pull system. B. the weighted average system. C. the activity driven system. D. the automated ordering system.

A. the material pull system.

A goal of performance reporting in a lean accounting system is Select one: A. to provide information to managers for constant improvement in cost efficiency and quality. B. to meet the reporting standards for generally accepted accounting principles. C. to provide full disclosure to the public about manufacturing costs and efficiencies. D. to show which producing departments are using approximately the same or different percentage of services.

A. to provide information to managers for constant improvement in cost efficiency and quality.

Partially completed goods that are in the process of being converted into a finish product are defined as Select one: A. work-in-process inventories. B. conversion inventories. C. raw materials inventories. D. operational inventories.

A. work-in-process inventories.

A single product produced by a continuous manufacturing process is an example of Select one: A. process management. B. job Costing. C. process manufacturing. D. process reengineering.

C. process manufacturing.

In a cost-based pricing approach, the last amount to be determined is Select one: A. variable cost. B. manufacturing cost. C. sales price. D. discretionary fixed cost.

C. sales price.

The following information is available pertaining to Evan Division, that uses a plantwide overhead rate based on machine hours: Mixing Dept. Finishing Dept. Total Overhead $30,000 $73,500 $103,500 Direct labor-hours 4,000 1,250 5,250 Machine-hours 1,500 3,000 4,500 Production information pertaining to Job 501: Mixing Dept. Finishing Dept. Total Prime costs $5,000 $ 0 $5,000 Direct Labor-hours 125 0 125 Machine-hours 5 4 9 Units produced 250 0 250 What are the total overhead costs assigned to Job 501? Select one: A. $240 B. $207 C. $360 D. $180

B. $207

The following information pertains to Hamilton Corporation: Beginning Inventory 1,000 units Ending Inventory 10,000 units Direct labor per unit $13 Direct materials per unit 5 Fixed overhead per unit 7 Fixed SG&A costs per unit 5 Variable overhead per unit 2 Variable SG&A costs per unit 1 What is the value of the ending inventory using the absorption costing method? Select one: A. $240,000 B. $270,000 C. $290,000 D. $343,000

B. $270,000

_____________________ is defined as the identification and selection of activities to maximize the value of the activities while minimizing their cost from the perspective of the final consumer. Select one: A. Activity-based costing B. Activity-based management C. Strategic cost management D. None of the above

B. Activity-based management

Which of the following statements about benchmarking is true? Select one: A. Benchmarking does not provide measurements that are useful in setting goals. B. Benchmarking can help to overcome resistance to change. C. Benchmarking causes employees to think suggested changes are impossible. D. Benchmarking is more efficient than other alternatives.

B. Benchmarking can help to overcome resistance to change.

Which of the following statements describes just-in-time (JIT) inventory management? Select one: A. JIT is an effective approach for shifting inventory costs to vendors. B. JIT is a comprehensive management philosophy that stresses attitudes that lead to minimum level inventories. C. JIT is a customer service driven strategy that seeks to strategically produce some excess inventory to guarantee inventories are always available to customers in a timely manner. D. JIT is only used when a company's vendors ship goods when they are ordered.

B. JIT is a comprehensive management philosophy that stresses attitudes that lead to minimum level inventories.

__________________ calls for establishing cost reduction targets for products or services that an organization is currently providing to customers. Select one: A. Target costing B. Kaizen costing C. Process reengineering D. Activity-based costing

B. Kaizen costing

Which of the following accurately describes the effect target costing has on the manufacturing design function? Select one: A. Target costing allows the design engineer's job to end once the product is designed. B. Target costing forces design engineers to explicitly consider the costs of manufacturing and other aspects of business that traditionally fall outside the engineering department. C. Target costing defines clear lines of responsibility among departments allowing for design engineers to be evaluated purely on meeting the customer's functional requirements. D. Target costing has no implications for design engineering.

B. Target costing forces design engineers to explicitly consider the costs of manufacturing and other aspects of business that traditionally fall outside the engineering department.

Which of the following characteristics is a consequence of the implementation of a plantwide allocation rate? Select one: A. Allocations are first conducted among departments, and then aggregated for the plant as a whole. B. The uniqueness of individual departments is not reflected in the cost numbers. C. Downstream costs are not measured at all. D. Managers have absolutely no incentive to control costs.

B. The uniqueness of individual departments is not reflected in the cost numbers.

An object to which costs are assigned is called Select one: A. a value chain. B. a cost object. C. a cost pool. D. overhead.

B. a cost object.

Cost-based pricing has traditionally been widely used because Select one: A. cost data are cheap. B. cost-based prices are defensible. C. revenues must exceed fixed costs if the firm is to remain in business. D. cost/benefit analysis is critical to such decisions.

B. cost-based prices are defensible.

Just-in-time is an approach toward managing Select one: A. production efficiency. B. inventories. C. labor. D. costs of production inputs.

B. inventories.

Collections of related activities intended to achieve a common purpose are called Select one: A. value chains. B. processes. C. activity groups. D. activities.

B. processes.

From a value chain perspective, value is defined by Select one: A. only the costs associated with producing a product. B. the amount of worth the final customer places on a product or service. C. all costs necessary to deliver a product or service to the end user. D. all costs associated with the life of a product or service (including all upstream and downstream costs).

B. the amount of worth the final customer places on a product or service.

Jackson Company has two service departments (S1 and S2) and two producing departments (A and B). Department S1 serves Departments S2, A, and B in the following percentages, respectively: 15%, 25%, and 60%. Department S2 serves Departments S1, A, and B in the following percentages, respectively: 0%, 70%, and 30%. Direct department costs for S1, S2, A, and B are $200,000, $16,000, $210,000, and $185,000, respectively. If Jackson uses the step method of allocating service department costs beginning with Department S1, what is the total amount of cost that will be allocated from S2 to Department A? Select one: A. $ 12,800 B. $105,000 C. $ 32,200 D. $-0-

C. $ 32,200

Foresight Company manufactures binoculars. The actual costs for 2016 and 2017 were as follows: 2016 2017 Direct materials: Plastic case $ 4.00 $ 3.80 Lens set 17.00 17.20 Direct labor 32.00 (1.6 hours) 30.00 (1.5 hours) Indirect manufacturing costs: Variable 8.00 7.10 Fixed 2.00 (50,000 units) 1.60 (60,000 units) Beginning in 2017, Foresight implemented a continuous improvement program that required a first-year cost reduction target of a 5 percent reduction of the 2016 base.Foresight's continuous improvement target for lens sets in 2017 was: Select one: A. $15.75 B. $17.20 C. $16.15 D. $16.00

C. $16.15

Fixed manufacturing overhead is recorded initially as an asset (inventory) under ______________ costing but as an operating expense under ______________ costing. Select one: A. Absorption; indirect B. Variable; absorption C. Absorption; variable D. Variable; direct

C. Absorption; variable

How is depreciation on the manufacturing building and equipment classified in financial reporting? Select one: A. As an irrelevant cost because it has already been incurred B. As a current expense C. As part of the cost of the products produced D. As a period cost

C. As part of the cost of the products produced

Which of the following statements describes a legitimate disadvantage of cost-based pricing? Select one: A. Marginal costs and revenues are difficult to measure. B. Determining the amount a customer is willing to pay may require estimation. C. Customers may not be willing to pay the price determined by the procedure. D. Most cost data are not readily available.

C. Customers may not be willing to pay the price determined by the procedure.

Which of the following tasks is not required when using a two-stage activity-based costing model? Select one: A. Identifying activities B. Assigning costs to activities C. Determining how much direct labor each cost object consumes D. Determining the cost per unit of activity

C. Determining how much direct labor each cost object consumes

All of the following are typical steps in benchmarking, except: Select one: A. Decide what to benchmark B. Plan the benchmark project C. Limit benchmarking only to competitors D. Understand your own performance

C. Limit benchmarking only to competitors

Which of the following procedures best describes activity-based costing? Select one: A. All overhead costs are recorded as expenses as incurred. B. Overhead costs are assigned directly to products. C. Overhead costs are assigned to activities; then costs are assigned to products. D. Overhead costs are assigned to departments; then costs are assigned to products.

C. Overhead costs are assigned to activities; then costs are assigned to products.

Which of the following statements most accurately describes financial accounting's view of period costs? Select one: A. Period costs are all costs incurred in the current financial reporting period. B. Period costs are all direct costs incurred in the current financial reporting period. C. Period costs are all non-manufacturing expenses incurred in the current financial reporting period. D. Period costs are a component of fully absorbed costs.

C. Period costs are all non-manufacturing expenses incurred in the current financial reporting period.

An element of just-in-time processing is Select one: A. dependable suppliers who are willing to deliver on short notice. B. a multi-skilled workforce. C. a total quality control system. D. all of the above.

C. a total quality control system.

Activity-based costing systems tend to _____________________ high-volume, low-complexity products. Select one: A. undercost B. overcost C. accurately cost D. None of the above

C. accurately cost

The word "Kaizen" is Japanese for Select one: A. materials pull. B. materials push. C. continuous improvement. D. little car.

C. continuous improvement.

A value-added approach focuses an organization's perspective on Select one: A. external suppliers and customers. B. a narrow market niche. C. internal activities and costs. D. governmental regulations.

C. internal activities and costs.

Activity-based costing's primary benefit is that it provides Select one: A. absolutely accurate product costing information. B. data for external financial reporting purposes. C. more precise cost data for internal decision-making purposes. D. all of the above

C. more precise cost data for internal decision-making purposes.

Which of the following statements about activity based costing is true? Select one: A. The most widely used approach to activity-based costing involves the use of a two-stage model. B. Activity-based costing involves tracing the cost of activities used by the various cost objects. C. Activity-based costing involves determining the cost of activities. D. All of the above.

D. All of the above.

________________ is a systematic approach to identifying the best practices to help an organization take action to improve performance. Select one: A. Target costing B. ISO 9000 C. Activity-based management D. Benchmarking

D. Benchmarking

Traditional costing systems often commit the cardinal sin of overproduction in a lean production company if managers are: Select one: A. Ordering excess inventory, to achieve quantity discounts and favorable prices B. Refusing to halt production to determine the cause of a quality problem, in order to avoid having idle employees and equipment C. Trying to obtain lower fixed costs per unit under absorption D. All of the above

D. All of the above

Which of the following aspects of manufacturing must be understood in order to implement activity based costing in a production setting? Select one: A. The production process B. The activities that occur in the production process must be known C. The cost drivers that generate activities within the production process D. All of the above

D. All of the above

Which of the following costs are treated as part of the cost of product? Select one: A. Wages of plant security guards B. Insurance on the plant building and equipment C. Depreciation on the kitchen sink in the plant cafeteria D. All of the above are product costs

D. All of the above are product costs

Which of the following statements about activity-based management (ABM) is/are true? Select one: A. ABM is concerned with how to effectively and efficiently manage activities and processes to provide value to the final consumer. B. ABM focuses managerial attention on what is most important among the activities performed to create value for customers. C. Defining processes and identifying key activities helps management better understand the business and to evaluate whether activities performed add value to the customer. D. All of the above are true.

D. All of the above are true.

All of the following statements about benchmarking are true, except: Select one: A. Benchmarking can be a psychological tool that helps overcome resistance to change. B. Benchmarking provides measurements that are useful in setting goals. C. Benchmarking is a systematic approach to identifying the best practices to help an organization take action to improve performance. D. Benchmarking should be focused only on studying competitors.

D. Benchmarking should be focused only on studying competitors.

Which of the following is not a drawback to cost-based pricing? Select one: A. Cost-based pricing requires accurate cost assignments. B. The greater the portion of unassigned costs, the greater the likelihood of overpricing and underpricing individual products. C. Cost-based pricing assumes goods or services are relatively scarce, and customers who want a product or service are, generally, willing to pay the price. D. In a competitive environment, cost-based approaches decrease the time and cost of bringing new products to market.

D. In a competitive environment, cost-based approaches decrease the time and cost of bringing new products to market.

Assuming sales prices and cost behavior remain unchanged, when absorption costing is used, overproducing creates all of the following situations except? Select one: A. A buildup of inventory levels B. Higher net income C. Less fixed costs on the income statement D. Less variable cost on the balance sheet

D. Less variable cost on the balance sheet

For which of the following products would job order costing be least likely to be used? Select one: A. Residential building B. Textbook printing C. Mortgage loan processing D. Newsprint paper Manufacturing

D. Newsprint paper Manufacturing

Which of the following is not a period cost? Select one: A. The president's salary B. Sales commissions C. Depreciation on the mainframe computer in the Information Systems Department D. Subsidy of the plant cafeteria

D. Subsidy of the plant cafeteria

______________ is when the product loses market acceptance. Select one: A. The start-up stage B. The growth stage C. The maturity stage D. The decline stage

D. The decline stage

What is the purpose for using predetermined overhead rates? Select one: A. Delays in product costing can be avoided B. Variation in cost assignment due to seasonality can be prevented C. Variation in cost assignment due to short-term variations in volume can be prevented D. Use of predetermined overhead rates serves all the above purposes

D. Use of predetermined overhead rates serves all the above purposes

All of the following costs are included in inventory under absorption costing except: Select one: A. Direct materials B. Direct labor C. Fixed manufacturing expenses D. Variable selling expenses

D. Variable selling expenses

Which of the following accounts increases when raw materials are used? Select one: A. Finished Goods Inventory B. Raw Materials Expense C. Raw Materials Inventory D. Work-in-Process Inventory

D. Work-in-Process Inventory

The method of accounting for inventory that assigns all manufacturing costs to inventory is sometimes referred to as Select one: A. prime costing. B. FIFO. C. the weighted average cost method. D. absorption costing.

D. absorption costing.

Activity-based costing is a technique for more precisely measuring the cost and profitability of Select one: A. products. B. customers. C. distribution channels. D. all of the above.

D. all of the above.

In an activity-based costing model, total costs assigned to cost objects may include Select one: A. only direct costs. B. both direct costs and resource costs. C. both activity costs and resource costs. D. both direct costs and activity costs.

D. both direct costs and activity costs.

All of the following are key elements of a just-in-time philosophy, except Select one: A. increased coordination throughout the value chain. B. reduced inventory. C. reduced production times. D. lack of a need for accurate product cost information.

D. lack of a need for accurate product cost information

When a job is completed in a job order costing system, the final cost of the job is determined by summing up Select one: A. the work-in-process inventory subsidiary ledgers. B. the statement of costs of goods manufactured. C. the finished goods activities report. D. the various costs on the job cost sheet

D. the various costs on the job cost sheet