acct test 2
The last step in activity-based costing is to a. identify the major activities involved in the manufacture of specific products. b. compute the overhead rate per cost driver. c. identify the cost driver that has a strong correlation to the costs accumulated in the cost pool. d. assign manufacturing overhead costs for each cost pool to products.
d
The predetermined overhead rate is computed by dividing estimated a. level of activity by estimated overhead costs. b. level of activity by expected overhead costs. c. overhead costs by estimated cost of jobs. d. overhead costs by expected activity base.
d
Which of the following is not a step in preparing a production cost report? a. Prepare a cost reconciliation schedule. b. Compute equivalent units of production. c. Compute the physical unit flow. d. Assign costs to particular jobs.
d
direct materials go straight to
direct manterials
_________ measures the work done during the period, expressed in fully completed units.
equivalent units of production
when calculating this we ignore beginning wip (step 2)
equivalent units of production
A debit balance in the Manufacturing Overhead Account at the end of the period indicates that overhead has been overapplied.
f
A mixed cost contains both selling and administrative cost elements.
f
Before costs are allocated to the cost pools, the cost drivers for each cost pool must be identified.
f
Costs are assigned to each specific job in a process cost system.
f
Equivalent units of production equals units completed and transferred out + units in beginning work in process.
f
In the first stage of activity-based costing, overhead is assigned to products using cost drivers.
f
Manufacturing costs incurred in a job order system are accumulated by debits to Purchases, Factory Labor, and Manufacturing Overhead.
f
Margin of safety is the difference between actual sales and contribution margin.
f
Overhead costs are not allocated by means of arbitrary volume-based cost drivers under ABC.
f
The contribution margin is the amount of revenue remaining after deducting fixed costs.
f
The entry to record the cost of goods sold includes a debit to Finished Goods Inventory. True False
f
large things, and each is very different. measures costs for each completed job rather than for set time periods.
job order costing system
this is the difference between actual or expected sales and sales at the breakeven point.
margin of safety
indirect materials goes to
moh
_____ is the actual units to be accounted for during a period, irrespective of any performed. (step 1)
physical units flow
in a _________ system a company can add material, labor, and overhead in all the work in process accounts.
process cost
accumulates the cost of materials, labor and manufacturing overhead just the same as a job order cost system.
process cost system
this is the range of the activity index over which the company expects to operate during the year.
relevant range
A job cost sheet is a form used to record the costs chargeable to a specific job and to determine the total and unit cost of the completed job.
t
Activity-based costing does not change the amount of overhead costs, but it does allocate those costs in a more accurate manner.
t
Actual overhead costs are debited to the Manufacturing Overhead account.
t
Each debit to Work in Process Inventory must be accompanied by a corresponding posting to one or more job cost sheets.
t
Even in today's automated environment, direct labor is sometimes the appropriate basis for assigning overhead cost to products.
t
If the unit contribution margin is $300 and fixed costs are $240,000 then the break-even point in units would be 800 units.
t
In a CVP income statement, contribution margin is reported in the body of the statement.
t
In a process cost system, the unit cost is total manufacturing costs divided by the equivalent units produced during the period.
t
In a process cost system, total costs are determined at the end of a period of time, such as a month.
t
Manufacturing overhead costs cannot be traced directly to a specific job.
t
Sales mix is the percentage that each product represents of total sales.
t
The accumulation of the costs of materials, labor, and manufacturing overhead is the same in a process cost system as in a job order cost system.
t
The cost reconciliation schedule shows that the total costs accounted for equal the total costs to be accounted for.
t
The first step in activity-based costing is to identify and classify the major activities involved in the manufacture of specific products, and allocate manufacturing overhead to the appropriate cost pools.
t
The range over which a company is expected to operate is called the relevant range of the activity index.
t
The requisition of factory supplies to production requires a debit to the Manufacturing Overhead account.
t
Two equivalent unit computations are necessary—one for materials and the other for conversion costs
t
Under ABC, overhead costs are shifted from the high-volume product to the low-volume product.
t
Under a job order system, the company assigns costs to each job, or each batch of goods, to fill a specific customer order or replenish inventory.
t
Value-added activities increase the worth of a product or service to customers and involve resource usage that customers are willing to pay for.
t
Variable costs are costs that remain the same per unit at every level of activity.
t
direct labor hours has to relate to supervising
t
the amount of direct labor used has decreased in many industries. DL goes down DO goes up
t
cost expressed in terms of equivalent units of production. when equivalent units of production are different for materials and conversion costs we compute 3 unit costs: materials, conversions, and total manufacturing (step 3)
unit production cost
each entry to _____ must be accompanied by a corresponding posting to one ore more job cost sheets.
wip
All of the following are benefits of ABC except it leads to a. elimination of all arbitrary cost allocations. b. more accurate cost data. c. enhanced control over overhead costs. d. better management decisions.
a
Unit costs for materials and conversion costs amount to $4 and $5 respectively. The ending work in process costs for 8,000 units (100% complete as to material and 70% complete as to conversion costs) amount to a. $60,000. b. $72,000. c. $44,000. d. $40,000.
a
the achieve ___________ a high degree of correlation must exist between the cost driver and the actuals consumption of the overhead cost in the cost pool.
accurate costing
this is an approach for allocating overhead costs. focuses on activity performed to produce a product or providing a service.
activity based costing
when calculating predetermined overhead rate you debit _____ and credit ________ to record it.
actual costs, (POHR)(actual activity
If the unit selling price is $500, the unit variable cost is $300, and the total monthly fixed costs are $300,000, then the contribution margin ratio is a. 30%. b. 40%. c. 50%. d. 60%.
b
Mixed costs may be separated into fixed costs and variable costs by using a. the relevant range method. b. the high-low method. c. the contribution margin method. d. all of the above.
b
Which of the following is not included in a production cost report? a. Costs accounted for. b. Entries to assign cost. c. Units accounted for. d. Units to be accounted for.
b
A department has no beginning work in process, has started 80,000 units and completed 50,000 units. Its ending work in process is 30,000 units, 60% complete as to conversion costs and fully complete as to materials. Its equivalent units for conversion costs are a. 50,000. b. 80,000. c. 68,000. d. 44,000.
c
In a job order cost system, debits to Work in Process Inventory originate from all of the following except a. applying the predetermined overhead rate. b. assigning direct labor from time tickets. c. assigning actual manufacturing overhead costs to jobs. d. assigning direct materials from requisition slips.
c
In process costing, the computation of unit production costs requires a. the accumulation of material and conversion costs in work in process for each department or process. b. the computation of equivalent units for material and conversion costs. c. both a and b. d. neither a nor b.
c
Machine hours would be an accurate cost driver for a. assembly costs. b. inspecting costs. c. machining costs. d. machine setup costs.
c
Which of the following is a false statement regarding assumptions of CVP analysis? a. Total fixed costs remain constant over the relevant range. b. Unit selling prices are constant. c. Changes in volume or level of activity increase variable costs per unit. d. All units produced are sold.
c
this is the study of how specific costs respond to changes in the level of business activity. some costs change and other remain the same.
cost behavior analysis
this shows that the total costs accounted for equals the total costs to be accounted for. (step 4)
cost reconciliation schedule