Cost Accounting - Second Examination

The fundamental cost objects of ABC are

activities

Advanced Technology Products produces 10 different fasteners. Each time a type of fastener is produced, the equipment must be stopped and items such as filters and drills bits must be changed, oil must be added to the equipment and some parts need lubrication. This work must be done before the products can be produced, the costs related to this activity would be part of which cost pool?

Batch-level costs

A major advantage of using the FIFO process-costing method is that

FIFO managers provides managers with information about changes in the cost per unit from one period to the next

If the rework is abnormal ________. A) it is debited to Wages Payable Control B) it is credited to Wages Payable Control C) it is credited to Loss from Abnormal Rework D) it is debited to Loss from Abnormal Rework

D) it is debited to Loss from Abnormal Rework

When the amount of scrap is immaterial, the easiest accounting entry when recording scrap sold for cash is:

Debit: Cash Credit: Sales of Scrap

Which of the following conditions usually exists when comparing normal and abnormal spoilage to controllability?

Normal is uncontrollable, Abnormal is Controllable

Which of the following is the costing system used for mass produces like or similar unites of products?

Process-costing systems

With traditional costing systems, products manufactured in small batches and in small annual volumes may be __________ because batch-related and product-sustaining costs are assigned using unit-related drivers. a. overcosted b. fairly costed c. undercosted d. ignored

Undercosted

Costs of normal spoilage are usually accounted for as

a component of the costs of good units manufactured

When spoiled goods have a disposal value, the net cost of the spoilage is computed by: a. deducting disposal value from the costs of the spoiled goods accumulated to the inspection point b. adding the costs to complete a salable product to the costs accumulated to the inspection point c. calculating the costs incurred to the inspection point d. None of these answers is correct.

a. deducting disposal value from the costs of the spoiled goods accumulated to the inspection point

Which of the following are not conversion costs? a. the cost of tires on an automobile b. the cost of depreciation on an automobile assembly plant c. the cost of direct laborers who assemble the parts of an automobile d. the cost of electricity to run the tools in the automobile assembly plant

a. the cost of tires on an automobile

The costs of normal spoilage are allocated to the units in ending work-in-process inventory, in addition to completed units a. if the units in ending inventory have not passed the inspection point. b. if the units in ending work-in-process inventory have passed the inspection point. c. if the units in ending work in process inventory are more than 50% complete. d. if the units in ending work-in-process inventory are less than 50% complete.

b. if the units in ending work-in-process inventory have passed the inspection point.

Spoilage that is an inherent result of the particular production process and arises even under efficient operating conditions is referred to as ________. A) incremental spoilage B) normal spoilage C) irregular spoilage D) direct spoilage

b. normal spoilage

In the computation of the cost per equivalent unit, the weighted-average method of process costing considers all the costs: a. entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period b. costs that have entered work in process from the units started or transferred in during the current accounting period c. that have entered work in process during the current accounting period from the units started or transferred in minus the costs associated with ending inventory d. that have entered work in process during the current accounting period from the units started or transferred in plus the costs associated with ending inventory

c. that have entered work in process during the current accounting period from the units started or transferred in minus the costs associated with ending inventory

Which of the following statements is true? a. In a job-costing system, individual jobs use different quantities of production resources b. In a process-costing system each unit uses a approximately the same amount of resources c. An averaging process is used to calculate unit costs in a job-costing system d. Both A and B are correct

d. Both A and B are correct

In a process-costing system, the calculation of equivalent unites is used for calculating: a. the dollar amount of the ending inventory b. the dollar amount of the cost of goods sold for the accounting period c. the dollar cost of a particular job d. both a and b are correct

d. both a and b are correct

Which of the following best describes scrap? a. units of production whether fully or partially completed, that do not meet the specifications that required by customers for good units and are discarded or sold at reduced prices b. products of a joint of production process that have low total sales values relative to the total sales c. unites of production that do not meet the specification required by customers but that are subsequently repaired and sold as good finished units d. residual materials that result from manufacturing a product

d. residual materials that result from manufacturing a product

Conversion costs:

in a process costing are usually considered to be added evenly throughout the production process

The loss from adnormal spoilage account would appear

in a seperate line item on an income statement

Activity based costing system differs from traditional costing systems in the treatment of

indirect costs

The inspection point is the:

stage of the production cycle where products are checked to determine whether they are acceptable or unacceptable units

Facility-sustaining costs are the cost of activities

that managers cannot trace to individual products or services but that support the organizations as a whole

An assumption of the FIFO process-costing method is that

the units in the beginning of the inventory are assumed to be completed first

The cost per good unit in the weighted-average method is equal to the:

total cost of direct materials and conversion costs per equivalent unit, plus a share of normal spoilage