Module 1 Practice Exam

For which situation below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?

A costume maker that makes specialty costumes for figure skaters

In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include:

A credit to the manufacturing overhead account

Which of the following situations always results in under applied overhead?

Actual overhead is greater than applied overhead

The corporate controller's salary would be considered:

Administrative Cost

Which of the following below increases cash?

Borrowing money by issuing a six-month note

During December, Fleeger Corporation incurred $51,000 of direct labor costs and $5,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

Debit to Work in Process of $51,000

Which of the following should be added to net income in calculating net cash flow from operating activities?

Depreciation Expense

Prime costs consists of direct materials combined with:

Direct Labor

Cash paid to acquire treasury stock should be shown on the statement of cash flows from investing activities

False

The cost of goods manufactured for a period is the amount transferred from work in process inventory to finished goods inventory during the period.

False

The declaration and issuance of a stock dividend would be reported on the statement of cash flows

False

Wages paid to production supervisors would be considered direct labor.

False

When completed goods are sold, the transaction is recorded as a debit to Cost of Goods Sold and a credit to Work in Process.

False

Munos Publishing Company uses a Job-Order Costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record the completion of Job KN668 at a total cost of $7,600?

Finished Goods $7,600 Work in Process $7,600

Which two terms below describe the wages paid to security guards that monitor a factory 24 hours a day?

Fixed cost and indirect cost

The sum of all amounts transferred from the Work in Process account and into the Finished Goods account represent the Cost of Goods Manufactured for the period.

True

Freeman Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labor hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor hours. The cost records for the year will show:

Underapplied overhead of $6,000

Direct labor is a part of both prime cost and conversion cost.

True

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $50,000 $60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

$296,000

Mega Sales sells some used store fixtures. The acquisition cost of the fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $3,000. The value of this transaction in the Investing section of the statement of cash flows is:

$3000

The following costs were incurred in August: Direct Materials $20,000 Direct Labor $18,000 Manufacturing Overhead $21,000 Selling Expenses $16,000 Administrative Expenses $21,000 Prime costs during the month totaled:

$38,000

The current period statement of cash flows includes the following: Cash balance at the beginning of the period $410,000 Cash provided by operating activities 185,000 Cash used in investing activities 43,000 Cash used in financing activities 97,000 The cash balance at the end of the period is?

$455,000

The following costs incurred in August: Direct Materials $37,000 Direct Labor $14,000 Manufacturing Overhead $38,000 Selling Expenses $10,000 Administrative Expenses $28,000 Conversion costs during the month totaled:

$52,000

Which of the following terms could be used to correctly describe the wages paid to the workers that cut up the cloth into the jean pattern shapes?

Conversion cost and variable cost

During October, Kreitner Inc. transferred $73,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $76,000. The journal entries to record these transactions would include a:

Credit to Work in Process of $73,000

What journal entry would Munos make to record $9,500 of depreciation on its printing process?

Manufacturing Overhead $9,500 Accumulated Depreciation $9,500

The costs of direct materials are classified as:

Manufacturing cost, prime cost and no conversion cost

Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?

Period Cost

The cost of fire insurance for a manufacturing plant is generally considered to be a:

Product Cost

An example of period cost is:

Rent on a headquarters building

Cash paid for equipment would be reported in the statement of cash flows in:

The cash flows from investing activities section

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in

The cash flows from operation activities section

Which of the following companies would be most likely to use a job-order costing system rather than a process cost system?

Shipbuilding