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ACC 202 Practice Quizzes

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Which of the following costs at a manufacturing company would be treated as a product cost under variable costing? sales manager's salary direct material cost property taxes on the factory building sales commissions

direct material cost

Prime cost consists of: direct materials and manufacturing overhead. direct materials, direct labor and manufacturing overhead. direct labor and manufacturing overhead. direct materials and direct labor.

direct materials and direct labor.

Tatar Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: Beginning inventories: Raw materials................... $37,000 Work in process................ $15,000 Results of operations: Raw materials purchased on account............................................ $480,000 Raw materials (all direct) requisitioned for use in production...... $434,000 How much is the ending balance in the Raw Materials inventory account? $83,000 $517,000 $37,000 $120,000

$83,000

Parwin Corporation plans to sell 23,000 units during August. If the company has 8,000 units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the month, how many units must be produced during the month? 22,000 24,000 32,000 31,000

24,000

Depreciation on a personal computer used in the marketing department of a manufacturing company would be classified as: A) a period cost that is fixed with respect to the company's output. B) a product cost that is fixed with respect to the company's output. C) a period cost that is variable with respect to the company's output D) a product cost that is variable with respect to the company's output.

A) a period cost that is fixed with respect to the company's output.

Which of the following may appear on a flexible budget performance report? All of the above may appear on a flexible budget performance report. A favorable revenue variance. An unfavorable spending variance. An unfavorable activity variance.

All of the above may appear on a flexible budget performance report.

Which of the following is NOT a period cost? A) Insurance on a company showroom where customers can view new products. B) Depreciation of factory maintenance equipment. C) Salary of a clerk who handles customer billing. D) Cost of a seminar concerning tax law updates that was attended by the company's controller.

B) Depreciation of factory maintenance equipment.

Product costs that have become expenses can be found in: A) selling expenses. B) cost of goods sold. C) administrative expenses D) period costs.

B) cost of goods sold.

Poorly trained workers could have an unfavorable effect on which of the following variances? Labor Rate Variance/Materials Quantity Variance A) Yes/Yes B) Yes/No C) No/Yes D) No/No

QUIZ 1

Chapters 1,2,3

QUIZ 2

Chapters 4,5,6

QUIZ 3

Chapters 7,8,9

The cost of direct materials is classified as a: Conversion Cost - Prime Cost A) No - No B) Yes - No C) No - Yes D) Yes - Yes

Choice C

FINAL QUIZ

Cumulitive

Which of the following would be relevant in the decision to sell or throw out obsolete inventory? Direct Material Cost Assigned to the Inventory/Fixed Overhead Cost Assigned to the Inventory A) Yes/Yes B) Yes/No C) No/Yes D) No/No

Which of the following is NOT a period cost? Depreciation of factory maintenance equipment. Insurance on a company showroom where customers can view new products. Salary of a clerk who handles customer billing. Cost of a seminar concerning tax law updates that was attended by the company's controller.

Depreciation of factory maintenance equipment.

In a process costing system, costs are traced directly to jobs. True False

False

Unit-level activities are performed each time a batch is handled or processed. True False

False

When materials are purchased in a process costing system, a work in process account is debited with the cost of the materials. True False

False

In a CVP graph (sometimes called a break-even chart), unit volume is represented on the horizontal (X) axis and dollars on the vertical (Y) axis. True False

True

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing? sales commissions direct material cost sales manager's salary property taxes on the factory building

direct material cost

Some investment opportunities that should be accepted from the viewpoint of the entire company may be rejected by a manager who is evaluated on the basis of: return on investment. residual income. contribution margin. segment margin.

return on investment.

When manufacturing overhead is applied to production, it is added to: the Work in Process account. the Raw Materials account. the Cost of Goods Sold account. the Finished Goods inventory account.

the Work in Process account.

The usual starting point for a master budget is: the sales forecast or sales budget. the direct materials purchase budget. the production budget. the budgeted income statement.

the sales forecast or sales budget.

A favorable labor rate variance indicates that actual hours exceed standard hours. standard hours exceed actual hours. the standard rate exceeds the actual rate. the actual rate exceeds the standard rate.

the standard rate exceeds the actual rate.

Dukes Corporation used a predetermined overhead rate this year of $2 per direct labor-hour, based on an estimate of 20,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred $38,000 Actual direct labor-hours worked................... 18,500 The overapplied or underapplied manufacturing for the year was: $1,000 underapplied $3,000 overapplied $3,000 underapplied $1,000 overapplied

$1,000 underapplied

Dukes Corporation used a predetermined overhead rate this year of $2 per direct labor-hour, based on an estimate of 20,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred $38,000 Actual direct labor-hours worked................... 18,500 The overapplied or underapplied manufacturing for the year was: $1,000 underapplied $1,000 overapplied $3,000 underapplied $3,000 overapplied

$1,000 underapplied

Mullee Corporation produces a single product and has the following cost structure: Number of units produced each year 7,000 Variable costs per unit: Direct materials $51 Direct labor $12 Variable manufacturing overhead $2 Variable selling and administrative expense $5 Fixed costs per year: Fixed manufacturing overhead $441,000 Fixed selling and administrative expense $112,000 The absorption costing unit product cost is: $63 per unit $65 per unit $149 per unit $128 per unit

$128 per unit

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (5,700 units) $ 319,200 Variable expenses 188,100 Contribution margin 131,100 Fixed expenses 106,500 Net operating income $ 24,600 If the company sells 5,300 units, its net operating income should be closest to: $24,600 $15,400 $22,874 $2,200

$15,400

Millner Corporation has provided the following data from its activity-based costing accounting system: Activity Cost Pool/Total Cost/Total Activity Design Products/ 41,372,448/7,798 product design hours Setting up Batches/$33,300/740 batch set-ups Assembling Products/$126,160/6,640 assembly hours The activity rate for the "designing products" activity cost pool is closest to: $176 per product design hour $57 per product design hour $101 per product design hour $1,372,448 per product design hour

$176 per product design hour

Millner Corporation has provided the following data from its activity-based costing accounting system: Activity Pool Cost/Total Cost/Total Activity Design Products/ 41,372,448/7,798 product design hours Setting up Batches/$33,300/740 batch set-ups Assembling Products/$126,160/6,640 assembly hours The activity rate for the "designing products" activity cost pool is closest to: $176 per product design hour $57 per product design hour $101 per product design hour $1,372,448 per product design hour

$176 per product design hour

Bippus Corporation manufactures two products: Product X08R and Product P56L. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X08R and P56L. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $247,000 13,000 MHs Machine setups Number of setups $60,000 150 setups Product design Number of products $56,000 2 products Order size Direct labor-hours $260,000 10,000DLHs Activity Measure X08R P56L Machine Hours 10,000 3,000 # of Setups 110 40 # of Products 1 4,000 Direct Labor Hrs 6,000 4,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product P56L? $418,000 $311,500 $249,200 $373,800

$249,200

Valvano Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $440,000, variable manufacturing overhead of $2.20 per machine-hour, and 50,000 machine-hours.The estimated total manufacturing overhead is closest to: $110,000 $440,000 $550,000 $440,002

$550,000

Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 70,000 Total fixed manufacturing overhead cost $ 511,000 Variable manufacturing overhead per direct labor-hour $ 2.10 Recently, Job K913 was completed with the following characteristics: Total direct labor-hours 150 Direct materials $ 705 Direct labor cost $ 4,650 The total job cost for Job K913 is closest to: $5,355 $6,765 $2,115 $6,060

$6,765

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity Level 2,500 Machine Hours Variable Overhead Costs: supplies $12,250 indirect labor 22,000 Fixed Overhead Costs supervision 15,500 Utilities 5,500 depreciation 6,500 Total Overhead Cost $61,750 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 2,400 machine-hours rather than 2,500 machine-hours? $59,280 $61,750 $59,830 $60,380

$60,380

Mossfeet Shoe Corporation is a single product firm. The company is predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year? Contribution Margin Ratio/Break Even Point A) Increase/Decrease B) Decrease/Decrease C) Increase/No Effect D) Decrease/No Effect

Which of the following journal entries would be used to record direct labor costs in a company having two processing departments (Department A and Department B)? A) Work in Process XXX Salaries and Wages Payable XXX B) Salaries and Wages Expense XXX Salaries and Wages Payable XXX C) Work in Process-Department A XXX Work in Process-Department B XXX Salaries and Wages Payable XXX D) Salaries and Wages Payable XXX Work in Process XXX

Which of the following is an example of a period cost in a company that makes clothing? A) Fabric used to produce men's pants. B) Monthly depreciation on production equipment. C) Advertising cost for a new line of clothing. D) Factory supervisor's salary.

C) Advertising cost for a new line of clothing.

Which of the following statements is not correct concerning multiple overhead rate systems? A) A company may choose to create a separate overhead rate for each of its production departments. B) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. C) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours. D) A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate.

C) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

Direct costs: A) are incurred to benefit a particular accounting period. B) are the variable costs of producing a product. C) can be easily traced to a particular cost object. D) are incurred due to a specific decision.

C) can be easily traced to a particular cost object.

Firebaugh Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: Raw materials purchased on account............................................ $520,000 Raw materials (all direct) requisitioned for use in production...... $467,000 What is the journal entry to record raw materials used in production? A) Raw Materials................................... 520,000 Work in Process......................... 520,000 B) Raw Materials................................... 467,000 Work in Process......................... 467,000 C) Work in Process................................ 520,000 Raw Materials............................ 520,000 D) Work in Process................................ 467,000 Raw Materials............................ 467,000

If activity is higher than expected, total fixed costs should be higher than expected. If activity is lower than expected, total fixed costs should be lower than expected. True Flase

False

In a process costing system, overhead is allocated to departments after being applied to units of product. True False

False

Under variable costing, fixed manufacturing overhead is treated as a product cost. True False

False

Which of the following statements is not correct concerning multiple overhead rate systems? A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. A company may choose to create a separate overhead rate for each of its production departments. In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours. A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate.

In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which of the following would probably be the most accurate measure of activity to use for allocating the costs of inspecting the finished products at Guerra? Inspection time Direct labor-hours Number of inspections Machine-hours

Inspection time

Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which of the following would probably be the most accurate measure of activity to use for allocating the costs of inspecting the finished products at Guerra? Number of inspections Direct labor-hours Inspection time Machine-hours

Inspection time

Which of the following statements about using a plantwide overhead rate based on direct labor is correct? Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs. It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver. The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs. Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs.

It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

The general model for calculating a quantity variance is: Actual quantity of inputs used × (Actual price − Standard price). Actual price × (Actual quantity of inputs used − Standard quantity allowed for output). (Actual quantity of inputs used × Actual price) − (Standard quantity allowed for output × Standard price). Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).

Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).

The basic idea underlying responsibility accounting is that a manager should be held responsible for those items—and only those items—that the manager can actually control to a significant extent. True False

True

The budgeted income statement is typically prepared before the budgeted balance sheet. True False

True

When a company shifts from a traditional cost system in which manufacturing overhead is applied based on direct labor-hours to an activity-based costing system with batch-level and product-level costs, the unit product costs of high volume products typically decrease whereas the unit product costs of low volume products typically increase. True False

True

A segment of a business responsible for both revenues and expenses would be called: an investment center. a cost center. residual income. a profit center.

a profit center.

Direct costs: are incurred due to a specific decision. are incurred to benefit a particular accounting period. can be easily traced to a particular cost object. are the variable costs of producing a product.

can be easily traced to a particular cost object.

When computing the cost per equivalent unit, the weighted-average method of process costing considers: costs incurred during the current period less cost of beginning work in process inventory. costs incurred during the current period plus cost of beginning work in process inventory. costs incurred during the current period only. costs incurred during the current period plus cost of ending work in process inventory.

costs incurred during the current period plus cost of beginning work in process inventory.

In October, Raddatz Inc. incurred $73,000 of direct labor costs and $6,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a: debit to Manufacturing Overhead of $6,000 debit to Work in Process of $79,000 credit to Work in Process of $79,000 credit to Manufacturing Overhead of $6,000

debit to Manufacturing Overhead of $6,000

During July at Loeb Corporation, $83,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,000. The journal entry to record the requisition from the storeroom would include a: debit to Work in Process of $79,000 debit to Raw Materials of $83,000 debit to Work in Process of $83,000 credit to Manufacturing Overhead of $4,000

debit to Work in Process of $79,000

Which of the following costs are always irrelevant in decision making? sunk costs avoidable costs opportunity costs fixed costs

sunk costs

A reason why absorption costing income statements are sometimes difficult to interpret is that: they omit variable expenses entirely in computing net operating income. they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories. they ignore inventory levels in determining cost of goods sold. they include all fixed manufacturing overhead on the income statement each year as a period cost.

they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories.

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because: activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours. activity-based costing has not been approved by the United Nation's International Accounting Board. under activity-based costing the sum of all product costs does not equal the total costs of the company. under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.

under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because: under activity-based costing the sum of all product costs does not equal the total costs of the company. under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products. activity-based costing has not been approved by the United Nation's International Accounting Board. activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours.

under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.

Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of: units in beginning work in process and the units started and completed. units in ending work in process and the units started and completed units in beginning work in process and the units started. units in ending work in process and the units started.

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