ACC 241 Exam #1 Multiple choice

If a frozen pizza plant is the cost object, classify each of the following costs as direct or indirect, respectively: property insurance, plant supervisor wages, and janitorial supplies.

All are direct, because cost object is the frozen pizza PLANT (factory)

Compared to a​ unit-based cost system​ (i.e. plantwide) an ABC cost system will improve costing accuracy​ when: A. overhead is a significant portion of total costs. B. non-unit-level costs are a high proportion of total overhead cost. C. the firm produces highly diverse products D. all of the above

All of the above

Which of the following cost of quality categories represent the cost incurred to detect poor quality goods or services prior to consumer delivery in the​ marketplace?

Appraisal cost

When the level of activity increases within the relevant range, how does each of the following change?

Average Unit=Decreases, Variable Cost=Increases, Fixed Unit=Decreases

Manufacturing overhead is underallocated if the amount

allocated during the period is less than the actual amount incurred.

If manufacturing overhead has been overallocated during the​ period, and most of the jobs produced have been​ sold, then

Cost of Goods Sold on the income statement should be decreased. Your answer is correct.

Machine set-up would most likely be classified as a​ ________ cost.

Batch-level

Machine setups are an example of​ batch-level costs. As the number of units in a batch​ increases, the cost per unit will generally

Decreases

Some management accounting experts argue that manufacturing costs are not inherently fixed or​ variable, but rather a function of the manner in which they are contracted. An example of a cost that is traditionally classified as a fixed cost but behaves as a variable cost​ is:

Depreciation expense that is based on the number of units produced.

The cost of warranty work is an example of a(n):

External failure cost

At a manufacturing​ company, inventory flows from work in process​ inventory, to raw materials​ inventory, to finished goods inventory. T/F

False

Machine set-up would be most likely be considered a unit-level cost. T/F

False

Mixed costs per unit decrease as volume increases because of the variable cost component. T/F

False

The storage of raw materials is considered a value-added activity. T/F

False

Since actual MOH is $20,000 less than estimated MOH, then overhead must have been over-allocated by $20,000. T/F

False (Compare applied to estimated, not actual)

If the finished goods inventory decreases between the beginning and the end of a period, then the cost of goods manufactured for the period is larger than the cost of goods sold. T/F

False (Finished Goods T-Account)

Choosing the method of allocating costs to products (i.e. plantwide vs ABC) can have an impact on the total manufacturing costs. T/F

False (Has impact on product level not total manufacturing cost)

Predetermined overhead rates are based on actual cost and activity data. T/F

False (Total ESTIMATED manufacturing overhead cost/Total ESTIMATED cost driver)

Which of the following statements correctly distinguishes between financial and managerial accounting?

Managerial accounting uses both financial and non-financial measures of performance

Product (inventoriable) costs differ from period expenses because?

Product costs may appear on the balance sheet as assets

Dallas, Inc. an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arise from a:

Product-level activity

Products and their costs flow through a production facility in the following order:

Raw materials, work-in-process, finished goods, cost of goods sold

Which of the following items could be an example of a cost​ object?

The accounting department, a manufacturing plant and an international plant

Inventoriable product costs for a manufactured product include

The costs of direct​ materials, direct labor and manufacturing overhead.

When​ work-in-process inventories increase during the period​ (the ending balance is greater than the beginning​ balance), what can be said of the relationship between total manufacturing costs and the cost of goods​ manufactured? (Assume no change in per unit​ costs.)

Total Manufacturing Costs are greater than the Cost of Goods Manufactured

In a manufacturing​ company, fixed costs remain the same at many different production levels within the relevant range. T/F

True

In activity-based costing, a separate activity rate (i.e., predetermined overhead rate) is computed for each activity cost pool by dividing the estimated overhead cost in the activity cost pool by the total expected activity for the activity cost pool. T/F

True

Indirect manufacturing costs should be included in manufacturing overhead. T/F

True

Volume-based (traditional, plant-wide)) cost systems tend to

Under-cost low-volume products and over-cost high-volume products

Molding and sanding each unit of product would most likely be classified as a​ ________ cost.

Unit - level

​A(n) ________ cost is a cost whose total amount changes in direct proportion to a change in volume.

Variable

Which of the following is an example of a manufacturing overhead expense​ (an indirect product​ cost) in a​ factory? A. Salaries of salespersons B. Wages of machine operators C. Wages of administrators in the corporate office D. Wages of factory maintenance personnel

Wages of factory maintenance personnel

Actual and normal costing are similar in their accounting for

direct material and direct labor costs.

A job costing system can be used by which types of​ companies?

​Service, manufacturing, and merchandising businesses