ACCT 2102 Test 1 Conceptual

1. What percentage complete is used for the equivalent unit calculation as it relates to transferred-in units? a. 0% b. 100% c. The same percentage as used for direct material costs in ending inventory. d. The same percentage as used for conversion costs in ending inventory.

B

1. In which of the following situations is a company most likely to benefit from implementing ABC? a. When the company already has the necessary accounting and technological expertise in place. b. When the company operates in an environment where the risk of cost distortion is high. c. When the company has very few competitors. d. When the company produces and sells a single product.

B

1. An activity performed on a group of units is said to be what ABC level of activity? a. batch b. unit c. facility d. product

A

1. Choose the option that best finishes the following statement: If the MOH actually used by a cost object in production is different than the MOH allocated to the cost object, _________ a. the total cost of the cost object will be distorted. b. the POHR used by the costing system is incorrect. c. the company will report a loss on the sale of the cost object. d. the company's customer base will decline.

A

1. Complete the statement: Equivalent units are used in a process costing system ______ a. to address the difference in cost that should be assigned to a completed unit and to a partially completed unit. b. to help track the physical flow of units through the production process. c. to differentiate between units started during the period and unit completed during the period. d. to accurately calculate gross profit for the period.

A

1. What is the formula to calculate the predetermined manufacturing overhead rate? a. total estimated MOH ÷ total estimated activity level for the allocation base b. total estimated direct labor costs ÷ total estimated direct labor hours c. total actual MOH ÷ total actual activity level for the allocation base

A

1. Which of the following equations best represents the formula for calculating profit? a. Revenue - Expenses b. Cash In - Cash Out c. Assets - Liabilities d. Sales - Costs

A

1. Which of the following is NOT considered a refined costing system for purposes of allocating MOH? a. traditional b. departmental c. activity based costing

A

1. Which of the following represents the sequential series of inventory accounts that product costs pass through for a manufacturer? a. Raw Material Inventory, Work in Process Inventory, Finished Goods Inventory b. Direct Material Inventory, Direct Labor Inventory, Manufacturing Overhead Inventory c. Research and Development, Design, Production, Marketing, Distribution, Customer Service d. Sales Revenue, Cost of Good Sold, SG&A

A

1. Which of the following statements best explains why MOH is allocated rather than traced to jobs? a. MOH is an indirect product cost. b. MOH is sometimes considered a period cost. c. MOH is not a real cost of production.

A

1. Which of the following statements concerning product costs is correct? a. All links in the value chain can be considered product costs. b. Product costs are initially inventoried on a company's Balance Sheet. c. Period costs are only expensed when a related unit of product is sold. d. Product costs are sometimes referred to as SG&A expenses.

B

1. How many POHRs are calculated if a company uses a departmental costing system to allocate MOH (assume the company has multiple production departments)? a. only one b. none c. more than one

C

1. Which of the following differs between job costing and process costing? a. The product cost categories used. b. The basic accounts used in the accounting system. c. The initial cost object. d. The ultimate cost object.

C

1. Which of the following product cost categories is impossible to trace to a job? a. Direct Material b. Direct Labor c. Manufacturing Overhead d. Operating Expenses

C

1. Which of the following should not be used as allocation bases for MOH in a traditional costing system? a. direct labor hours b. machine hours c. units produced

C

1. Which of the following statements is correct regarding the inventory cost flow assumptions used in process costing? a. The first-in, first-out method is easier to use than the weighted average method. b. The weighted average method is more accurate than the first-in, first-out method when product costs vary drastically from period to period. c. Companies who adopt the weighted average method typically use a production cost report to track units and costs. d. The first-in, first-out method combines the physical flow and costs of units in beginning inventory and units started during the period.

C

1. Which of the following statements is incorrect concerning Job Costing? a. Companies who produce their product in small batches would use Job Costing. b. The initial cost object in Job Costing is a job. c. It is possible for a job to consist of more than one unit of product. d. Only manufacturers can use Job Costing.

D

1. Which of the following would be considered a direct product cost for a computer manufacturer? (assume the company's cost object is a unit of product) a. Commissions paid to sales staff b. Rent paid on the manufacturing facility c. Wages paid to factory supervisors d. Hard drive used in computers

D

1. Why is using a job costing system inefficient for a manufacturer who produces large batches of identical units of product? a. Direct material and direct labor costs cannot be easily identified. b. All units are completed in the period in which they are started. c. The ultimate goal of the costing system is not to determine the cost of unit of product. d. All of the units produced require the same input and conversion process.

D

1. True/False: Conversion costs include direct material and manufacturing overhead.

F

1. True/False: If a balance exists in the temporary MOH account at the end of the period, it can be ignored for purposes of preparing the company's financial statements.

F

1. True/False: It is likely that a company implementing ABC would use only use volume based cost drivers.

F

1. True/False: Only manufacturers have both product and period costs.

F

1. True/False: Units transferred in to department 2 from department 1 during the period and units in beginning inventory for department 2 for the same period are always equal.

F

1. True/False: When raw materials are used for a job, Work in Process Inventory decreases.

F

1. True/False: A departmental costing system will typically use the same types of cost drivers as used with a traditional costing system.

T

1. True/False: Before categorizing costs as either direct or indirect, a company must identify a cost object.

T

1. True/False: Both Merchandisers and Manufacturers hold inventory

T

1. True/False: The ultimate goal of any product costing system for a manufacturer is to determine the cost of producing one unit of product.

T

1. True/False: To calculate the direct labor costs incurred, the direct labor wage rate is multiplied by the direct labor hours logged for the job.

T