ACCT 305 Quiz 2 Vocab Questions

Which of the following approaches allocates overhead by multiplying an actual overhead rate * actual activity a. Actual costing b. Normal costing c. Regression costing d. Standard costing

a. Actual costing

For which of the following businesses would a job order cost system be appropriate? a. Auto repair shop b. Crude oil refinery c. Drug manufacturer d. Root beer producer

a. Auto Repair Shop Reason: Auto repair is a job order, while the other choices are process cost

A manager is trying to estimate the manufacturing costs of a new product. Which cost estimation method would be the best method to determine the total cost of manufacturing the new product? a. Engineering estimates b. Regression analysis c. Account analysis d. Scattergraph

a. Engineering estimates Reason: A new product has no previous history so there is no past data points, regression, or account analysis ability

The journal entry to record requisitions of materials for new jobs started during the period is: a. WiP - Mat Inv. b. Mat Inv. - Purch. c. COGS - Fin. Goods d. Fin Goods - WiP

a. WiP - Mat. Inv. Reason: A requisition is a request for material from the production process, so it is materials entering production

Underapplied overhead occurs when the balance in the Manufacturing Overhead Control account is: a. greater than the balance in the Applied MO account b. equal to the balance in the Applied MO account c. less than the balance in the Applied MO account d. less than the balance in the Finished Goods Inventory account

a. greater than the balance in the Applied MO account Reason: Underapplied occurs when the actual overhead incurred exceeds the overhead applied to jobs

The Cost Flow Diagram for product costing includes all of the following costs EXCEPT: a. selling expenses b. direct materials c. direct labor d. fixed manufacturing overhead

a. selling expenses Reason: Selling expense is not a product cost; it is a period cost

Which of the following is the difference between variable costs and fixed costs? a. Variable costs per unit fluctuate and fixed costs per unit remain constant b. Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable c. Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change d. Variable costs per unit change in varying increments, while fixed costs per unit change in equal units

b. Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable Reason: Variable cost per unit are constant, fixed costs in total are constant; in the long term all costs are variable

Fogel Flight Company uses a job-order costing system. The direct materials for Job #045391 were purchased in September and put into production in October. The job was not completed by the end of October. At the end of October, in which account would the direct material cost assigned to #045391 be located? a. Raw materials inventory b. Work-In-Process Inventory c. Finished Goods Inventory d. Cost of Goods Manufactured

b. Work-In-Process Inventory

Given actual costs for various levels of output, the method that will always give the most reliable measure of the fixed and variable components is the: a. high-low method b. linear regression method c. scattergraph method d. account analysis method

b. linear regression method Reason: Linear regression will always give the most reliable measure of the fixed and variable components for various levels of output; high-low may give the best line but scattergraph and account analysis rely on judgement

The basic cost flow model is: a. EB + BB = TI + TO b. BB + EB = TI + TO c. EB - BB = TI - TO d. EB - BB = TO - TI

c. EB - BB = TI - TO Reason: The terms are moved around, but the algebra makes EB - BB = TI - TO and BB + TI - TO = EB equal

When a manufacturing company has a highly automated manufacturing plant producing many different products, what is probably the most appropriate basis of applying overhead costs to work-in-process? a. Direct labor hours b. Direct labor dollars c. Machine hours d. Cost of materials used

c. Machine hours Reason: Machine hours would more closely reflect the usage of the automated equipment

Which of the following accounts is used to accumulate the actual manufacturing overhead costs incurred during a period? a. Applied Manufacturing Overhead b. Work-In-Process Inventory c. Manufacturing Overhead Control d. Cost of Goods Sold

c. Manufacturing Overhead Control

A disadvantage of the high-low method of cost analysis is that it: a. typically results in a totally inaccurate cost formula b. is too time consuming to apply c. uses only two data points, which may not be representative of normal conditions d. relies totally on the judgment of the person performing the cost analysis

c. uses only two data points, which may not be representative to normal conditions Reason: The estimates are not always inaccurate; the high-low method is fast to apply, and it doesn't rely solely on judgement

The journal entry to record the completion of a job in a job order cost system is: a. D: WiP Inv. C: Mat. Inv. b. D: Mat. Inv. C: Purch. c. D: COGS C: Fin. Goods d. D: Fin Goods C. WiP Inv.

d. D: Fin Goods C: WiP Inv. Reason: When a job is complete it leaves work-in-process and goes to finished goods

The journal entry to record the actual manufacturing overhead costs for indirect materials is a. WiP - App. MO b. Mat. - App. MO c. MO Cont. - FG Inv. d. MO Cont. - Mat.

d. MO Cont. - Mat

A cost driver is defined as: a. the largest cost in a manufacturing process b. a fixed cost that cannot be avoided c. the significant factor in developing a new product d. a casual factor that increases the total cost of a cost objective

d. a casual factor that increases the total cost of a cost objective Reason: Cost driver is a casual factor that increases the total cost of a cost objective

In the cost equation TC = F + VX, X is best describes as the: a. cost that do not vary with changes int eh activity level b. costs that do vary with changes in the activity level c. total cost estimate at a particular activity level d. activity level used to estimate the total cost

d. activity level used to estimate the total cost Reason: The letter X is best described as the activity level used to estimate the total cost; for example, this would be the volume in number of units of output, by definition

A system that mass-produces a single, homogeneous output in a continuous process is a(n): a. cost management system b. two-stage allocation system c. operation costing d. continuous flow process

d. continuous flow process Reason: Definition of continuous flow process

In the standard regression equation of y=a+bx, the letter a is best described as the: a. independent variable b. dependent variable c. slope of the equation d. intercept of the equation

d. intercept of the equation Reason: "A" is the intercept of the equation, this is a basic definition of the term of the formula