ACCT 4370 - EXAM 1 PRACTICE EXAM

Job-Order Costing System:

A costing system in which many different products, jobs, or services are produced each period - costs are traced and allocated to jobs - (job costs/job units) = avg. cost per unit

An example of a period cost is:

Advertising expense

Define Product Cost:

All costs incurred in acquiring or making a product (Ex. inventoriable costs)

Thomlin Company forecasts that total factory overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000, and the actual machine hours are 330,000 hours. If Thomlin Company uses a predetermined factory overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is over/under applied by?

Applied Overhead = (Pred. Overhead Rate x Actual Machine Hours) - Actual Overhead Incurred = ($50 x 330,000) - $16M = ($17M - $16M) = $1,000,000 OVER

The recording of the factory labor incurred for general factory use would include a debit to:

Factory Overhead

Which is an example of a factory overhead cost?

Factory heating, AC, and lighting

Total Fixed Cost:

Fixed Manufacturing OH + Fixed Selling Expense + Fixed Admin. Expense

Define Manufacturing Overhead:

Includes all manufacturing costs except direct materials and direct labor. Can NOT be easily traced to finished products

Define Common Costs:

Indirect costs incurred to support a number of cost objects, and can NOT be traced to any individual cost object

Define Direct Labor:

Labor costs that CAN be easily traced to individual units of product

Define Indirect Cost:`

The opposite of direct cost, tought to be traced. to a specific unit (Ex. Manufacturing Overhead)

At the end of a fiscal year, the Factory Overhead is small. This balance would normally be:

Transferred to Cost of Goods Sold

The recording of jobs completed includes a credit to:

Work in Process

The recording of jobs completed would include a debit to:

Work in Process

Which of the following costs are referred to as conversion costs?

Direct labor costs and factory overhead costs

The cost of a manufactured product generally consists of which of the following costs?

Direct labor, Direct materials, and Factory overhead

If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a:

Debit balance and under applied

In a Job-Order Costing system, the entry to record the flow of direct materials into production is:

Debit: Work in Process Credit: Materials

The entry to record the direct labor costs into production in a job-order cost accounting system is:

Debit: Work in Process Credit: Wages Payable

Which of these following accounts would be found on an income statement?

Cost of goods sold

Which of the following is a direct material cost for an automobile manufacturer?

Cost of interior upholstery

Define Period Cost:

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued (Ex. advertising costs)

Define Direct Cost:

Costs that can be easily traced to a unit of product

Conversion Cost:

DL + MOH

Prime Cost:

DM + DL

Product Cost:

DM + DL + MOH

Variable Manufacturing Cost:

DM + DL + Variable MOH

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 200,000 total machine hours. Year to date, the actual overhead is $15,500,000 and the actual machine hours are 220,000 hours. If TTC uses a predetermined overhead rate based on machine hours for applying overhead, what is the overhead rate?

Overhead rate = (total overhead/total machine hours) = 15,000,000/220,000 = $75 per machine hour

Rent expense on a factory building would be treated as a(n):

Product cost (it's a factory cost)

Define Direct Materials:

Raw materials that become an integral part of the product and CAN be easily traced

Which of the following is NOT a product cost?

Sales and administrative expenses

Period Cost:

Selling Expense + Admin. Expense

Which of the following is NOT a prime cost?

Supervisor's wages

Administrative Expenses

The costs to operate the company (Ex. CEO salary)

Marketing/Selling Expenses

The costs to sell and advertise the product (Ex. Salespeople wages)