exam 2 acct 310

d

For which of the following industries would​ job-order costing most likely not be​ appropriate? A. Aircraft assembly. B. Small business printing. C. Home construction. D. Cereal production.

b

How does a​ job-costing system differ from a​ process-costing system? A. A​ process-costing system allocates indirect costs to​ products; a​ job-costing system does not allocate indirect costs to products. B. A​ job-costing system assigns costs to distinct​ units; a​ process-costing system assigns costs to masses of similar units. C. A​ job-costing system allocates indirect costs to​ products; a​ process-costing system does not allocate indirect costs to products. D. A​ job-costing system assigns costs to masses of similar​ units; a​ process-costing system assigns costs to distinct units.

b

Identify the appropriate​ way(s) to dispose of​ under- or overallocated overhead costs. A. ​(1) Proration to all operating expense​ accounts, (2)​ Year-end write-off to miscellaneous​ expense, (3) Restatement of all overhead entries using budgeted indirect costs rates rather than actual indirect cost. B. ​(1) Proration to work in​ process, finished goods and cost of good​ sold, (2)​ Year-end write-off to cost of goods​ sold, (3) Restatement of all overhead entries using actual indirect costs rates rather than budgeted indirect cost rates. C. ​(1) Proration to materials​ inventory, finished goods and cost of good​ sold, (2)​ Year-end write-off to work in process​ inventory, (3) Restatement of all overhead entries using budgeted indirect costs rates rather than actual indirect cost. D. No entry is required to dispose of over or​ under-allocated overhead.

a

Identify the main difference between journal entries in process costing and job costing. A. There is often more than one​ work-in-process account in process costinglong dash​-one for each process. B. The journal entries in process costing are posted to record the number of units as they are moved from one department to another. Journal entries in job costing are posted to record costs rather than number of units. C. The​ weighted-average method is used for the journal entries in process costing while the FIFO method is used for the journal entries in job costing. D. The journal entries in process costing are the same as those made in​ job-costing systems.

a

Identify the ways in which a house construction company may use​ job-cost information. A. ​(a) to determine the profitability of individual​ jobs, (b) to assist in bidding on future​ jobs, and​ (c) to evaluate professionals who are in charge of managing individual jobs B. ​(a) to divide the total costs of constructing all the houses by the total number of houses built to obtain an average cost of each​ house, and​ (b) to apply the average​ per-unit cost to each of the identical or similar houses built in that period C. ​(a) to report profit results to​ shareholders, and​ (b) to report taxable profits to tax authorities D. None of the above.

b

Identify three different debit entries to the​ Work-in-Process Control​ T-account under normal costing. A. direct materials​ purchased, indirect manufacturing labor paid to​ employees, manufacturing overhead incurred B. direct materials​ used, direct manufacturing labor billed to a​ job, manufacturing overhead allocated to a job C. direct materials​ purchased, completion and transfer of jobs to finished​ goods, sale of completed goods D. direct materials​ purchased, manufacturing overhead​ incurred, completion and transfer of jobs to finished goods

a

Identify three major source documents used in​ job-costing systems. A. job cost record​ (sheet), materials requisition​ record, and labor time record B. accounts receivable aging​ report, accounts payable aging​ report, and inventory control report C. general​ journal, general​ ledger, and trial balance D. balance​ sheet, income​ statement, and cash flow statement

c

A company might use budgeted costs rather than actual costs to compute​ direct-labor rates because A. the budgeted costs will result in a higher gross margin. B. the budgeted cost will result in lower corporate income taxes. C. it may be difficult to trace direct labor costs to jobs as they are completed. D. the budgeted costs are more accurate.

a

If manufacturing labor costs are added to the process at a different time compared to other conversion​ costs, an additional cost categorylong dashdirect manufacturing labor costslong dashwould be needed to assign these costs to products. a) True b) False

d

Assuming beginning work in process is​ zero, the equivalent units of production computed using FIFO versus weighted average will have the following​ relationship: a) FIFO equivalent units will be greater than​ weighted-average equivalent units. b) ​Weighted-average equivalent units are always greater than FIFO equivalent units. c) FIFO equivalent units will be less than​ weighted-average equivalent units. d) ​Weighted-average equivalent units will be equal to FIFO equivalent units.

c

Conroe Company is reviewing the data provided by its management accounting system. Which of the following statements​ is/are correct? I. A cost driver is a causal factor that increases the total cost of a cost object. II. Cost drivers may be volume based or activity based. III. Cost drivers are normally the largest cost in the manufacturing process. a) I only is correct. b) II and III only are correct. c) I and II only are correct. d) ​I, II, and III are correct.

c

Costing system refinement A. is a process used to categorize various activity cost pools on the basis of the different types of cost​ drivers, or​ cost-allocation bases, or different degrees of difficulty in determining​ cause-and-effect (or​ benefits-received) relationships. B. describes a costing approach that uses broad averages for assigning the cost of resources uniformly to cost objects when the individual products or​ services, in​ fact, use those resources in​ non-uniform ways. C. means making changes to a simple costing system that reduces the use of broad averages for assigning the cost of resources to cost objects and provides better measurement of the costs of overhead resources used by different cost objects. D. describes an​ event, task, or unit of work with a specified purpose. Consistent with its more strategic​ focus, costing system refinement identifies activities in all functions of the value chain. Costing system refinement first calculates the costs of individual activities and then assigns costs to cost objects such as products and services on the basis of the mix of activities needed to produce each product or service.

d

Distinguish between actual costing and normal costing. A. Actual costing and normal costing differ in their use of actual or budgeted​ direct-cost rates. B. Actual costing and normal costing differ in their use of actual or budgeted quantities of​ direct-cost inputs. C. Actual costing and normal costing differ in their use of actual or budgeted quantities of​ cost-allocation bases. D. Actual costing and normal costing differ in their use of actual or budgeted​ indirect-cost rates.

d

Does increasing the number of​ indirect-cost pools guarantee an increase in the accuracy of product or service​ costs? A. ​Yes, increasing the number of​ indirect-cost pools will always increase the homogeneity of the cost pools​ themselves, and​ will, in​ turn, improve the accuracy of the indirect costs allocated to product or service costs. B. ​No, increasing the number of​ indirect-cost pools does not guarantee increased accuracy of product or service costs. If the existing cost pool is not​ homogeneous, accuracy will increase only if the increased cost pools themselves increase in homogeneity. C. ​No, increasing the number of​ indirect-cost pools does not guarantee increased accuracy of product or service costs. If the existing cost pool is already​ homogeneous, increasing the number of cost pools will not increase accuracy. D. Both B. and C.

b

In process​ costing, why are costs often divided into two main​ classifications? A. Process costing systems separate costs into cost categories according to the inventory method being used. Indirect costs are used under the​ weighted-average method and direct costs are used under the FIFO method. B. Process costing systems separate costs into cost categories according to the timing of when costs are introduced into the process.​ Often, only two cost​ classifications, direct materials and conversion​ costs, are necessary. Direct materials are frequently added at the start or end of the process and conversion costs are often added throughout the process. C. Process costing systems separate costs into cost categories according to the type of product or service being provided. Direct materials are applicable only to the manufacture of a product and conversion costs are applicable only when a service is being provided. D. Process costing systems separate costs into cost categories according to the timing of when costs are introduced into the process.​ Often, only two cost​ classifications, fixed and variable​ costs, are necessary. Fixed costs are only added at the start of the process and variable costs are added at the end.

c

Nobis Company uses an ABC system. Which of the following statements​ is/are correct with respect to​ ABC? I. Departmental costing systems are a refinement of ABC systems. II. ABC systems are useful in​ manufacturing, but not in merchandising or service industries. III. ABC systems can eliminate cost distortions because ABC develops cost drivers that have a​ cause-and-effect relationship with the activities performed. a) II and III only are correct. b) ​I, II, and III are correct. c) III only is correct. d) None of the listed choices is correct.

d

Select four decisions for which ABC information is useful. A. 1. Allocating direct material costs 2. Allocating direct labor costs 3. Identifying direct manufacturing overhead cost pools 4. Identifying indirect manufacturing overhead cost pools B. 1. ​Product-cost cross subsidization 2. Converting​ product-sustaining costs into​ unit-level costs 3. Identifying cost objects 4. Predicting gross profit C. 1. Identifying problems and uncertainties 2. Obtaining information 3. Making predictions about the future 4. Choosing among alternatives D. 1. Pricing and product mix 2. Cost reduction and process improvement 3. Product design 4. Decisions for planning and managing activities

d

The three guidelines for refinement​ include: A. 1. Identify the products that are the chosen cost objects. 2. Identify the direct and indirect costs of the products. 3. Compute the total cost of the products by adding all direct and indirect costs assigned to the products. B. 1. Set cost reduction targets in terms of reducing the cost per unit of a​ cost-allocation base in different activity areas. 2. Perform an analysis of the factors that cause costs to be incurred​ (cost drivers) in order to identify opportunities for improving the way work is done. 3. Evaluate whether particular​ nonvalue-added activities can be reduced or eliminated. C. 1. Select the activities and​ cost-allocation bases to use for allocating indirect costs to the products. 2. Identify the indirect costs associated with each​ cost-allocation base. 3. Compute the rate per unit of each​ cost-allocation base. D. 1. Classify as many of the total costs as direct costs as is economically feasible. 2. Expand the number of indirect cost pools until each of these pools is more homogenous. 3. Use the​ cause-and-effect criterion, when​ possible, to identify the​ cost-allocation base for each​ indirect-cost pool.

d

What are the four levels of a cost​ hierarchy? A. 1. Direct materials 2. Direct labor 3. Direct manufacturing overhead 4. Indirect manufacturing overhead B. 1. Direct costs 2. Indirect costs 3. Variable costs 4. Fixed costs C. 1. Design costs 2. Manufacturing costs 3. Distribution costs 4. Customer service costs D. 1. Output​ unit-level costs 2. ​Batch-level costs 3. ​Product-sustaining costs or​ service-sustaining costs 4. ​Facility-sustaining costs

a

What are the main costs and limitations of implementing ABC​ systems? A. The measurements necessary to implement it require many calculations and can be costly to operate. B. Identifying the​ five-step decision-making process required to implement an ABC system is very time consuming. C. The fact that ABC systems cannot be used for service and merchandising companies is its main limitation. D. All of the above.

b

What is an​ activity-based approach to designing a costing​ system? A. An​ activity-based approach traces direct costs to a cost object by using the actual​ direct-cost rates times the actual quantities of the​ direct-cost inputs. Indirect costs are allocated based on the actual​ indirect-cost rates times the actual quantities of the ​cost-allocation bases. B. An​ activity-based approach refines a costing system by focusing on individual activities as the fundamental cost objects. It uses the cost of these activities as the basis for assigning costs to other cost objects such as products or services. C. An​ activity-based approach describes a particular costing approach that uses broad averages for assigning the cost of resources uniformly to cost objects. D. An​ activity-based approach means making changes that result in cost numbers better measuring the way different cost​ objects, such as​ products, use different amounts of resources of the company. These changes require the assignment of costs to direct and indirect cost pools and the use of a single​ indirect-cost rate.

b

Which if the following are not conversion​ costs? A. the cost of depreciation on an automobile assembly plant B. the cost of tires on an automobile C. the cost of direct laborers who assemble the parts of an automobile D. the cost of electricity to run the tools in the automobile assembly plant

d

Which of the following are examples of industries that use​ process-costing systems? A. Pharmaceutical B. Semiconductor Chips C. Oil refining D. All of the above

b

Which of the following describes the distinctive characteristic of FIFO computations in assigning costs to units completed and to units in ending work in​ process? A. Calculates the equivalent unit cost of all the work done to date and assigns this cost to equivalent units completed and transferred out of the​ process, and to equivalent units in ending​ work-in-process inventory. B. Assigns the cost of the previous accounting​ period's equivalent units in beginning​ work-in-process inventory to the first units completed and transferred out of the process and assigns the cost of equivalent units worked on during the current period first to complete beginning​ inventory, next started and completed new​ units, and finally to units in ending​ work-in-process inventory. C. Standard costs are assigned first to complete beginning​ work-in-process inventory, next started and completed new​ units, and finally to start new units that are in ending​ work-in-process inventory. D. None of the above.

c

Which of the following describes the distinctive characteristic of​ weighted-average computations in assigning costs to units completed and to units in ending work in​ process? A. Assigns the cost of the previous accounting​ period's equivalent units in beginning​ work-in-process inventory to the first units completed and transferred out of the process and assigns the cost of equivalent units worked on during the current period first to complete beginning​ inventory, next started and completed new​ units, and finally to units in ending​ work-in-process inventory. B. Standard costs are assigned first to complete beginning​ work-in-process inventory, next started and completed new​ units, and finally to start new units that are in ending​ work-in-process inventory. C. Calculates the equivalent unit cost of all the work done to date and assigns this cost to equivalent units completed and transferred out of the​ process, and to equivalent units in ending​ work-in-process inventory. D. None of the above.

b

Which of the following does not accurately describe the application of​ job-order costing? A. Finished goods that are purchased by customers will directly impact cost of goods sold. B. Manufacturing overhead costs incurred is used to determine total manufacturing costs. C. Indirect manufacturing labor and indirect materials are part of the actual manufacturing costs incurred. D. Direct materials and direct manufacturing labor are included in total manufacturing costs.

c

Which of the following statements is​ true? A. ABC systems provide benefit to manufacturing companies only. Merchandising companies carry only merchandising​ (finished goods) inventory and service companies generally carry no inventory at​ all, and​ therefore, an ABC system would not apply to these companies. B. ABC systems apply equally well to manufacturing and merchandising​ companies, but not to service companies. Service companies generally carry no​ inventory, and​ therefore, an ABC system would provide​ little, if​ any, benefit. C. ABC systems apply equally well to​ manufacturing, merchandising and service companies. D. ABC systems apply equally well to manufacturing and​ retail-oriented merchandising​ companies, but not to​ distribution-oriented merchandising​ companies, which carry only finished goods​ inventory, or to service​ companies, which do not carry inventory.

a

Why might an advertising agency use job costing for an advertising campaign by​ PepsiCo, whereas a bank might use process costing to determine the cost of checking account​ deposits? A. Job costing enables all the specific aspects of each job to be​ identified, whereas process costing can be used to compute the cost of numerous identical or similar services. B. Whenever a product or service is unique or​ distinct, process costing is the most efficient way to assign costs. Therefore since each banking transaction is​ unique, the banks use process costing to determine the cost of checking account deposits. C. Job costing can be used to compute the cost of masses of similar​ services, in contrast process costing enables all the specific aspects of each job to be identified individually. D. An advertising agency provides the same service to all its​ clients, while a bank supplies its customers with specialized services. For that reason an advertising agency would use job costing to monitor the costs of an advertising campaign by PepsiCo.

c

Why should managers worry about product overcosting or​ undercosting? A. Overcosting products may lead to sales that acutally result in losses because the sales may bring in less revenue than the cost of the resources they use. Undercosting products may lead to the loss market share to competitors selling similar products. B. Averaging can result in inaccurate and misleading cost data. As​ such, companies may overinvest in products that have been​ overcosted, and underinvest in products that have been undercosted. C. Overcosting may result in competitors entering a market and taking market share for products that a company erroneously believes are​ low-margin or even unprofitable. Undercosting may result in companies selling products on which they are in fact losing​ money, when they erroneously believe them to be profitable. D. If prices of products are determined by the market based on consumer demands and​ competition, a product that is overcosted may appear more profitable than it actually​ is, while a product that is undercosted may appear less profitable than it actually is.

b

​"Transferred-in costs are those costs incurred in the preceding accounting​ period." Do you​ agree? Explain. A. No.​ Transferred-in costs or current period costs are costs incurred only while the product is being processed within the current department. As the costs are incurred in the current​ period, they are transferred in and assigned to the units. B. No.​ Transferred-in costs or previous department costs are costs incurred in a previous department that have been charged to a subsequent department. These costs may be costs incurred in that previous department during this accounting period or a preceding accounting period. C. Yes.​ Transferred-in costs or previous department costs are only costs incurred in a preceding accounting period. As units move from one accounting period to​ another, the related costs are transferred by monthly journal entries. D. None of the above are correct.​ Transferred-in costs have nothing to do with costs incurred during any accounting period.