Accounting 2 test 1
Which terms will make the following statement true? When manufacturing overhead is over applied, the manufacturing overhead account has a ________ balance and applied manufacturing overhead is greater than _____ manufacturing overhead
Credit, actual
Jastak Co uses the weighted average method in its process costing system.Operating data for the painting dept for April appear below Units Con. % complete Beg WIP 1,000 80% Txfr in 98,800 ending WIP 8,300 90% What were the equivalent units for conversion costs in the painting dept in April?
1,000+98,800= 99,800 99,800-8,300= 91,500 8,300 x 90%= 7,470 91,500+7,470= 98,970
Loll Company uses the weighted average method in its process costing system.Operating data for the first processing department for the month of June appear below Units Con % complete Begin work in process 11,000 50% started prod in June 98,000 end work in process 21,000 80% According to the company records, the conversion costs in beginning WIP inv was $46,915 . Additional conversion costs of $825,183 were incurred during the month. What was the cost per equivalent unit for conversion costs for the month?
11,000+98,000= 109,000 109,000-21,000= 88,000 88,000+ 1,680= 104,800 $46,915+ $825,183= $872,098 872,098/104,800= $8.322
At the beginning of the year, manufacturing overhead was estimated to be $267,500.At the end of the year,actual direct labor hours were 22,100, actual manufacturing overhead was $262,500 and manufacturing overhead applied was $13,750.If the predetermined overhead rate is based on direct labor hours, then estimated direct labor hours at the beginning of the year used in the predetermined overhead must have been
262,500+13,750=276,250 276,250/22,100=$12.50 267,500/$12.50= 21,400 direct labor hours
The assembly department started the month with 14,000 units in its beginning work in process inventory. An additional 296,000 units were transferred in from the prior department during the month to begin processing in the assembly department. There were 14,000 units in the ending work in process inventory of the assembly department. How many units were transferred to the next processing department during the month?
296,000
Parameter Co uses the weighted average method in its process costing system. The moulding dept is the 2nd dept in its production process. The data below summarize the departments operations in Jan. Units Con. %complete Beg WIP 3,800 90% tranferred in 53,000 complete and txfr 51,300 end WIP 5,500 30% The accounting records indicate that the conversion cost that had been assigned to beginning WIP inventory was $5,096 and a total of $87,668in conversion costs were incurred during Jan. What was the cost per equivalent unit for conversion costs for Jan in the molding dept?
5,500 x 30%= 1,650 51,300+1,650= 52,950 $87,668+$5,096=$92,764 $92,764/52,950=$1.752
Sanchez Co uses the weighted average method in its process costing system. The fitting dept is the 2nd dept in its production process.The data below summarizes the dept operations in Mar Units Con % completed Beg WIP 7,000 60% Txfr in 52,000 end WIP 3,500 80% The depts cost per equivalent unit for conversion cost was $8.66. How much conversion cost was assigned to the units transferred out?
7,000+ 52,000= 59,000 59,000-3,500= 55,500 55,500 x $8.66= $480,630
Each of the following would be period costs except:
Depreciation of a machine used in manufacturing
Which of the following is the correct formula to compute the predetermined overhead rate?
Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.
A debit balance in the manufacturing overhead account at the end of the year means that manufacturing overhead is over applied.
F
A process cost system would be used to account for the cost of manufacturing an oil tanker
F
A variable cost is a cost whose cost per unit varies as the activity level rises and falls
F
Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products.
F
All costs incurred in a merchandising firm are considered to be period costs
F
Committed fixed costs are fixed costs that are not controllable
F
Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm
F
Direct labor hours should never be used as a measure of activity in an activity based costing system.
F
In a process costing system overhead costs are traced to units of product as they are incurred
F
In process costing,the equivalent units computed for materials is generally the same as that computed for direct labor
F
Indirect costs, such as manufacturing overhead, are always fixed costs
F
Selling and administrative expenses are product costs under GAAP
F
The cost of a completed job in a job-order costing system typically consists of the actual direct materials cost of the job, the actual direct labor cost of the job,and the actual manufacturing overhead cost of the job
F
The following journal entry would be made to apply overhead cost to jobs in a job-order costing system: Manufacturing overhead xxx Work in process xxx
F
The job cost sheet is used in both job order costing and process costing
F
The weighted average method of process costing can only be used if materials are added at the beginning of the production process
F
When assigning costs to partially completed units in the ending work in process inventory, it is not necessary to consider the percentage completion of the units under the weighted average method
F
The salary of the president of a manufacturing company would be classified as which?
Period cost
Designing a new product is an example of
Product level activity
Which of the following should not be included as part of manufacturing overhead at a company at makes office furniture?
Sheet steel in a file cabinet made by the company
A job cost sheet is used to accumulate costs charged to a job
T
Costs classified as batch level costs should depend on the number of batches processed rather than on the number of units produced, the number of units sold, or other measures of volume.
T
Direct material costs are generally variable costs
T
Even if operations are interrupted or cutback, committed fixed costs remain largely unchanged in the short term because the costs of restoring them later are likely to be far greater than any short-run savings that might be realized
T
Facility level activities are activities that support administrative costs
T
If a company has a great deal of product diversity, activity based costing will generally yield more accurate product product costs than traditional overhead application rates based on direct labor hours or machine hours
T
If manufacturing overhead applied exceeds the actual manufacturing overhead costs of the period, then manufacturing overhead is over applied
T
In activity based costing, there are a number of activity cost pools,each of which is allocated to products using its own unique measure of activity
T
In process costing, costs accumulated in processing departments rather than by job
T
Process costing would be used by companies producing the following items: bricks, bolts, pharmaceutical items, natural gas, and electricity
T
Product level activities relate to specific products and typically must be carried out regardless of how many batches are run or units of product are made
T
Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead
T
The activity rates in activity based costing are not intended to set targets for how quickly a task should be completed
T
The first stage allocation in activity based costing is the process by which overhead costs are assigned to activity pools
T
The following journal entry would be made in a process costing system when units that have been completed with respect to the work done in processing Dept Z are transferred from Processing Dept Z to Processing Dept Y Work in Process, Dept Y xxx Work in Process, Dept Z xxx
T
The process of assigning overhead cost to jobs is known as overhead application
T
The use of predetermined overhead rates in a job-order cost system makes it possible to estimate the total cost of a given job as soon as production is completed
T
Top management salaries should not go into the manufacturing overhead account
T
Under applied or over applied manufacturing overhead represents the difference between actual overhead costs and applied overhead costs
T
When the level of activity increases, total variable cost will increase
T
The term "relevant range" means the range of activity over which
The assumptions about fixed & variable cost behavior are reasonably valid
The balance in the work in process account equals
The balances on the job cost sheets of uncompleted jobs
In computing its predetermined overhead rate, Marple Co inadvertently left its indirect labor costs out of the computation. This oversight will cause
The costs of goods manufactured to be understated
Which of the following characteristics applies to process costing, but does not apply to job order costing?
The use of equivalent units of production
Last month,when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity,variable costs are 50% of total unit costs.If 10,500 units are manufactured next month and the cost behavior patterns remain unchanged the :
Total cost per unit will decrease
In a process costing system, manufacturing overhead applied is usually recorded as a debit to
Work in process
A company has 2 processing departments: A & B.Which of the following entries or sets of journal entries would be used to record the transfer between processing departments and from the final processing department to finished goods?
Work in process Dept. B xxx Work in Process Dept.A xxx Finished goods xxx Work in process Dept. B xxx
In a job-order costing system, the use of direct materials that have been previously purchased is recorded as a debit to
Work in process inventory
The cost of beginning inventory under the weighted average method is
added in with current period costs in determining cost per equivalent unit for a given period
Which of the following would NOT be treated as a product cost for external financial reporting purposes?
advertising expense
Over applied manufacturing overhead occurs when
applied overhead exceeds actual overhead
Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves?
direct labor hours
Personnel administration is an example of
facility level activity
Within the relevant range, variable cost per unit will
remain constant
Providing the power required to run production equipment is an example of a
unit level activity
In a job-order costing system, indirect materials that have been previously purchased and that are used in production are recorded as a debit to
Manufacturing overhead
Guerra Ele manufactures a variety of electronic gadgets for use in the home.Which of the following would probably be the most accurate measure of activity to use for allocating the cost of inspecting the finished products
Inspection time
The following costs were incurred in Sept: Direct materials 38,000 Direct labor 29,000 Manufacturing overhead 21,000 Selling expenses 17,000 Administrative expenses 32,000 Conversion costs totaled:
$50,000
Compton Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in DeptA and on a machine hours basis in Dept B.At the beginning of the most recently completed year, the company made the following estimates: Dept A Dept B Direct labor cost $56000 $33000 Manufacturing OH $67,200 $45,000 Direct labor hours 8,000 9,000 Machine hours 4,000 15,000 What predetermined overhead rate would be used in Dept A & Dept B respectively?
$67,200/$56000= 120% $45,000/15,000= $3
Which of the following costs would not be included as part of manufacturing overhead?
Insurance on sales vehicles
Daguio Co uses direct labor hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $224,580.At the end of the year, actual direct labor hours were 18,200. Manufacturing overhead for the year was under applied by 12,100, & the actual manufacturing overhead was 219,580. The predetermined overhead rate for the year must have been closest to
219,580-12,100= 207,480 207,480/18200= $11.40
A company should use process costing, rather than job order costing if
the product is composed of mass produced homogenous units
When switching from a traditional costing system to an activity based costing system that includes some batch level costs
the unit product costs of high volume products typically change less than the unit product costs of low volume products
