Accounting chapters 17-20
Which of the following is not a characteristic of a process cost system? a.The system measures costs for each completed job. b.Manufacturing costs are grouped by departments. c.The system allocates costs between completed and partially completed units within a department. d.The system may use several work in process accounts.
a.The system measures costs for each completed job.
All of the following could be considered a direct material except a.glue b.fabric c.steel d.lumber
a.glue
Which of the following is a period cost? a.salary of telephone receptionist in the sales office b.computer chips used by a computer manufacturer c.salary of a security guard for the factory parking lot d.depreciation on factory lunchroom furniture
a.salary of telephone receptionist in the sales office
Goods that are partially completed by a manufacturer are a.work in process inventory b.merchandise inventory c.materials inventory d.finished goods inventory
a.work in process inventory
A company manufactured 50,000 units of a product at a cost of $450,000. It sold 45,000 units at $15 each. The gross profit is a.$600,000 b.$270,000 c.$750,000 d.$240,000
b.$270,000
Compute conversion costs given the following data: direct materials, $389,700; direct labor, $209,400; factory overhead, $175,800 and selling expenses, $42,600. a.$774,900 b.$385,200 c.$565,500 d.$133,200
b.$385,200
Recording jobs completed would include a debit to a.Work in Process b.Finished Goods c.Factory Overhead d.Cost of Goods Sold
b.Finished Goods
Process and job order cost systems are similar in all of the following ways except a.both use perpetual inventory system for materials, work in process, and finished goods b.both use job cost sheets c.both allocate factory overhead costs to products d.both classify product costs as direct materials, direct labor, and factory overhead
b.both use job cost sheets
The primary goal of managerial accounting is to provide information to a.creditors b.management c.investors d.external auditors
b.management
Rent expense on a factory building would be treated as a a.direct cost b.product cost c.period cost d.direct materials cost
b.product cost
In the manufacture of 10,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,000. What is the total conversion cost? a.$218,000 b.$53,000 c.$158,000 d.$323,000
c.$158,000
Work in process inventory increased by $20,000 during the current year. Cost of goods manufactured was $180,000. Total manufacturing costs incurred are a.$189,000 b.$198,000 c.$200,000 d.$160,000
c.$200,000
Department R had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period. During the period, 30,000 units of direct materials were added, 32,000 units were completed, and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was a.26,000 b.31,950 c.29,450 d.32,450
c.29,450
The relationship of $310,068 to $123,278, expressed as a ratio, is a.0.7 b.1.7 c.4.2 d.2.5
d.2.5
The three categories of manufacturing costs comprising the total cost of work in process are direct labor, direct materials, and a.accounting salaries expense b.selling expenses c.direct expenses d.factory overhead
d.factory overhead
Short-term creditors are typically most interested in analyzing a company's a.profitability b.marketability c.operating results d.liquidity
d.liquidity
A widely used activity base for developing factory overhead rates in highly automated settings is a.direct labor dollars b.direct labor hours c.direct materials d.machine hours
d.machine hours
Which of the following is not a characteristic evaluated in ratio analysis? a.profitability b.solvency c.liquidity d.marketability
d.marketability
Period costs include a.operating costs that are shown on the income statement when products are sold b.current assets on the balance sheet c.current liabilities on the balance sheet d.operating costs that are shown on the income statement in the period in which they are incurred
d.operating costs that are shown on the income statement in the period in which they are incurred
Horizontal analysis is a technique for evaluating financial statement data a.on a certain date b.as it may appear in the future c.for one period of time d.over a period of time
d.over a period of time
What term is used to describe the process of developing the organization's objectives and translating those into courses of action? a.improving b.decision making c.supervising d.planning
d.planning
Which of the following would most likely use a job order cost system? a.company that manufactures chlorine for swimming pools b.oil refinery c.paper mill d.swimming pool installer
d.swimming pool installer
On which of the following would the labor costs for an individual job be recorded? a.payroll register b.in-and-out cards c.clock cards d.time tickets
d.time tickets
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 a.$500,000 overapplied b.$500,000 underapplied c.$1,000,000 overapplied d.$1,000,000 underapplied
a.$500,000 overapplied
A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability. The amount of working capital immediately after payment is a.$720,000 b.$595,000 c.$845,000 d.$125,000
a.$720,000
The four steps necessary to complete a cost of production report in a process cost system are: 1.Allocate costs to units transferred out and partially completed units.2.Determine the units to be assigned costs.3.Determine the cost per equivalent unit.4.Compute equivalent units of production. The correct ordering of the steps is a.2, 4, 3, 1 b.4, 2, 3, 1 c.2, 3, 4, 1 d.2, 3, 1, 4
a.2, 4, 3, 1
The relationship of $325,000 to $125,000, expressed as a ratio, is a.2.6 b.2.0 c.0.5 d.2.5
a.2.6
If a company uses a process cost system to account for the costs in its five production departments, how many work in process accounts will it use? a.5 b.6 c.4 d.2
a.5
Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000. It had 50,000 shares of common stock outstanding during the entire year. Richards Corporation's common stock is selling for $35 per share. The price-earnings ratio is a.7 b.5 c.14 d.2
a.7
Recording jobs shipped and customers billed would include a debit to a.Cost of Goods Sold b.Finished Goods c.Cash d.Accounts Payable
a.Cost of Goods Sold
Department S had no work in process at the beginning of the period. It added 12,000 units of direct materials during the period at a cost of $84,000. During the period, 9,000 units were completed, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500, and factory overhead was $9,900. The total conversion costs for the period were a.$143,400 b.$49,500 c.$9,900 d.$59,400
d.$59,400
Which of the following accounts will not be found on the statement of cost of goods manufactured? a.Purchases b.Work in Process c.Factory Overhead d.Cost of Goods Sold
d.Cost of Goods Sold
The recording of the application of factory overhead costs to jobs would include a credit to a.Work in Process b.Wages Payable c.Cost of Goods Sold d.Factory Overhead
d.Factory Overhead
Which of the following is not a characteristic of a job order cost system? a.It is best suited for industries that manufacture custom goods. b.It provides a separate record for the cost of each quantity of product that passes through the factory. c.It uses only one work in process account. d.It accumulates cost for each department within the factory.
d.It accumulates cost for each department within the factory.
Which of the following would least likely be considered a managerial accounting report? a.a schedule of total manufacturing costs incurred b.a statement of cost of goods manufactured c.a report to analyze potential efficiencies and savings for the purchase of new production equipment d.a statement of stockholders' equity
d.a statement of stockholders' equity
In horizontal analysis, each item is expressed as a percentage of the a.total assets figure b.net income figure c.retained earnings figure d.base year figure
d.base year figure
Which of the following is the most useful in analyzing companies of different sizes? a.price-level accounting b.comparative statements c.audit report d.common-sized financial statements
d.common-sized financial statements
In most business organizations, the chief management accountant is called the a.chief executive officer b.chairman of the board c.chief accounting officer d.controller
d.controller
What term refers to the cost of changing direct materials into a finished manufactured product? a.factory overhead cost b.period cost c.direct labor cost d.conversion cost
d.conversion cost
Which of the following are reported on the income statement as part of cost of goods? a.administrative expenses b.period costs c.operating expenses d.cost of goods manufactured
d.cost of goods manufactured
Indirect labor and indirect materials are classified as a.operating costs and period costs b.operating costs and product costs c.factory overhead and period costs d.factory overhead and product costs
d.factory overhead and product costs
At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to a.decrease by $1,700,000 b.decrease by $3,400,000 c.increase by $3,400,000 d.increase by $1,700,000
d.increase by $1,700,000
The controller's staff often consists of several management accountants. All of the following would most likely be on the controller's staff except a.cost accountants b.general accountants c.budget analysts d.investments and shareholder relations managers
d.investments and shareholder relations managers
The percent of fixed assets to total assets is an example of a.profitability analysis b.horizontal analysis c.solvency analysis d.vertical analysis
d.vertical analysis
Materials must have which two qualities in order to be classified as direct materials? a.They must be introduced into the process in both work in process inventories and finished goods inventories. b.They must be classified as both prime costs and conversion costs. c.They must be an integral part of the finished product and a significant portion of the total product cost. d.They must be an integral part of the finished product, but can be an insignificant portion of the total product cost
c.They must be an integral part of the finished product and a significant portion of the total product cost.
Recording jobs completed would include a credit to a.Factory Overhead b.Finished Goods c.Work in Process d.Cost of Goods Sold
c.Work in Process
Which of the following is not a characteristic of useful managerial accounting reports? a.prepared as needed b.accurate c.adhere to GAAP d.historical and estimated data
c.adhere to GAAP
A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was a.$218,000 b.$222,000 c.$190,000 d.$226,000
a.$218,000
Compute conversion costs given the following data: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290. a.$384,200 b.$543,800 c.$731,700 d.$187,900
a.$384,200
The following information is available for Jase Company: Market price per share of common stock$25.00Earnings per share on common stock1.25 Which of the following statements is correct? a.The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year. b.The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of the year. c.The price-earnings ratio is 5% and a share of common stock was selling for 5% more than the amount of earnings per share at the end of the year. d.The market price per share and the earnings per share are not statistically related to each other.
a.The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year.
A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the materials controlling account in the general ledger to the controlling accounts for a.Work in Process and Factory Overhead b.Work in Process and Cost of Goods Sold c.Work in Process and Finished Goods d.Finished Goods and Cost of Goods Sold
a.Work in Process and Factory Overhead
What term is used to describe the process of monitoring operating results and comparing actual results with the expected results? a.controlling b.planning c.directing d.improving
a.controlling
The details concerning the costs incurred on each job order are accumulated in a work in process account and supported by a a.cost ledger b.materials ledger c.creditors ledger d.stock ledger
a.cost ledger
The journal entry for the flow of direct labor costs into production in a job order cost accounting system is to a.debit Work in Process, credit Wages Payable b.debit Factory Overhead, credit Wages Payable c.debit Finished Goods, credit Wages Payable d.debit Factory Overhead, credit Work in Process
a.debit Work in Process, credit Wages Payable
Which of the following is a product cost? a.drill bits for a drill press used in the plant assembly area b.salary of the company receptionist c.advertising for a particular product d.salary of a sales manager
a.drill bits for a drill press used in the plant assembly area
The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of a.equivalent units b.conversion costs c.ending work in process d.units started and completed
a.equivalent units
If the cost of a material is a small portion of total production cost, it may be classified as part of a.factory overhead cost b.miscellaneous costs c.selling and administrative costs d.direct labor cost
a.factory overhead cost
Which of the following products would be manufactured using a job order cost system? a.graduation invitation b.cell phone c.highlighter pen d.recliner
a.graduation invitation
A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will a.increase and remain the same, respectively b.both increase c.remain the same and decrease, respectively d.both decrease
a.increase and remain the same, respectively
Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory? a.job order cost system b.general cost system c.replacement cost system d.process cost system
a.job order cost system
Costs on the income statement for both a merchandiser and a manufacturer would be a.operating expenses b.cost of goods manufactured c.direct materials d.direct labor incurred
a.operating expenses
Indirect costs incurred in a manufacturing environment that are not traced directly to a product are treated as a.product costs and expensed when the goods are sold b.period costs and expensed when incurred c.period costs and expensed when the goods are sold d.product costs and expensed when incurred
a.product costs and expensed when the goods are sold
At the end of the fiscal year, the balance in Factory Overhead is small. The balance would be a.transferred to Cost of Goods Sold b.transferred to Work in Process c.transferred to Finished Goods d.allocated between Work in Process and Finished Goods
a.transferred to Cost of Goods Sold
Leverage implies that a company has a.a high current ratio b.debt financing c.a high earnings per share d.equity financing
b.debt financing
Managers use managerial accounting information for all of the following except to a.determine the cost of manufacturing a product b.evaluate the company's stock performance c.analyze the performance of a company's operations d.support long-term planning decisions
b.evaluate the company's stock performance
All of the following would be reported on the balance sheet as a current asset except a.work in process inventory b.factory overhead c.materials inventory d.finished goods inventory
b.factory overhead
For which of the following businesses would the job order cost system be appropriate? a.oil refinery b.hospital c.lumber mill d.canned soup processor
b.hospital
Which of the following are the two main types of cost accounting systems for manufacturing operations? a.process cost and general accounting systems b.job order cost and process cost systems c.process cost and replacement cost systems d.job order and general accounting systems
b.job order cost and process cost systems
One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to a.judge the relative potential of two companies of similar size in different industries b.make a better comparison of two companies of different sizes in the same industry c.determine which companies in a single industry are of the same value d.determine which companies in a single industry are of the same size
b.make a better comparison of two companies of different sizes in the same industry
Which of the following is most associated with managerial accounting? a.is prepared for users outside the organization b.may rely on estimates and forecasts c.always reports on the entire entity d.must follow GAAP
b.may rely on estimates and forecasts
Which of the following are basic phases of the management process? a.supervising and directing b.planning and controlling c.decision making and supervising d.organizing and directing
b.planning and controlling
Which of the following is the correct flow of manufacturing costs? a.work in process, finished goods, raw materials, cost of goods sold b.raw materials, work in process, finished goods, cost of goods sold c.cost of goods sold, raw materials, work in process, finished goods d.raw materials, finished goods, cost of goods sold, work in process
b.raw materials, work in process, finished goods, cost of goods sold
On a common-sized income statement, 100% is assigned to a.gross profit b.sales c.net cost of merchandise sold d.net income
b.sales
For which of the following businesses would a process cost system be appropriate? a.dressmaker b.shampoo manufacturer c.boat repair service d.custom furniture manufacturer
b.shampoo manufacturer
Which of the following is not a reason a firm would use a job order cost system? a.to determine product pricing b.to determine department costs within the firm c.to help control costs d.to determine profit
b.to determine department costs within the firm
An analysis in which all the components of an income statement are expressed as a percentage of sales is a a.solvency analysis b.vertical analysis c.horizontal analysis d.liquidity analysis
b.vertical analysis
Which of the following will not be found on the balance sheet of a manufacturing company? a.work in process b.finished goods c.cost of goods sold d.materials
c.cost of goods sold
A report prepared periodically for each processing department summarizing the product costs incurred by the department and the allocation of those costs between completed and partially completed units is termed a a.process cost report b.factory overhead production report c.cost of production report d.manufacturing cost report
c.cost of production report
In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following journal entries? a.debit Finished Goods—Dept. A; credit Work in Process—Dept. B b.debit Work in Process—Dept. B; credit Cost of Goods Sold—Dept. A c.debit Work in Process—Dept. B; credit Work in Process—Dept. A d.debit Work in Process—Dept. B; credit Finished Goods—Dept. A
c.debit Work in Process—Dept. B; credit Work in Process—Dept. A
The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as a a.direct materials cost b.factory overhead cost c.direct labor cost d.miscellaneous cost
c.direct labor cost
The cost of a manufactured product generally consists of which of the following costs? a.direct materials cost and factory overhead cost only b.direct materials cost and direct labor cost only c.direct labor cost, direct materials cost, and factory overhead cost d.direct labor cost and factory overhead cost only
c.direct labor cost, direct materials cost, and factory overhead cost
Which of the following is not included in conversion costs? a.indirect labor b.factory overhead c.direct materials d.direct labor
c.direct materials
Which of the following is an example of a factory overhead cost? a.insurance premiums on salespersons' automobiles b.repair and maintenance cost on an administrative building c.factory heating and lighting cost d.president's salary
c.factory heating and lighting cost
Which of the following is not included in the computation of the quick ratio? a.accounts receivable b.cash c.inventory d.marketable securities
c.inventory
The numerator for the return on common stockholders' equity computation is a.net income b.income from operations minus interest expense c.net income minus preferred dividends d.income before income tax
c.net income minus preferred dividends
Managerial accounting reports are a.related to the entire business entity only b.prepared according to GAAP c.prepared according to management needs d.prepared periodically only
c.prepared according to management needs
In process cost accounting, the costs of direct materials and direct labor are charged directly to a.job orders b.customer accounts receivable c.processing departments d.service departments
c.processing departments
Which of the following costs incurred by a tool manufacturer would not be included in conversion costs? a.factory maintenance personnel supplies b.factory supervisor's salary c.raw steel d.machine operator's wages
c.raw steel
The numerator for the computation of accounts receivable turnover is a.total assets b.average accounts receivable c.sales d.accounts receivable at year-end
c.sales
All of the following are characteristics of a process cost system except a.manufacturing costs are grouped by department rather than by job b.the cost flows are similar to the physical flow of materials through the production departments c.the system accumulates costs per job d.the system may use several work in process inventory accounts
c.the system accumulates costs per job
The basis for recording direct labor costs incurred is a summary of the period's a.employees' earnings records b.job cost sheets c.time tickets d.clock cards
c.time tickets
On a common-sized balance sheet, 100% is assigned to a.total property, plant, and equipment b.total current assets c.total assets d.total liabilities
c.total assets