Accounting Exam 2 CONCEPTS
If Ohio started work ojn 3000 units during the period and these units were 70% of the way through manufacturing, it would be correct to say that the company has
3000 physical units of production (even when in production they still have 3000 physical units-- even tho cookies are still baking you still have them)
Roberts uses process costing and has two manufacturing departments. Goods are started in Department no. 1, passed along to Department no. 2 where additional parts are attached and processing occurs, and then transferred out to the finished-goods warehouse. The following equivalent-unit costs relate to Department no. 2 for the current period: Transferred-in $19 Parts 11 Conversion cost 6 Production that is completed and transferred to the finished-goods warehouse should be assigned a unit cost of: A. $6. B. $11. C. $17. D. $30. E. $36.
36 (add transferred-in +parts+ conversion cost)
the following tasks are associated with an activity based costing system
4213 (ABC it's easy as 4213) 4. Identification of cost pools 2. Identification of cost drivers 1. Calculation of cost application rates 3. Assignment of costs to products
which of the following correctly expresses the equivalent units of production w respect to materials and b in end wip inv?
A, 6,000; B, 6,000 (remember that doesn't how much % completed still have same ending inv cause it is materials)
which of the following choices correctly shows how costs are accumulated in a process-costing system?
BY BATCH: NO BY TIME PERIOD: YES BY PROCESS OR DEPARTMENT: YES
correctly depicts a cost that arises from a bath level/facility level
Batch Level: Inspection Facility Level: Property taxes
Hamilton, which uses a process-costing system, had a balance in its Work-in-Process account of $68,000 on January 1. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Hamilton should make a journal entry on December 31 that includes:
CREDIT to WIP for 432 (didnt mess up they are just trying to find out how much came out of wip inv)
Which of the following best describes procedures used in operation costing to assign direct material and conversion costs to production
DM costs: Similar to those in job costing Conversion Costs: similar to those in process costing
activity pools and activity measures likely has the LOWEST degree of correlation
Employee travel to job sites (sites are within 100 mile radius of company headquarters) and number of employees
when calculating unit costs under the weighted-avg process-costing method, the unit cost is based on:
a summation of costs in the be beginning work-in-process inv plus costs incurred in the CURRENT PERIOD
process costing would be used in all of the following except
automobile repair
Morrison, Inc., which uses a process-cost accounting system, passes completed production from Department A to Department B for further manufacturing. The journal entry to record completed production in Department A requires:
debit to WIP DEPT. B and a CREDIT to WIP. A (increasing WIP of B because transfers from A to B)
the first processing department in a sequence...
direct materials and conversion costs
the second processing department
direct materials, conversion, and transferred in costs
which of the following is the proper sequence of events in ABC
identification of cost pools, identification of cost driver, calc application rate, assignment of costs to products
process costing is used for
large number of identical products
Successful adoptions of ABC typically occur when companies rely on
multidisciplinary project teams
which of the following generally fails to signal the need for a new product costing system
product line profit margins are easy to explain
as a result, which costs would likely change from indirect to direct
production setup, FGs inspection, and product shipping
which of the following is least likely to be classified as batch level activity in ABC
property taxes
consumptions ratios are useful in determining
the existence of product line diversity
Department no. 2 receives goods from Department no. 1, adds material, completes the units, and transfers the units to Department no. 3 for final processing. The cost of goods completed by Department no. 2 would include charges for: A. direct materials. B. conversion cost. C. direct materials and conversion cost. D. transferred-in costs. E. transferred-in costs, direct materials, and conversion cost.
transferred in costs, direct materials, and conversion costs
which of the following are needed to calculate the total cost of the ending WIP inv under the weighted avg process costing method
unit cost: yes EU: yes (unit cost and equivalent cost are needed to calculate the total cost of the ending WIP under the weighted avg process costing method)
Equivalent unit calculations are necessary to allocate costs between
units completed and ending work in process
which of the following data are needed to calculate total equivalent units under the weighted average method
units completed.....during the period, work-to-date in ending WIP
which of the following companies would likely use a process-costing system
NO, YES, YES (careful cause another question like this-- Custom Furniture Manufacturer:No, chemical producer: yes, soft drink bottle: yes)
of the following organizations, activity-based costing cannot be used by
NONE OF THE ABOVE
A hospital administrator is in the process of implementing an ABC system. which of the following tasks would NOT be part of this process
None of the above as all these tasks would be part of this process
Activity based costing systems:
often reveal products... that were under- or overcosted
what is the effect of this overstatement on conversion cost units and physical units manufactured
overstated, none (overstate will effect conversion to be overstated but mat is 100% no matter what so not affected)
which of the following tasks is NOT normally associated with ABC
preparation of allocation of matrices
in comparison with a system that uses a single, volume based cost driver, an activity based costing system is preferred when a company has
product line diversity or a large proportion of nonunit-level activites
operation costing
tends to PARALLEL process costing with respect to the treatment of CONVERSION COSTS
When computing the conv cost per equivalent unit under the weighted-avg method of process costing, all of the following info would be except
the conversion work performed during the current period on the beg wip inv
if equivalent units for conversion cost=59,000
the ending WIP inv of 10,000 physical units were 30% (3,000 difference so the physical units * % for conversion)
under tradtional costing
ALL OF THE ABOVE would be considered indirect costs
#21 which of the following correctly expresses the total equivalent units of production w respect to material x and y
material x: 48,000 material y: 40,000
proper order of preceding tasks?
2,1,4,3
which of the following statements about ABOUT ABC is FALSE
ABC cannot be used by service businesses
which of the following about operation costing is (are true)
I, II, III (ALL)
which of the following statements regarding similarities between process and job-order costing are true?
( I and III) both system assign production costs to units of output AND the flow of costs through the manufacturing accounts is essentially the same
Barnett Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were completed and as of April 30, 5,100 units remained in production. How many units were started during April? A. 11,600. B. 17,700. C. 20,500. D. 30,700. E. None of the above.
17,700 (beg WIP inv + started, new, transferred in= completed, transferred out+ End WIP)
the division of activities into unit level, batch level, product sustaining level, and facility level
HIEARCHY
consider following statements
I and II (Productivity diversity creates costing problems...& Overhead costs that are not incurred...)
Consider the following statements regarding traditional costing systems
I and III (overhead costs are applied to products on the basis of volume-related measures and traditional costing system tend to distort unit manufacturing costs)
which of these factor should be considered in the selection of a cost driver
I, II, and III (ALL)
regarding product sustaining activities
III. They are needed to support an entire product line
which of the following statements is false?
In process costing, the TOTAL COST of each unit is found by dividing the total factory costs by the number of units completed
is NOT a broad, cost classification category typically used in ABC
MANAGEMENT LEVEL
which of the following is LEAST likely to be classified as a facility-level activity
Machine Processing Cost
research and testing costs associated with the new ovens is said to arise from
PRODUCT SUSTAINING
which of the following is a possible tool that the company can use to accomplish this task
Storyboards
when determining the cost of a manufactured good under an operation-costing system, a company would
TRACE DIRECT material cost TO EACH PRODUCT PRODUCED...
In ABC system, direct materials would typically be classified as a
UNIT LEVEL COST
Geene inc, which uses a process costing system tranfers completed production from dep 1 to 2 for further work. which best describes that account that would CREDITED
WIP dept 1 (transfers from one to 2 and credit means decrease)
which of the following manufacturers would most likely not use a process
a builder of customized yachts
uses machine hours to apply manufacturing overhead to products
a large proportion of UNIT level activities and FAIRLY varying consumption ratios
widely varying consumption ratios
are reflective of product line diversity
in any ABC, materials recieving would typically be
batch-level activity
Many traditional costing system
combine...widely varying elements of overhead into a single cost pool
In a process-costing system, manufacturing costs are accumulated by
department or process, and time period
which of the following is a key document in a typical process costing system
department production report
unit costs in a process-costing system are derived by using
equivalent units
companies that use a process-cost accounting system would
establish a separate WIP account....for each manufacturing department
the salaries of a manufacturing plant's management are said to arise from
facility-level activities