Accounting Exam 4
A disadvantage of maintaining high inventory levels includes:
Both hiding underlying production problems and the fact that maintaining inventory is wasteful and unnecessary
Products costs include all of the following EXCEPT:
CEO salary
Just-in time processing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. One of the ways in which this is accomplished in manufacturing and non manufacturing processes is by:
Combining processing functions into work centers and cross-training workers to preform more than one function
Which of the following costs are NOT included in finished goods inventory?
Company president's salary
Which of the following costs is a mixed cost?
Rental costs of $5,000 per month plus $.30 per machine hour of use
Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?
Salary of a factory supervisor
Which of the following would most likely be a period cost?
Salary of telephone receptionist in the sales office?
The following are all product costs EXCEPT:
Sales and administrative expenses
For purposes of analysis, mixed costs are generally:
Separated into their variable and fixed cost components
Which of the following is FALSE in regards to direct materials for an auto manufacturer?
Small plastic clips to hold on door panels, because they become part of the auto, must be accounted for as direct materials
As production increases, what should happen to the variable costs per unit?
Stay the same
The finished goods account is the controlling account for the:
Stock ledger
The amount of time spent by each employee and the labor cost incurred for each individual job or for factory overhead are recorded on:
Time tickets
The basis for recording direct and indirect labor costs incurred is a summary of the period's:
Time tickets
Which of the following is NOT true about why a service firm will use the job order costing system?
To determine department costs within the firm
Job cost sheets can provide information to managers for all but which of the following?
Utilities, managerial salaried, and depreciation of computers in the corporate office.
Which of the following products probably would be manufactured using a job order costing system?
Wedding invitations
Which of the following would most likely use a job order costing system?
a swimming pool installer
Costs that are treated as assets until the product is sold are called:
product costs
In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a:
receiving report
Which of the following describes the behavior of the variable cost per unit?
remains constant with changes in production
the relative distribution of sales among the various products sold by a business is termed the:
sales mix
The graph of a variable cost when plotted against its related activity base appears as a:
straight line
The point where the profit line intersects the horizontal axis on the profit-volume chart represents:
the break-even point
The point where the sales line an the total costs line intersect on the cost-volume-profit chart represents:
the break-even point
The point where the profit line intersects the left vertical axis on the profit volume chart represents:
the maximum possible operating loss
the contribution margin ratio is
the same as the profit-margin ratio
When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed:
there is no limit
which of the following conditions would cause the break-even point to increase?
total fixed cost increase
Costs that remain constant on a per-unit level as the level of activity changes are called:
variable costs
Costs that vary in total in direct proportion to changes in an activity level are called:
variable costs
In cost-volume-profit analysis, all costs are classified into the following 2 categories:
variable costs and fixed costs
The recording of the hobs completed would decrease:
work in progress
which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?
contribution margin ratio
Job order costing and process costing are:
cost accounting systems
The systematic examination of the relationships among selling prices, volume of sales and production, costs, expenses, and profits is termed:
cost-volume-profit analysis
Cost-volume-profit analysis cannot be used if which of the following occurs:
costs cannot be properly classified into fixed and variable costs
The difference between the current sales revenue and the sales at the break-even point is called the:
margin of safety
With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break even point and profit. such an analysis is called:
"what if" or sensitivity analysis
Compute factory overhead from the following costs: Depreciation on Factory buildings: $20,000 Depreciation on office Equipment: 20,000 Direct materials used: 70,000 Indirect labor: 3,000
$23,000`
Cost behavior refers to the manner in which:
A cost changes as the related activity changes
The period costs of a textbook printer would include:
Advertising expenses
A difference in quantity of materials used on two comparable jobs may be caused by:
All of these: -inadequately trained employees -poor quality materials -employee carelessness
Which of the following items would NOT be classified as a part of factory overhead?
Direct labor used
The cost of materials entering directly into the manufacturing process is classified as:
Direct materials cost
Which of the following is an example of a cost that varies in total as the number of units produced changes?
Direct materials cost
Which types of inventories does a manufacturing business report on its balance sheet?
Direct materials inventory, work in progress inventory, and finished goods inventory
Which of the following would most likely be a product cost?
Drill bits for a drill press used in the plant assembly area
Just-in-time manufacturing practices include all of the following EXCEPT:
Emphasizing push manufacturing to ensure inventory levels that will provide a buffer against production problems
The recording of jobs completed would increase:
Finished goods
Which of the following would probably NOT be found in the accounting system of a service provider?
Finished goods ledger
Which of the following graphs illustrates the behavior of a total fixed cost?
Graph 1
which of the following graphs illustrates the nature of a mixed cost?
Graph 2
Which of the following graphs illustrates the behavior of a total variable cost?
Graph 3
In a job order costing system, the effect of the flow of direct materials into production is to:
Increase work in progress, decrease materials inventory
The sale of a finished good on account:
Increases cost of goods sold, decreases finished goods, increases accounts receivable, and increases sales.
Each account in the work in progress subsidiary ledger is called a:
Job cost sheet
Which of the following are two main types of cost accounting systems for manufacturing operations?
Job order cost and process cost system
For which of the following businesses would the process cost system be appropriate?
Lumber mill
The direct labor an overhead costs of providing services to clients are accumulated in:
Work in progress
A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of materials from the materials account to:
Work in progress and factory overhead
For a manufacturing business, inventory that is in the process of being manufacturer is referred to as:
Work in progress inventory
The recording of the jobs shipped and customers billed would increase:
cost of goods sold
If variable costs per unit decreased because of a decrease in utility rates, the break-even point would:
decrease
If variable cost per unit increased because of an increase hourly wage rates, the break-even point would:
increase
Rouney Co. gas budgeted salary increases to factory supervisors totaling 10%. If selling prices and all other cost relationships are held constant, next year's break-even point will:
increase by 10%
Recording direct labor costs in a job order cost accounting system:
increases work in progress, increases wages payable
which of the following activity bases would be the most appropriate for food cost of a hospital?
number of patients who stay in a hospital
Knowing how costs behave is useful to management for all of the following reasons EXCEPT:
predicting customer demand
Which of the following conditions would cause the break-evenpoint to decrease?
unit variable cost decreases
which of the following conditions would cause the break-even point to increase?
unit variable cost increases
The document authorizing the issuance of materials from the storeroom is the:
Materials requisition
Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?
Number of miles driven
Which of the following manufacturing costs is an indicated cost of producing a product?
Oil lubricants used for factory machinery
Just-in-time manufacturing uses which of the following techniques?
Organizes the plant in such a way as to reduce product movement from station to station.
Which of the following statements is TRUE regarding lead time?
Reducing nonvalue-added lead time reduces costs and improves the speed of production
An activity-based costing system allocates factory overhead rates to products or services using:
The cost of activities based on an activity rate times the number of activity-based usage quantities
At the end of the fiscal year, the balance of Factory Overhead is small. This balance would normally be:
Transferred to Cost of Goods Sold
Period costs include all of the following EXCEPT:
Wages of an assembly worker
Which of the following is an example of a direct materials cost for an automobile manufacturer?
Cost of interior upholstery
Which of the following is an example of direct labor cost for an airplane manufacturer?
Cost of wages of assembly worker
For which of the following businesses would the job order cost system be appropriate?
Custom cabinet manufacturer
Pull manufacturing is driven by which of the following?
Customer demand
As production increases, what would you expect to happen to fixed costs per unit?
Decrease
Which of the following describes the behavior of the fixed cost per unit?
Decreases with increasing production
Which of the following is considered a part of factory overhead cost?
Depreciation of factory buildings
In a job order cost accounting system used by a service business, which of the following items would normally NOT be included as part of overhead?
Direct labor
The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished product is classified as:
Direct labor cost
The cost of a manufactured product generally consists of which of the following costs?
Direct labor cost, direct materials cost, and factory overhead.
Which of the following items would NOT be classified as part of factory overhead?
Direct labor used
The recording of the application of factory overhead costs to jobs would decease:
Factory Overhead
The recording of the factory labor incurred for general factory use would increase:
Factory Overhead
Which of the following is an example of a factory overhead cost?
Factory heating and lighting cost
If the cost of direct materials is a small portion of total production cost, it may be classified as part of:
Factory overhead cost
Which of the following statements is TRUE regarding fixed and variable costs?
Fixed costs are fixed in total, and variable costs are fixed per unit
Increases in work in progress account occur when:
direct labor is recorded from the time sheet
Which of the following is an example of a cost that varies in total as the number of units produced changes?
electricity per KWH to operate factory equipment
clinton co. has an operating leverage of 4. sales are expected to increase by 8% next year. operating income is:
expected to increase by 32%
