Accting Chapter 10

Consider the following information about the cost of a product: Direct materials $900 Direct labor 600 Factory overhead 200 Selling expenses 70 Administrative expenses 70 What is the cost of the manufactured product? a.$1,700 b.$1,840 c.$140 d.$940

a.$1,700

Which of the following is an example of a product cost? a.Costs of power (electricity) to run machines b.Payroll taxes to the government c.Commission expenses d.Salaries of office executives

a.Costs of power (electricity) to run machines

Which of the following statements about managerial accounting is true? a.Under managerial accounting, reports are prepared as needed by management for its decision making. b.Under managerial accounting, transactions and events are required to be recorded and reported using generally accepted accounting principles (GAAP). c.Managerial accounting is mainly used to generate financial information for external parties. d.Reports generated using managerial accounting are required to be reported annually but may be reported monthly or quarterly.

a.Under managerial accounting, reports are prepared as needed by management for its decision making.

A _____ cost system provides product costs for each quantity of product that is manufactured. a.job order b.process c.DuPont d.standard

a.job order

Russet Inc. estimates total factory overhead cost of $100,000 for the year and an activity base of 25,000 direct labor hours. The predetermined factory overhead rate is _____ per direct labor hour. a.$6 b.$4 c.$5 d.$9

b.$4

Which of the following statements about the activity-based costing (ABC) method is true? a.The ABC method allocates factory overhead less accurately than does the single, plantwide overhead rate. b.In complex manufacturing systems, one way to avoid distorted product costs is by using the activity-based costing method. c.Service companies should never use the ABC method to determine the cost of providing services to customers. d.Many service companies find that the ABC method can lead to service cost distortions.

b.In complex manufacturing systems, one way to avoid distorted product costs is by using the activity-based costing method.

Which of the following statements best describes a traditional production process? a.Processing functions are combined into work centers, sometimes called manufacturing cells. b.Supervisors enter materials into manufacturing so as to keep all the manufacturing departments (processes) operating. c.The product is often placed on a movable carrier that is centrally located in the work center. d.Workers are often cross-trained to perform more than one function.

b.Supervisors enter materials into manufacturing so as to keep all the manufacturing departments (processes) operating.

Which of the following is an example of a direct labor cost? a.Salaries of office executives b.Wages given to assemblers for assembling a laptop computer c.Salaries of production supervisors d.Wages given to maintenance employees

b.Wages given to assemblers for assembling a laptop computer

When a job is completed and the client is billed, the costs are transferred to a _____ account. a.factory overhead b.cost of services c.finished goods d.work-in-process

b.cost of services

Question Content Area A _____ cost system provides product costs for each manufacturing department or process. a.job order b.process c.DuPont d.standard

b.process

If a service business bills clients for services in advance, the billed amount is a.transferred to the work-in-process account when it is billed. b.treated as deferred revenue until the services are completed. c.not recorded in the books. d.directly transferred to the cost of services account.

b.treated as deferred revenue until the services are completed.

Assume that a hospital uses activity-based costing to allocate hospital overhead to patients. Which of the following is the first step in allocating it? a.Allocating overhead costs to patients based upon activity usage b.Determining activity rates for each cost pool c.Identifying activity cost pools d.Allocating overhead costs to patients based upon a single overhead rate Feedback Area

c.Identifying activity cost pools

In a just-in-time (JIT) system, each work center is connected to other work centers through information contained on a a.Kaizen. b.poka-yoke. c.Kanban. d.chaku.

c.Kanban.

Which of the following statements represents a difference between financial accounting and managerial accounting? a.Managerial accounting deals only with cash flows, expenses, and revenues, whereas financial accounting deals with assets, liabilities, cash flows, expenses, and revenues. b.Managerial accounting information is audited annually, whereas financial accounting information is not audited annually. c.Managerial accounting information is not restricted by specific rules such as generally accepted accounting principles (GAAP), whereas financial accounting transactions and events are recorded and reported using GAAP. d.The reports generated using managerial accounting are for all the stakeholders of a company, whereas the reports generated using financial accounting are meant only for the internal stakeholders. Feedback Area

c.Managerial accounting information is not restricted by specific rules such as generally accepted accounting principles (GAAP), whereas financial accounting transactions and events are recorded and reported using GAAP.

The raw materials inventory consists of a.the costs of the direct and indirect materials that have already entered the manufacturing process. b.indirect materials costs that have entered the manufacturing process but are associated with products that have not been completed. c.the costs of the direct and indirect materials that have not yet entered the manufacturing process. d.direct materials costs that have entered the manufacturing process but are associated with products that have not been completed.

c.the costs of the direct and indirect materials that have not yet entered the manufacturing process.

Which of the following is an advantage of using a job order cost accounting system? a.A job order cost accounting system helps in avoiding service cost distortions. b.A job order cost accounting system is the most effective method of allocating factory overhead. c.A job order cost accounting system uses cost of activities to determine product costs. d.A job order cost accounting system can be used by managers for cost evaluation, decision making, and performance analysis.

d.A job order cost accounting system can be used by managers for cost evaluation, decision making, and performance analysis.

Which of the following would be included in the materials inventory? a.The cost of television sets present in the stock of companies that manufacture electronic goods b.The cost of textiles present in the stock of companies that manufacture textiles c.The cost of laptops present in the stock of companies that manufacture laptops d.The cost of rubber present in the stock of companies that manufacture tires

d.The cost of rubber present in the stock of companies that manufacture tires