ACCY 200 CQ 7 (Ch 13,14)

An activity-based costing system involves identifying the activity that causes the incurrence of a cost; this activity is known as a: cost applier. cost object. direct cost. cost driver.

cost driver.

In the T-account cost flow diagram of balance sheet inventory accounts and the income statement cost of goods sold account: cost of goods sold is debited to finished goods inventory. cost of goods manufactured is debited to finished goods inventory. raw materials purchases are debited to work in process. direct labor costs are credited to work in process.

cost of goods manufactured is debited to finished goods inventory.

Which of the following will cause income determined with absorption costing to be higher than income determined with direct costing? units produced equal units sold. units produced are greater than units sold. units produced are less than units sold. income determined with absorption costing will always equal income determined with direct costing.

units produced are greater than units sold.

Which of the following describes the correct sequence of flow of costs for a manufacturing firm? Raw materials, work-in-process, finished goods, cost of goods sold. Raw materials, finished goods, work-in-process, cost of goods sold. Raw materials, work-in-process, cost of goods sold, finished goods. Work-in-process, raw materials, finished goods, cost of goods sold.

Raw materials, work-in-process, finished goods, cost of goods sold.

Common costs pertain to costs that: are direct costs. are commonly incurred. are directly traceable to a cost object. are not directly traceable to a cost object.

are not directly traceable to a cost object.

A predetermined overhead rate is used to: keep track of actual overhead costs as they are incurred. assign indirect costs to cost objects. establish prices for manufactured products. allocate selling and administrative expenses to manufactured products.

assign indirect costs to cost objects.

The predetermined overhead application rate based on direct labor hours is computed as: actual total overhead costs divided by estimated direct labor hours. estimated total overhead costs divided by estimated direct labor hours. estimated total overhead costs divided by actual direct labor hours. actual total overhead costs divided by actual direct labor hours.

estimated total overhead costs divided by estimated direct labor hours.

Direct costing may be used for: external financial reporting purposes. internal reporting purposes. all of these. income tax reporting purposes.

internal reporting purposes.

An example of a cost that is likely to have a direct relationship with products being manufactured is: salaries of production supervisors. depreciation of production equipment. sales force salaries. production labor costs.

production labor costs.

Standards are most appropriately used to: support the planning and control processes of the firm. reward workers and managers who meet them. penalize workers and managers who do not meet them. calculate the unit cost of a product or service.

support the planning and control processes of the firm.