Exam 1: Managerial Accounting
A job-order costing system would be best suited for production of a large quantity of a homogeneous product.
A breakfast cereal manufacturer.
The salary of the company's accountant.
Administrative Cost
In the cost reconciliation report under the weighted-average method, the "Total cost accounted for" equals:
Cost of ending work in process inventory + Cost of units transferred out
Prime costs
Direct Materials + Direct Labor
The wages of employees who assemble computers from components.
Direct labor cost
The cost of a hard drive installed in a computer.
Direct materials cost
A job-order costing system would be best suited for production of a large quantity of a homogeneous product.
False
In a process costing system, costs are traced directly to jobs.
False
Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type operations such as those that manufacture computers.
False
Depreciation on equipment used to test assembled computers before release to customers.
Manufacturing overhead cost
The salary of the assembly shop's supervisor.
Manufacturing overhead cost
Assigning manufacturing overhead to a specific job is complicated by all of the below except:
Manufacturing overhead is incurred only to support some jobs.
In a job-order costing system that is based on machine-hours, which of the following formulas is correct?
Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours
Sales commissions paid to the company's salespeople.
Selling cost
The cost of advertising in the Puget Sound Computer User newspaper.
Selling cost
A direct cost is a cost that can be easily traced to the particular cost object under consideration.
True
Absorption costing allocates all manufacturing costs to products produced and is an acceptable accounting method under Generally Accepted Accounting Principles (GAAP).
True
Actual overhead costs are not assigned to jobs in a job costing system.
True
Advertising is not considered a product cost even if it promotes a specific product.
True
In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs.
True
Job-order costing would be more likely to be used than process costing in situations where many different products or services are produced each period to customer specifications.
True
Manufacturing overhead cost is applied in process costing according to the allocation base that is incurred in the department.
True
The absorption cost approach provides for the absorption of all manufacturing costs, fixed and variable, into units of product.
True
The costs attached to products that have not been sold are included in ending inventory on the balance sheet.
True
The sum of all manufacturing costs except for direct materials and direct labor is called manufacturing overhead.
True
The three cost elements ordinarily included in product costs are direct materials, direct labor, and manufacturing overhead.
True
The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory.
True
When a company applies more overhead to production than it actually incurs, the overhead is overapplied.
True
When raw materials are purchased, they are recorded as an asset.
True
Conversion costs
Wages paid to employees that convert materials to product
Overapplied
applied 720k incurred 718k overapplied 2k COGS decrease NOP increase
Underapplied
applied 720k incurred 733k underapplied 13k COGS increase NOP decrease
Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type operations such as those that manufacture computers.
processing department.