Exam 2 Accounting Quizzes

recording the transfer of the cost of items completed in the Forming Department to the Packaging Department would include a:

debit to work in process inventory-packaging

When a company has established separate manufacturing overhead rates for each department, it is using:

departmental overhead rates

conversion costs include:

direct labor and manufacturing overhead

Using the same information as in Question 9, assume that the beginning Work in Process inventory for the Mixing Department had $12,000 in conversion costs; and that $30,000 in conversion costs were added during the month. What is the cost per equivalent unit for conversion costs?

$7.00

Non-value added activities are

Activities that could be reduced or removed from the process with no ill effect on the end product or service. Also called waste activities. Activities that neither enhance the customer's image of the product or service nor provide the competitive advantage.

Which of the following is the last step of the 5-step process costing procedure?

Assign total costs to units completed and to units in ending WIP Inventory

The benefits of using the ABC costing system are higher if the company

has high indirect costs and produces many different products that use differing amounts of resources

Four basic steps are used in an ABC system. List the proper order of these steps, which are currently scrambled below:

1. Identify the primary activities and estimate a total cost pool for each. 2. Select an allocation base for each activity. 3. Calculate an activity cost allocation rate for each activity. 4. Allocate the costs to the cost object using the activity cost allocation rates.

There are 10,000 units in Work in Process inventory for the Mixing Department as the end of the month. The units were 60% complete for conversion costs. What are the equivalent units for conversion costs using the weighted-average method?

6,000

Regarding activity-based consisting systems, which of the following statement is true?

ABC costing systems have separate indirect cost allocation rates for each activity.

Which of the following terms describes the process of reevaluting activities to reduce costs while satisfying customers' needs?

Value engineering

Baxter Company produces children's wiffle ball set using a three-step sequential process that includes molding, coloring and finishing. When the sets are completely finished, out of which account should the cost be transferred?

WIP Inventory-Fishing

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is

activity-based costing

Which of the following is included in the costs transferred out of the second process of a three-step production process?

costs of the previous process combined with costs of the current process

Which of the following would use process costing?

crayon manufactureer

equivalent units are usually determined for

direct materials and conversion costs

The first step in developing an ABC system is

identify the primary activities and estimate a total cost pool for each.

The management strategy designed to eliminate waste is called a(n)

lean thinking

Which of the following is a result of cost distortion?

over-costing of some products and under-costing of other products

The Shaping Department started the month with beginning Work in Process inventory of $15,000. During the month, it was assigned the following costs: direct materials, $120,000; direct labor, $40,000; overhead allocated at the rate of 20% of direct labor cost. Inventory with a cost of $160,000 was transferred to finished goods. What was the ending balance of Work in Process inventory for the department?

$23,000

Hay Company had 3,000 units in its beginning inventory, 2,000 units in its ending inventory and completed and transferred out 14,000 during the month. What are the total units to account for?

16,000

the number of equivalent units is computed as:

the number of physical units x percentage of completion

In ABC, how is the activity allocation rate computed?

the total estimated activity cost pool is divided by the total estimated activity allocation base.

Quality-related costs generally fall into four different categories, which include all of the following except

transportation costs