INF 220 IS Principles

Information about the cost of a product is given below. Direct materials = $1,000 Direct labor = $400 Factory overhead = $200Selling expenses = $100 Administrative expenses = $50 What is the cost of the manufactured product? a. $1,750 b. $1,600 c. $750 d. $150

$1,600

Assume that Camellias Hotel uses activity-based costing to allocate hotel overhead to guests. Consider the following data for the housekeeping department: Budgeted costs = $100,000 Total estimated activity-base usage = 3,200 hours Based on the information provided, the housekeeping department's activity rate is _____. (Round answer to two decimal places.) a.$50.50 per housekeeping hour b.$31.25 per housekeeping hour c.$36.25 per housekeeping hour d.$45.25 per housekeeping hour

$31.25 per housekeeping hour

Russet Inc. estimates the 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: a.$4 per direct labor hour. b.$5 per direct labor hour. c.$2 per direct labor hour. d.$6 per direct labor hour.

$4 per direct labor hour.

Which of the following statements is true about the disposal of factory overhead balance? a. An ending positive balance in the factory overhead account is disposed of by increasing Cost of Goods Sold and decreasing Factory Overhead. b.An ending negative balance in the factory overhead account is disposed of by increasing Cost of Goods Sold and decreasing Factory Overhead. c.An ending positive balance in the factory overhead account is disposed of by increasing Factory Overhead and decreasing estimated activity base. d.An ending negative balance in the factory overhead account is disposed of by increasing Cost of Goods Sold and increasing estimated activity base.

An ending positive balance in the factory overhead account is disposed of by increasing Cost of Goods Sold and decreasing Factory Overhead.

Which of the following is true of a professional service business that uses a job order cost accounting system? a. Cost of Services for a professional service business is similar to the cost of goods sold account for a manufacturing business. b. Direct labor and overhead costs are the secondary product costs for a professional service business. c. For a professional service business, direct labor and overhead costs of rendering services to clients are accumulated in a finished goods account. d. A work-in-process account and related work-in-process ledger are not necessary for a professional service business.

Cost of Services for a professional service business is similar to the cost of goods sold account for a manufacturing business.

_____ cost is both a prime cost and a conversion cost. a. Direct materials b. Direct labor c. Indirect labor d. Indirect materials

Direct labor(Conversion costs are the costs of converting materials into a finished product.)

Which of the following is true about financial accounting? a. Financial accounting information is required to be reported annually but may be reported monthly or quarterly. b. Financial accounting is not constrained by rules such as generally accepted accounting principles. c. Under financial accounting, reports are mainly prepared to be used by internal parties. d.Financial accounting information is reported as needed by management for its decision making.

Financial accounting information is required to be reported annually but may be reported monthly or quarterly.

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 single overhead rate

Identifying activity cost pools

Which of the following represents the difference between a just-in-time (JIT) and a traditional manufacturing process? a. In a traditional manufacturing process, service activities are assigned to individual work centers, whereas in a JIT manufacturing process, they are assigned to centralized service departments. b. In a traditional manufacturing process, a worker typically performs only one function, whereas in a JIT manufacturing process, a worker is often cross-trained to perform more than one function. c. In a traditional manufacturing process, processing functions are combined into manufacturing cells, whereas in a JIT manufacturing process, products move from process to process as each function or step is completed. d. The objective of a traditional manufacturing process is to increase the efficiency of operations, whereas the objective of a JIT manufacturing process is to keep all the manufacturing processes operating.

In a traditional manufacturing process, a worker typically performs only one function, whereas in a JIT manufacturing process, a worker is often cross-trained to perform more than one function.

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

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

Which of the following statements is true about the work-in-process inventory? a. It consists of completed jobs that have already been sold. b. It consists of direct materials costs, direct labor costs, and factory overhead costs that have entered the manufacturing process but are associated with products that have not been completed. c. It consists of completed jobs that have not been sold. d. It consists of the costs of the direct and indirect materials that have not yet entered the manufacturing process.

It consists of direct materials costs, direct labor costs, and factory overhead costs that have entered the manufacturing process but are associated with products that have not been completed.

Which of the following statements is true about the raw materials inventory? a. It consists of the costs of the direct and indirect materials that have already entered the manufacturing process. b. It consists of indirect materials costs that have entered the manufacturing process but are associated with products that have not been completed. c. It consists of the costs of the direct and indirect materials that have not yet entered the manufacturing process. d.It consists of direct materials costs that have entered the manufacturing process but are associated with products that have not been completed.

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

Which of the following is true of process cost systems? a.Process cost systems are often used by companies that manufacture unique products. b.Process cost systems are often used by companies that manufacture custom products for customers. c.Process cost systems are often used by companies that manufacture batches of similar products. d.Process cost systems are often used by companies that manufacture units of a product that are indistinguishable from each other.

Process cost systems are often used by companies that manufacture units of a product that are indistinguishable from each other.

Which of the following statements is true if a service business bills clients for services in advance? a .The billed amount is transferred to the work-in-process account as and when it is billed. b. The billed amount is treated as deferred revenue until the services are completed. c. The billed amount is not at all recorded in the books. d. The billed amount is directly transferred to the cost of services account.

The billed amount is treated as deferred revenue until the services are completed.

Which of the following is an example of factory overhead cost? a. Commission paid to a sales person b. The cost of silicon wafers for microcomputer chips c. The salary of a production supervisor d. The cost of electronic components for a television

The salary of a production supervisor

Which of the following statements is true about managerial accounting? 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. 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.

Examples of product costs include: a. costs of power (electricity) to run machines. b. payroll taxes to the government. c. commission expenses. d. salaries to office executives.

costs of power (electricity) to run machines.

In a just-in-time system, a _____ contains information that connects each work center to the other. a. kaizen b. poka-yoke c. kanban d. chaku

kanban

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

process(A cost system that provides product costs for each manufacturing department is often used by companies that manufacture units of a product that are indistinguishable from each other.)

Examples of direct labor costs include: a. salaries given to office executives. b. wages given to assemblers for assembling a laptop computer. c. salaries of production supervisors. d.wages given to maintenance employees.

wages given to assemblers for assembling a laptop computer.