Accounting 210 Conceptual

Which one of the following transactions causes the Manufacturing Overhead account to be debited in a job order cost accounting system? A. Completed products during the period. B. Purchased raw materials on account. C.Incurred direct labor. D. Used indirect materials.

D

Which statement describes a fixed cost? A. The unit costs stay the same at every activity level. B. When activity increases, its cost per unit increases. C. It varies in total at every level of activity. D. When activity declines, its cost per unit increases.

D

How do you determine MOH applied?

POR x actual activity base

When the units required to fill a special order can be produced within existing plant capacity, which of the following will not increase? A. Contribution margin. B. Fixed costs. C. Revenues. D. Variable costs.

Fixed Costs

Which of the following costs are classified as a period cost? A. Wages paid to a factory custodian. B. Wages paid to a production department supervisor. C. Wages paid to a cost accountant department supervisor. D. Wages paid to an assembly worker.

Wages paid to a cost accountant department supervisor

The primary objective of just-in-time processing is to A. identify relevant activity cost drivers. B. identify value-added activities. C. accumulate overhead in activity cost pools. D. eliminate or reduce all manufacturing inventories.

d

Bonita Manufacturing thinks that the best activity base for its manufacturing overhead is machine hours. The estimate of annual overhead costs is $680000. The company used 1000 hours of processing for Job A15 during the period and incurred actual overhead costs of $710000. The budgeted machine hours for the year totaled 20000. What amount of manufacturing overhead should be applied to Job A15? A. $680. B. $34000. C. $35500. D. $710.

34000

A high degree of operating leverage: A. exposes a company to greater earnings volatility risk. B. exposes a company to less earnings volatility risk. C. is computed by dividing fixed costs by contribution margin. D. indicates that a company has a larger percentage of variable costs relative to its fixed costs.

A

Activity-based costing A. is a two-stage overhead cost allocation system that identifies activity cost pools and cost drivers. B. uses direct labor as its primary cost driver. C. is the initial phase of converting to a just-in-time operating environment. D. can be used only in a job order costing system.

A

At the break-even point A. contribution margin equals total fixed costs. B. sales equal total variable costs. C. sales equal total fixed costs. D. contribution margin equals total variable costs.

A

Cost-plus pricing means that: A. Selling price = Cost + (Markup percentage x Cost). B. Selling price = Manufacturing cost + (Markup percentage x Manufacturing cost). C. Selling price = Fixed cost + (Markup percentage x Fixed Cost). D. Selling price = Variable cost + (Markup percentage + Variable cost).

A

Mixed costs consist of a A. variable cost element and a fixed cost element. B. fixed cost element and a controllable cost element. C. relevant cost element and a controllable cost element. D. variable cost element and a relevant cost element.

A

Product costs include each of the following except A. selling and administrative expenses. B. direct labor. C. direct materials. D. manufacturing overhead.

A

Indicate whether the following statements are true or false. (a) The reasoning behind ABC cost allocation is that products consume activities and activities consume resources. (b) Activity-based costing is an approach for allocating direct labor to products. (c) In today's increasingly automated environment, direct labor is never an appropriate basis for allocating costs to products. (d) A cost driver is any factor or activity that has a direct cause-effect relationship with resources consumed. (e) Activity-based costing segregates overhead into various cost pools in an effort to provide more accurate cost information.

A-True B-False C-False D-True E-True

A company is more likely to use a job costing system if A. it manufactures products with unique characteristics. B. it uses a periodic inventory system. C. it manufactures a large volume of similar products. D. its production is continuous.

A-of it manufactures products with unique characteristics

In order to maximize profits when limited resources are available a company should concentrate on the producing products with: A. the highest contribution margin per unit of limited resource. B. the highest unit contribution margins. C. the lowest limited resource requirements. D. the lowest unit variable costs.

A: the highest contribution margin per unit of limited resource

As the complexity of a product's manufacturing operation increases, the number of activities and cost drivers used in an activity-based cost system will likely A. vary randomly. B. increase. C. stay about same. D. decrease.

B

Gossen Company is planning to sell 200,000 pliers for $4 per unit. The contribution margin ratio is 25%. If Gossen will break even at this level of sales, what are the fixed costs? A. $160,000. B. $200,000. C. $300,000. D. $100,000.

B

If a traditional costing system allocates too much overhead to one product, the firm is likely to experience which of the following problems? A. An increase in the number of defective products produced B. The firm may lose market share to competitors C. The firm may be underpricing the product D. The product is in danger of becoming obsolete

B

What is contribution margin? A. The amount of revenue remaining after deducting fixed costs. B. The amount available to cover fixed costs and contribute to profits. C. The amount available to cover fixed and variable costs and contribute to profits. D. The percent of selling price pertaining to the cost of goods sold.

B

Which group of costs consists of only product costs? A. Factory maintenance, sales commissions, salaries paid to sales clerks B.Direct labor, indirect labor, factory utilities C. Indirect labor, factory building depreciation, administrative expenses D. Direct labor, direct materials, and selling expenses

B

Which one of the following statements is correct? A. Companies that produce many different products or services are more likely to use process costing systems. B. Process costing systems use periodic inventory systems. C. Process costing systems assign costs to departments or processes for a time period. D. Production is continuous when a job-order costing is used to ensure that adequate quantities are on hand.

C.

Why do companies, using job order costing to estimate manufacturing overhead costs, allocate them to individual jobs and products? A. Manufacturing overhead is a period cost, not a job or product cost. B. It enables the company to determine the approximate cost of each job as it gets completed. C. The actual overhead costs are not determinable. D. It is more accurate to estimate costs.

B-it enables the company to determine the approximate cost of each job as it gets completed

Which one of the following is true concerning manufacturing and merchandising companies' inventories on the balance sheet? A. Raw materials is to a manufacturer what merchandise inventory is to a merchandiser. B. Finished goods is to a manufacturer what merchandise inventory is to a merchandiser. C. Manufacturer's include raw materials, work in process, finished goods, and cost of goods sold on the balance sheet, while merchandisers include only merchandise inventory and cost of goods sold on their balance sheet. D. A merchandiser reports its inventories as a current asset, and a manufacturer reports in

B.

Assigning manufacturing costs to work in process results in credits to all of the following except A. manufacturing overhead. B. factory labor. C. finished goods inventory. D. raw materials inventory.

C

Which of the following is not an important element of just-in-time processing? A. A total quality control system B. A multi-skilled workforce C. Multiple product lines D.Dependable suppliers

C

Work in Process Inventory is debited for all of the following except A. factory labor used. B. direct materials used. C. manufacturing overhead incurred. D. manufacturing overhead applied.

C

Which one of the following is correct concerning contribution margin? A. It equals sales revenue minus total costs. B. It is calculated by subtracting total manufacturing costs from sales revenue. C. It is calculated by subtracting variable manufacturing costs from sales. D. It is helpful in determining the effect of changes in sales on net income.

D

In order to achieve the most accurate costing, the cost driver chosen for a given activity must show a ___________ between the cost driver and the actual consumption of overhead costs. A. low degree of correlation B. moderate connection C. reasonable relationship D. high degree of correlation

D

The activity-based overhead rate is computed by dividing A. Actual overhead per activity by expected use of cost drivers per activity. B. Estimated overhead per activity by actual use of cost drivers per activity. C. Actual overhead per activity by actual use of cost drivers per activity. D.Estimated overhead per activity by expected use of cost drivers per activity.

D

To assign overhead costs to an individual product, the activity-based overhead rate is multiplied by A. the number of direct labor hours used during the period. B. the number of employees who participate in manufacturing the product. C. the number of products produced during the period. D. the number of cost drivers used per product.

D

Usually, under- or overapplied overhead is considered to be an adjustment to A. finished goods. B. work in process. C.finished goods and cost of goods sold. D. cost of goods sold.

D

What type of cost remains the same per unit at every level of activity? A. Mixed cost. B. Fixed cost. C. Semivariable cost. D. Variable cost.

D

Which of the following answer choices lists the three manufacturing costs? A. Work in process, finished goods, and cost of goods sold B. Raw materials, work in process, and finished goods C. Indirect materials, indirect labor, and factory-related costs D. Direct materials, direct labor, and manufacturing overhead

D

Which one of the following causes the work in process account to increase in a job order cost accounting system? A. Incurred direct labor. B. Completed products during the period. C. Incurred and paid indirect labor. D. Requisitioned direct materials from the storeroom.

D

Manufacturing overhead is underapplied if A. actual overhead equals applied overhead. B. actual overhead is less than applied. C. the predetermined rate equals the actual rate. D. actual overhead is greater than applied.

D-actual overhead is greater than applied

Raw materials are assigned to a job when A. the materials are received from the vendor. B. the job is sold. C. the materials are purchased. D. the materials are issued by the materials storeroom.

D-the materials are issued by the materials storeroom

Werth Company produces tie racks. Its estimated fixed costs for the year are $288,000, and the estimated variable costs per unit are $14. Werth expects to produce and sell 60,000 racks at a price of $20 per unit. How many units will be sold at breakeven? A. 3,600. B. 14,400. C. 20,571. D. 48,000.

D: 48,000

Coronado Company is considering replacing equipment with a cost of $29500, accumulated depreciation of $20600, and a 2 year remaining useful life. The new equipment has a cost of $42200 and a useful life of 6 years. The seller has offered a trade-in allowance of $7600. The new equipment is much more efficient. Coronado projects cost savings of $10000 per year if the new equipment is purchased. Which of the following is not relevant in deciding whether to retain or replace equipment? A. Trade-in allowance of existing equipment. B. Cost of new equipment. C. Book value of existing equipment. D. Cost savings.

D: book value of existing equipment

What two components make up the predetermined overhead rate?

Estimated Annual Overhead Costs/estimated annual operating activity

Which account is credited when a job is completed? A. Cost of Goods Sold. B. Finished Goods Inventory. C. Sales Revenue. D. Work in Process Inventory.

Work in Process Inventory

During the current year, Carlisle Manufacturing expected Job No. 16 to cost $450,000 of overhead, $750,000 of materials, and $300,000 in labor. Carlisle applied overhead based on direct labor cost. Actual production required an overhead cost of $420,000, $825,000 in materials used, and $330,000 in labor. All of the goods were completed. What is the amount of over- or under-applied overhead? A. $30,000 underapplied. B. $75,000 overapplied. C. $30,000 overapplied. D. $75,000 underapplied.

b