Accounting Final Test 2

$390,000

A company manufactures wallets. Last month's costs were: What were the prime costs for the month?

True

An expense such as advertising could be considered a discretionary fixed cost

True

Both process costing and job costing assign costs to units as they proceed through the process.

False

Direct labor hours would be the most appropriate cost allocation base for a Machining Department that uses machine robotics extensively.

Committed

Fixed cost that are the result of pervious management decisions that current managers have no control over in the short run are called ________ fixed costs.

True

If a company's plantwide overhead rate is allocated based on direct labor hours, then each job will be allocated manufacturing overhead based on the total direct labor hours incurred on the job, regardless of the manufacturing department in which those hours were incurred.

True

In a manufacturing company, fixed costs remain the same at many different production levels within the relevant range.

True

Indirect labor would be a component of conversion costs.

true

It is easier to allocate indirect costs to the products that actually caused those costs if an ABC system is used rather than a traditional costing system.

$450

James industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The assembly department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments: Actual Results Assembly Departments Sanding Department Direct labor hours used 8 5 Machine Hours Used 10 7 The cost for direct labor is $30 per direct labor hour and the cost of the direct materials used by job 603 is 1,400

True

Prime Costs include direct labor and direct materials.

false

Process costing is typically used for businesses that make unique goods in relatively small amounts

$7.50

The Cosmo Corporation manufactures and assembles office chairs. Cosmo uses an activity-based costing system to allocate all manufacturing conversion costs. Each chair consists of 15 separate parts totaling $125 in direct materials, and requires 2.0 hours of machine time to produce. Additional information follows:

True

The allocation base selected for each department should be the cost driver of the costs in the departmental overhead pool.

Process Costing

The costing system used by a company making computer chips would be

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

The first step in developing an ABC system is

False

The variable cost per unit of activity increases as activity increases

True

To determine the amount of overhead allocated, the overhead rate is divided by the cost of the driver.

$2.08/unit

Total fixed costs for Taylor Inc are $240,000. Total costs, including both fixed and variable, are $500,000 if 125,000 units are produced. The variable cost per unit is

True

Total mixed costs increase as volume increases because of the variable cost component

False

Unit variable costs do not change as total production increases

False

When overhead is allocated to every product using the same manufacturing overhead rate, this rate is called the departmental overhead rate.

Transferred costs

When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?

Both the above

Which of the following condition(s) favors using departmental overhead rates in place of a plantwide overhead rate?

Process Costing

Which of the following product costing systems is normally used to assign costs to goods that are mass produced?