cost chap 4 +5

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

9) With traditional costing systems, products manufactured in small batches and in small annual volumes may be ________ because batch-related and product-sustaining costs are assigned using unit-related drivers.A) overcosted B) fairly costed C) undercosted D) ignored

1) The budgeted indirect-cost rate is calculated ________. A) at the beginning of the yearB) during the yearC) at the end of each quarter D) at the end of the year

10) Extreme Manufacturing Company provides the following ABC costing information: Activities Account inquiryAccount billingAccount verification accounts Correspondence letters Total Costs $320,000 $200,000 $173,250 Department A 2,700 hours 900,000 lines 8,000 accounts 1,400 letters Activity-cost drivers 16,000 hours 4,000,000 lines 70,000 accounts 4,000 letters $24,000 $717,250 Total costsThe above activities are used by Departments A and B as follows: Account inquiry hours Account billing linesAccount verification accounts Correspondence letters Department B 4,200 hours 750,000 lines 6,000 accounts 1,800 letters How much of the account inquiry cost will be assigned to Department A? A) $54,000B) $320,000C) $160,000 D) $84,000

6) ABC and traditional systems are quite similar in ________. A) the treatment of direct costsB) the allocation of overheadsC) evaluating performance D) the identification of cost pools

8) ________ is the process of assigning indirect costs to products. A) Cost allocationB) Job cost recordingC) Cost pooling D) Cost tracing

Franklin Inc. manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2018: Direct materials$170,000 Direct labor (4,000 hours @ $10/hour)46,000 Indirect labor17,000 Plant facility rent34,000 Depreciation on plant machinery and equipment 24,500 Sales commissions33,000 Administrative expenses 28,000 For June 2018, manufacturing overhead is ________. A) overallocated by $7,300B) underallocated by $20,700C) overallocated by $20,700 $170,000 46,000 17,000 34,000 24,500 33,000 28,000 D) underallocated by $7,300

A Overallocated by $7,300; Allocated $82,800 (4,600 × $18 per dlh) when actual overhead is $75,500 (17,000 + 34,000 + 24,500).

1) A job that shows low profitability may be the result of ________. A) excessive usage of direct materialsB) inefficient direct manufacturing laborC) overpricing the job D) insurance claim of the damaged goods

16) Using activity-cost rates rather than department indirect-cost rates to allocate costs results in different product costs when ________.A) a single activity accounts for a sizable portion of department costsB) there are several homogeneous cost pools C) different activities have the same cost-allocation baseD) different products use different resources in the same proportion

2) It only makes sense to implement an ABC system when ________. A) a single product is produced in bulkB) its benefits exceed its implementation costsC) it traces more costs as direct costs D) production process is labor-intensive

3) Which of the following is a reason that has accelerated the demand for refinements to the costing system?A) The declining demand for customized products has led managers to decrease the variety of products and services their companies offer.B) The use of product and process technology has led to an increase in indirect costs and a decrease in direct costs.C) The increased of automated processes has led to the increase in direct manufacturing cost leading to a decrease in break even point.D) The increasing competition in product markets has led to an increase in contribution margin resulting in a decrease of break even point.

3) Which of the following is true of the Work-in-Process Control account?A) It tracks all direct material purchases.B) Its balance is the sum of amounts from all in-process individual job-cost records. C) It is an expense account.D) It tracks overhead costs in-process from beginning through completion.

4) Job costing ________.A) cannot be used by the service industryB) records the flow of costs for each product or serviceC) allocates an equal amount of cost to each unit made during a time period D) is used when each unit of output is identical

4) Which of the following general ledger accounts will have a subsidiary ledger account? A) Cost of Goods Sold accountB) Work-in-Process Control accountC) Joe's Accounts Receivable subsidiary account D) Operating Expenses account

4) Which of the following statements is true of ABC systems?A) ABC systems provide less insight than traditional systems into the management of the indirect costs. B) ABC systems are used by managers for strategic decisions rather than for inventory valuation in merchandising companies.C) Service companies find great value from ABC because a vast majority of their cost structure is composed of direct costs.D) ABC systems is valuable for pricing decisions but not for understanding, managing, and reducing costs in government institutions.

4) Which of the following statements is true of activity-based costing?A) In activity-based costing, direct labor-hours is always the best allocation base to allocate all non- manufacturing indirect costs.B) Activity based costing is more suited to companies with high product diversity than companies with single product line.C) Activity based costing broadly averages or spreads the cost of resources uniformly to cost objects such as products or services.D) The main advantage of activity-based costing over peanut-butter costing is the accurate distribution of all direct costs to the products.

5) For a business that offers customers a store where product can be purchased and picked up or a delivery service that can ship the product directly to the customer, which of the following would most likely be the best cost allocation base for distribution costs?A) number of customer service phone calls and emails per period B) number of pounds of product shipped or delivered C) Electricity costs for the periodD) Number of products sold

5) Job-costing is likely to be used by________. A) oil refining companiesB) advertising agenciesC) Mortgage payment processors D) breakfast cereal producers

5) Which of the following statements about ABC is not true?A) A byproduct of ABC implementation can improve the efficiency of operationsB) ABC should be implemented solely by the accountants as they are the guardians of the accounting information systemC) ABC may empower employees to also implement cost saving projectsD) Although implementation of ABC can be a refinement of a cost system, it has its limitations

6) When $10,0000 direct materials are requisitioned, which of the following would be the correct journal entry? A) Manufacturing Overhead Control $10000 Materials Control$10000 B) Work-in-Process Control $10000 Materials Control$10000 C) Materials Control $10000 Work-in-Process Control$10000 D) Accounts Payable Control $10000 Materials Control $10000

6) Which of the following statements is true of ABC systems? A) ABC system will always result in higher product costs.B) ABC system employs multiple activity-cost drivers.C) ABC system is least suited for service companies. D) ABC system is simpler compared to traditional systems.

7) Payment of the factory rent would require debits and credits to which accounts? A) Debit: Work-in-Process Control accountCredit: Cash B) Debit: Manufacturing Overhead Control account Credit: Cash C) Debit: Cost of Goods Sold account Credit: Prepaid Rent D) Debit: Factory Depreciation account Credit: Accumulated Depreciation Control

7) Recognizing ABC information is not always perfect because ________.A) it mostly uses far too many indirect cost pools than what is actually requiredB) it balances the need for better information against the costs of creating a complex system C) it lacks the simplicity that traditional systems used to have to allocate overhead costsD) it never measures how the resources of an organization are used

8) Advanced Technology Products produces 10 different fastners. Each time a type of fastener is produced, the equipment must be stopped and items such as filters and drill bits must be changed, oil must be added to the equipment and some parts need lubrication. This work must be done before the products can be produced, the costs related to this activity would be part of which cost pool? A) Output-level costsB) Batch-level costsC) Product-sustaining costs D) Service-sustaining costs

23) Franklin Inc. manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2018: Direct materials$100,000 Direct labor (4,000 hours @ $10/hour)40,000 Indirect labor10,000 Plant facility rent26,000 Depreciation on plant machinery and equipment 24,500 Sales commissions23,000 Administrative expenses 31,000 The amount of manufacturing overhead allocated to all jobs during June 2018 totals ________. A) $91,500B) $60,000C) $76,000 D) $60,500

B 4,000 × $15 per dlh = $60,000

5) The accounting firm firm of Smith & Jones LLC has a staff of 34 staff accountants and auditors and administrative staff. Budgeted total costs of the firm total $5,000,000 of which $2,900,000 is direct-labor costs. Assuming that the remaining costs are indirect and direct-labor cost is the allocation base, calculate the budgeted indirect cost rate. A) 42% of direct-labor cost B) 72% of direct-labor cost C) 58% of direct-labor cost D) 172% of direct-labor cost

B 2,100,000 / 2,900,000

4) The basic source document for direct manufacturing labor is the ________. A) job-cost recordB) materials-requisition recordC) labor-time record D) labor-requisition record

1) Put the following ABC implementation steps in order ________. A Compute the allocation rates. B Compute the total cost of the products. C Identify the products that are the cost objects. D Select the cost allocation bases. A) DACB B) DBCAC) BADCD) CDAB

1) Which of the following reasons explain why ABC concepts may be of great value to service companies? A) It allows for more accurate cost accounting for inventoryB) It promotes more accurate cost of goods sold reportingC) It helps make financial reporting more accurate D) A significant portion of the cost structure of a service firm is composed of indirect costs

11) Which account is credited to write off the difference between allocated and actual overhead using the proration approach?A) Work-in Process ControlB) Manufacturing Overhead Allocated C) Finished Goods ControlD) Manufacturing Overhead Control

16) Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $68,750. The budgeted number of nozzles to be inserted is 11,000. What is the budgeted indirect cost allocation rate for this activity?A) $0.16 B) $0.32C) $1.16D) $6.25

2) Activity based costing system differs from traditional costing systems in the treatment of ________. A) direct labor costsB) direct material costsC) prime costs D) indirect costs

5) Which of the following increases (are debited to) the Work-in-Process Control account? A) actual plant insurance costsB) customer services costsC) marketing expenses D) direct manufacturing labor costs

7) Assigning direct costs to a cost object is called ________. A) cost allocationB) cost assignmentC) cost pooling D) cost tracing

9) When "available time" (i.e., setup-hours) is used to calculate a cost of a resource and to allocate costs to cost objects , the system is called:A) job costingB) process costing C) hybrid costingD) time-driven activity based costing

8) Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?A) $15.00 B) $54.00C) $195.00D) $180.00

D $5,400,000 / 30,000 hours = $180.00

10) The ending balance in the Work-in-Process Control account represents the costs of all jobs that ________.A) have not been completedB) have been completed but not sold C) have been completed and sold to customers D) are reported on the income statement

12) Given this change in the cost structure ________.A) The costing results for chess pieces under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system.B) Chess pieces have benefited from the new system.C) Chess pieces are definitely more accurately costed.D) Chess will now have a lower sales price.

14) Extreme Manufacturing Company provides the following ABC costing information: Activities Account inquiryAccount billingAccount verification accounts Correspondence letters Total Costs Department A 2,100 hours 500,000 lines 7,000 accounts 1,200 letters Activity-cost drivers 14,000 hours 7,000,000 lines 50,000 accounts 4,000 letters Total costsThe above activities are used by Departments A and B as follows: $280,000 $350,000 $93,750 $29,000 $752,750 Account inquiry hours Account billing linesAccount verification accounts Correspondence letters Department B 3,600 hours 350,000 lines 5,000 accounts 1,600 letters How much of the total costs will be assigned to Department A? A) $88,825B) $118,825C) $120,000 D) $85,075

14) Which of the following items is debited to the Work-in-Process account? A) allocated manufacturing overheadB) completed goods transferred out of the plantC) accumulated depreciation on fixed assets D) accounts receivable

16) Manufacturing overhead costs incurred for the month are: UtilitiesDepreciation on equipment Repairs $45,000 $27,000 $17,000 Which account is debited assuming utilities and repairs were on account? A) Manufacturing Overhead Control, 89,000B) Utilities Overhead Control, 45,000C) Accumulated Depreciation Control, 27,000 D) Accounts Payable Control, 62,000

17) Activity-based costing is most likely to yield benefits for companies ________.A) with complex product design processes that vary significantly from product to product B) with operations that remain fairly consistent across product linesC) in a monopolistic marketD) having nominal percentage of indirect costs

17) Which of the following statements regarding manufacturing overhead allocation is true? A) It includes all manufacturing costs that cannot be directly traced to a product or service. B) The costs can be grouped only as a single indirect-cost pool.C) Total costs are unknown at the end of the accounting period. D) Allocated amounts are debited to Manufacturing Overhead Control.

2) Overcosting a particular product may result in: A) pricing the product too highB) pricing the product too lowC) operating efficiencies D) understating total product costs

2) Using department indirect-cost rates to allocate costs will result in results similar to ABC if: A) a single activity accounts for a sizable portion of the costs of the departmentB) several activities cause a sizable portion of the costs of the departmentC) a single activity accounts for a small portion of the costs of the department D) several activities cause a small portion of the costs of the department

3) The fundamental cost objects of ABC are ________. A) activitiesB) cost driversC) products D) services

5) A single indirect-cost rate distorts product costs because ________.A) there is an assumption that all support activities affect all products in a uniform way B) it recognizes specific activities that are required to produce a productC) competitive pricing is ignoredD) it assumes all costs are product costs

6) For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts, what would be the best allocation base for human resource adminstration costs?A) direct labor hours B) electricity costsC) number of parts purchased D) machine hours

8) A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis ________.A) can be used to eliminate nonvalue-added activitiesB) is easy to analyze and interpret C) takes the choices and judgment challenges away from the managers D) emphasizes how managers can achieve higher sales

8) Activity-based costing (ABC) can eliminate cost distortions because ABC systems ________. A) establish a cause-and-effect relationship with the activities performedB) use single cost pool for all overhead costs, thereby enabling simplicityC) use a broad average to allocate all overhead costs D) never consider interactions between different departments in assigning support costs

1) ABC systems create ________.A) one large cost poolB) homogeneous activity-related cost poolsC) activity-cost pools with a broad focusD) activity-cost pools containing many direct costs

1) Which of the following statements is true of a peanut-butter costing system?A) A peanut-butter costing system typically has more-homogeneous indirect cost pools.B) A peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects.C) A peanut-butter costing system assumes that all costs are variable.D) In a peanut-butter costing system, costs of activities are used to assign costs to other cost objects such as products or services based on the activities the products or services consume.

10) ABC systems help managers to ________.A) value ending inventory more accuratelyB) identify new designs to reduce costsC) evaluate direct material costs more efficiently D) improve the inventory turnaround time

11) For externally reported inventory costs, the Work-in-Process Control account is increased (debited) by ________.A) marketing costsB) allocated plant utility costs C) the purchase costs of direct and indirect materials D) customer-service costs

12) Extreme Manufacturing Company provides the following ABC costing information: Activities Account inquiryAccount billingAccount verification accounts Correspondence letters Total Costs Department A 2,900 hours 600,000 lines 12,000 accounts 1,800 letters Total costsThe above activities are used by Departments A and B as follows: $420,000 $225,000 $95,000 $46,000 $786,000 Activity-cost drivers 14,000 hours 5,000,000 lines 40,000 accounts 8,000 letters Account inquiry hours Account billing linesAccount verification accounts Correspondence letters Department B 4,400 hours 450,000 lines 10,000 accounts 2,200 letters How much of account verification costs will be assigned to Department A? A) $23,750B) $28,500C) $95,000 D) $47,500

18) When a job is complete ________.A) actual indirect manufacturing labor is excluded from the total cost of the job B) Finished Goods Control is debitedC) the cost of the job is transferred to Manufacturing Overhead ControlD) it is reduced from Manufacturing Overhead Control account

2) ________ is considered while choosing a cost allocation base for activity costs in ABC costing. A) Marketing strategy and material price levelB) Availability of reliable data and measuresC) Product price level D) Market share of a product

25) Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows: Activities Material handling Assembly Inspection Cost driver Number of parts Labor hours Time at inspection station Allocation Rate $5 per part $20 per hour $10 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $20 per labor hour. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 10 remote controls are produced? The batch requires 100 parts, 5 direct manufacturing labor hours, and 3 minutes of inspection time. A) $2.00 per remote control B) $63.00 per remote control C) $35.00 per remote control D) $630.00 per remote control

3) Activity-based costing information can be used for ________. A) product-mix decisionsB) pricing decisionsC) advertisement decisions D) inventory valuation

8) Which of the following is true of plant utility costs?A) It increases the Materials Control account.B) It increases the Manufacturing Overhead Control account. C) It increases the Work-in-Process Control account.D) It is a direct cost.

Cannady produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit. 9) The total amount of indirect costs assigned to product SR6 using the traditional method is ________ the total amount assigned using ABC.A) more thanB) less than C) equal toD) more accurate than

22) Candle Corp. applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $80 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order include: Direct materials of $44,000; 300 direct manufacturing labor-hours at $25 per hour; and a 20% markup rate on total manufacturing costs. The bid price for this special order is ________. A) $60,500B) $90,600C) $81,600 D) $61,800

B (DU $44,000 + DML (300 × $25) + MOH 24,000) × 120% = $90,600

1) Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Supervision of direct labor Machine maintenance Facility rent Cost driver Activity level Direct labor-hours 800,000 Machine-hours 960,000 Square feet of area 100,000 $320,000 $120,000 $200,000 $640,000 Total overhead costsThe accounting records show the Mossman Job consumed the following resources: Cost driver Direct labor-hours Machine-hours Square feet of area Actual level 200 1,600 50 Which method of allocation probably best estimates actual overhead costs used? Why? A) Single direct labor-hours cost driver because it is best to allocate total costs uniformly to individual jobs. B) Single direct labor-hours cost driver because it is easiest to analyze and interpret. C) Three activity-cost drivers because they best reflect the relative consumption of resources. D) Three activity-cost drivers because product costs can be significantly cross-subsidized.

1) Process costing is ________.A) used to enhance employees' job satisfactionB) used by businesses to price unique products or identical products produced in batches C) used by businesses to price identical productsD) used by businesses when manufacturing goods above normal capacity

1) Refining a cost system involves which of the following?A) classifying as many costs as indirect costs as is feasibleB) creating as many cost pools as possible to capture all costsC) identifying the activities involved in a process and understanding how those activities consume resourcesD) Seeking an easier and more cost effective way to calculate average costs

10) Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system? A) batch-level, output unit-level, product-sustaining level, and facility-sustaining levelB) batch-level, output unit-level, facility-sustaining levels, product-sustaining levelsC) output unit-level, batch-level, product-sustaining level, and facility-sustaining level D) facility-sustaining level, output unit-level, batch-level, product-sustaining level

11) Extreme Manufacturing Company provides the following ABC costing information: Activities Account inquiryAccount billingAccount verification accounts Correspondence letters Total Costs $320,000 $220,000 $182,000 Department A 2,200 hours 600,000 lines 5,000 accounts 1,000 letters Activity-cost drivers 16,000 hours 4,000,000 lines 80,000 accounts 4,000 letters Total costsThe above activities are used by Departments A and B as follows: $25,000 $747,000 Account inquiry hours Account billing linesAccount verification accounts Correspondence letters Department B 3,700 hours 450,000 lines 3,000 accounts 1,400 letters How much of the account billing cost will be assigned to Department B? A) $220,000B) $110,000C) $24,750 D) $33,000

13) Extreme Manufacturing Company provides the following ABC costing information: Activities Account inquiryAccount billingAccount verification accounts Correspondence letters Total Costs $390,000 $275,000 $130,500 Department A 2,500 hours 800,000 lines 9,000 accounts 2,000 letters Activity-cost drivers 13,000 hours 5,000,000 lines 60,000 accounts 4,000 letters Total costsThe above activities are used by Departments A and B as follows: $22,000 $817,500 Account inquiry hours Account billing linesAccount verification accounts Correspondence letters Department B 4,000 hours 650,000 lines 7,000 accounts 2,400 letters How much of correspondence costs will be assigned to Department A? A) $22,000B) $49,500C) $11,000 D) $11,242

13) The goal of a properly constructed ABC system is to ________. A) have the most accurate cost systemB) identify more indirect costsC) develop the best cost system that meets the cost/benefit test D) have separate allocation rates for each department

15) Which account would be credited if the following labor wages were incurred in a furniture manufacturing company? Assembly workers $20,000 Janitors $11,000 A) Work-in-Process Control, 31,000B) Manufacturing Overhead Control, 31,000 C) Wages Payable Control, 31,000D) Accounts Payable Control, 31,000

17) Service companies, in particular, find great value from ABC because a vast majority of their cost structure is composed of ________ costs.A) primeB) factory C) indirectD) committed

18) Which of the following statements is true of ABC systems?A) ABC systems are time-driven cost systems.B) ABC systems classify some direct costs as indirect costs and some indirect costs as direct costs. C) ABC systems provide valuable information to managers beyond accurate product costs.D) ABC systems assume all costs are variable costs.

2) Excellent Printing has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages. For 2018, Excellent Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis: Cost pool Manufacturing overhead costs Design changes $ 120,000 Setups 640,000 Inspections 80,000 Total manufacturing overhead costs $840,000 Activity level 200 design changes 4,000 setups 16,000 inspections During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity PagesDesign changes Setups Inspections Money Managers 60,000 10 20 30 Hospital Systems 76,000 2 10 38 When costs are assigned using the single cost driver, number of pages printed, then Hospital Systems ________.A) is fairly billed because resources are allocated uniformly to all jobsB) is grossly under billed for the job, while other jobs will be unfairly over billed C) will likely seek to do business with competitorsD) will contribute too little to profits, and Wallace Printing will not want to accept additional work from the company

2) For a company which produce its products in batches, the CEO's salary is a(n) ________ cost. A) batch-levelB) output unit-levelC) facility-sustaining D) product-sustaining

2) Which of the following is true of refinement of a costing system?A) While refining a costing system, companies should identify as many indirect costs as is economically feasible.B) A homogeneous cost pool will use multiple cost drivers to allocate costs.C) It reduces the use of broad averages for assigning the cost of resources to cost objects.D) It is likely to yield the most decision-making benefits when direct costs are a high percentage of total costs.

20) The advantage of using normal costing instead of actual costing is ________. A) indirect costs are assigned at the end of the year when they are knownB) the job cost is more accurate under normal costingC) indirect costs are assigned to a job on a timely basis D) normal costing provides a higher gross profit margin

24) Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows: Activities Material handling Assembly Inspection Cost driver Number of parts Labor hours Time at inspection station Allocation Rate $1 per part $20 per hour $10 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $30 per labor hour. Nichols' management is considering to implement ABC system because ________. A) ABC system can be implemented cheaplyB) ABC system provides more accurate direct cost figuresC) ABC system is a highly refined costing system D) ABC system requires minimal expertise to operate

3) For a company with diverse products, undercosting overhead of a product will lead to product-cross - subsidization which means that:A) direct labor costs of the product are misallocatedB) direct material costs of the product are misallocated C) indirect costs of another product are misallocated D) direct costs of another product are misallocated

3) The following conditions with departmental indirect-cost rates will result in allocation of costs similar to ABC costing except:A) a single activity accounts for a sizable portion of the costs of the departmentB) Significant costs are incurred on different activities within a department C) several activities cause a sizable portion of the costs of the departmentD) significant costs are incurred for different activities with different cost -allocation bases within a department

3) Which of the following cost and cost allocation base have a strong cause and effect relationship? A) administration costs and cubic feetB) setup costs and square feetC) quality control costs and the number of inspections D) machine maintenance and setup hours

4) Aqua Company produces two products-Alpha and Beta. Alpha has a high market share and is produced in bulk. Production of Beta is based on customer orders and is custom designed. Also, 55% of Beta's cost is shared between design and setup costs, while Alpha's major portions of costs are direct costs. Alpha is using a single cost pool to allocate indirect costs. Which of the following statements is true of Aqua?A) Aqua will overcost Beta's direct costs as it is using a single cost pool to allocate indirect costs.B) Aqua will undercost Alpha's indirect costs because alpha has high direct costs.C) Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs.D) Aqua will overcost Beta's indirect costs because beta has high indirect costs.

5) Lavender Company is a logistics company and has recently implemented ABC system. Using activity- based information, it decides to reduce the bulkiness of the packages delivered, thereby reducing costs. This suggests that ABC system helps managers in ________ decisions.A) pricing B) product-mixC) process-improvementD) product-design

5) Product-cost cross-subsidization means that:A) when one product is overcosted, it results in more than one other product being overcostedB) when a company undercosts more than one of its products, it will overcost more than one of its other productsC) when a company undercosts one of its products, it will overcost at least one of its other productsD) when one product is overcosted it results in all other products being overcosted

6) Extracts from cost information of Hebar Corp.: Assuming that setup-hours is considered a more effective cost drive for allocating setup costs than direct labor-hours. Which of the following statements is true of Hebar's setup costs under traditional costing? A) L3 pack is undercosted by $5,850 B) L7 pack is undercosted by $5,750 C) L3 pack is overcosted by $5,850 D) L7 pack is overcosted by $5,850

6) Facility-sustaining costs are the costs of activities ________.A) undertaken to support individual products or services regardless of the number of units or batches in which the units are producedB) related to a group of units of a product or services, rather than each individual unit of product or serviceC) that managers cannot trace to individual products or services but that support the organization as a wholeD) performed on each individual unit of a product or service such as the cost of energy, machine depreciation, and repair

6) Which of the following has accelerated need for refined cost systems? A) global monopoliesB) rising pricesC) intense competition D) a shift toward increased direct costs

7) Which of the following is true with activity based cost accounting?A) Activity-based costing ignores the allocation of marketing and distribution costs.B) Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.C) The focus is on activities that account for a sizable fraction of indirect costs .D) Chances of product-cost cross-subsidization are higher in activity-based costing compared to traditional costing systems.

7) ________ are the costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced.A) Unit-level costsB) Batch-level costs C) Product-sustaining costs D) Facility-sustaining costs

9) Actual (rather than allocated) manufacturing overhead costs are first recorded in the ________. A) Work-in-Process Control accountB) Finished Goods Control accountC) Manufacturing Overhead Control account D) Cost of Goods Sold account

9) One reason for assigning selling and distribution costs to products for analytical purposes is ________. A) to justify a varied product-mixB) that these costs should be included in the cost of goods sold in the income statementC) to ensure that all costs are considered D) that all direct costs must be assigned

Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using one cost driver (direct manufacturing labor hours), the cost of a set of wooden chess pieces is $325.00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of woods used. The new cost of a set of chess pieces was determined to be $298.00 per set. 11) The reduction in cost per unit of wooden chess pieces under ABC system is due to difference in allocation of ________.A) labor costsB) prime costs C) indirect costs D) material costs

26) Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2018, the following estimates were provided for the coming year: Machining Direct labor-hours 60000 Machine-hours 30000 Direct labor cost $550,000 Manufacturing overhead costs$420000 Assembly Direct labor-hours 25,000 Machine-hours 40,000 Direct labor cost 850,000 Manufacturing overhead costs 240,000 The accounting records of the company show the following data for Job #316: Machining Direct labor-hours 120 Machine-hours 70 Direct material cost $325 Direct labor cost $150 Assembly Direct labor-hours 80 Machine-hours 5 Direct material cost $150 Direct labor cost$475 What amount of manufacturing overhead costs will be allocated to Job #316? A) $1,460.00B) $970.00C) $1,748.00 D) $1,188.00

C ($420,000 / 30,000 mh × 70 mh) + [($240,000 / 25,000) × 80 dlh] = $1,748.00

27) Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2018, the following estimates were provided for the coming year: Machining Direct labor-hours 80000 Machine-hours 20000 Direct labor cost $550,000 Manufacturing overhead costs$480000 Assembly Direct labor-hours 40,000 Machine-hours 20,000 Direct labor cost 900,000 Manufacturing overhead costs 280,000 The accounting records of the company show the following data for Job #316: Machining Direct labor-hours 120 Machine-hours 50 Direct material cost $250 Direct labor cost $125 Assembly Direct labor-hours 55 Machine-hours 5 Direct material cost $150 Direct labor cost$375 What are the total manufacturing costs of Job #316? A) $1,885.00 B) $2,085.00 C) $2,485.00 D) $900.00

C DM $400 + DML $500 + MOH $1,585 = $2,485.00

1) Excellent Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages. For 2018 Excellent Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis: Cost pool Manufacturing overhead costs Design changes $ 120,000 Setups 640,000 Inspections 80,000 Total manufacturing overhead costs $840,000 Activity level 300 design changes 5,000 setups 8,000 inspections During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Pages 60,000 Design changes 10 Setups 20 Inspections 30 Hospital Systems 76,000 0 10 38 When costs are assigned using the single cost driver, number of pages printed, then ________. A) Excellent Printers will want to retain this highly profitable customerB) Money Managers will likely seek to do business with competitorsC) Money Managers is unfairly over billed for its use of printing resources D) Money Managers is grossly under billed for the job, while other jobs will be unfairly over billed

1) ________ is an example of an output unit-level cost in the cost hierarchy. A) Factory rent expenseB) Building security costsC) Top management compensation costs D) Machine depreciation

10) Given this change in the cost ________.A) SR6 will now command a higher sales priceB) SR6 has benefited from the new systemC) SR6 is definitely more accurately costedD) the costing results for SR6 under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system

11) The cost allocation base ________.A) is a grouping of individual indirect cost itemsB) are costs related to a particular cost object that cannot be traced to that cost object in an economically feasible wayC) is anything for which a measurement of costs is desiredD) is a systematic way to link an indirect cost or group of indirect costs to cost objects

12) Which account is debited if materials costing $100,000 are sold? A) Revenues accountB) Work-in-Process Control accountC) Materials Control account D) Cost of Goods Sold account

13) Which account is credited if direct materials of $28,000 and indirect materials of $7,000 are sent to the manufacturing plant floor?A) Manufacturing Overhead Control for $35,000B) Work-in-Process Control for $35,000 C) Accounts Payable Control for $21,000 D) Materials Control for $35,000

2) In the service sector, to achieve timely reporting on the profitability of an engagement, a company will use ________.A) budgeted rates for all direct costsB) budgeted rates for indirect costs C) actual costingD) budgeted rates for some direct costs and indirect costs

3) Top management compensation cost is an example of ________ in the cost hierarchy. A) unit-level costsB) batch-level costsC) product-sustaining costs D) facility-sustaining costs

3) Which of the following is a sign that an ABC system may be useful for an organization?A) Significant amounts of indirect costs are allocated using multiple cost pools.B) Products make similar demands on resources because of similarities in volume, process steps, batch size, or complexity.C) Many indirect costs are described as batch-level costs, product-sustaining costs, or facility-sustaining costs.D) Operations staff disagrees with accountants about the costs of manufacturing and marketing products and services.

4) Demand for refinements to the costing system has accelerated due to ________. A) increase in direct costsB) decrease in product diversityC) decrease in indirect costs D) competition in product markets

4) Management accountants use the cost hierarchy to first calculate the ________. A) labor costs of each product and then they compute material costsB) overhead costs of each product and then they compute prime costsC) factory costs of each product and then they compute labor costs D) total costs of each product and then they compute per-unit costs

4) Which of the following statements is true of costing systems?A) Single-indirect cost pool systems always result in overcosting of products.B) Single-indirect cost pool systems classify some direct costs as indirect costs.C) ABC systems always result in overcosting of products.D) ABC systems classify some indirect costs as direct costs helping to improve processes

4) ________ costs support the organization as a whole. A) Unit-levelB) Batch-levelC) Product-sustaining D) Facility-sustaining

5) It is usually difficult to find good cost driver (cause-and-effect relationship) between ________ and a cost allocation base.A) unit-level costsB) batch-level costs C) product-sustaining costs D) facility-sustaining costs

5) Johnson Superior Products Inc. produces hospital equipment and the setup requirements vary from product to product. Johnson produces its products based on customer orders and uses ABC costing. In one of its indirect cost pools, setup costs and distribution costs are pooled together. Costs in this pool are allocated using number of customer orders for the easiness of costing operations. Based on the information provided, which of the following arguments is valid? A) Johnson has clearly failed to identify as many direct costs as is economically feasible.B) All costs in a homogeneous cost pool have the same or a similar cause-and-effect relationship with the single cost driver that is used as the cost-allocation base for Johnson.C) Johnson has unnecessarily wasted resources by classifying setup and distribution costs as they could have been considered as direct costs.D) Johnson has failed to use the correct cost driver as the cost-allocation base for setup costs.

7) It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that ________.A) total costs reflect market priceB) value-added costs can be eliminated C) there is high likelihood of cross-subsidizing of product costs D) product-pricing errors are minimal

8) Which of the following is a sign that an ABC system will provide benefits?A) There are relatively few indirect cost pools associated with the product and the indirect costs are a small percentage of total product costB) All the products produced are similar and sell in equal proportions (sales mix)C) Operations staff has no substantial disagreements with the reported costs of manufacturing and marketing products and services.D) All or most indirect costs are treated as output-unit level costs.

21) Crandle Corp. applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order include: Direct materials of $40,000; 400 direct manufacturing labor- hours at $15 per hour; and a 50% markup rate on total manufacturing costs. Estimated total product costs for this special order equal ________. A) $105,000B) $64,000C) $46,000 D) $70,000

D DM $40,000 + DML (400 × $15) + MOH $24,000 (400 × 60) = $70,000

3) Advantage Inc. employs 29 professional cleaners. Budgeted costs total $1,955,000 of which $1,702,000 is direct costs. Budgeted indirect costs are $839,500 and actual indirect costs were $795,600. Budgeted professional labor-hours are 1,150,000 and actual hours were 1,221,875. What is the budgeted direct cost- allocation rate? A) $1.70 per hourB) $1.60 per hourC) $0.73 per hourD) $1.48 per hour

D $1,702,000 / 1,150,000 = $1.48

1) Which of the following are reasons for using longer periods, such as a year, to calculate indirect cost rates?A) shorter the period, the greater is the influence of seasonal patterns on the amount of costsB) longer the period, the greater is the influence of seasonal patterns on the amount of costs C) shorter the period, the smaller is the influence of seasonal patterns on the amount of opportunity costs D) longer the period, the smaller is the influence of seasonal patterns on the amount of opportunity costs

13) ________ is used to record and accumulate all the costs assigned to a specific job. A) Job-cost recordB) Materials-requisition recordC) Cost-allocation base D) Labor-requisition record

2) Process costing ________.A) allocates all product costs, including materials, and laborB) results in different costs for different units producedC) is commonly used by general contractors who construct custom-built homes D) is used exclusively in manufacturing

2) The Materials Control account is increased when ________. A) direct materials are purchasedB) indirect materials are soldC) materials are requisitioned for production D) materials are converted to finished goods

2) The actual indirect-cost rate is calculated by ________.A) dividing actual total indirect costs by the actual total quantity of the cost-allocation baseB) multiplying actual total indirect costs by the actual total quantity of the cost-allocation base C) dividing the actual total quantity of the cost allocation base by actual total indirect costsD) multiplying the actual total quantity of the cost allocation base by actual total indirect costs

2) The method that restates all overhead entries in the general ledger and subsidiary ledgers using actual cost rates rather than budgeted cost rates is called ________.A) the adjusted allocation rate approachB) the proration approach C) the write-off of cost of goods sold approach D) the weighted-average cost approach

4) A manufacturer utilizes three separate indirect cost pools. Which of the following is true? A) Each indirect cost pool utilizes a separate cost-allocation rateB) Each indirect cost pool is a subset of total direct costsC) Each indirect cost pool relates to multiple cost centers D) Each indirect cost pool utilizes the same cost-allocation rate for all costs incurred

4) When using a normal costing system, manufacturing overhead is allocated using the ________ manufacturing overhead rate and the ________ quantity of the allocation base.A) budgeted; actualB) budgeted; budgeted C) actual; budgeted D) actual; actual

5) Problems with costing occur when ________.A) incorrect job numbers are recorded on source documentsB) bar coding is used to record materials used on the jobC) a computer screen requests an employee number before that employee is able to work on information related to a specific jobD) incorrect product delivery forms are entered into the system

5) The ________ adjusts individual job-cost records to account for underallocated or overallocated overhead.A) adjusted allocation-rateB) proration approach C) write-off to cost of goods sold approach D) weighted-average cost approach

6) The adjusted allocation approach yields the benefits of ________.A) timeliness and convenience of normal costingB) allocating budgeted manufacturing overhead costs at the end of the year C) write-off to the cost of goods sold approachD) the proration approach

6) The budgeted indirect-cost rate for each cost pool is computed as ________.A) budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base B) budgeted annual quantity of cost allocation base divided by budgeted annual indirect costs C) actual annual indirect costs divided by budgeted annual quantity of cost allocation baseD) budgeted annual indirect costs divided by budgeted actual quantity of cost allocation base

7) The formula for the predetermined indirect cost rate is:A) Budgeted annual indirect costs divided by actual quantity of cost-allocation baseB) Budgeted annual indirect costs divided by budgeted annual quantity of cost-allocation base C) Actual annual indirect costs divided by budgeted annual quantity of cost-allocation baseD) Actual annual indirect costs divided by actual annual quantity of cost-allocation base

7) Which of the following companies will use a process costing system? A) an oil refining companyB) a manufacturer of shipsC) a custom kitchen cabinet company D) an advertising firm

9) A company would use multiple cost-allocation bases ________.A) if managers believed the benefits exceeded the additional costs of that costing systemB) because there is more than one way to allocate overheadC) because this is a simpler approach than using one cost allocation baseD) if managers believe that using multiple cost-allocation bases is the only acceptable method

Filippucci Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) is different from the actual amount incurred ($225,000). Ending balances in the relevant accounts are: Work-in-Process $ 10,000 Finished Goods 20,000 Cost of Goods Sold 170,000 10) Under the writeoff approach, the difference between Manufacturing Overhead Control and Manufacturing Overhead Allocated is adjusted in the ________.A) Cost of Goods Sold accountB) Work-in Process account C) Manufacturing Overhead account D) Miscellaneous Expenses account

River Falls Manufacturing uses a normal cost system and had the following data available for 2018: Direct materials purchased on account $150,000 Direct materials requisitioned 84000 Direct labor cost incurred 125000 Factory overhead incurred 146000 Cost of goods completed 288000 Cost of goods sold 258000 Beginning direct materials inventory 25000 Beginning WIP inventory. 69000 Beginning finished goods inventory. 51000 Overhead application rate, as a percent of direct-labor costs 120% The journal entry to record the materials placed into production would include a ________. A) credit to Direct Materials Inventory for $84,000B) debit to Direct Materials Inventory for $150,000C) credit to WIP Inventory for $84,000 D) debit to WIP Inventory for $150,000

River Falls Manufacturing uses a normal cost system and had the following data available for 2018: Direct materials purchased on account $159,000 Direct materials requisitioned 85000 Direct labor cost incurred 133000 Factory overhead incurred 140000 Cost of goods completed 285000 Cost of goods sold 249000 Beginning direct materials inventory 34000 Beginning WIP inventory. 70000 Beginning finished goods inventory. 55000 Overhead application rate, as a percent of direct-labor costs 130% The ending balance of direct materials inventory is ________. A) $108,000B) $193,000C) $85,000 D) $119,000

A $34,000 + $159,000 - $85,000 = $108,000

9) Sky High Company has two departments, X and Y. The following estimates are for the coming year: X Direct manufacturing labor-hours 20,000 Machine-hours 30,000 Manufacturing overhead $300,000 Y Direct manufacturing labor-hours 30,000 Machine-hours 20,000 Manufacturing overhead $330,000 The budgeted indirect-cost driver rate for Y based on the number of machine-hours is in excess of X by ________. (Round interim and the final answer to the nearest cent.)A) $6.50 per machine-hourB) $21.50 per machine-hour C) $1.50 per machine-hourD) $16.50 per machine-hour

A X = $300,000 / 30,000 mh = $10.00 Y = $330,000 / 20,000 mh = $16.50; Excess = $16.50 − $10.00 = $6.50

17) For 2018, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $6.00 per unit. The selling price of the product is $21.00. The estimated manufacturing overhead costs are $275,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $350,000 and actual machine hours are 50,000. Using job costing, the 2018 actual indirect-cost rate is ________. A) $7.00 per machine-hourB) $5.50 per machine-hourC) $8.75 per machine-hour D) $8.50 per machine-hour

A $350,000 / 50,000 mh = $7.00

5) Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A Direct materials $700000 Direct manufacturing labor $200000 Manufacturing overhead$500000 Department B Direct Materials $100,000 Direct manufacturing labor $800,000 Manufacturing overhead $400,000 The actual material and labor costs charged to Job #432 were as follows: Direct materials: $25,000 Direct labor: Department A $8,000 Department B$12,000 Total$20,000 Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. For Department B, the manufacturing overhead allocation rate is ________. A) 50.0%B) 90.0 %C) 200.0% D) 250.0%

A $400,000 / $800,000 = 50.0%

15) Fixed costs remain constant at $450,000 per month. During high-output months variable costs are $300,000, and during low-output months variable costs are $125,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 24,000 for high-output months and 5,000 for low-output months? A) $31.25 per hour; $115.00 per hour B) $31.25 per hour; $31.25 per hour C) $18.75 per hour; $25.00 per hour D) $12.50 per hour; $115.00 per hour

A $450,000 / 24,000 = $18.75 $450,000 / 5,000 = $90.00 $300,000 / 24,000 = 12.50 $125,000 / 5,000 = 25.00 High Month = $31.25 Low Month = $115.00

12) Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect- cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company. Direct materials$60,000 Direct labor. $15,000 Manufacturing overhead costs $50,000 Machine-hours 100,000 mh Case High School Job Direct materials $2,400 Direct labor.$600 Manufacturing overhead costs Machine-hours 1,000 mh What amount of manufacturing overhead costs will be allocated to this job? A) $500B) $1,250C) $450 D) $650

A 1,000 mh × $50,000 / 100,000 mh = $500

32) Beta Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A direct materials$800,000 Direct manufacturing labor $200,000 Manufacturing overhead $500,000 Department B Direct materials$200,000 Direct manufacturing labor $900,000 Manufacturing overhead $450,000 The actual material and labor costs charged to Job #432 were as follows: Direct materials: $25,000 Direct labor: Department A $10,000 Department B$12,000 Total. $22,000 Beta applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. Proportion of manufacturing overhead with respect to the total cost of the job is ________. A) 39.74%B) 32.05%C) 28.21% D) 42.68%

A DM $25,000 + DML $22,000 + MOH $31,000 [($10,000 × $500,000 / $200,000)] + [$12,000 × $450,000 / $900,000] = $78,000$31,000 / $78,000 = 39.74%

6) A local accounting firm employs 24 full-time professionals. The budgeted annual compensation per employee is $45,000. The average chargeable time is 420 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis. Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $790,000, and the firm expects to have 90 clients during the coming year. What is the budgeted direct labor cost rate per hour? (Round the final answer to the nearest cent.) A) $28.57 per hourB) $20.90 per hourC) $4.46 per hour D) $107.14 per hour

A Total direct labor cost = $45,000 × 24 = $1,080,000Total hours = 420 × 90 = 37,800 hoursDirect labor cost rate per hour = $1,080,000 / 37,800 = $28.57 per hour

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A Direct materials $600000 Direct manufacturing labor $100000 Manufacturing overhead$400000 Department B Direct Materials $100,000 Direct manufacturing labor $600,000 Manufacturing overhead $300,000 The actual material and labor costs charged to Job #432 were as follows: Direct materials: $28,000 Direct labor: Department A $18,000 Department B$12,000 Total$30,000 Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. Manufacturing overhead costs allocated to Job #432 total ________. A) $78,000B) $12,000C) $36,000 D) $48,000

A [($18,000 × $400,000 / $100,000)] + [$12,000 × $300,000 / $600,000] = $78,000

1) In the service sector ________.A) direct labor costs are always easy to trace to jobsB) a budgeted direct-labor cost rate may be used to apply direct labor to jobs C) normal costing may not be usedD) overhead is generally applied using an actual cost-allocation rate

1) The spreading of underallocated or overallocated overhead among ending work-in-process, finished goods, and cost of goods sold is called ________.A) the adjusted allocation rate approachB) the proration approach C) the write-off of cost of goods sold approach D) the weighted-average cost approach

11) A job-cost sheet details the ________. A) direct materials purchased and paid B) direct labor costs incurredC) indirect labor costs incurred D) actual indirect overhead costs incurred

14) ABC Manufacturing Inc. ends the month with two jobs still in progress. Job 5 has $10,000 of materials, $2,000 of direct labor and $8,000 of manufacturing overhead allocated. Job 6 was $30,000 of materials, $2,000 of direct labor and $10,000 of manufacturing overhead allocated. The cost of goods sold for the month was $40,000 and of that 30% was overhead. There were no finished goods in stock as the month ends. If the manufacturing overhead is underallocated by $10,000, which of the following choices would be the correct way to prorate it, assuming the proration is based on the allocated overhead in the ending balances of work-in-process, finished goods, and cost of goods sold? A) Job 5 would be allocated another $2,500 of costB) Job 6 would be allocated another $4,000 of costC) Cost of goods sold would be reduced by $3,300 D) Cost of goods sold would be increase by $10,000

2) For a given job the direct costs associated with the job are ________.A) actual overhead that has been applied to the jobB) raw materials that can be traced to the job in an economically feasible way C) All sunk costs that can be traced to the job in an economically feasible way D) all fixed costs

20) Elite Stationary employs 20 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2018: Budget Indirect costs $250,000 Annual salary of each employee $200,000 Annual salary of each trainee $40,000 Total professional labor-hours 40,000 DLH Actual Indirect costs $400,000 Annual salary of each employee $250,000 Annual salary of each trainee $45,000 Total professional labor-hours 50,000 DLH When a normal costing system is used, clients using proportionately more full-time employees than trainees will ________.A) be over billed for actual resources usedB) be under billed for actual resources used C) be billed accurately for actual resources used D) result in an under allocation of direct costs

3) Job costing is ________.A) used by businesses to price identical productsB) used by businesses to price unique products for different jobs C) used to calculate equivalent unitsD) used to calculate the percentage of work completed

3) Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs: Identify indirect costs Compute the total cost of the job Select cost-allocation bases Compute the indirect cost rate A) ACDBB) CADBC) BACDD) DCAB

5) Direct costs ________.A) are anything for which a measurement of costs is desiredB) are costs related to a particular cost object that can be traced to that cost object in an economically feasible mannerC) focus specifically on the costing needs of the CFOD) are costs related to a particular cost object that cannot be traced to that cost object in a cost-effective manner

7) If indirect-cost rates are calculated monthly, distortions might occur because of ________. A) rental costs paid monthlyB) property tax payments made in July and DecemberC) routine monthly preventive-maintenance costs that benefit future months D) salary hikes at the beginning of the financial year

9) Allocating indirect costs to departments based on the relative revenue earned by those departments is done based on which of the following criterion?A) direct hours utilizedB) benefits received C) material resources usedD) cause-and-effect relationships

19) Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $18 per direct labor-hour. The following data are obtained from the accounting records for October 2018: Direct materials $370,000 Direct labor (3,300 hours @ $17/hour) 56,100 Indirect labor 22,000 Plant facility rent 53,000 Depreciation on plant machinery and equipment 41,000 Sales commissions 17,000 Administrative expenses 29,000 The actual amount of manufacturing overhead costs incurred in October 2018 totals ________. A) $277,500B) $116,000C) $162,000 D) $123,000

B $22,000 + $53,000 + $41,000 = $116,000

18) For 2018, Winters Manufacturing uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $2.00 per unit. The selling price of the product is $27.00. The estimated manufacturing overhead costs are $220,000 and estimated 20,000 machine hours. The actual manufacturing overhead costs are $225,000 and actual machine hours are 25,000. What is the profit margin earned if each unit requires two machine-hours? A) 45.00%B) 25.93%C) 50.00%D) 90.00%

B $225,000/25,000 = $9.00$27.00 − $2.00 − ($9.00 × 2) = $7; $7 / $20 = 25.93%

8) Sky High Company has two departments, X and Y. The following estimates are for the coming year: X Direct manufacturing labor-hours 20,000 Machine-hours 30,000 Manufacturing overhead $300,000 Y Direct manufacturing labor-hours 30,000 Machine-hours 20,000 Manufacturing overhead $330,000 A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is ________. A) $25.00 per direct labor-hourB) $12.60 per direct labor-hourC) $27.50 per direct labor-hour D) $16.50 per direct labor-hour

B $630,000 / 50,000 dlh = $12.60

31) River Falls Manufacturing uses a normal cost system and had the following data available for 2018: Direct materials purchased on account $148,000 Direct materials requisitioned 88000 Direct labor cost incurred 127000 Factory overhead incurred 148000 Cost of goods completed 299000 Cost of goods sold 250000 Beginning direct materials inventory 34000 Beginning WIP inventory. 70000 Beginning finished goods inventory. 55000 Overhead application rate, as a percent of direct-labor costs 105% The ending balance of work-in-process inventory is ________. A) $418,350B) $119,350C) $127,000 D) $426,000

B $70,000 + $88,000 + $127,000 + 1.05 ($127,000) - 299,000 = $119,350

4) Global Manufacturing Inc. uses normal costing during the year to allocate manufacturing overhead to jobs in a job costing system. At year end, it uses the adjusted allocation rate approach to account for underallocated or overallocated overhead. During 2018, Global's manufacturing overhead was underallocated by 10%. Job 117 had the following costs: Direct materials $1,600 Direct labor $3,400 Manufacturing overhead allocated $2,000 Which of the following would be the after adjustment cost of Job 117? A) $7,340B) $7,200C) $7,700 D) $6,300

B DM $1,600 + DL $3,400 + MOH Allocated ($2,000 x 1.1) = $7,200

13) Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect- cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Direct materials$40,000 Direct labor$10,000 Manufacturing overhead costs $45,000 Machine-hours 100,000 mh Case High School Job Direct Materials $2000 Direct Labor $400 Manufacturing Overhead costs Machine Hours. 900mh What are the total manufacturing costs of this job? A) $2,400B) $2,805C) $2,895 D) $1,995

B DM $2,000 + DML $400 + MOH $405 = $2,805

18) Elite Stationary Inc. employs 20 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2018: Budget Indirect costs$300,000 Annual salary of each employee $200,000 Annual salary of each trainee $35,000 Total professional labor-hours20,000 dlh Actual Indirect costs$400,000 Annual salary of each employee $210,000 Annual salary of each trainee $40,000 Total professional labor-hours40,000 dlh What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour? (Round the final answers to the nearest cent.)A) $200.00; $16.75B) $217.50; $15.00 C) $115.00; $10.00D) $135.00; $10.00

B [($200,000 × 20) + ($35,000 × 10)] / 20,000 = $217.50 budgeted direct rate $300,000 / 20,000 = $15.00 budgeted indirect rate

1) A cost is considered direct if it can be traced to a particular cost object in a cost effective way which means it can beA) traced easily with the aid of technologyB) traced in a manner that is accurate C) traced in an economically feasible wayD) possibly traced accurately with an investment in hardware and software

10) In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.A) direct materialsB) direct labor C) manufacturing overhead costs D) total costs

10) Which of the following includes both traced direct costs and allocated indirect costs? A) cost tracingB) cost poolsC) cost assignments D) cost allocations

12) A job-cost record uses information from ________.A) a materials-requisition record to record raw material purchases from suppliersB) a materials-requisition report to record the type and quantity of item received in an order from a supplierC) a labor-time card to record an employee's wage rate and hours spent on a particular jobD) the bill of materials to ensure the goods are of the prescribed quality

14) An increase in direct labor cost per unit ________. A) increases the fixed costB) increases profitsC) increases the variable cost D) increases overhead costs

16) Managers and accountants collect most of the cost information that goes into their systems through ________.A) an information data bankB) computer programs C) source documents D) time surveys

2) A ________ is anything for which a measurement of costs is desired. A) cost-allocation baseB) cost poolC) cost object D) cost-application base

2) The difference between actual costing and normal costing is ________. A) normal costing uses actual quantities of direct-costsB) actual costing uses actual quantities of direct-costsC) normal costing uses budgeted indirect-costs D) actual costing uses actual quantities of cost-allocation bases

3) A ________ is a grouping of individual indirect cost items. A) cost-allocation baseB) cost assignmentC) cost pool D) job-costing system

3) ABC Manufacturing Inc. ends the month with two jobs still in progress. Job 5 has $10,000 of materials, $2,000 of direct labor and $8,000 of manufacturing overhead allocated. Job 6 has $30,000 of materials, $2,000 of direct labor and $12,000 of manufacturing overhead allocated. The cost of goods sold for the month was $40,000 and there was no finished goods in stock as the month ended. If the manufacturing overhead was underallocated by $10,000, which of the following choices would be the correct way to prorate it based on ending balances before proration? A) The entire $10,000 of underallocated manufacturing overhead should be allocated to cost of goods sold B) $4,000 of the underallocated manufacturing overhead should be split between Job 6 and cost of goods soldC) $2,000 of the overallocation should be allocated to Job 5 D) The entire $10,000 of underallocated manufacturing overhead should be added to operating expenses for the month

3) Actual costing is a costing system that traces direct costs to a cost object by ________.A) using the budgeted direct cost rates times the budgeted quantities of direct-cost inputs B) using the actual direct costs rates times the budgeted quantities of the direct-cost inputs C) using the actual direct cost rates times the actual quantities of the direct-cost inputsD) using the budgeted direct cost rates times the actual quantities of the direct cost inputs

4) The budgeted direct-labor cost rate includes ________. A) budgeted total costs in indirect cost poolB) budgeted total direct-labor costs in the denominator C) budgeted total direct-labor costs in the numerator D) budgeted total direct-labor hours in the numerator

5) An example of a denominator reason for calculating annual indirect-cost rates includes ________. A) Budgeted annual indirect costs divided by actual quantity of cost-allocation baseB) semi-annual insurance payments in March and SeptemberC) higher levels of output demanded during the fall months D) prepaid rent in January for the months January through June

6) In a costing system, ________.A) cost tracing allocates indirect costsB) cost allocation assigns direct costsC) a cost-allocation base can be either financial or nonfinancialD) a cost object should be a product and not a department or a geographic territory

6) Which of the following differentiates job costing from process costing?A) Job costing is used when each unit of output is identical, and process costing deals with unique products.B) Job costing is used when each unit of output is identical and not produced in batches, and process costing deals with unique products produced on large scale.C) Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches.D) Job costing is used by manufacturing industries, and process costing is used by service industries.

7) The approach often used when dealing with small amounts of underallocated or overallocated overhead is the ________.A) adjusted allocation-rate approachB) proration approach C) write-off to cost of goods sold approach D) adjusted write-off approach

15) Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A Direct materials $700000 Direct manufacturing labor $200000 Manufacturing overhead$500000 Department B Direct Materials $100,000 Direct manufacturing labor $800,000 Manufacturing overhead $400,000 The actual material and labor costs charged to Job #432 were as follows: Direct materials: $25,000 Direct labor: Department A $8,000 Department B$12,000 Total$20,000 Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. For Department A, the manufacturing overhead allocation rate is ________. A) 40.0%B) 50.0%C) 250.0% D) 90.0%

C $500,000 / $200,000 = 250.0%

9) X-Industries manufactures 3-D printers. For each unit, $3,400 of direct material is used and there is $2,600 of direct manufacturing labor at $16 per hour. Manufacturing overhead is applied at $20 per direct manufacturing labor hour. Calculate the profit earned on 46 units if each unit sells for $9,500.A) $65,320B) $35,880C) $11,500D) $3,250

C $3,400 + $2,600 + (($2,600 / $16) × $20) = $9,250Profit earned on 46 units = ($9,500 − $9,250) × 46 units = $11,500

11) Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect- cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company. Direct materials$60,000 Direct labor. $15,000 Manufacturing overhead costs $50,000 Machine-hours 100,000 mh Case High School Job Direct materials $2,400 Direct labor.$600 Manufacturing overhead costs Machine-hours 1,000 mh For Lancelot Manufacturing, what is the annual manufacturing overhead cost-allocation rate? A) $0.75B) $1.25C) $0.50 D) $50.00

C $50,000 / 100,000 mh = $0.50 per mh

31) River Falls Manufacturing uses a normal cost system and had the following data available for 2018: Direct materials purchased on account $145,000 Direct materials requisitioned 82000 Direct labor cost incurred 127000 Factory overhead incurred 140000 Cost of goods completed 288000 Cost of goods sold 248000 Beginning direct materials inventory 25000 Beginning WIP inventory. 63000 Beginning finished goods inventory. 53000 Overhead application rate, as a percent of direct-labor costs 125% The ending balance of finished goods inventory is ________. A) $53,000B) $40,000C) $93,000 D) $288,000

C $53,000 + $288,000 - $248,000 = $93,000

10) Manton Manufacturing applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Bear product. Estimates for this order include: Direct materials of $79,000; 680 direct manufacturing labor-hours at $25 per hour; and a 25% markup rate on total manufacturing costs. Manufacturing overhead cost estimates for this special-order total ________. A) $60,550B) $57,800C) $40,800D) $59,250

C $60 × 680 dlh = $40,800

For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $340,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $450,000 and actual machine hours are 50,000. What is the difference between the budgeted and the actual manufacturing overhead using job costing? (Round interim and the final answer to the nearest cent.) A) $2.75B) $2.20C) $0.50D) $2.25

C Budgeted manufacturing overhead rate: $340,000 / 40,000 mh = $8.50 per machine-hour Actual manufacturing overhead is $450,000 / 50,000 = $9.00 per machine hour. Difference is $9.00 - $8.50 = $0.50

8) A local accounting firm employs 27 full-time professionals. The budgeted annual compensation per employee is $40,500. The average chargeable time is 420 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis. Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $781,500, and the firm expects to have 75 clients during the coming year. If ten clients are lost and the workforce stays at 27 employees, then the direct labor cost rate per hour: A) $34.71 per hourB) $24.81 per hourC) $40.05 per hour D) $21.89 per hour

C Total direct cost = $40,500 × 27 = $1,093,500Total hours = 420 × 65 = 27,300 hoursDirect cost rate per hour = $1,093,500 / 27,300 = $40.05 per hourThe direct labor cost rate per hour increased from $34.71 per hour to $40.05 per hour

Elite Stationary Inc. employs 20 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2018: Budget Indirect costs$300,000 Annual salary of each employee $200,000 Annual salary of each trainee $35,000 Total professional labor-hours20,000 dlh Actual Indirect costs$400,000 Annual salary of each employee $210,000 Annual salary of each trainee $40,000 Total professional labor-hours40,000 dlh How much should a client be billed in a normal costing system when 1,000 professional labor-hours are used?A) $215,000B) $125,000 C) $130,000D) $145,000

C [($210,000 × 20) + ($40,000 × 10)] / 40,000 × 1,000= 115000 $300,000 / 20,000 × 1,000= 15000 115000+15000= $130,000

1) In a normal costing system, the Manufacturing Overhead Control account ________. A) is increased by allocated manufacturing overheadB) is credited with amounts transferred to Work-in-ProcessC) is decreased by allocated manufacturing overhead D) is debited with actual overhead costs

3) Which of the following statements about normal costing is true?A) Direct costs and indirect costs are traced using an actual rate.B) Direct costs and indirect costs are traced using budgeted rates.C) Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate. D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.

4) An example of a numerator reason for calculating annual indirect-cost rates includes ________. A) fewer production workdays in a monthB) cost of raw materials purchasedC) higher snow-removal costs during the winter D) the number of units produced

5) Which of the following statements about actual costing is true?A) Manufacturing costs of a job are available earlier under actual costing. B) Corrective actions can be implemented sooner under actual costing. C) Actual costing uses budgeted indirect-cost rates calculated annually. D) Actual costing uses actual indirect-cost rates calculated annually.

8) The Robinson Corporation manufactures automobile parts. During the year, the company sold $5,600,000 of parts that had a cost of $3,200,000. At year end, these are the balances for cost of goods sold and its manufacturing overhead accounts: Cost of goods sold $3,200,000Manufacturing overhead allocated $1,400,000 Manufacturing overhead control $1,495,000 What would be the correct journal entry to close out the overhead accounts assuming that the write-of to cost of goods sold approach is used? A) Manufacturing overhead control Cost of goods sold Manufacturing overhead allocated B) Sales Cost of goods sold Gross profit C) Finished goods Manufacturing overhead allocated Manufacturing overhead control D) Cost of goods sold Manufacturing overhead allocated Manufacturing overhead control

6) For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $300,000 and estimated machine hours are 50,000. The actual manufacturing overhead costs are $420,000 and actual machine hours are 60,000. Using job costing, the 2018 budgeted manufacturing overhead rate is ________. (Round the final answer to the nearest cent.)A) $8.40 per machine-hourB) $5.00 per machine-hour C) $7.00 per machine-hourD) $6.00 per machine-hour

D $300,000 / 50,000 mh = $6.00 per machine-hour

12) Financial Planning Partners Inc., employs 12 full-time CPAs and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Indirect costs $300,000 Annual salary of each attorney $118,000 Annual salary of each paraprofessional $31500 Total professional labor-hours. 50000 dlh Actual Indirect costs $309,000 Annual salary of each attorney $128,000 Annual salary of each paraprofessional $32,500 Total professional labor-hours 56,000 dlh When using a normal costing system, year-end accounting records will show that indirect costs are ________.A) perfectly allocatedB) underallocated C) within budgetD) overallocated

D Overallocated; allocated is $336,000 ($300,000 / 50,000 × 56,000 dlh), when actual is only $309,000.

20) Smith and Jones CPA firm employs 12 accountants and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget: Indirect costs $290,000 Annual salary of each attorney $90,000 Annual salary of each paraprofessional $32,000 Total professional labor-hours 20,000 dlh Actual Indirect costs $310,000 Annual salary of each attorney $105,000 Annual salary of each paraprofessional $33,000 Total professional labor-hours 25,000 dlh What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional labor- hour? A) $63.60; $11.60B) $70.00; $14.50 C) $79.50; $12.40D) $63.60; $12.40

D [($105,000 × 12) + ($33,000 × 10)] / 25,000 = $63.60 actual direct rate $310,000 / 25,000 = $12.40 actual indirect rate

25) Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2018, the following estimates were provided for the coming year: Machining Direct labor-hours 60000 Machine-hours 20000 Direct labor cost $450,000 Manufacturing overhead costs$300000 Assembly Direct labor-hours 70,000 Machine-hours 30,000 Direct labor cost 750,000 Manufacturing overhead costs 210,000 The accounting records of the company show the following data for Job #316: Machining Direct labor-hours 120 Machine-hours 60 Direct material cost $350 Direct labor cost $350 Assembly Direct labor-hours 75 Machine-hours 5 Direct material cost $100 Direct labor cost$450 For Bauer Manufacturing, what is the annual manufacturing overhead cost-allocation rate for the Machining Department?A) $3.00B) $6.00 C) $5.00D) $15.00

D $300,000 / 20,000 mh = $15.00 per mh

14) Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect- cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Direct materials$40,000 Direct labor$10,000 Manufacturing overhead costs $45,000 Machine-hours 100,000 mh Case High School Job Direct Materials $2000 Direct Labor $400 Manufacturing Overhead costs Machine Hours. 900mh What is the bid price for the Case High School job if the company uses a 40% markup of total manufacturing costs?A) $3,360B) $1,122 C) $960D) $3,927

D (DM $2,000 + DML $400 + MOH $405) × (1 + 40/100) = $3,927

7) A local accounting firm employs 28 full-time professionals. The budgeted annual compensation per employee is $41,000. The average chargeable time is 430 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis. Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,000, and the firm expects to have 95 clients during the coming year. What is the budgeted indirect-cost rate per hour? A) $6.86 per hourB) $65.37 per hourC) $28.10 per hour D) $19.27 per hour

D Indirect-cost rate per hour = $787,000 / 430 × 95 = $19.27 per hour

21) Francis and Hartley Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Indirect costs $270,000 Annual salary of each attorney $100,000 Annual salary of each paraprofessional $29,000 Total professional labor-hours 50,000 dlh Actual Indirect Costs $300,000 Annual Salary of each attorney $110,000 Annual salary of each Paraprofessional $30,000 Total professional labor-hours 60,000 dlh How much should the client be billed in an actual costing system if 220 professional labor-hours are used?

D [($110,000 × 12) + ($30,000 × 10)] / 60,000 × 220 = $5,940 ($300,000 / 60,000 × 220)= 1100 5940+1100= 7040

cost chap 4 +5

संबंधित स्टडी सेट्स

adult 3- exam 1 quiz/ATI questions

MKT 350 Quiz 3

EXAM 1 online quizzes

Spanish Quiz Alejandro Chapter 6 Questions

PHYSICS FINAL REVIEW

Special Tests

6,7,8

Seizure Disorder

Constitutional Law Chapter 11

Kine 2050 Chapter 4

Restaurant Management ch 1 and 2

EMT: Chapters 33-34 Review

LAB 01 EXERCISE 4 Applying the Scientific Method

Thrombocytopenia

MCQ_For_Midterm

CMN 396 EXAM 2

AMI

Advanced Med Surgical

Series 65 - Unit 8

FIN Quiz Ch. 16