Exam 3 RETL 262
Overhead costs are assigned to each product based on ________. A. the proportion of that product's use of the cost driver B. a predetermined overhead rate for a single cost driver C. price of the product D. machine hours per product
A
The amount of a unit's sales price that helps to cover fixed expenses is its ________. A. contribution margin B. profit C. variable cost D. stepped cost
A
Which of the following is a prime cost? A. direct labor B. work in process inventory C. administrative labor D. factory maintenance expenses
A
A process costing system is most likely used by which of the following? A. airplane manufacturing B. a paper manufacturing company C. an accounting firm specializing in tax returns D. a hospital
B
When variable costs increase and all other variables remain unchanged, the break-even point will ________. A. remain unchanged B. increase C. decrease D. produce a lower contribution margin
B
Which is not a task typically associated with ABC systems? A. calculating the overhead application rate for each cost pool B. applying a single cost rate C. identifying a cost driver D. more correctly allocating overhead costs
B
Which of the following is a conversion cost? A. raw materials B. direct labor C. sales commissions D. direct material used
B
A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit? A. $40 B. $60 C. $90 D. $150
C
In a process cost system, factory depreciation expense incurred is debited to ________. A. finished goods inventory B. work in process inventory C. manufacturing overhead D. cost of goods sold
C
When fixed costs decrease and all other variables remain unchanged, the break-even point will ________. A. remain unchanged B. increase C. decrease D. produce a lower contribution margin
C
When sales price increases and all other variables are held constant, the break-even point will ________. A. remain unchanged B. increase C. decrease D. produce a lower contribution margin
C
Which of the following is a reason a company would implement activity-based costing? A. The cost of record keeping is high. B. The additional data obtained through traditional allocation are not worth the cost. C. They want to improve the data on which decisions are made. D. A company only has one cost driver.
C
Which of the following lists contains only conversion costs for an inflatable raft manufacturing corporation? A. vinyl for raft, machine operator, electricity, insurance B. machine operator, electricity, depreciation, plastic for air valves C. machine operator, electricity, depreciation, insurance D. vinyl for raft, electricity, insurance, plastic for air valves
C
During production, how are the costs in process costing accumulated? A. to cost of goods sold B. to each individual product C. to manufacturing overhead D. to each individual department
D
Which is not a step in activity-based costing? A. identify the activities performed by the organization B. identify the cost driver(s) associated with each activity C. compute a cost rate per production D. assign costs to products by multiplying the cost driver rate by the volume of the cost driver units consumed by the product
C
Which of the following production characteristics is better suited for process costing and not job order costing? A. Each product batch is distinguishable from the prior batch. B. The costs are easily traced to a specific product. C. Costs are accumulated by department. D. The value of work in process is the direct material used, the direct labor incurred, and the overhead applied to the job in process
C
Which is the correct formula for computing the overhead rate? A. estimated use of the cost driver for production/estimated overhead for the activity b. estimated overhead for the product/estimated use of the cost driver for the activity C. estimated use of the cost driver for production/estimated overhead for the activity D. estimated overhead for the activity/estimated use of the cost driver for the activity
D
In a process costing system, which account shows the overhead assigned to the department? A. cost of goods sold B. finished goods inventory C. raw material inventory D. work in process inventory
D
The costs to be accounted for consist of which of the following? A. costs added during the period B. costs of the units in ending inventory C. costs started and transferred during the period D. costs in the beginning inventory and costs added during the period
D
Which is not needed to compute equivalent units of production? A. the percentage of completion for inventory still in process B. the number of units transferred out C. the number of units started and completed D. the material cost per unit
D
