F342: Cost Accounting Chapter 3-5
The journal entry to record salaries and wages of factory supervisors and warehouse clerks includes a debit to:
Factory Overhead
Indirect manufacturing costs such s indirect labor, indirect materials, factory rent and utilities are all part of actual_____________ cost
Factory overhead
Cost of items ready for sale are held in:
Finished goods inventory
Which of the following is NOT an example of a decision involving structural cost drivers?
Workforce empowerment
When using ________, the cost or profitability of each job cannot be computed until the end of the period.
actual costing
When a resource is used for some purpose, a(n) _______ is incurred.
cost
Enabling the assignment of costs to cost objects and explaining cost behavior are the two important roles provided by _________.
cost drivers
The appropriate costing method when most costs incurred can be identified with a specific product, client, or project is _________ costing.
job
1. Cost accumulation method 2. Cost measurement method 3. Overhead application method
1. Job costing, process costing, or joint costing 2. Actual, normal, or standard costing 3. Volume-based or activity-based
True or False: How successful firms need to apply cost management is dependent on the competitive strategy being used.
False
When a company has multiple departments, it is always best to use departmental overhead rates instead of a single plantwide rate. True or False?
False
When materials are transferred out of Material Inventory, they are always transferred into Work-in-Process Inventory. True or False?
False
A cost that does not change with the volume of a designed cost driver within the relevant range is a(n) __________
Fixed cost
Which of the following is a period cost?
Interest expense
A primary way to ensure accurate data is to have effective:
Internal accounting controls
Operations costing identifies direct materials by:
Job
The document used to summarize the costs of a particular job is called a:
Job cost sheet
True and False: Many types of costs are volume-based, meaning they vary with the amount produced or quantity provided.
True
True or False: Manufacturing departments can be considered either cost pools or cost objects.
True
True or False: The cost driver for variable cost can be either volume-based or activity based.
True
True or False: To properly interpret total average unit cost, it must be separated into unit variable and unit fixed costs.
True
The amount by which actual factory overhead exceed factory overhead applied is known as:
Underapplied Overhead
Total costs within the relevant range that includes both variable and fixed components is referred to as a(n):__________
mixed cost
Scrap can be classified as:
- Relating to a specific job - Common to all jobs
Cost pools may be based on:
- Responsibility center - Source of the cost - Type of cost
Normal spoilage may either be ___________ or _________.
- Specific - Common
Normal spoilage can be:
- Spread over the cost of all jobs - Attached to the cost of a specific job. - Charged to factory Overhead
Which of the following statements are true?
- The law of diminishing marginal productivity occurs at higher levels of the cost driver. - At low values for the cost driver, costs increases at a decreasing rate.
Effective management of manufacturing costs requires that the cost information be:
- Timely - Accurate
Volume-based product costing may assign overhead costs based on:
- Units produced - Direct labor hours per unit
The value chain of a manufacturer begins with ________ activities such as design ends with ________ activities including customer service.
- Upstream - Downstream
A cost leadership firm that produces a commodity is likely to use:
- Process costing - Standard costing - Activity-based costing
In various service industries, a job is referred is as a:
- Project - Client - Case
At the end of an accounting period overapplied overhead can be disposed of by:
- Prorating the amount among work in process, finished goods, and cost of goods sold. - Adjusting cost of goods sold.
When a job consists of units planned for future sale, the ________ method approach is being used and when jobs are produced based on customer demand, the _______ method approach is being used.
- Push - Pull
Types of rework include rework on:
- Abnormal defective units. - Normal defective units
Four types of cost drivers are:
- Activity based - Volume based - Structural - Executional
Fixed costs:
- Are generally not expected to change within a year. - Are define for a period of time.
Normal Costing:
- Avoids cost per unit fluctuations that can occur with actual costing. - Is used by many firms
A job cost sheet:
- Contains all three cost elements - May include detailed data required by management.
Direct material cost generally includes:
- Cost of materials used in the production of the product. - A reasonable allowance for scrap and defects.
The components of the cost of goods manufactured calculation are:
- Direct materials used - Overhead - Direct labor
The two types of cost assignments are ________ and __________.
- Direct tracing - Allocation
Types of cost assignment include:
- Direct tracing - Cost allocation
Which of the following employees would be classified as indirect labor?
- Factory supervisor - Plant security guard - Factory custodian
Having a detailed description of the firm's activities:
- Improves operational and management control - Helps the firm achieve its strategic objectives.
Which of following statement are true?
- Indirect labor includes factory supervisors and material handlers - Payroll taxes and fringe benefits for assemble line workers may be treated as indirect labor. - Labor can sometimes be both direct and indirect depending on the cost object.
A company that accumulates costs by tracing them to specific products and services is using ________ costing while a company that accumulates costs at the department level and then allocates them to products and services is using ________ costing.
- Job - Process
Factors that influence the cost of preparing information for decision making include:
- Level of aggregation - Level of desired accuracy - Timeliness
Characteristics that help determine a firm's operational complexity include:
- Number and diversity of products - Production processes and locations. - Distribution networks
Costs added to Work-in-Process Inventory include:
- Overhead cost - Direct labor cost
Overhead is assigned to products using cause and effect criteria and various cost drivers when using:
Activity Based costing systems
An actual costing system uses actual direct material and direct labor costs and records _________ factory overhead for the jobs.
Actual
An error in allocation that results from using a plantwide rate instead of departmental rates is a(n) _______ error
Aggregation
Cost drivers are also called _________.
Allocation bases
Assembly workers' wages:
Are always direct labor but some labor costs such as payroll taxes and training may be treated as indirect labor.
Ideally, the selection of an allocation base should:
Be based on a cause-and-effect relationship
A detailed listing of all materials needed for a job is provided on a(n):
Bill of material
Which cost management systems use actual direct material and actual direct labor costs?
Both actual and normal costing
Which of the following is an example of a decision involving structural cost drivers?
Complexity
Any factor that causes total cost to change is a(n) ________.
Cost driver
Indirect costs are assigned using:
Cost drivers
The dollar amount of a product transferred to the income statement at the time of sale is called _____________.
Cost of Goods Sold
A merchandising company is likely to have:
Cost of goods sold
Meaningful groups into which costs are assigned are called:
Cost pools
Purchases recorded in the Materials Inventory account include:
Direct and Indirect materials
Prime costs are the combination of:
Direct materials and direct labor
Factors the firm can manage in the short term to reduce costs are _______ cost drivers.
Executional
The journal entry to record indirect labor wages debits:
Factory Overhead
The production department uses a(n) ________ to request materials for production.
Materials requisition
Selling and administrative costs are:
Never product costs
Spoilage that is uncontrollable in the short term and is considered a regular part of production is called:
Normal spoilage
Underapplied or overapplied overhead is usually adjusted:
Only at the end of the year
Cost of goods manufactured includes:
Only product costs
A hybrid costing approach that uses elements of both job and process costing is known as ________ costing.
Operation
If applied overhead is greater than actual overhead, overhead is _________
Overapplied
All indirect costs are combined into a single cost pool called ________.
Overhead
The process of assigning overhead costs to a job known as ________.
Overhead application
Then ending balance of inventory is determined by a count when using a(n) ___________.
Periodic inventory system.
An estimated overhead rate used to assign factory overhead to a job is known as the __________.
Predetermined factory overhead rate
A firm that produces a limited variety of homogeneous products is likely to use _______.
Process costing
To make nonconforming goods acceptable so they can be sold in regular channels requires __________.
Rework
An error in allocation that results from the selection of an inappropriate cost driver is a(n) _________ error.
Specification
A cost varies in increments greater than the number of units as the volume of the cost driver changes is a _________.
Step cost
These are strategic in nature and involve decision that have long-term effects on the firm's total costs.
Structural cost drivers
The determination of whether a cost is variable generally depends on:
The nature of the cost object
Pay rates and information for assigning direct labor costs to individual jobs are shown on a(n) ___________.
Time ticket
Having necessary information available to management to facilitate effective decision making is:
Timeliness
Within the relevant range of activity _______are expected to remain approximately constant.
Total fixed costs and per unit variable costs.
The sum of direct materials used, direct labor and overhead is called __________ for the period.
Total manufacturing cost
A firm can use __________ analysis to help assess the long term consequences of it's current or planned commitment to a structural cost driver.
Value chain
Within the relevant range of activity, per unit _____ costs are expected to remain approximately constant.
Variable
Costs that are consumed during operations are:
Variable costs
The proper treatment of abnormal spoilage is to:
charge it to a special loss account
The process of classifying and assigning material, labor, and overhead costs to cost objects is known as __________.
costing
A cost that can be conveniently and economically traced to a cost pool or cost object is called a(n) _________.
direct cost
The formula for the predetermined overhead rate is:
estimated overhead / estimated amount of a cost driver
Costs that provide capacity for operations that _____ costs.
fixed
A clothing manufacturer would most likely treat the cost of thread as a(n)_______ material.
indirect
The cost of goods finished and transferred out of the Work-in-Process Inventory account during a specified period is called cost of goods ________.
manufactured
Within the _____ the total cost curve is approximately linear.
relevant range