Accounting 201

To the nearest whole dollar, what should be the total property taxes at a sales volume of 30,900 units? (Assume that this sales volume is within the relevant range.) $237,930 $222,915 $207,900 $181,660 Given: $207,900 - Within the relevant range, a fixed cost is constant.

207,900

The following costs were incurred in September: Direct materials $40,100 Direct labor $29,700 Manufacturing overhead $21,200 Selling expenses $25,600 Administrative expenses $32,100 Conversion costs during the month totaled: $148,700 $61,300 $50,900 $69,800

50,900

The following costs were incurred in September: Direct materials $39,900 Direct labor $30,300 Manufacturing overhead $23,000 Selling expenses $19,500 Administrative expenses $31,900 Prime costs during the month totaled: $93,200 $70,200 $53,300 $144,600

70200

Which of the following would be considered a product cost for external financial reporting purposes?

Cost of sand spread on the factory floor to absorb oil from manufacturing machines.

Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products are called (check all that apply):

Direct labor.

unit product cost

Explanation: Direct materials $ 45,000 Direct labor $13 per DLH × 630 DLHs 8,190 Manufacturing overhead $11 per MH × 350 MHs 3,850 Total cost $ 57,040 Unit product cost $ 22.82

A process cost system would be used to account for the cost of manufacturing an oil tanker.

false

Depreciation on office equipment would be included in product costs.

false

Indirect costs, such as manufacturing overhead, are always fixed costs.

false

Manufacturing salaries and wages incurred in the factory are period costs.

false

Selling and administrative expenses are product costs under generally accepted accounting principles.

false

The cost of a completed job in a job-order costing system typically consists of the actual direct materials cost of the job, the actual direct labor cost of the job, and the actual manufacturing overhead cost of the job.

false

The advertising costs that Pepsi incurred to air its commercials during the Super Bowl can best be described as a:

fixed cost

A decrease in production will ordinarily result in an increase in fixed production costs per unit.

true

A job cost sheet is used to accumulate costs charged to a job.

true

A mixed cost is partially variable and partially fixed.

true

Committed fixed costs represent organizational investments with a multi-year planning horizon that can't be significantly reduced even for short periods.

true

If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be underapplied.

true

The process of assigning overhead cost to jobs is known as overhead application.

true

At a sales volume of 38,500 units, Thoma Corporation's sales commissions (a cost that is variable with respect to sales volume) total $646,800. To the nearest whole dollar, what should be the total sales commissions at a sales volume of 36,000 units? (Assume that this sales volume is within the relevant range.) (Do not round intermediate calculations.) $646,800 $691,717 $604,800 $616,320 Sales commission per unit = Total sales commission ÷ Unit sales = $646,800 ÷ 38,500 units = $16.80 per unit Total sales commission = Sales commission per unit × Unit sales = $16.80 per unit × 36,000 units = $604,800

604,800

There are two acceptable methods for closing out any balance of underapplied or overapplied manufacturing overhead. One method involves allocation of the balance among several accounts, whereas the other closes any balance directly to:

COGS

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

Sheet steel in a file cabinet made by the company.

If it is a material amount, overapplied or underapplied overhead should be disposed of by allocating it to (check all that apply):

WIP, finished goods, cost of goods sold

The term differential cost refers to:

a difference in cost which results from selecting one alternative instead of another.

Which of the following would NOT be treated as a product cost for external financial reporting purposes?

advertising expenses

in activity based costing, an activity is

any event that causes the consumption of overhead resources

Which terms will make the following statement true? When manufacturing overhead is overapplied, the Manufacturing Overhead account has a __________ balance and applied manufacturing overhead is greater than __________ manufacturing overhead.

credit, actyal

Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves?

direct labor hours

Conversion costs do NOT include:

direct materials

Materials that physically become part of the product and can be traced to specific units or batches of product are called (check all that apply):

direct materials

A direct cost is a cost that cannot be easily traced to the particular cost object under consideration.

false

A fixed cost remains constant if expressed on a unit basis.

false

Conversion cost is the sum of direct labor cost and direct materials cost.

false

Departmental overhead rates are generally preferred to plant-wide overhead rates when:

he activities of the various departments in the plant are not homogeneous.

The salary paid to the supervisor of an assembly line would normally be classified as (check all that apply):

indirect labor and manufacturing overhead

Materials that are used in support of the production process but that do not become a part of the product and are not clearly identified with units or batches of product are called (check all that apply):

indirect materials MOH

Which of the following costs would not be included as part of manufacturing overhead?

insurance on sale vehicles

the cost of direct materials

is a product cost

A source document that production managers use to request materials for manufacturing and that is used to assign materials costs to specific jobs or to overhead is a

materials requisition

Which of the following costs is often important in decision making, but is omitted from conventional accounting records?

opportunity cost

An example of a committed fixed cost is:

property taxes on the factory building

Goods a company acquires to use in making products are called (check all that apply):

raw materials inventory

variable cost

remains constant on a per unit basis as the number of units produced increases.

On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents:

the amount of cost of goods completed during the current year whether they were started before or during the current year.

The term "relevant range" means the range of activity over which:

the assumptions about fixed and variable cost behavior are reasonably valid.

A company should use process costing, rather than job order costing, if:

the product is composed of mass-produced homogeneous units.

What document is used to determine the actual amount of direct labor to record on a job cost sheet?

time ticket

Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead.

true

Top management salaries should not go into the Manufacturing Overhead account.

true

Underapplied or overapplied manufacturing overhead represents the difference between actual overhead costs and applied overhead costs.

true

A process costing system:

uses a separate Work in Process account for each processing department.

Which of the following is classified as a direct labor cost?

wages of assembly workers yes salaries of manager no

Which of the following costs is an example of a period rather than a product cost?

wages of sales persons

Bakker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $98,560 and 3,200 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $100,410 and actual direct labor-hours were 3,000. The overhead for the year was: (Round your intermediate calculations to 2 decimal places.) $6,160 underapplied $8,010 overapplied $6,160 overapplied $8,010 underapplied Actual manufacturing overhead incurred $100,410 Manufacturing overhead applied to Work in Process 92,400 Underapplied (overapplied) manufacturing overhead $8,010

8010

The following data have been recorded for recently completed Job 674 on its job cost sheet. Direct materials cost was $2,127. A total of 32 direct labor-hours and 256 machine-hours were worked on the job. The direct labor wage rate is $20 per labor-hour. The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $27 per machine-hour. The total cost for the job on its job cost sheet would be: $7,054 $9,679 $11,824 $6,635

9,679

In activity-based costing, an activity cost pool is (check all that apply):

A "bucket" in which costs are accumulated that relate to a single activity measure. An allocation base in an activity-based costing system. A cost driver.

When a company shifts from a traditional cost system in which manufacturing overhead is applied based on direct labor-hours to an activity-based costing system with batch-level and product-level costs, the unit product costs of low volume products typically decrease whereas the unit product costs of high volume products typically increase.

false