Accounting 204 Exam 1

The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): Multiple Choice period cost. direct material cost. indirect material cost. opportunity cost.

indirect material cost.

Which of the following would usually be found on a job cost sheet under a normal cost system? Actual direct material cost Actual manufacturing overhead cost A) Yes Yes B) Yes No C) No Yes D) No No Multiple Choice Choice A Choice B Choice C Choice D

Choice B

A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes direct costs. True / False

False

A job cost sheet is used to record how much a customer pays for the job once the job is completed. True / False

False

Assume that a company closes out any manufacturing overhead overapplied or underapplied to cost of goods sold. Then in the Schedule of Cost of Goods Sold, Adjusted cost of goods sold = Unadjusted cost of goods sold + Overapplied overhead - Underapplied overhead. True / False

False

If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be overapplied. True / False

False

In a traditional format income statement for a merchandising company, cost of goods sold is a variable cost that is included in the "Variable expenses" portion of the income statement. True or False?

False

Which of the following statements is true when referring to the high-low method of cost analysis? Multiple Choice The high-low method has no major weaknesses. The high-low method is very hard to apply. In essence, the high-low method draws a straight line through two data points. The high-low method uses all of the available data to estimate fixed and variable costs.

In essence, the high-low method draws a straight line through two data points.

Which of the following statements about using a plantwide overhead rate based on direct labor is correct? Multiple Choice Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs. Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs. It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver. The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.

It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

Assigning manufacturing overhead to a specific job is complicated by all of the below except: Multiple Choice Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job. Manufacturing overhead is incurred only to support some jobs. Manufacturing overhead consists of both variable and fixed costs. The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period.

Manufacturing overhead is incurred only to support some jobs.

If manufacturing overhead is underapplied, then: Multiple Choice actual manufacturing overhead cost is less than estimated manufacturing overhead cost.Incorrect the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred. the predetermined overhead rate is too high. the Manufacturing Overhead account will have a credit balance at the end of the year.

Process is less than the actual manufacturing overhead cost incurred.

Refer to the T-account below: Manufacturing Overhead (2) 4,000 (7) 150,000 (3) 15,000 (4) 80,000 (5) 30,000 (6) 25,000 154,000 150,000 Bal. 4,000 Entry (4) could represent which of the following except? Multiple Choice Indirect labor cost incurred. Factory insurance cost. Overhead cost applied to Work in Process. Depreciation on factory equipment.

Overhead cost applied to Work in Process.

Refer to the T-account below: Work In Process Bal. 30,000 (12) 270,000 (4) 90,000 (6) 70,000 (9) 110,000 Bal. 30,000 Entry (12) could represent which of the following? Multiple Choice Direct labor cost incurred in production. Purchases of raw materials. The cost of goods manufactured transferred to Finished Goods. The cost of indirect materials incurred in production.

The cost of goods manufactured transferred to Finished Goods.

A variable cost remains constant if expressed on a unit basis. True of False?

True

The appeal of using multiple departmental overhead rates is that they presumably provide a more accurate accounting of the costs caused by jobs. True / False

True

The schedule of cost of goods manufactured contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and it summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods. True / False

True

The sum of all manufacturing costs except for direct materials and direct labor is called manufacturing overhead. True or False?

True

Firlit Corporation incurred $69,000 of actual Manufacturing Overhead costs during October. During the same period, the Manufacturing Overhead applied to Work in Process was $70,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a: Multiple Choice debit to Work in Process of $70,000 credit to Work in Process of $70,000 debit to Manufacturing Overhead of $69,000 credit to Manufacturing Overhead of $69,000

debit to Manufacturing Overhead of $69,000

Fixed costs expressed on a per unit basis: Multiple Choice increase with increases in activity. decrease with increases in activity. are not affected by activity.Incorrect should be ignored in making decisions since they cannot change.

decrease with increases in activity.