acct 210 test 2
Of the following four cost categories, the sum of which pairs should be equal? 1. Beginning Inventory 2. Costs added this period 3. Ending Inventory 4. Cost of Goods Manufactured A. 1 + 2 = 3 + 4 B. 2 + 3 = 4 + 1 C. 3 + 1 = 2 + 4 D. All of the above are correct. E. None of the above are correct.
A. 1 + 2 = 3 + 4
Which of the following costs would be applied to manufactured inventory under variable costing? A. Cost of raw materials B. Rental payments on administrative offices C. Commissions to sales persons D. Salary of factory manager E. Rental payments on factory
A. Cost of raw materials
Which of the following is a disadvantage of using variable costing? A. Two sets of accounting records must be maintained. B. Inventory values tend to be overstated. C. CVP relationships are more difficult to determine than under absorption costing. D. Per-customer or per-product contribution margin is obscured.
A. Two sets of accounting records must be maintained.
Activity-Based Costing is best explained by which of the following statements? A. Calculating costs sequentially by the order that they affect the production process. B. Accumulating and allocating overhead costs based on a variety of activity drivers. C. Ordering all costs alphabetically for easier cataloging in a database. D. More accurately tracking materials and labor costs for each product.
B. Accumulating and allocating overhead costs based on a variety of activity drivers.
Which of the following is a drawback to absorption costing as opposed to variable costing? A. Management cannot accurately price products because non-manufacturing overhead is not applied to inventory B. Managers can manipulate earnings by simply producing more than is sold in a period C. Fixed overhead is simply expensed as a period cost without being properly considered as a cost of inventory D. Absorption costing is not allowed for GAAP purposes E. There is no drawback: absorption costing is always preferable to variable costing
B. Managers can manipulate earnings by simply producing more than is sold in a period
Which of the following statements most accurately describes Activity-Based Costing? A. Costs are accumulated in departments and allocated based on a single driver for each department. B. Costs are accumulated in departments and allocated based a variety of drivers for each department. C. Costs are accumulated in cost pools and allocated based on a single driver for each pool. D. Costs are accumulated in cost pools and allocated based on a variety of drivers for each pool. E. None of the above
C. Costs are accumulated in cost pools and allocated based on a single driver for each pool.
Which of the following statements is true regarding current manufacturing companies? A. Most production labor time is spent running production equipment rather than actually physically working on a product. B. Production processes are highly automated and complex. C. Manufacturing Overhead constitutes a significant portion of per-unit costs. D. All of the above
D. All of the above
Which of the following statements regarding Activity-Based Costing is correct? A. Overhead costs are allocated based on actual costs incurred in a period. B. Direct costs (materials and labor) are accumulated in cost pools and assigned based on driver usage. C. Increases in information technology have made Activity-Based Costing less useful. D. Cost drivers and cost objects are essential parts of Activity-Based Costing. E. All of the above are correct.
D. Cost drivers and cost objects are essential parts of Activity-Based Costing.
Which of the following best describes the weighted average cost flow assumption? A. Direct materials are added evenly throughout the process B. Equivalent units of production for conversion costs do not match the physical flow of units C. Inventory cost layers are kept separate based on the period of production D. Cost per equivalent unit is calculated by combining costs from both the current and previous periods E. None of the above
D. Cost per equivalent unit is calculated by combining costs from both the current and previous periods
When a company uses a process costing system and has more than one department, which of the following types of accounts will result in multiple accounts in the general ledger? WIP Materials W/P Finished Goods
WIP
CoolBreeze Manufacturing produces a single product, a tabletop fan. They reported the following information from their operations last period: Cost of Direct Materials used in production:$50,000 Cost of Direct Labor wages:$37,500 Variable Manufacturing Overhead:$25,000 Fixed Manufacturing Overhead:$125,000 Total units produced:10,000 Under absorption costing what was the per-unit cost of the units produced? a. None of the above b. $23.75 c. $11.25 d. $12.50 e. $8.75
b. $23.75
Activity-Based Costing assumes that most overhead costs can be easily allocated based on one or two drivers. true false
false
If production is greater than sales, Cost of Goods Sold will be higher under absorption costing than under variable costing. true false
false
Using Activity-Based Costing results in a different total amount of overhead allocated than that allocated under traditional costing models. true false
false
Which of the following is not an example of a type of company that would likely prefer a process costing system? home building packaged food production oil refining electricity generation
home building
It is better to base a predetermined overhead rate on the practical capacity of production rather than actual production. true false
true
Process costing is ideal for business situations that involve the production of a relatively standardized product, using a continuous-flow operation. true false
true
The sum of costs added this period and those in beginning inventory should equal the sum of the costs in ending inventory and the cost of goods transferred out. true false
true
Under a FIFO process costing system, the costs associated with inventory produced this period are kept separate from the costs of inventory produced in other periods. true false
true
Under absorption costing, a change in the level of production will affect the amount of fixed costs reported on the income statement for the period. true false
true
Under variable costing, a company expenses all fixed overhead costs in the same period that it incurs them. true false
true