acct. test 4

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Which of the following would be most likely to use process costing?

a lawn fertilizer manufacturer

Which of the following would most likely use a job order costing system?

a swimming pool installer

In most business organizations, the chief management accountant is called the

controller

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?

debit Work in Process—Dept. B; credit Work in Process—Dept. A

In a job order cost accounting system, the entry to record the flow of direct materials into production is to

debit work in process, credit materials

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as

direct labor cost

The two categories of cost comprising conversion costs are

direct labor, factory over head

A job order cost system would be appropriate for a crude oil refining business.

false

Conversion cost is the combination of direct materials cost and factory overhead cost.

false

Conversion costs consist of product costs and period costs.

false

Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.

false

Custom-made goods would be accounted for using a process costing system.

false

Equivalent units are the sum of direct materials used and direct labor incurred.

false

If 30,000 units of materials enter production during the first year of operations, 25,000 of the units are finished, and 5,000 are 50% completed, the number of equivalent units of production would be 28,500.

false

If factory overhead applied exceeds the actual costs, overhead is said to be underapplied.

false

If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system.

false

Managerial accounting reports must be prepared according to generally accepted accounting principles.

false

Prime costs consist of factory overhead and direct labor.

false

Process manufacturing usually reflects a manufacturer that produces small quantities of unique items.

false

The first step in determining the cost of goods completed and ending inventory valuation using process costing is to calculate equivalent units of production.

false

The process cost system is appropriate where few products are manufactured and each product is made to customers' specifications.

false

For which of the following businesses would the job order cost system be appropriate?

hospital

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to

increase by $1,700,000

A process cost system be appropriate for a

natural gas refinery

Managerial accounting reports are

prepared according to management needs

Which of the following is the correct flow of manufacturing costs?

raw materials, work in process, finished goods, cost of goods sold

In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a

receiving report

For which of the following businesses would a process cost system be appropriate?

shampoo manufacturer

A manufacturer may employ a job order cost system for some of its products and a process cost system for others.

true

A process cost accounting system is best used by manufacturers of like units of product that are not distinguishable from each other during a continuous production process.

true

A process cost accounting system provides product costs for each of the departments or processes within the factory.

true

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as factory overhead cost.

true

Depreciation expense on factory equipment is part of factory overhead cost.

true

Depreciation on factory plant and equipment is an example of factory overhead cost.

true

Direct materials, direct labor, and factory overhead are assigned to each manufacturing process in a process costing system.

true

Factory overhead is an example of a product cost.

true

Factory overhead is applied to production using a predetermined overhead rate.

true

If 16,000 units of materials enter production during the first year of operations, 12,000 of the units are finished, and 4,000 are 75% completed, the number of equivalent units of production would be 15,000.

true

If the principal products of a manufacturing process are identical, a process cost system is more appropriate than a job order cost system.

true

If the underapplied factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the fiscal year.

true

Managerial accounting information includes both historical and estimated data.

true

Managerial accounting provides useful information to managers on product costs.

true

The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead cost.

true

The direct labor costs and factory overhead costs incurred by a production department are referred to as conversion costs.

true

Department M had 2,000 units 40% completed in process at the beginning of June, 12,000 units completed during June, and 1,200 units 25% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories?

$11,500

In the manufacture of 10,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,000. What is the total conversion cost?

$158,000

Compute conversion costs given the following data: Direct Materials, $367,000; Direct Labor, $207,800; Factory Overhead, $181,500 and Selling Expenses, $35,800.

$389,300

Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June. Using the first-in, first-out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period?

$5,850

The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is

$62 per machine hour

Jensen Company reports the following: Direct materials used $345,000 Direct labor incurred 250,000 Factory overhead incurred 400,000 Operating expenses 175,000 Jensen Company's product costs are

$995,000


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