Cost Exam #2
87) The stand alone method uses the product in the bundle with the most sale and then uses this ranking to allocate the bundled revenues to individual products
FALSE
81) Under the incremental method, the first incremental user receives the largest allocation of the common costs
FALSE
82) Allocating the common costs can best be achieved by using the stand alone cost allocation method
FALSE
94) Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs
Ans 94
80) Which of the following would be the case under the stand - alone method of allocating common costs?
Ans 80
83) Revenue allocation is used when
Ans 83
84) Which of the following best describes the stand alone revenue allocation method
Ans 84
85) The best method to determining weights for the stand alone revenue allocation method is
Ans 85
86) If management wants to choose a method of revenue allocation the best captures the "benefits received" by customers then they would use _____ to allocate revenue to products in a bundle
Ans 86
90) If a single rate cost allocation method is used, what is the allocation rate per hour used?
Ans 90
91) If a dual rate cost allocation method is used, what amount of materials laboratory costs will be budgeted for the large plane department?
Ans 91
92) Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs
Ans 92
93) If a dual rate cost allocation method is used, what amount of materials laboratory costs will be budgeted for the small plane department
Ans 93
100) Using the stand alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Reading fun in the first package
Ans 100
18) Under the weighed average method, how would you calculate the cost per equivalent units with regards to conversion costs?
Ans 18
19) Which of the following steps are part of the First in first out process costing method?
Ans 19
20) Which of the following is true of weighted average process costing
Ans 20
27) Transferred in costs are treated as if they are
Ans 27
28) Which of the following describes rework
Ans 28
29) Which of the following is an example of spoilage?
Ans 29
30) Which of the following best describes scrap?
Ans 30
31) Which of the following is an example of scrap?
Ans 31
33) Which of the following statements is true of normal spoilage and abnormal spoilage?
Ans 33
34) The costs of normal spoilage are typically included as a component of the costs of good units manufactured.
Ans 34
40) Which of the following is true of the total calculation of the cost per good unit under the weighted average process costing method
Ans 40
41) Excluding spoiled units in the equivalent - unit calculation results in
Ans 41
46) Normal spoilage is computed on the basis of the number of ______
Ans 46
47) Which of the following is true of unit costs of normal and abnormal spoilage when they are detected at the same inspection point
Ans 47
49) What is the number of spoiled units?
Ans 49
50) Normal spoilage totals ______
Ans 50
51) Abnormal spoilage totals ______
Ans 51
52) What is the total cost per equivalent unit using the weighted average method of process costing?
Ans 51
53) What cost is allocated to abnormal spoilage using the weighted average process costing method?
Ans 53
54) What is the amount of direct materials and conversion costs assigned to ending work in process using the weighted average process costing method?
Ans 54
55) What are the normal and abnormal spoilage units, respectively, for March when using FIFO?
Ans 55
58) Under the weighted average method, what would be the equivalent units of work done for the period ?
Ans 58
59) 700 shirts are sold as seconds at $13 per shirt. Cost of spoiled shirts is $501,800. Cost of shirts at inspection point equals $9,502,000. Calculate the net cost of the spoilage
Ans 59
60) BIG CHART - Flow of production - Equivalent units - Total Costs - Weighted Average Method
Ans 60
61) BIG CHART - Flow of production - Equivalent units - Total Costs FIFO method
Ans 61
63) Stand alone cost allocation method - Incremental cost allocation method - Shapley value method
Ans 63
64) Stand alone - incremental cost
Ans 64
65) Stand alone method
Ans 65
66) The method that allocates costs in each cost pool using the same rate per unit is known as the
Ans 66
67) Which of the following departments would not be considered a service or support department?
Ans 67
68) When using the dual rate method the fixed cost allocation is based on
Ans 68
69) Which of the following is an advantage of a dual rate method?
Ans 69
70) Which of the following is a disadvantage of a dual - rate method?
Ans 70
72) To discourage unnecessary use of a support department, management might _____
Ans 72
73) Special cost allocation problems arise when ____
Ans 73
74) The method that allocates each departments budgeted costs is to operating departments only is called
Ans 74
75) Under which allocation method are one - way reciprocal support services recognized?
Ans 75
76) Which of the following statements is false with regards to departmental cost allocations?
Ans 76
79) Corny Solutions, food items, Located, the costs incurred at the Iowa plant would be considered
Ans 79
95) Using the step down method what amount of Maintenance department cost will be allocated to department B if the service department with the highest percentage of interdepartmental support service is allocated first?
Ans 95
96) Using the direct method what amount of Warehouse Department costs will be allocated to department books?
Ans 96
97) What is the complete reciprocated cost of the Plant Maintenance Department?
Ans 97
98) What is the complete reciprocated cost of the data processing department?
Ans 98
99) Which of the following linear equations represents the complete reciprocated cost of the Personnel department?
Ans 99
13) Which of the following statements is true?
Ans. #13
62) Direct Method - Step down method -
Ans. 62
77) Both direct and step down method can provide relevant information for outsourcing decisions
FALSE
15) Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials.
FALSE
16) Underestimating the degree of completion of ending work in process leads to increase in operating income
FALSE
17) Equivalent units is a derived measure of output calculated by converting the quantity of inputs into the amount of completed output that could be produced with that quantity of input.
FALSE
25) IN a period of rising prices, the weighted average method will result in higher tax payments
FALSE
26) In a period of falling prices, the lower cost of goods sold under the FIFO method leads to higher operating incomes and higher tax payments
FALSE
35) Abnormal spoilage is spoilage inherent in a particular production process
FALSE
37) Normal spoilage is spoilage that is NOT considered to be inherent in a production process
FALSE
39) Units spoiled due to machine breakdowns and operator errors are normal spoilage
FALSE
42) The first step in the five step procedure for process costing with spoilage is to compute the output in terms of equivalent units
FALSE
43) The last step in the five step procedure for process costing with spoilage is to summarize total costs accounted for
FALSE
71) The dual cost allocation method classifies costs into two pools, a budgeted cost pool and an actual cost pool.
FALSE
14) If manufacturing labor costs are added to the process at a different time compared to other conversion costs, an additional cost category - direct manufacturing labor costs - would be needed to assign these costs to products.
TRUE
21) The weighted average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period
TRUE
22) Weighted average cost per equivalent unit is obtained by dividing the sum of costs for beginning work in process plus costs for work done in the current period by total equivalent units of work done to date
TRUE
23) The cost of units completed can differ materially between the weighted average and the FIFO methods of process costing
TRUE
24) Under the FIFO method of process costing costs incurred and units produced in the current period are used to calculate the cost per equivalent unit of work in the current period in contrast the weighted average method which merges the units and costs of the previous period with that of the current period
TRUE
32) Rework is finished production that is NOT in accordance with customer desires. The product is re done and sold as finished goods.
TRUE
36) Companies calculate the units of abnormal spoilage and record the cost in the Loss from abnormal spoilage account, which appears as a separate line item in an income statement
TRUE
38) Normal spoilage rates are computed by dividing units of normal spoilage by total good units completed, NOT actual units started in production
TRUE
44) Spoilage is typically assumed to occur at the stage of completion where inspection takes place
TRUE
45) Under the FIFO method, all spoilage costs are assumed to be related to the units completed during this period using the costs of the current period
TRUE
48) If a company inspects units only at the end of the production process, the units in ending work in process inventory are not assigned any costs of normal spoilage
TRUE
78) Complete reciprocated costs is the support departments own costs plus any interdepartmental cost allocations
TRUE
88) The selling prices method under stand alone revenue allocation method is best because the weights explicitly consider the prices customers are willing to pay for the individual products
TRUE
89) When allocating the revenues between a bundled product offering, management judgement can be used in issuing revenue - allocation weights
TRUE
1) What is the unit cost per equivalent unit of beginning inventory in department A?
Work #1
10) Of the 150,000 units Swivel started during February, how many were finished during the month? Weighted average costing
Work #10
11) What is the direct materials cost assigned to ending work in process inventory at the end of February?
Work #11
12) What is the cost of the goods transferred out during February?
Work #12
2) What are the equivalent units for direct materials and conversion costs, respectively, for June?
Work #2
3) What is the total amount debited to the Work in process account during the month of June?
Work #3
4) What is the direct materials cost per equivalent unit during June?
Work #4
5) What is the conversion cost per equivalent unit in June?
Work #5
6) What amount of direct materials costs is assigned to the ending Work in process account for June?
Work #6
7) What amount of conversion costs is assigned to the ending work in process account for June?
Work #7
8) The Swivel Chair company manufacturers a standard recliner. During February, the firms Assembly Department started production of 150,000 chairs. During the month, the firm completed 176,000 chairs and transferred them to the finishing department. The firm ended the month with 21,000 chairs in ending inventory. All direct materials are added at the beginning of the production cycle. Weighted - average cost is used by Swivel. What were the equivalent units for materials for February?
Work #8
9) What were the equivalent units for conversion costs for February if the beginning inventory was 70% complete as to conversion costs and ending inventory was 40% complete as to conversion costs?
Work #9
