Exam Ch 4-6

THE FOLLOWING INFORMATION IS PROVIDED BY SALINGER CORPORATION FOR THE YEAR: Actual direct labor hours worked 62,100 Budgeted overhead $405,000 Budgeted direct labor hours 50,500 Actual overhead costs incurred $621,000 Which of the following is the predetermined overhead rate, if calculated using direct labor hours? (Round to two decimal places.)

$8.02

THE UNIT-COSTING METHOD THAT EXCLUDES PRIOR-PERIOD WORK AND COSTS IN COMPUTING CURRENT-PERIOD UNIT WORK AND COSTS IS CALLED THE

FIFO costing method

ACTIVITY-BASED COSTING USES ONLY UNIT-LEVEL DRIVERS FOR COSTING.

False

PREDETERMINED OVERHEAD RATES ARE CALCULATED AT THE END OF EACH YEAR FOR THE UPCOMING BUDGET YEAR USING THE FORMULA: OVERHEAD RATE = BUDGETED ANNUAL DRIVER LEVEL ÷ BUDGETED ANNUAL DRIVER LEVEL.

False

THE DIFFERENCE BETWEEN ACTUAL OVERHEAD AND APPLIED OVERHEAD IS UNDERAPPLIED OVERHEAD.

False

THE JUSTIFICATION FOR NOT USING A DEPARTMENTAL RATE FOR OVERHEAD COST ASSIGNMENT IS THAT IT INCREASES ACCURACY.

False

WHICH OF THE FOLLOWING STATEMENTS ABOUT NORMAL SPOILAGE IS TRUE?

It is expected due to the nature of the production process.

WHICH OF THE FOLLOWING STATEMENTS ABOUT A PRODUCTION REPORT PREPARED UNDER A PROCESS-COSTING SYSTEM IS TRUE?

It provides information about the physical units processed in a department.

FOR A MANUFACTURER, THE THREE INVENTORY ACCOUNTS ON THE BALANCE SHEET ARE

Materials, Work in Process, and Finished Goods

ABNORMAL SPOILAGE IS TREATED DIFFERENTLY FROM NORMAL SPOILAGE IN WHAT WAY?

Normal spoilage is absorbed as part of the product cost but abnormal spoilage costs are treated separately.

EFFORTS TO SIMPLIFY ACTIVITY-BASED COSTING SYSTEMS (ABC) INVOLVE EITHER BEFORE-THE-FACT SIMPLIFICATION OR AFTER-THE-FACT SIMPLIFICATION.

True

UNIT-BASED COSTING FIRST ASSIGNS OVERHEAD COSTS TO DEPARTMENTAL POOLS AND THEN ASSIGNS THESE COSTS TO PRODUCTS USING PREDETERMINED OVERHEAD RATES BASED ON UNIT-LEVEL DRIVERS.

True

A COST TRANSFERRED FROM A PRIOR PROCESS TO A SUBSEQUENT PROCESS IS REFERRED TO AS:

a transferred-in cost

THE PREDETERMINED OVERHEAD RATE IS USUALLY CALCULATED AT THE

beginning of the year

WHICH OF THE FOLLOWING PRODUCTS WOULD NOT USE JOB-ORDER COSTING?

chemicals

DETERMINING THE DOLLAR AMOUNTS OF DIRECT MATERIALS, DIRECT LABOR, AND OVERHEAD USED IN PRODUCTION INVOLVES

cost measuring

AS PRODUCTION OCCURS, MATERIALS, DIRECT LABOR, AND APPLIED MANUFACTURING OVERHEAD ARE RECORDED IN

work in process

TRANSFERRED-IN COSTS ARE ACCOUNTED FOR IN THE SAME MANNER AS

materials added at the beginning of the process.

A PURE SERVICE ORGANIZATION HAS

no raw materials, no tangible items, and no separation between the plant and the customer.

PRODUCT COSTS CAN BE DISTORTED IF A UNIT-BASED ACTIVITY DRIVER IS USED AND

non-unit-based overhead costs are a significant proportion of total overhead and the consumption ratios differ between unit-based and non-unit-based input categories.

WHICH OF THE FOLLOWING ACTIVITY LEVELS HAS THE ADVANTAGE OF USING THE SAME ACTIVITY LEVEL YEAR AFTER YEAR AND, IN TURN, PRODUCING LESS FLUCTUATION FROM YEAR TO YEAR IN THE ASSIGNMENT OF PER-UNIT OVERHEAD COST?

normal activity level

A SECONDARY ACTIVITY IS

one that is consumed by intermediate cost objects.

IN PROCESS COSTING, COSTS ARE ACCOUNTED FOR BY

process

A SOURCE DOCUMENT

provides transaction data that can be recorded in a database.

WHEN PRODUCTS AND THEIR COSTS ARE MOVED FROM ONE PROCESS TO THE NEXT PROCESS, IN THE PROCESS OR DEPARTMENT INTO WHICH THE COSTS ARE MOVED, THE COSTS ARE REFERRED TO AS

transferred-in costs

A DEBIT BALANCE IN OVERHEAD CONTROL IMPLIES THAT ACTUAL OVERHEAD COSTS EXCEED OVERHEAD APPLIED.

true

A PROCESS IS A SERIES OF ACTIVITIES OR OPERATIONS, WHICH ARE LINKED TO PERFORM A SPECIFIC OBJECTIVE.

true

A PRODUCTION PROCESS MAY YIELD A TANGIBLE PRODUCT OR A SERVICE, AND THE UNIQUE CHARACTERISTICS OF THE PROCESS DETERMINE THE BEST APPROACH FOR DEVELOPING A COST MANAGEMENT SYSTEM.

true

COST FLOW FOLLOWS COSTS FROM THE POINT THEY ARE INCURRED TO THE POINT THEY ARE RECOGNIZED AS AN EXPENSE ON THE INCOME STATEMENT.

true

IN AN ACTIVITY-BASED COSTING SYSTEM, ACTIVITY COST IS APPLIED TO EACH JOB BY MULTIPLYING THE ACTIVITY RATE BY THE JOB'S USE OF THE ASSOCIATED ACTIVITY DRIVER.•

true

IN FIRMS WITH ENDING WORK-IN-PROCESS INVENTORIES, OUTPUT IS MEASURED USING EQUIVALENT UNITS.

true

SPOILAGE IN A PROCESS-COSTING SYSTEM MEANS THAT MORE UNITS ENTER THE PROCESS THAN LEAVE IT.

true

THE FIFO COSTING METHOD RECOGNIZES THAT THE WORK AND COSTS CARRIED OVER FROM THE PRIOR PERIOD LEGITIMATELY BELONG TO THAT PERIOD.

true

UNIT COST IS A CRITICAL PIECE OF INFORMATION FOR A MANUFACTURING BUSINESS AS WELL AS A SERVICE COMPANY.

true

THE EFFECT OF UNIFORM PRODUCTION LEVELS ON UNIT PRODUCTION COSTS CAN BE ACHIEVED BY

using a factory overhead rate based on long-run normal production activity level.

WHEN COMPUTING EQUIVALENT UNITS OF PRODUCTION, THE METHOD THAT COMBINES PARTIALLY COMPLETED UNITS IN BEGINNING INVENTORY WITH CURRENT-PERIOD PRODUCTION IS THE

weighted average costing method

THE ACTIVITY THAT AIDS MANAGEMENT IN ACHIEVING OBJECTIVES SUCH AS PRODUCT OR CUSTOMER COSTING, CONTINUOUS IMPROVEMENT AND ENVIRONMENTAL MANAGEMENT IS CALLED

activity classification

UNIT COST INFORMATION IS NEEDED FOR

all of these choices

THE TOTAL OVERHEAD ASSIGNED TO ACTUAL PRODUCTION AT ANY POINT IN TIME IS CALLED

applied overhead

A DEBIT BALANCE IN OVERHEAD CONTROL IMPLIES THAT ACTUAL OVERHEAD COSTS EXCEED OVERHEAD APPLIED.

automobile

Robinson Corporation constructs new homes. Assume that Robinson uses a job-order costing system. During July, the following transactions occurred: Robinson purchased $4,500 of lumber on account. Robinson used $3,750 of lumber in production and incurred 50 hours of direct labor at $15 per hour. Depreciation of $1,500 on equipment used to build new houses was recorded. A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash. The journal entry to record the requisition of lumber for Robinson would include a

debit to Work in Process of $3,750.

IN A JOB-ORDER COSTING SYSTEM, IF COSTS ARE INCURRED TO REWORK A JOB DUE TO INADEQUATE TRAINING OF PERSONNEL, THESE COSTS WOULD BE

debited to Manufacturing Overhead Control.

UNIT-LEVEL COST DRIVERS CREATE DISTORTIONS WHEN

different products consume resources differently.

FOR A LABOR-INTENSIVE MANUFACTURING OPERATION, WHICH OF THE FOLLOWING WOULD BE THE MOST APPROPRIATE ACTIVITY DRIVER?

direct labor hours

THE TERM GIVEN TO UNITS THAT REPRESENT THE NUMBER OF COMPLETED UNITS THAT IS EQUAL, IN TERMS OF PRODUCTION INPUTS, TO A GIVEN NUMBER OF PARTIALLY COMPLETED UNITS IS

equivalent units

THE COMPLETE UNITS THAT COULD HAVE BEEN PRODUCED GIVEN THE TOTAL AMOUNT OF PRODUCTIVE EFFORT EXPENDED FOR THE PERIOD UNDER CONSIDERATION ARE THE

equivalent units of output.

FOR THE RECEIVING DEPARTMENT OF A PROCESS-COSTING MANUFACTURER, TRANSFERRED-IN GOODS ARE MATERIALS THAT ARE ADDED AT THE END OF THE PROCESS.

false

OPERATION COSTING USES A BLEND OF JOB-ORDER AND PROCESS-COSTING PROCEDURES WHENEVER BATCHES OF DISSIMILAR PRODUCTS ARE PRODUCED.

false

PRINT ITEMHETEROGENEITY MEANS THAT SERVICES CANNOT BE INVENTORIED AND MUST BE CONSUMED WHEN PERFORMED.

false

PRINT ITEMIN A JOB-ORDER COSTING SYSTEM, DIRECT LABOR COSTS ASSIGNED TO A JOB ARE DIFFERENT THAN THE COSTS ASSIGNED TO WORK-IN-PROCESS INVENTORY.

false

THE PRODUCTION REPORT IS THE DOCUMENT THAT SUMMARIZES THE MANUFACTURING ACTIVITY THAT TAKES PLACE IN THE FINISHED GOODS WAREHOUSE.

false

THE SOURCE DOCUMENT KNOWN AS A TIME TICKET ASSIGNS THE DIRECT OVERHEAD TO EACH PARTICULAR JOB.

false

THE UNIQUENESS OF THE PRODUCTS OR UNITS FOR COST ACCOUNTING PURPOSES RELATES TO THEIR COMMON COSTS.

false

THE DOCUMENT THAT IDENTIFIES EACH JOB AND ACCUMULATES ITS MANUFACTURING COSTS IS CALLED A

job-order cost sheet

A SYSTEM THAT ASSIGN(S) COSTS BY THE JOB IS TERMED

job-order costing system