F342: Cost Accounting Chapter 3-5

The journal entry to record salaries and wages of factory supervisors and warehouse clerks includes a debit to:

Factory Overhead

Indirect manufacturing costs such s indirect labor, indirect materials, factory rent and utilities are all part of actual_____________ cost

Factory overhead

Cost of items ready for sale are held in:

Finished goods inventory

Which of the following is NOT an example of a decision involving structural cost drivers?

Workforce empowerment

When using ________, the cost or profitability of each job cannot be computed until the end of the period.

actual costing

When a resource is used for some purpose, a(n) _______ is incurred.

cost

Enabling the assignment of costs to cost objects and explaining cost behavior are the two important roles provided by _________.

cost drivers

The appropriate costing method when most costs incurred can be identified with a specific product, client, or project is _________ costing.

job

1. Cost accumulation method 2. Cost measurement method 3. Overhead application method

1. Job costing, process costing, or joint costing 2. Actual, normal, or standard costing 3. Volume-based or activity-based

True or False: How successful firms need to apply cost management is dependent on the competitive strategy being used.

False

When a company has multiple departments, it is always best to use departmental overhead rates instead of a single plantwide rate. True or False?

False

When materials are transferred out of Material Inventory, they are always transferred into Work-in-Process Inventory. True or False?

False

A cost that does not change with the volume of a designed cost driver within the relevant range is a(n) __________

Fixed cost

Which of the following is a period cost?

Interest expense

A primary way to ensure accurate data is to have effective:

Internal accounting controls

Operations costing identifies direct materials by:

Job

The document used to summarize the costs of a particular job is called a:

Job cost sheet

True and False: Many types of costs are volume-based, meaning they vary with the amount produced or quantity provided.

True

True or False: Manufacturing departments can be considered either cost pools or cost objects.

True

True or False: The cost driver for variable cost can be either volume-based or activity based.

True

True or False: To properly interpret total average unit cost, it must be separated into unit variable and unit fixed costs.

True

The amount by which actual factory overhead exceed factory overhead applied is known as:

Underapplied Overhead

Total costs within the relevant range that includes both variable and fixed components is referred to as a(n):__________

mixed cost

Scrap can be classified as:

- Relating to a specific job - Common to all jobs

Cost pools may be based on:

- Responsibility center - Source of the cost - Type of cost

Normal spoilage may either be ___________ or _________.

- Specific - Common

Normal spoilage can be:

- Spread over the cost of all jobs - Attached to the cost of a specific job. - Charged to factory Overhead

Which of the following statements are true?

- The law of diminishing marginal productivity occurs at higher levels of the cost driver. - At low values for the cost driver, costs increases at a decreasing rate.

Effective management of manufacturing costs requires that the cost information be:

- Timely - Accurate

Volume-based product costing may assign overhead costs based on:

- Units produced - Direct labor hours per unit

The value chain of a manufacturer begins with ________ activities such as design ends with ________ activities including customer service.

- Upstream - Downstream

A cost leadership firm that produces a commodity is likely to use:

- Process costing - Standard costing - Activity-based costing

In various service industries, a job is referred is as a:

- Project - Client - Case

At the end of an accounting period overapplied overhead can be disposed of by:

- Prorating the amount among work in process, finished goods, and cost of goods sold. - Adjusting cost of goods sold.

When a job consists of units planned for future sale, the ________ method approach is being used and when jobs are produced based on customer demand, the _______ method approach is being used.

- Push - Pull

Types of rework include rework on:

- Abnormal defective units. - Normal defective units

Four types of cost drivers are:

- Activity based - Volume based - Structural - Executional

Fixed costs:

- Are generally not expected to change within a year. - Are define for a period of time.

Normal Costing:

- Avoids cost per unit fluctuations that can occur with actual costing. - Is used by many firms

A job cost sheet:

- Contains all three cost elements - May include detailed data required by management.

Direct material cost generally includes:

- Cost of materials used in the production of the product. - A reasonable allowance for scrap and defects.

The components of the cost of goods manufactured calculation are:

- Direct materials used - Overhead - Direct labor

The two types of cost assignments are ________ and __________.

- Direct tracing - Allocation

Types of cost assignment include:

- Direct tracing - Cost allocation

Which of the following employees would be classified as indirect labor?

- Factory supervisor - Plant security guard - Factory custodian

Having a detailed description of the firm's activities:

- Improves operational and management control - Helps the firm achieve its strategic objectives.

Which of following statement are true?

- Indirect labor includes factory supervisors and material handlers - Payroll taxes and fringe benefits for assemble line workers may be treated as indirect labor. - Labor can sometimes be both direct and indirect depending on the cost object.

A company that accumulates costs by tracing them to specific products and services is using ________ costing while a company that accumulates costs at the department level and then allocates them to products and services is using ________ costing.

- Job - Process

Factors that influence the cost of preparing information for decision making include:

- Level of aggregation - Level of desired accuracy - Timeliness

Characteristics that help determine a firm's operational complexity include:

- Number and diversity of products - Production processes and locations. - Distribution networks

Costs added to Work-in-Process Inventory include:

- Overhead cost - Direct labor cost

Overhead is assigned to products using cause and effect criteria and various cost drivers when using:

Activity Based costing systems

An actual costing system uses actual direct material and direct labor costs and records _________ factory overhead for the jobs.

Actual

An error in allocation that results from using a plantwide rate instead of departmental rates is a(n) _______ error

Aggregation

Cost drivers are also called _________.

Allocation bases

Assembly workers' wages:

Are always direct labor but some labor costs such as payroll taxes and training may be treated as indirect labor.

Ideally, the selection of an allocation base should:

Be based on a cause-and-effect relationship

A detailed listing of all materials needed for a job is provided on a(n):

Bill of material

Which cost management systems use actual direct material and actual direct labor costs?

Both actual and normal costing

Which of the following is an example of a decision involving structural cost drivers?

Complexity

Any factor that causes total cost to change is a(n) ________.

Cost driver

Indirect costs are assigned using:

Cost drivers

The dollar amount of a product transferred to the income statement at the time of sale is called _____________.

Cost of Goods Sold

A merchandising company is likely to have:

Cost of goods sold

Meaningful groups into which costs are assigned are called:

Cost pools

Purchases recorded in the Materials Inventory account include:

Direct and Indirect materials

Prime costs are the combination of:

Direct materials and direct labor

Factors the firm can manage in the short term to reduce costs are _______ cost drivers.

Executional

The journal entry to record indirect labor wages debits:

Factory Overhead

The production department uses a(n) ________ to request materials for production.

Materials requisition

Selling and administrative costs are:

Never product costs

Spoilage that is uncontrollable in the short term and is considered a regular part of production is called:

Normal spoilage

Underapplied or overapplied overhead is usually adjusted:

Only at the end of the year

Cost of goods manufactured includes:

Only product costs

A hybrid costing approach that uses elements of both job and process costing is known as ________ costing.

Operation

If applied overhead is greater than actual overhead, overhead is _________

Overapplied

All indirect costs are combined into a single cost pool called ________.

Overhead

The process of assigning overhead costs to a job known as ________.

Overhead application

Then ending balance of inventory is determined by a count when using a(n) ___________.

Periodic inventory system.

An estimated overhead rate used to assign factory overhead to a job is known as the __________.

Predetermined factory overhead rate

A firm that produces a limited variety of homogeneous products is likely to use _______.

Process costing

To make nonconforming goods acceptable so they can be sold in regular channels requires __________.

Rework

An error in allocation that results from the selection of an inappropriate cost driver is a(n) _________ error.

Specification

A cost varies in increments greater than the number of units as the volume of the cost driver changes is a _________.

Step cost

These are strategic in nature and involve decision that have long-term effects on the firm's total costs.

Structural cost drivers

The determination of whether a cost is variable generally depends on:

The nature of the cost object

Pay rates and information for assigning direct labor costs to individual jobs are shown on a(n) ___________.

Time ticket

Having necessary information available to management to facilitate effective decision making is:

Timeliness

Within the relevant range of activity _______are expected to remain approximately constant.

Total fixed costs and per unit variable costs.

The sum of direct materials used, direct labor and overhead is called __________ for the period.

Total manufacturing cost

A firm can use __________ analysis to help assess the long term consequences of it's current or planned commitment to a structural cost driver.

Value chain

Within the relevant range of activity, per unit _____ costs are expected to remain approximately constant.

Variable

Costs that are consumed during operations are:

Variable costs

The proper treatment of abnormal spoilage is to:

charge it to a special loss account

The process of classifying and assigning material, labor, and overhead costs to cost objects is known as __________.

costing

A cost that can be conveniently and economically traced to a cost pool or cost object is called a(n) _________.

direct cost

The formula for the predetermined overhead rate is:

estimated overhead / estimated amount of a cost driver

Costs that provide capacity for operations that _____ costs.

fixed

A clothing manufacturer would most likely treat the cost of thread as a(n)_______ material.

indirect

The cost of goods finished and transferred out of the Work-in-Process Inventory account during a specified period is called cost of goods ________.

manufactured

Within the _____ the total cost curve is approximately linear.

relevant range