Accounting Test #3 (17,18)

In either a job order or a process costing system, credits to the Materials Inventory account represent: A) The cost of materials placed into production. B) The cost of materials relating to finished goods. C) The cost of unused materials returned to inventory. D) The cost of materials purchased during the period.

A) The cost of materials placed into production.

The type of cost accounting method likely to be used for overhead costs.

Activity-based costing

A job order cost system would be appropriate in the manufacturing of: A) Paints. B) Custom-made furniture. C) Standard-grade plywood. D) Breakfast cereal.

B) Custom-made furniture

Equivalent units of production are: A) Not assigned to beginning work-in-process or ending work-in-process. B) A measure representing the percentage of a unit's cost that has been completed. C) The total units completed during the period. D) Not computed separately for each input added during production.

B) a measure representing the percentage of a unit's cost that has been completed.

Marty's Metal Shop uses a job order cost system. It applies overhead to jobs at a rate of 175% of direct labor costs. Job No. 2617 required $800 in direct labor costs. The job was initially budgeted to require $850 in direct labor costs. Overhead applied to Job NO. 2617 during the period amounted to: A) $850 B) $1,487.50 C) $1,400 D) $1,275

C) $1,400

Manufacturing overhead is not: A) A product cost. B) A manufacturing cost. C) A period cost. D) An indirect cost.

C) A period cost.

Direct Labor and overhead consumed in a production process.

Conversion costs

An activity base that can be traced directly to units produced and can be used as a denominator in computing an overhead application rate.

Cost driver

A measure of the quantity of production work done during a time period, including work on partially completed units.

Equivalent units

The document that provides information for the cost of goods manufactured is: A) the job cost sheet B) payroll check C) material requisition D) time cards

A job cost sheet

During August, Department Z started and completed 90,000 units and also finished 18,000 units that were 75% completed on July 31. On August 31, Department Z's ending inventory consisted of 26,000 units that were 45% completed. All manufacturing costs are incurred at a uniform rate throughout Department Z's production process. The number of equivalent units of production for Department Z during August is: A) 106,200 B) 90,000 C) 117,800 D) 94,500

A) 106,200

If 8,000 units were in beginning inventory, 26,000 units were started, and 6,000 units were in the ending inventory, how many units were transferred out? A) 28,000 units B) 24,000 units C) 40,000 units D) 26,000 units

A) 28,000 units

The Work in Process account in a job order cost accounting system will be debited for: A) Direct labor, direct materials, and applied overhead. B) Only direct materials and applied overhead. C) Only direct labor and direct materials. D) Direct labor, direct materials, and actual overhead.

A) Direct labor, direct materials, and applied overhead.

The Work in Process - Assembly account would be credited and the Work in Process - Packaging account would be debited when: A) Goods are transferred from Assembly to Packaging. B) The units are complete and ready for sale. C) Goods are transferred from Packaging to Assembly. D) The number of units started during the period is greater than the number of units in process at the end of the period.

A) Goods are transferred from Assembly to Packaging.

In beginning inventory in Work in Process is zero, 2,000 units are started during the period, and 300 units remain in ending inventory, how many equivalent units were completed and transferred out? A) 300 units B) 1,700 units C) 285 units D) 2,000 units

B) 1,700 units

The Finishing Department of Berle Industries works on only one product, and all costs are incurred uniformly while these units remain in the department. On March 1, 6,000 units were in process that were 45% completed. An additional 60,000 units were transferred into the Finishing Department during March. At March 31, there were 25,000 units in process that were 75% completed. Compute the equivalent units of production for the Finishing Department during March. A) 81,450 units B) 57,050 units C) 69,550 units D) 60,000 units

B) 57,050 units

Manufacturing overhead is: A) A direct cost that can be traced to a specific job. B) An indirect cost that cannot be traced to a specific job. C) A direct cost that cannot be traced to a specific job. D)A direct cost that cannot be traced to a specific job.

B) An indirect cost that cannot be traced to a specific job.

The account Work-in-Process Inventory: A) Consists of the cost of new materials used, labor but not overhead. B) Consists of goods being manufactured that are incomplete. C) Consists of completed goods that have not yet been sold. D) Consists of materials to be used in the production process.

B) Consists of goods being manufactured that are incomplete.

The best cost system to use for a company producing a continuous stream of similar items would be a: A) No cost system is required when jobs are similar. B) Process costing system. C) Job order system D) Production costing system.

B) Process costing system.

A process costing system differs from a job order costing system in that: A) There is no need for overhead application rates in process costing systems. B) Process costing systems are used when production involves large volumes of standardized products, whereas job order costing systems are used when each job or batch of products is uniquely different. C) Per-unit costs are not computed in process costing systems. D) Process costing systems are used primarily in service industries, whereas job order costing systems are used in manufacturing operations.

B) Process costing systems are used when production involves large volumes of standardized products, whereas job order costing systems are used when each job or batch of products is uniquely different.

Debits to the Manufacturing Overhead account record: A) The amount of overhead incurred on a specific job. B) The actual amounts of overhead costs incurred during a period C) All conversion costs of a period D) The amount of overhead applied to production during a period

B) The actual amounts of overhead costs incurred during a period

A job cost sheet usually contains a record of each of the following except: A) The cost of direct materials changed to a particular job. B) The overhead costs actually incurred on a particular job. C) The cost of direct labor charged to a particular job. D) The overhead cost applied to a particular job.

B) The overhead costs actually incurred on a particular job.

If manufacturing overhead is materially over-applied, it is best to: A) Close it to work-in-process inventory. B) Close it to cost of good sold. C) Apportion it among work-in-process, finished goods, and cost of goods sold. D) Close it to finished goods inventory.

C) Apportion it among work-in-process, finished goods, and cost of goods sold.

The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery. Payments made to Winter for last week's work should be: A) Credited to the Direct Labor account. B) Debited to Work in Process Inventory. C) debited to the Manufacturing Overhead account. D) Debited to the Direct Labor account.

C) Debited to the Manufacturing Overhead account.

Under-applied overhead at the end of a month: A) Indicates a poorly designed cost accounting system. B) Results when actual overhead costs are less than amounts applied to work in process. C) Is represented by a debit balance remaining in the Manufacturing Overhead account. D) Is represented by a credit balance remaining in the Work in Process Inventory account.

C) Is represented by a debit balance remaining in the Manufacturing Overhead account.

Which of the following is a characteristic of manufacturing overhead in a job order cost system? A) It is directly traceable to specific jobs or units. B) It includes the cost of all labor relating to manufacturing operations. C) It is assigned to units produced by means of an overhead application rate. D) It includes the cost of direct materials used and of indirect labor.

C) It is assigned to united produced by means of an overhead application rate.

The basic types of cost accounting systems are: A) Completed job cost systems and work in process cost systems B) Direct cost systems and indirect cost systems C) Job order cost systems, activity based cost system and process cost systems. D) Fixed cost system and variable cost systems

C) Job order cost systems, activity based cost systems, and process cost systems.

Which of the following is an advantage of developing a predetermined overhead application rate? A) Actual overhead will always be less than applied overhead. B) Long-run fluctuations in volume of output are eliminated. C) The overhead application rate facilitates assigning overhead costs to the ending inventory of work in process. D) In a job order system, unit costs can be determined only at the end of the period.

C) The overhead application rate facilitates assigning overhead costs to the ending inventory of work in process.

In a process costing system, the number of units started and completed for a period is equal to: A) Units transferred out less units in ending work in process. B) Units transferred out plus units of beginning work in process. C) Units transferred out less units in beginning work in process. D) Units transferred out plus units ending in work in process.

C) Units transferred out less units in beginning work in process.

The total of all direct labor, direct materials, and manufacturing overhead transferred from work in process to finished goods.

Cost of finished goods manufactured

A predetermined overhead application rate: A) Applies the same amount of overhead to each product or service. B) Can be determined by dividing budgeted direct labor costs by the budgeted factory overhead costs. C) Is computed at the end of the period once actual overhead costs are known. D) Expresses an expected relationship between overhead costs and an activity base.

D) Expresses an expected relationship between overhead costs and an activity base.

When a job is completed: A) Cost of goods sold is debited B) Materials inventory is credited C) Work-in-process inventory is debited D) Finished goods inventory is debited

D) Finished goods inventory is debited

The type of cost accounting method likely to be used by a construction company.

Job order costing

The type of cost accounting system likely to be used by a construction company.

Job order costing

A means of assigning indirect product costs to work in process during the period.

Overhead application rate

The type of cost accounting method likely to be used in a Coca-Cola bottling plant.

Process costing

Process cost information for the period, including physical flow and total cost to account for.

Production cost report