Cost Accounting Final Exam

A journal entry debiting Work-in-Process would normally NOT be accompanied by a credit to a. Materials Inventory. b. Finished Goods. c. Overhead Control. d. Wages Payable.

b. Finished Goods.

"As manager of the buying division, I can purchase component X from an outside manufacturer for $40. I'm not accepting a transfer price from inside my own company that is more than that." Which of the following statements means the same as the statement above? a. The transfer price ceiling is equal to the market price. b. The transfer price floor is equal to the market price. c. The transfer price is set by the open market. d. None of these.

a. The transfer price ceiling is equal to the market price.

Unit-level product costing assigns a. direct materials and direct labor directly to products and assigns overhead to pools which are assigned to products using predetermined overhead rates based on drivers that increase proportionally with output. b. "direct materials, direct labor and overhead to cost pools which are assigned to products using predetermined overhead rates based on drivers that increase proportionally with output." c. direct materials and direct labor directly to products and assigns overhead to pools which are assigned to products using predetermined overhead rates based on drivers that increase as activity increases. d. "direct materials, direct labor and overhead to cost pools which are assigned to products using predetermined overhead rates based on drivers that increase as activity increases."

a. direct materials and direct labor directly to products and assigns overhead to pools which are assigned to products using predetermined overhead rates based on drivers that increase proportionally with output.

"There are 50,000 units in ending WIP that are 60% complete. The company uses FIFO. What is the number of equivalent material units associated with these 50,000 physical units under the following three independent assumptions? Materials added at the beginning __________, Materials added uniformly ___________, and Materials added at the end __________." a. "0, 30,000, 50,000" b. "50,000, 30,000, 0" c. "0, 20,000, 0" d. "30,000, 30,000, 30,000" e. "50,000, 20,000, 50,000"

b. "50,000, 30,000, 0"

Which of the following departments is NOT a support department? a. Food services b. Bottling c. Health services d. Security

b. Bottling

"A company has two support departments (S1 and S2, with S1 as the biggest) and two producing departments (P1 and P2). Which of the following $0 transfers could not occur?" a. S2 transfers $0 to P1 if P1 didn t use S2 during the period. b. S1 transfers $0 to S2 under the direct method. c. S1 transfer $0 to S2 using the reciprocal method. d. All of these could occur. e. None of these could occur.

b. S1 transfers $0 to S2 under the direct method.

If there is a debit balance in overhead control, that implies a. actual overhead costs exceed overhead applied. b. applied overhead exceeds actual overhead. c. estimated overhead has not been closed to cost of goods sold. d. none of these.

b. applied overhead exceeds actual overhead.

Manufacturers producing unique or customized products would employ a(n) a. process costing system. b. job-costing system. c. homogeneous costing system. d. all of these.

b. job-costing system.

"The second WIP, began the period with 30,000 in process. These units were 75% complete at the beginning of the period and materials are added at the beginning of the process. Using the FIFO assumption, what are the equivalent units for these 30,000 units? Transferred in ________, Materials ________, and Conversion ________." a. "0, 30,000, 22,500" b. "30,000, 0, 22,500" c. "0, 0, 7,500" d. "30,000, 30,000, 7,500" e. "0, 0, 22,500"

c. "0, 0, 7,500"

Division A's Residual Income is $1,500,000. Division B's Residual Income is $1,850,000. Which division has a better Residual Income? a. Division A b. Division B c. It is not possible to determine because these divisions may be different sizes. Even thought division B's residual income is higher, that division could be much larger (more assets) than division A. d. It is not possible to determine because these divisions may provide very different products, possibly in different industries and comparison across industries is not possible.

c. It is not possible to determine because these divisions may be different sizes. Even thought division B's residual income is higher, that division could be much larger (more assets) than division A.

Activity-based costing assigns cost to cost objects by first tracing costs to a. products and then tracing costs to cost objects. b. departments and then tracing costs to products. c. activities and then tracing costs to cost objects. d. customers and then tracing costs to products.

c. activities and then tracing costs to cost objects.

Which of the following is NOT part of the financial accounting information system? a. filing reports with the SEC b. reporting a large contingent liability to current and potential shareholders c. determining the future cash flows of a proposed flexible manufacturing system d. preparing GAAP financial statements

c. determining the future cash flows of a proposed flexible manufacturing system

You are examining the t-account for a particular WIP used in process accounting. Can you tell if there was normal spoilage? a. "Yes, the cost of spoilage is removed from the t-account with a credit entry." b. "No, spoilage is an expense and does not appear in WIP, which is an inventory account." c. "Maybe, but only if the process chooses to separate the entries for normal and abnormal spoilage into two entries." d. "No, the cost of normal spoilage is included in another journal entry and is not separately identifiable."

d. "No, the cost of normal spoilage is included in another journal entry and is not separately identifiable."

Developing a company strategy for responding to anticipated new markets is an example of a. planning. b. control. c. decision making. d. all of these.

d. all of these.

The chief accounting officer of an organization is the a. vice president of finance. b. internal auditor. c. treasurer. d. controller.

d. controller.

Manufacturing overhead consists of all a. costs other than direct materials. b. manufacturing costs other than direct materials. c. costs other than direct materials and direct labor. d. manufacturing costs other than direct materials and direct labor.

d. manufacturing costs other than direct materials and direct labor.

Which of the following costs would be considered a direct material? a. glue in the production of automobiles b. labor used to finish product DL c. depreciation on the corporation's office building non-manufacture cost d. paper used in the production of books

d. paper used in the production of books

You are examining the t-account for a particular WIP used in process costing. Each debit and credit to that WIP account represents a journal entry with an offsetting credit or debit. Which of the following would NOT be one of those offsetting credits or debits? a. Debit another WIP b. Credit another WIP c. Credit Materials Inventory d. Debit a loss e. Credit Finished Goods

e. Credit Finished Goods