Exam 1 LearnSmart: Prologue + Chapter 1 + Chapter 2 (combined)
A(n) __________ is a component of an organization about which a manager wants cost, revenue, or profit data.
-Segment
The _________ of __________ is based on the insight that effectively managing bottlenecks is a key to success.
-Theory -Constraints
A document used to record how long workers spend on each job and task is called a(n) ____________ ___________. (one word per blank)
-Time -Sheet
Mixed costs are commonly known as semi-____________ costs.
-Variable
Costs incurred to obtain customers' orders are known as ___________ costs.
-selling
True or False: Presenting fixed costs on an average per unit basis can be misleading. a. True b. False
a. True
Smith, Inc. uses a job-order costing system with the predetermined overhead rate of $12 per machine-hour. The job cost sheet for Job #42A listed $12,000 in direct labor cost, $18,000 in direct materials cost, 1,200 direct labor-hours and 1,100 machine hours. The total cost of job #42A is $______________.
-$43,200
Fillia, Inc. worked on three jobs this period: Job 14C, which cost $15,000; Job 23A, which cost $28,000, and Job 45B, which cost $23,000. At the end of the period, only Job 14C was still in process (unfinished). The cost of goods manufactured this period is $______________.
-$51,000
A detailed plan for the future, normally expressed in quantitative terms, is known as a(n) _____________.
-Budget
Sales revenue minus variable expenses equals _____________ _____________.
-Contribution -Margin
Gathering feedback to ensure that plans are being properly followed is part of the _________ process.
-Controlling
In carrying out the _________ function, managers make sure that the corporation's plans are being followed.
-Controlling
When a company says "You should choose us because we understand and respond to your individual needs better than our competitors," it is following a(n) ___________ ___________ strategy.
-Customer -Intimacy
The essence of strategy is _________ __________ propositions.
-Customer -Value
A change in revenues between two alternatives is known as _____________ revenue or incremental revenue.
-Differential
Costs that can be easily and conveniently traced to a specific product are called ___________ costs.
-Direct
When using the high-low method, the slope of the line equals the ________ cost per unit of activity.
-Variable
Units that are only partially complete are in __________ ____________ __________.
-Work -In -Process
A measure such as direct labor-hours or machine-hours used to assigned overhead costs to products and services is called a cost driver or a(n) ___________ ___________.
-allocation -base
The lean production approach: (select all that apply) a. Is sometimes called just-in-time production b. Tends to result in fewer defects c. Organizes resources about the flow of business processes d. Encourages departments to maximize output
The lean production approach: (select all that apply) a. Is sometimes called just-in-time production b. Tends to result in fewer defects c. Organizes resources about the flow of business processes
At the beginning of the year Champions, Inc. estimated that its total overhead costs would be $110,000 for the year. Its allocation base is direct labor hours, and it estimated it would use a total of 10,000 hours. By the end of the year, actual overhead costs were $115,000, and 10,200 labor hours were actually used. Based on this info, Champions' overhead for the year was: a. $2,800 underapplied b. $2,200 overapplied c. $5,000 underapplied d. neither overapplied nor underapplied
a. $2,800 underapplied
Based on the following information, calculate the predetermined overhead rate per direct labor dollar: -Estimated MO: $500,000 -Estimated DL cost: $250,000 -Actual MO: $720,000 -Actual DL cost: $300,000 a. $2.00 per direct labor dollar b. $2.88 per direct labor dollar c. $2.40 per direct labor dollar d. $1.67 per direct labor dollar
a. $2.00 per direct labor dollar
What is another name for a bottleneck? a. Constraint b. Strategy c. Defect
a. Constraint
What type of cost is never relevant and should be disregarded when making decisions? a. Sunk b. Opportunity c. Marginal d. Incremental
a. Sunk
True or False: A particular cost may be direct or indirect depending on the cost object. a. True b. False
a. True
Variable costs vary ____________ within the relevant range of activity. a. in total b. per unit
a. in total
Raw materials: a. include both direct and indirect materials b. consist of unprocessed items only c. include only indirect materials d. include only direct materials
a. include both direct and indirect materials
Managerial accounting: (select all that apply) a. is not mandatory b. must follow GAAP/IFRS c. emphasizes the future d. reports to managers inside the organization e. emphasizes companywide reports f. emphasizes relevance
a. is not mandatory c. emphasizes the future d. reports to managers inside the organization f. emphasizes relevance
Using the high-low method, the fixed cost is calculated: (select all that apply) a. using either the high or low level of activity b. by adding the total cost to the variable cost c. before the variable cost is calculated d. after the variable cost is calculated
a. using either the high or low level of activity d. after the variable cost is calculated
In the equation Y = a + bX, b denotes the: (select all that apply) a. variable cost per unit of activity b. fixed cost per unit of activity c. Level of activity d. slope of the line
a. variable cost per unit of activity d. slope of the line
Cost of goods manufactured: a. is the same as cost of goods sold b. includes all manufacturing cost of goods finished during the period c. is generally recorded as an asset on the balance sheet
b. includes all manufacturing cost of goods finished during the period
Predetermined overhead rates: (select all that apply) a. are used to apply direct labor costs to jobs b. make it easier to apply overhead to jobs c. require an estimated total overhead cost and estimated total allocation base d. are computed before each job
b. make it easier to apply overhead to jobs c. require an estimated total overhead cost and estimated total allocation base
The manufacturing overhead account contains: a. a single kind of indirect cost b. many different kinds of indirect costs c. a single kind of direct costs d. many different kinds of direct costs
b. many different kinds of indirect costs
The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find: a. actual overhead b. overhead applied to the job c. the predetermined overhead rate for the job d. the total cost of the job
b. overhead applied to the job
Calculate the cost of goods available for sale: -COGM: $234,000 -Beg. FGI: $18,000 -End. FGI: $24,000 a. $240,000 b. $228,000 c. $252,000 d. $258,000
c. $252,000 Goods available for sale = $234,000 + $18,000 = $252,000
Calculate the cost of goods available for sale: -COGM: $410,000 -Beg. FGI: $110,000 -End. FGI: $125,000 a. $425,000 b. $395,000 c. $520,000 d. $535,000
c. $525,000 Goods available for sale = $410,000 + $110,000 = $520,000
A journal entry that debits Salaries expense and credits Salaries and wages payable would record: a. Assembly workers' wages b. Maintenance salaries c. Administrative salary cost d. Factory supervisors' salary costs
c. Administrative salary cost
An exam thats on planning, controlling and decision-making skills is required to become a(n): a. CPA b. Internal auditor c. CMA
c. CMA
Determining which products and services to promote is part of the __________ process. a. Controlling b. Planning c. Decision making
c. Decision making
A method that uses all the available data points to divide a mixed cost into its fixed and variable components is called: a. the engineering approach b. the contribution approach c. least-squares regression d. high-low
c. least-squares regression
Why do companies use a predetermined overhead rate rather than an actual overhead rate? a. A predetermined overhead rate is easier to use b. A predetermined overhead rate is more accurate c. An actual overhead rate can never be calculated d. An actual overhead rate is not known until the end of the period
d. An actual overhead rate is not known until the end of the period
Which of the following is only true in a multiple predetermined overhead rate system? a. Multiple types of overhead are included to calculate the predetermined overhead rate b. Overhead is applied multiple times throughout the period c. Each category of overhead may have its own predetermined overhead rate d. Each production department may have its own predetermined overhead rate
d. Each production department may have its own predetermined overhead rate
A journal entry that debits Work in Process and Manufacturing overhead and credits Raw materials records the: a. application of manufacturing overhead b. purchase of materials c. completion of goods d. issuance of materials
d. Issuance of materials
Which of the following statements is false? a. Managerial accounting is useful in almost any career. b. Governmental entities can use managerial accounting c. Managerial accounting is useful in helping make future plans d. Managerial accounting is not applicable to nonprofit industries
d. Managerial accounting is not applicable to nonprofit industries
Place these items from the income statement in the order in which they should appear: a. Gross margin b. Cost of goods sold c. Net operating income d. Sales e. Selling and administrative expenses
d. Sales b. Cost of goods sold. a. Gross margin e. Selling and administrative expenses c. Net operating income
Which of the following is not a required skill of an effective leader? a. Technical competence b. Communication c. Integrity d. Sense of humor
d. Sense of humor
What is underapplied or overapplied overhead? a. Overhead applied to work in process b. The sum of overhead applied to work in process and actual overhead c. Actual overhead d. The difference between overhead applied to work in process and actual overhead
d. The difference between overhead applied to work in process and actual overhead
Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing? a. The salary of an attorney at a law firm b. The salary of a surgeon at a hospital c. The wages of technicians at an auto repair shop d. The salary of the manager at a hair salon
d. The salary of the manager at a hair salon
When only a portion of units involved in a job are sold, what accounting entry occurs? a. Unsold units are transferred to another job b. The entire cost of the job is transferred from finished goods to cost of goods sold c. The cost is held in the finished goods account until all units involved in the job are sold d. The unit product cost is used to calculate the amount that will be transferred from finished goods to cost of goods sold
d. The unit product cost is used to calculate the amount that will be transferred from finished goods to cost of goods sold
Put the steps from the schedule cost of goods manufactured in the order in which they appear: a. Cost of goods manufactured b. Add: Beginning work in process inventory c. Deduct: Ending work in process inventory d. Total manufacturing costs
d. Total manufacturing costs b. Add: Beginning work in process inventory c. Deduct: Ending work in process inventory a. Cost of goods manufactured
The average manufacturing overhead cost per unit tends to: a. remain fairly constant b. contain direct materials costs c. be more than direct materials cost per unit d. vary from one period to the next
d. vary from one period to the next
Place these items in the order in which they appear on the schedule of costs of goods sold. a. Add: underapplied overhead b. Deduct: finished goods inventory, ending c. Adjusted cost of goods sold d. Unadjusted cost of goods sold e. Cost of goods available for sale
e. Cost of goods available for sale b. Deduct: finished goods inventory, ending d. Unadjusted cost of goods sold a. Add: underapplied overhead c. Adjusted cost of goods sold
In a least-squares regression line, the vertical intercept (a) of the line represents the total ___________ cost.
-fixed
Product costs are also called ___________ costs.
-inventoriable
The components of prime costs are direct __________ costs and direct __________ costs.
-labor -materials
The cost of goods ___________ is the sum of all amounts transferred form Work in process to Finished goods during a period.
-manufactured
The revenue obtained from selling one additional unit of product is called ___________ revenue.
-marginal
A credit balance in the Manufacturing overhead account means overhead was __________.
-overapplied
Direct materials, direct labor, and manufacturing overhead are all ___________ costs.
-product
Fixed and variable costs should only be computed if a(n) __________ shows the relationship to be approximately linear.
-scattergraph
The schedule of cost of goods _________ summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold.
-sold
A game plan that enables a company to attract customers by distinguishing itself from competitors is a(n) ____________.
-strategy
Within the relevant range, _________ costs remain constant on a per unit basis.
-variable
Match each event in the process of accounting for manufacturing overhead with the appropriate entry: First group: 1. Actual overhead is incurred 2. A job is completed 3. The period ends Second group: a. Manufacturing overhead is closed b. Manufacturing overhead is debited c. Manufacturing overhead is credited
1. Actual overhead is incurred -B. Manufacturing overhead is debited 2. A job is completed -C. Manufacturing overhead is credited 3. The period ends -A. Manufacturing overhead is closed
The following info relates to the present and proposed methods. -Revenues: Present: $140,000 Proposed: $190,000 -Variable Costs: Present: $60,000 Proposed: $70,000 -Fixed Costs: Present: $20,000 Proposed: $25,000 Calculate the differential net income or loss from the proposal. a. $35,000 differential net income b. $50,000 differential net income c. $15,000 differential net income d. $40,000 differential net income
a. $35,000 differential net income
Applied manufacturing overhead is entered on what side of the Manufacturing overhead account? a. Always the credit side b. Always the debit side c. The debit side, if actual is greater than applied d. The credit side, if actual is greater than applied
a. Always the credit side
Why should the ideal allocation base drive overhead costs? a. Bases that do not drive overhead cost cause product costs to be distorted b. Bases that do not drive overhead cost cannot be used to calculated an overhead amount c. Bases that do not drive overhead costs are difficult to keep track of
a. Bases that do not drive overhead cost cause product costs to be distorted
A(n) ____________ is anything that prevents you from getting more of what you want. (select all that apply) a. Bottleneck b. Constraint c. Link d. Surplus
a. Bottleneck b. Constraint
A type of indirect cost incurred to benefit more than one cost object is a(n) _______________ cost. a. Common b. Opportunity c. Sunk d. Prime
a. Common
Which of the following are used to calculate goods available for sale on the schedule of cost of goods sold? (Select all that apply) a. Cost of goods manufactured b. Beginning finished goods inventory c. Cost of goods sold d. Ending finished goods inventory
a. Cost of goods manufactured b. Beginning finished goods inventory
Which of the following are used to calculate goods available for sale on the schedule of cost of goods sold? (select all that apply) a. Cost of goods manufactured b. Cost of goods sold c. Beginning finished goods inventory d. Ending finished goods inventory
a. Cost of goods manufactured c. Beginning finished goods inventory
The difference in costs between two alternatives is called a(n) ____________ cost. a. Differential b. Opportunity c. Sunk d. Common
a. Differential
Which of the following are included in the total cost of a job? (select all that apply) a. Direct labor cost b. Applied manufacturing overhead c. Nonmanufacturing cost d. Direct materials cost e. Actual manufacturing overhead
a. Direct labor cost b. Applied manufacturing overhead d. Direct materials cost
When comparing financial and managerial accounting, managerial accounting is more likely to: (select all that apply) a. Emphasize the business decisions affecting the future b. Follow generally accepted accounting principles c. Provide information to external users, such as stockholders and banks d. Focus on parts or segments of an organization
a. Emphasize the business decisions affecting the future d. Focus on parts or segments of an organization
A process used by company to proactively identify and manage risks is called: a. Enterprise risk management b. Local risk management c. Internal control management
a. Enterprise risk management
Which of the following are most likely fixed costs? (select all that apply) a. Factory rent b. Administrative salaries c. Electricity to operate factory machines d. Factory insurance
a. Factory rent b. Administrative salaries d. Factory insurance
What categories of costs contain labor charges that cannot be easily traced to a job? (select all that apply) a. Indirect labor b. Manufacturing overhead c. Direct labor
a. Indirect labor b. Manufacturing overhead
Manufacturing overhead consists of: a. all manufacturing costs other than direct labor and direct materials b. all indirect costs c. all manufacturing costs d. all costs other than direct labor and direct materials
a. all manufacturing costs other than direct labor and direct materials
Manufacturing overhead costs: (select all that apply) a. are indirect costs b. do not impact the average cost per unit c. tend to vary significantly, in total, from one period to the next d. consists of many different items
a. are indirect costs d. consists of many different items
A document that lists the type and quantity of each type of direct material needed to complete a unit of product is called a: a. bill of materials b. material requisition form c. job cost sheet
a. bill of materials
Gross margin is calculated by subtracting ________ from _________. a. cost of goods sold; sales b. selling and administrative expenses; sales c. fixed cost; sales d. variable cost; sales
a. cost of goods sold; sales
Actual manufacturing overhead is entered on what side of the Manufacturing overhead account? a. Always the credit side b. Always the debit side c. The debit side, if actual is greater than applied d. The credit side, if actual is greater than applied
b. Always the debit side
What kinds of manufacturing costs are assigned to units of product in absorption costing? a. Only variable manufacturing costs b. Both variable and fixed manufacturing costs c. Neither variable nor fixed manufacturing costs d. Only fixed manufacturing costs
b. Both variable and fixed manufacturing costs
The series of steps followed to carry out a task in an organization is called a: a. Strategy b. Business process c. Theory of Constraints d. Value chain
b. Business process
How are manufacturing cost that cannot be traced to a particular product assigned to products and services? a. By adding a markup to direct labor costs b. By averaging across time and across products c. By determining how much of the cost was actually caused by a particular product
b. By averaging across time and across products
Cost objects include: (select all that apply) a. Anything for which revenue data is desired b. Customers c. Organizational subunits d. Anything for which cost data is desired
b. Customers c. Organizational subunits d. Anything for which cost data is desired
A company cannot: a. Take steps to reduce risk b. Eliminate risk c. Accept risk d. Take steps to avoid risk
b. Eliminate risk
True or False: Assembly-line workers' wages are period costs. a. True b. False
b. False
True or False: Good leadership skills are all it takes to be successful as a manager. a. True b. False
b. False
True or False: Labor costs that can be specifically traced to a product are indirect labor costs. a. True b. False
b. False
On which financial statement do selling and administrative costs first appear? a. Statement of owners' equity b. Income statement c. Statement of cash flows d. Balance sheet
b. Income statement
If underapplied overhead is closed out to Cost of goods sold, will cost of Goods sold be increased or decreased? a. Decreased b. Increased
b. Increased
To calculate a predetermined overhead rate, divide estimated manufacturing overhead by: a. actual manufacturing overhead b. estimated allocation base c. estimated direct labor hours d. estimated units of production
b. estimated allocation base
What kind of costs are assigned to units of product in absorption costing? (select all that apply) a. fixed selling and administrative costs b. fixed manufacturing costs c. variable selling and administrative costs d. variable manufacturing costs
b. fixed manufacturing costs d. variable manufacturing costs
Total manufacturing overhead costs tend to: a. vary greatly with production b. remain fairly constant c. be impossible to assign to jobs d. be easily traceable to jobs
b. remain fairly constant
How individual costs change as the level of activity level increases or decreases is referred to as cost __________.
-behavior
Labor costs that are easily traced to a job are called ________ labor costs.
-Direct
Materials that become an important component of the finished product whose cost can be easily and conveniently traced to the finished product are _____________ materials.
-Direct
In an automobile manufacturing plant, the assembly-line workers are considered to be _____________ ____________.
-Direct Labor
********** Fixed costs that can be cut-back or eliminated without significant damage to a company's long-term goals are __________ fixed cost and __________ fixed costs can not be easily changed or eliminated.
-Discretionary -Committed
Completed units that have not yet been sold are found in ____________ __________ inventory.
-Finished -Goods
Differential costs are also known as _________ costs.
-Incremental
___________ accounting is concerned with providing information to those who direct and control the organization.
-Managerial
The schedule cost of goods ___________ summarizes costs that remain in Work in process inventory and that have been transferred from Work in process to Finished goods inventory.
-Manufactured
There are two broad classifications of costs: manufacturing costs and _________ costs.
-Nonmanufacturing
A(n) __________ report compares actual results to targets.
-Performance
Preparing a budget is part of the __________ process.
-Planning
The _________ function specifies how the company will carry out and implement strategies.
-Planning
A normal costing system applies overhead by job by multiplying a(n) ________________ _______________ rate by the _____________ amount of the allocation base incurred by the job.
-Predetermined -Overhead -Total
Any purchased materials that will go into the finished product are recorded in the ___________ ___________ inventory account.
-Raw -Materials
The level of activity within which variable and fixed cost assumptions are valid is known as the ___________ ____________.
-Relevant -range
A(n) ________ ________ consists of the major business functions that add value to a company's products and services.
-Value -Chain
The process used to assign overhead costs to products is called overhead __________.
-application
Raw materials inventory is originally recorded in a(n) ______________ account.
-asset
When preparing financial statements in job-order costing system, finished goods flow first to the ____________ ____________ and then to the ______________ _____________.
-balance -sheet -income -statement
What are materials requisition forms used for? (select all that apply) a. Making entries in the accounting records b. Summarizing the cost of a job c. Specifying the cost of materials to be ordered d. Controlling the flow of materials into production
a. Making entries in the accounting records d. Controlling the flow of materials into production
Which account is credited when overhead is applied? a. Manufacturing overhead b. Cost of goods sold c. Accounts payable d. Work in process
a. Manufacturing overhead
Answering questions with data-driven analysis utilizes a manager's: a. Measurement skills b. Ethical skills c. Leadership skills d. Corporate social responsibility skills
a. Measurement skills
Which of the following statements are true? (select all that apply) a. Most manufacturing companies in the U.S. use direct labor as an overhead allocation base b. Activity-based costing is designed to more accurately match overhead costs to what causes them c. Due to changes in production, direct labor costs have increased and overhead costs have decreased d. Direct labor is an appropriate allocation base when it can be shown to drive costs
a. Most manufacturing companies in the U.S. use direct labor as an overhead allocation base b. Activity-based costing is designed to more accurately match overhead costs to what causes them d. Direct labor is an appropriate allocation base when it can be shown to drive costs
Indirect materials include: a. Nails, glue, and thread b. Factory manager's salary c. Factory rent and insurance d. Laptop computer keyboards
a. Nails, glue, and thread
Which of the following statements are true? (select all that apply) a. Period costs are expensed in the same period in which they incurred b. Nonmanufacturing costs are period costs c. The wages of assembly-line workers are period costs d. Period costs are also called inventoriable costs
a. Period costs are expensed in the same period in which they incurred b. Nonmanufacturing costs are period costs
Which of these managerial accounting functions are relevant to business majors, such as marketing and human resource management? (select all that apply) a. Planning b. Filing tax returns c. Controlling d. Decision making
a. Planning c. Controlling d. Decision making
When a company says "You should choose us because we offer higher quality products than our competitors," it is following a(n) ___________ strategy. a. Product leadership b. Customer intimacy c. Operational excellence
a. Product leadership
Put the steps in order for calculating direct materials on the schedule cost of goods manufactured in order. a. Raw materials inventory, beginning b. Deduct: Indirect materials included in manufacturing overhead c. Add: Purchases of raw materials d. Deduct: Raw materials inventory, ending e. Raw materials used in production f. Total raw materials available
a. Raw materials inventory, beginning c. Add: Purchases of raw materials f. Total raw materials available d. Deduct: Raw materials inventory, ending e. Raw materials used in production b. Deduct: indirect materials included in manufacturing overhead
Which of the following are considered non-manufacturing costs? (select all that apply) a. Sales commissions b. Company president's salary c. Assembly-line worker wages d. Insurance on plant equipment
a. Sales commissions b. Company president's salary
********* Which of the following statements are true? (select all that apply) a. Scattergraphs are a way to diagnose cost behavior b. Scattergraphs should be used after high-low or regression analysis is performed c. When plotting a scattergraph, cost is the independent variable d. Plotting data on a scattergraph is an important diagnostic step
a. Scattergraphs are a way to diagnose cost behavior d. Plotting data on a scattergraph is an important diagnostic step
Which of the following cost are charged directly to the income statement? (select all that apply) a. Selling costs b. Manufacturing overhead c. Administrative costs d. Direct labor e. Direct materials
a. Selling costs c. Administrative costs
The institute of Management Accountants adopted the: a. Statement of Ethical Professional Practice b. Ethical Guidelines Statement c. Statement of Ethics and Conduct
a. Statement of Ethical Professional Practice
Companies have a corporate social responsibility to serve: (select all that apply) a. Suppliers b. Communities c. Customers d. Employees e. Competitors
a. Suppliers b. Communities c. Customers d. Employees
Which of the following statements are true? (select all that apply) a. The primary role of management accountants is to help improve performance. b. Very few professional accountants in the United States work in nonpublic accounting c. Management accountants help design accounting systems d. The public accounting profession has a strong managerial accounting orientation.
a. The primary role of management accountants is to help improve performance. c. Management accountants help design accounting systems
Which of the following statements are true? (select all that apply) a. The relevant range of activity is approximated by a straight line b. Within the relevant range of activity, fixed costs remain constant in total c. Within the relevant range of activity total variable costs do not change
a. The relevant range of activity is approximated by a straight line b. Within the relevant range of activity, fixed costs remain constant in total
Which of the following is a process management method that can be used to manage and improve business processes? a. Theory of Constraints b. Virtual reality c. Strategy Planning
a. Theory of Constraints
True or False: If investors could not rely on a company's financial statements, they would likely reduce the amount they invest, leaving the company with less money for productive investments. a. True b. False
a. True
********* The high-low method: (select all that apply) a. Uses only two data points b. Is based on periods where the activity tends to be unusual c. Is difficult to apply and requires a statistical software package d. Generally provides an accurate estimate of true cost behavior during normal periods
a. Uses only two data points b. Is based on periods where the activity tends to be unusual
What account is debited for the issuance of direct materials into production? a. Work in process b. Raw materials c. Manufacturing overhead d. Accounts payable
a. Work in process
A cash payment of $400 was made for the monthly insurance premium on administrative office equipment. The journal entry to record this event would: a. debit insurance expense and credit cash b. debit depreciation expense and credit cash c. debit work in process and credit cash d. debit manufacturing overhead and credit cash
a. debit insurance expense and credit cash
The cost of jobs still unfinished at the end of a period are included in: a. ending work in process inventory b. beginning finished goods inventory for the next period c. the income statement d. cost of goods manufactured
a. ending work in process inventory
Administrative costs include: a. executive compensation and public relations costs b. factory maintenance workers' and factory supervisors' salaries c. shipping costs and sales commissions d. sales commissions and factory supervisors' salaries
a. executive compensation and public relations costs
The United States requires absorption costing for: (select all that apply) a. external financial reports b. internal financial reports c. tax reports
a. external financial reports c. tax reports
In terms of social responsibility, companies provide environmental and human rights advocates with: a. full disclosure of suppliers located in developing countries b. reasonable time to prepare orders c. resources that support charities d. honest information about plans such as plant closings
a. full disclosure of suppliers located in developing countries
A journal entry debiting Cost of goods sold and crediting Finished goods is made when: a. goods are sold b. the period is completed c. goods are started d. goods are finished
a. goods are sold
Typical cost drivers include: (Select all that apply) a. machine-hours b. computer time c. utilities cost d. flight-hours c. machine depreciation
a. machine-hours b. computer time d. flight hours
Actual overhead costs may not be proportional to the actual amount of the allocation base used because: (select all that apply) a. many actual overhead cost are fixed b. overhead costs are all variable costs c. the predetermined rate might not be estimated correctly d. overhead spending may not be under control
a. many actual overhead cost are fixed d. overhead spending may not be under control
******** Cost behavior: (select all that apply) a. refers to how a cost will change as activity level changes b. is a detailed analysis technique used to determine whether costs are fixed or variable c. categorizes costs as fixed, mixed and variable d. is the relative proportion of each type of cost in an organization
a. refers to how a cost will change as activity level changes c. categorizes costs as fixed, mixed and variable
Opportunity costs: (select all that apply) a. should be considered in decision making b. are benefits that are given up when selecting one alternative over another c. are uncommon in decision making d. are part of traditional accounting records
a. should be considered in decision making b. are benefits that are given up when selecting one alternative over another
The fixed portion of mixed cost represents: a. the minimum cost of having a service available for use b. the maximum cost to be incurred from providing a service c. the cost incurred for actual consumption of a service
a. the minimum cost of having a service available for use
A bill of materials contains the: (select all that apply) a. type of each direct material needed to complete a unit of product b. the quantity of materials to be drawn from the storeroom c. type of materials to be drawn form the storeroom d. job that will be charged for the cost of the materials e. quantity of each direct material needed to complete a unit of product
a. type of each direct material needed to complete a unit of product e. quantity of each direct material needed to complete a unit of product
The cost of a completed job on the job cost sheet consists of: a. Applied direct materials, applied direct labor, and applied overhead costs b. Actual direct materials, actual direct labor, and applied overhead costs c. Applied direct materials, applied direct labors, and actual overhead costs d. Actual direct materials, actual direct labor, and actual overhead costs
b. Actual direct materials, actual direct labor, and applied overhead costs
A company estimated its manufacturing overhead would total $500,000 and that it would use 200,000 direct labor hours for the year. Actual manufacturing overhead for the year was $625,000, and 260,000 direct labor hours were actually used. Based on this information, calculate the amount that overhead was overapplied or underapplied? a. $125,000 overapplied b. $25,000 overapplied c. $25,000 underapplied d. $187,000 underapplied
b. $25,000 overapplied
Given the following, calculate total manufacturing costs applied to jobs: DM: $40,000 DL: $100,000 MO applied: $120,000 Beg. WIP inventory: $30,000 End WIP inventory: $12,000 a. $302,000 b. $260,000 c. $278,000 d. $242,000
b. $260,000
******* Based on the following information, compute the cost of goods sold for Spengler Merchandising Corp.: -Sales: $400,000 -Purchases: $300,000 -Beg. Inventory: $50,000 -End. Inventory: $90,000 -Selling expenses: $70,000 -Administrative expenses: $30,000 -Accounts receivable: $110,000 a. $370,000 b. $260,000 c. $340,000 d. $140,000
b. $260,000 Beginning inventory + purchases - ending inventory = cost of goods sold
At the beginning of the year JVL, Inc., estimated that its total overhead costs would be $120,000 for the year. Its allocation base in direct labor hours, and it estimated it would use a total of 12,000 hours. By the end of the year, actual overhead costs were $111,000, and 10,800 labor hours were actually used. Based on this information, JVL's overhead for the year was: a. $12,000 underapplied b. $3,000 underapplied c. $9,000 overapplied d. neither overapplied nor underapplied
b. $3,000 underapplied
Which of the following statements is true? a. If you are an accounting major, you are most likely to spend your career working in a job in public accounting. b. Accounting majors who want to work as management accountants still need strong financial accounting skills. c. Managerial accounting knowledge is only required if one desires employment in public accounting
b. Accounting majors who want to work as management accountants still need strong financial accounting skills.
An activity base: (select all that apply) a. Is a measure of whatever causes fixed costs to occur b. Is sometimes called a cost driver c. Measures whatever causes costs to vary d. Is part of the organization where major operations are planned and carried out
b. Is sometimes called a cost driver c. Measures whatever causes costs to vary
Which method is used by companies that make many different products each period? a. Process costing b. Job-order costing
b. Job-order costing
Which of these approaches can be used to manage and improve how business processes take place? (Select all that apply) a. Corporate Social Responsibility b. Lean Production c. Theory of Constraints
b. Lean Production c. Theory of Constraints
Which of these approaches can be used to manage and improve how business processes take place? (select all that apply) a. Corporate Social Responsibility b. Lean Production c. Theory of Constraints
b. Lean Production c. Theory of Constraints
When a company says "You should choose us because we can deliver products and services faster, more conveniently and at a lower price than our competitors" it is following a(n) ___________ strategy. a. Product leadership b. Operational excellence c. Customer intimacy
b. Operational excellence
******** Which of the following statements are true? (select all that apply) a. All costs in a merchandising company are period costs b. Period costs are expensed when incurred. c. Inventorial costs are expensed in the period in which they are incurred d. Product costs are also called inventoriable costs
b. Period costs are expensed when incurred. d. Product costs are also called inventoriable costs
Why have direct labor costs decreased relative to overhead as a component of product costs? (select all that apply) a. Labor has become more unionized b. Production processes have become more automated c. Products have grown more sophisticated and complex d. More full-time labor is being used
b. Production processes have become more automated c. Products have grown more sophisticated and complex
A journal entry that debits manufacturing overhead and credits accounts payable could record which of the following transactions? (check all that apply) a. Depreciation on factory equipment b. Rent expense on factory equipment c. Factory utilities expense d. The purchase of indirect materials
b. Rent expense on factory equipment c. Factory utilities expense
Which of the following is not one of the categories into which manufacturing costs are generally classified? a. Direct labor b. Selling & administrative expenses c. Direct materials d. Manufacturing overhead
b. Selling & administrative expenses
Which of the following would be classified as manufacturing overhead? (select all that apply) a. Direct materials b. The factory supervisor's salary c. The CEO's salary d. Office equipment depreciation e. Factory insurance
b. The factory supervisor's salary e. Factory insurance
Which statements regarding the high-low method are true? (select all that apply) a. When applying this method, use the data points with the high and lowest level of cost b. The high-low method should only be used if a scattergraph plot indicates a linear relationship between cost and activity c. It only uses two data points d. It is superior to least-squares regression
b. The high-low method should only be used if a scattergraph plot indicates a linear relationship between cost and activity c. It only uses two data points
Which of the following would not be considered a job in a service firm that uses job-order costing? a. A client at a law firm b. The tax department in an accounting firm c. A patient in a hospital d. A repair job at an auto repair shop
b. The tax department in an accounting firm
How can bar codes be used in accounting for manufacturing costs? a. They allow indirect costs to be automatically recorded and posted b. They allow direct labor costs to be automatically recorded and posted c. They allow indirect costs to be easily traced to jobs d. They reduce the amount of time direct labor spends on jobs
b. They allow direct labor costs to be automatically recorded and posted
Which of the following are differences between the traditional and contribution format to income statements? (select all that apply) a. The traditional income statement is for internal use, while the contribution format income statement is for external use b. Traditional income statements focus on cost function. Contribution format statements focus on cost behavior. c. Compared to traditional statements, contribution format statements provide management with a tool to make decision making easier
b. Traditional income statements focus on cost function. Contribution format statements focus on cost behavior. c. Compared to traditional statements, contribution format statements provide management with a tool to make decision making easier
Will the greatest benefit come from focusing improvement efforts on the strongest or weakest link in a chain? a. Neither b. Weakest c. Strongest
b. Weakest
The variable cost per unit using the high-low method is calculated as: a. Y = a + bX b. change in cost divided by change in activity c. change in activity divided by change in cost d. total cost minus total fixed cost
b. change in cost divided by change in activity
When using the high-low method, if the high or low levels do not match the high or low levels of activity: a. skip that period and move to the next highest or lowest level where costs and activity match b. choose the periods with the highest and lowest level of activity and their associated costs c. choose the periods with the high and lowest level of costs and their associated activities
b. choose the periods with the highest and lowest level of activity and their associated costs
Is actual manufacturing overhead debited or credited to the manufacturing overhead account? a. credited b. debited
b. debited
To calculate the unit product cost using the job cost sheet: a. add direct labor to manufacturing overhead and divide by the number of units produced b. divide the total job cost by the number of units produced c. multiply the total job cost by the number of units produced d. add direct labor to direct materials and divide by the number of units produced
b. divide the total job cost by the number of units produced
A contribution format income statement: (select all that apply) a. is prepared primarily for external reporting purposes b. separates costs into their fixed and variable components c. can assists with management decision making d. reports both gross margin and net income
b. separates costs into their fixed and variable components c. can assists with management decision making
Which of the following costs would NOT be classified as manufacturing overhead? a. factory utilities b. tires used to produce vehicles c. a factory supervisor's salary d. depreciation on machinery
b. tires used to produce vehicles
When a job is completed, its cost are transferred OUT of: a. manufacturing overhead b. work in process c. cost of goods sold d. finished goods
b. work in process
Put the steps for computing the predetermined overhead rate in order: a. Estimate total fixed overhead & variable overhead per unit of allocation base for the coming period b. Calculate the predetermined overhead rate c. Estimate the total amount of the allocation base required d. Use the cost formula Y = a + bX to estimate the total expected overhead for the upcoming year
c. Estimate the total amount of the allocation base required a. Estimate total fixed overhead & variable overhead per unit of allocation base for the coming period d. Use the cost formula Y = a + bX to estimate the total expected overhead for the upcoming year b. Calculate the predetermined overhead rate
Place these items in the order in which they appear on the schedule of costs of goods sold. a. Unadjusted cost of goods sold b. Add: Cost of goods manufactured c. Finished goods inventory, beginning d. Deduct: Finished goods inventory, ending e. Cost of goods available for sale
c. Finished goods inventory, beginning b. Add: Cost of goods manufactured e. Cost of goods available for sale d. Deduct: Finished goods inventory, ending a. Unadjusted cost of goods sold
If consumers assumed every potential deal was a rip-off, the cost of transactions would ___________ and the threat of legal action would ___________. a. Decrease, increase b. Increase, decrease c. Increase, increase d. Decrease, decrease
c. Increase, increase
What is one of the reasons companies are paying closer attention to their corporate social responsibilities? a. Companies prefer socially responsible suppliers b. Companies prefer socially responsible investors c. Investors prefer socially responsible companies
c. Investors prefer socially responsible companies
Which of the following would be considered direct materials in a service firm that uses job-order costing? a. Beds in a hospital b. Tools in an auto repair shop c. Paperwork at a law firm d. Scissors at a hair salon
c. Paperwork at a law firm
A company's poor social performance is likely to cause: (select all that apply) a. Improvement in the company's reputation b. Improved fiscal performance c. Stakeholders to feel the company is focused on only the bottom line d. Customers to feel alienated
c. Stakeholders to feel the company is focused on only the bottom line d. Customers to feel alienated
Discretionary fixed costs include: (select all that apply) a. factory depreciation b. insurance expense c. advertising d. management training programs
c. advertising d. management training programs
A journal entry that debits Finished goods and credits work in process records the: a. beginning of a job b. sale of a job c. completion of a job d. end of a period
c. completion of a job
A company incurred $10,000 in direct labor costs and $8,000 in indirect labor costs. The journal entry to record this transaction would: a. debit Salaries and Wages payable $18,000 and credit Work in process $8,000 and Manufacturing overhead $10,000. b. debit Work in process $8,000 and Manufacturing overhead $10,000 and credit Salaries and wages payable $18,000 c. debit Work in process $10,000 and Manufacturing overhead $8,000 and credit Salaries and wages payable $18,000 d. debit Salaries and wages payable $18,000 and credit Work in process $10,000 and Manufacturing overhead $8,000
c. debit Work in process $10,000 and Manufacturing overhead $8,000 and credit Salaries and wages payable $18,000
A total of $10,000 in manufacturing overhead was applied to Job #40. The journal entry to record this would: a. debit Cost of goods sold $10,000 and credit Work in process $10,000 b. debit Cost of goods sold $10,000 and credit Manufacturing overhead $10,000 c. debit Work in process $10,000 and credit Manufacturing overhead $10,000 d. debit Manufacturing overhead $10,000 and credit Work in process $10,000
c. debit Work in process $10,000 and credit Manufacturing overhead $10,000
The journal entry to record depreciation on factory equipment would: a. debit work in process and credit depreciation expense b. debit work in process and credit accumulated depreciation c. debit manufacturing overhead and credit accumulated depreciation d. debit manufacturing overhead and credit depreciation expense
c. debit manufacturing overhead and credit accumulated depreciation
The journal entry to record the recognition of accrued property taxes on a company's production facility would be to: a. debit work in process and credit manufacturing overhead b. debit manufacturing overhead and credit accounts payable c. debit manufacturing overhead and credit property taxes payable d. debit works i process and credit property taxes payable
c. debit manufacturing overhead and credit property taxes payable
In a system that uses multiple predetermined overhead rates, overhead is applied: a. before production begins b. at the end of each period c. in each department as jobs proceed through the department d. at the end of the total production process
c. in each department as jobs proceed through the department
Manufacturing overhead costs include: a. administrative taxes and insurance, sales commissions, and factory assembly workers' wages b. direct materials, sales commissions, and factory assembly workers' wages c. indirect materials, factory supervisors' salaries, and factory taxes and insurance d. direct materials, administrative taxes and insurance, and sales commissions
c. indirect materials, factory supervisors' salaries, and factory taxes and insurance
Average manufacturing overhead cost per unit usually varies from one period to the next because: a. it usually contains many variable costs, which vary from one period to the next b. the makeup of manufacturing overhead changes from period to period c. it usually contains fixed costs, which remain constant in total even when production changes
c. it usually contains fixed costs, which remain constant in total even when production changes
The cost of producing one more unit is the _________ cost. a. opportunity b. differential c. marginal d. sunk
c. marginal
A job cost sheet contains: (select all that apply) a. selling costs charged to the job b. the selling price of the job c. materials costs charged to that job d. manufacturing overhead costs charged to the job e. labor costs charged to the job
c. materials costs charged to that job d. manufacturing overhead costs charged to the job e. labor costs charged to the job
Committed fixed costs include: (select all that apply) a. research b. public relations c. real estate taxes d. top management salaries
c. real estate taxes d. top management salaries
When calculating cost of direct materials on the schedule of cost of goods manufactured, the cost of indirect materials must be: a. subtracting from beginning raw materials inventory b. added to beginning raw materials inventory c. subtracted from raw materials used in production d. added to raw materials used in production
c. subtracted from raw materials used in production
When using account analysis, an account is classified as either fixed or variable based on: a. the equation Y = a + bX b. scattergraphs c. the analyst's prior knowledge of how the cost behaves d. engineering estimates of production methods
c. the analyst's prior knowledge of how the cost behaves
In the equation Y = a + bX, Y is the: a. level of activity b. total fixed cost c. total mixed cost d. variable cost per unit of activity
c. total mixed cost
A ___________ cost changes in direct proportion to changes in the activity level. a. mixed b. fixed c. variable
c. variable
Why is the unit product cost different from the cost that would be incurred if another unit were produced? a. There would be no additional cost to produce another unit b. The cost that would be incurred if another unit were produced cannot be calculated c. The predetermined overhead rate changes with each unit produced d. The cost to produce another unit is the incremental or marginal cost
d. The cost to produce another unit is the incremental or marginal cost
When are direct materials cost recorded on the job cost sheet? a. When the job is sold to a customer b. When the job is complete c. When the requisition form is submitted to the storeroom clerk d. When direct materials are issued to the job
d. When direct materials are issued to the job
Which of the following would not be a good allocation base for manufacturing overhead? a. units of product b. direct labor hours c. machine hours d. accounting hours
d. accounting hours
Overhead is overapplied if: a. actual overhead is more than applied overhead b. adjusted cost of goods sold is more than unadjusted cost of goods sold c. cost of goods manufactured is less than cost of goods sold d. actual overhead is less than applied overhead
d. actual overhead is less than applied overhead
When are the actual manufacturing overhead costs recorded in the Manufacturing Overhead account? a. at the end of the period b. as the allocation base is used on a job c. when the job is complete d. as they are incurred
d. as they are incurred
Direct labor and overhead costs incurred to change raw materials into finished products are known as ________ costs. a. prime b. period c. opportunity d. conversion
d. conversion
The journal entry to record shipping goods to customers includes a debit to: a. work in process b. finished goods c. sales revenue d. cost of goods sold
d. cost of goods sold
In June, $3,000 of prepaid factory insurance expired. The journal entry to record this even would: a. debit Work in process and credit Prepaid insurance b. debit Prepaid insurance and credit Manufacturing overhead c. debit Prepaid insurance and credit Work in process d. debit Manufacturing overhead and credit Prepaid insurance
d. debit Manufacturing overhead and credit Prepaid insurance
The journal entry to record shipping goods to customers includes a credit to: a. work in process b. manufacturing overhead c. cost of goods sold d. finished goods
d. finished goods
Direct materials and direct labor are both: a. selling and administrative costs b. nonmanufacturing costs c. period costs d. manufacturing costs
d. manufacturing costs
A journal entry that debits Raw Materials and credits Accounts Payable is recording the: a. completion of goods b. issuance of materials into production c. sale of goods d. purchase of materials
d. purchase of materials
Put the steps for calculating direct materials on the schedule of cost of goods manufactured in order. a. Raw materials used in production b. Deduct: indirect materials included in manufacturing overhead c. Deduct: Raw materials inventory, ending d. Total raw materials available e. Add: purchases of raw materials f. Raw materials inventory, beginning
f. Raw materials inventory, beginning e. Add: purchases of raw materials d. Total raw materials available c. Deduct: Raw materials inventory, ending a. Raw materials used in production b. Deduct: indirect materials included in manufacturing overhead
