Managerial accounting Chapter 1-10 quizzes

Which of the following budgets are prepared before the sales budget?

Budgeted Income Statement: NO Direct Labor Budget: NO

In a process costing system, manufacturing overhead cost is also called conversion cost.

FALSE

In process costing, the equivalent units computed for materials is generally the same as that computed for conversion costs.

false

Factory overhead is typically a(n):

mixed cost.

The usual starting point for a master budget is:

the sales forecast or sales budget.

Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $24,000 and variable expenses of $6,480. Product Y45E had sales of $29,000 and variable expenses of $11,010. The fixed expenses of the entire company were $32,280. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:

would decrease.

Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales of $20,000 and variable expenses of $7,400. Product X08S had sales of $39,000 and variable expenses of $6,170. The fixed expenses of the entire company were $41,160. If the sales mix were to shift toward Product R38T with total sales remaining constant, the overall break-even point for the entire company:

would increase.

Roddam Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Product K09EProduct G17BSales$ 28,000$ 38,000Variable expenses$ 11,200$ 8,600 The fixed expenses of the entire company were $41,970. If the sales mix were to shift toward Product K09E with total dollar sales remaining constant, the overall break-even point for the entire company:

would increase.

Rotonga Manufacturing Company leases a vehicle to deliver its finished products to customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle? Direct Cost Fixed Cost A)YesYes B)YesNo C)NoYes D)NoNo

Choice C- Not a direct cost. IS a fixed cost.

An example of a committed fixed cost is:

a long-term equipment lease.

For the past 8 months, Jinan Corporation has experienced a steady increase in its cost per unit even though total costs have remained stable. This cost per unit increase may be due to _____________ costs if the level of activity at Jinan is _______________.

fixed, decreasing

A budget that is based on the actual activity of a period is known as a:

flexible budget.

When sales exceed production and the company uses the LIFO inventory flow assumption, the net operating income reported under variable costing generally will be:

greater than net operating income reported under absorption costing.

When the level of activity decreases within the relevant range, the fixed cost per unit will:

increase

A cost that would be included in product costs under both absorption costing and variable costing is:

variable manufacturing costs.

Within the relevant range, variable costs can be expected to:

vary in total in direct proportion to changes in the activity level.

A process costing system is employed in those situations where:

where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis.

Dietrick Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Product B32LProduct K84BSales$ 46,000$ 27,000Variable expenses$ 13,800$ 14,670 Fixed expenses for the entire company were $42,550. If the sales mix were to shift toward Product B32L with total sales remaining constant, the overall break-even point for the entire company:

would decrease.

The following data are available for the Phelps Corporation for a recent month: Product AProduct BProduct CTotalSales$ 150,000$ 130,000$ 90,000$ 370,000Variable expenses91,000104,00027,000222,000Contribution margin$ 59,000$ 26,000$ 63,000148,000Fixed expenses 55,000Net operating income $ 93,000 The break-even sales for the month for the company is closest to

$137,500

Schister Systems uses the following data in its Cost-Volume-Profit analyses: TotalSales$ 400,000Variable expenses280,000Contribution margin120,000Fixed expenses100,000Net operating income$ 20,000 What is total contribution margin if sales volume increases by 20%?

$144,000

A cement manufacturer has supplied the following data: Tons of cement produced and sold680,000Sales revenue$ 2,788,000Variable manufacturing expense$ 1,156,000Fixed manufacturing expense$ 760,000Variable selling and administrative expense$ 272,000Fixed selling and administrative expense$ 294,000Net operating income$ 306,000 If the company increases its unit sales volume by 4% without increasing its fixed expenses, then total net operating income should be closest to:

$360,400

A tile manufacturer has supplied the following data: Boxes of tiles produced and sold520,000Sales revenue$ 2,132,000Variable manufacturing expense$ 650,000Fixed manufacturing expense$ 464,000Variable selling and administrative expense$ 260,000Fixed selling and administrative expense$ 312,000Net operating income$ 446,000 If the company increases its unit sales volume by 3% without increasing its fixed expenses, then total net operating income should be closest to:

$482,660

Derst Incorporated sells a particular textbook for $140. Variable expenses are $25 per book. At the current volume of 6,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:

$690,000

Evan's Electronics Boutique sells a digital camera. The following information was reported for the digital camera last month: Sales$ 17,600Variable expenses9,680Contribution margin7,920Fixed expenses3,600Net operating income$ 4,320 Evan's margin of safety in dollars and percentage are closest to:

$9,600 and 55%

A company that makes organic fertilizer has supplied the following data: Bags produced and sold200,000Sales revenue$ 1,560,000Variable manufacturing expense$ 660,000Fixed manufacturing expense$ 448,000Variable selling and administrative expense$ 180,000Fixed selling and administrative expense$ 214,000Net operating income$ 58,000 The company's degree of operating leverage is closest to:

12.41

A manufacturer of premium wire strippers has supplied the following data: Units produced and sold580,000Sales revenue$ 4,176,000Variable manufacturing expense$ 2,871,000Fixed manufacturing expense$ 778,000Variable selling and administrative expense$ 348,000Fixed selling and administrative expense$ 104,000Net operating income$ 75,000 The company's degree of operating leverage is closest to:

12.76

Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river. The trip is priced at $20 per person and has a CM ratio of 30%. Mio's fixed expenses are $84,000. Last year, sales were $400,000 and profit was $36,000. How many units need to be sold to break-even, and how many need to be sold to earn a profit of $42,000?

14,000 and 21,000

The following information pertains to Nova Co.'s cost-volume-profit relationships: Breakeven point in units sold1,000Variable expenses per unit$ 500Total fixed expenses$ 150,000 How much will be contributed to net operating income by the 1,001st unit sold?

150

A company that makes organic fertilizer has supplied the following data: Bags produced and sold200,000Sales revenue$ 1,560,000Variable manufacturing expense$ 660,000Fixed manufacturing expense$ 448,000Variable selling and administrative expense$ 180,000Fixed selling and administrative expense$ 214,000Net operating income$ 58,000 The company's margin of safety in units is closest to:

16,111 units

Bristo Corporation has sales of 2,000 units at $35 per unit. Variable expenses are 40% of the selling price. If total fixed expenses are $22,000, the degree of operating leverage is:

2.10

Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales. The margin of safety is:

225,000

Sunnripe Corporation manufactures and sells two types of beach towels, standard and deluxe. Sunnripe expects the following operating results next year: StandardDeluxeTotal sales$ 450,000$ 50,000Total variable expenses$ 360,000$ 20,000 Sunnripe expects to have a total of $57,600 in fixed expenses next year. What is Sunnripe's overall break-even point next year in sales dollars?

240,000

Highjinks, Incorporated, has provided the following budgeted data: Sales20,000 unitsSelling price$ 100 per unitVariable expense$ 70 per unitFixed expense$ 450,000 What is the company's margin of safety as a percentage of sales?

25%

A manufacturer of cedar shingles has supplied the following data: Bundles of cedar shakes produced and sold360,000Sales revenue$ 2,412,000Variable manufacturing expense$ 1,170,000Fixed manufacturing expense$ 714,000Variable selling and administrative expense$ 414,000Fixed selling and administrative expense$ 82,000Net operating income$ 32,000 The company's degree of operating leverage is closest to:

25.88

Corporation X sold 25,000 units of product last year. The contribution margin per unit was $2, and fixed expenses totaled $40,000 for the year. This year fixed expenses are expected to increase to $45,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same net operating income as was earned last year?

27,500

A manufacturer of tiling grout has supplied the following data: Kilograms produced and sold380,000Sales revenue$ 2,736,000Variable manufacturing expense$ 1,349,000Fixed manufacturing expense$ 336,000Variable selling and administrative expense$ 399,000Fixed selling and administrative expense$ 372,000Net operating income$ 280,000 The company's break-even in unit sales is closest to:

272,308

Northern Pacific Fixtures Corporation sells a single product for $28 per unit. If variable expenses are 65% of sales and fixed expenses total $9,800, the break-even point is:

28,000

A manufacturer of tiling grout has supplied the following data: Kilograms produced and sold380,000Sales revenue$ 2,736,000Variable manufacturing expense$ 1,349,000Fixed manufacturing expense$ 336,000Variable selling and administrative expense$ 399,000Fixed selling and administrative expense$ 372,000Net operating income$ 280,000 The company's degree of operating leverage is closest to:

3.53

A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are $224,000, its margin of safety is:

32,000

A manufacturer of cedar shingles has supplied the following data: Bundles of cedar shakes produced and sold360,000Sales revenue$ 2,412,000Variable manufacturing expense$ 1,170,000Fixed manufacturing expense$ 714,000Variable selling and administrative expense$ 414,000Fixed selling and administrative expense$ 82,000Net operating income$ 32,000 The company's break-even in unit sales is closest to:

346,087

A manufacturer of premium wire strippers has supplied the following data: Units produced and sold580,000Sales revenue$ 4,176,000Variable manufacturing expense$ 2,871,000Fixed manufacturing expense$ 778,000Variable selling and administrative expense$ 348,000Fixed selling and administrative expense$ 104,000Net operating income$ 75,000 The company's margin of safety in units is closest to:

45,455 units

Valdez Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (6,000 units)$ 240,000Variable expenses180,000Contribution margin60,000Fixed expenses54,000Net operating income$ 6,000 The break-even point in unit sales is closest to:

5,400 units

Bear Publishing sells a nature guide. The following information was reported for a typical month: TotalPer UnitSales$ 17,600$ 16.00Variable expenses9,680 Contribution margin7,920 Fixed expenses3,600 Net operating income$ 4,320 What is Bear's current break-even point in unit and dollars?

500 units and $8,000

Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (1,000 units)$ 50,000Variable expenses32,500Contribution margin17,500Fixed expenses12,250Net operating income$ 5,250 The break-even point in unit sales is closest to:

700 units

Which of the following types of companies would typically use process costing rather than job-order costing?

A breakfast cereal manufacturer.

Mossfeet Shoe Corporation is a single product firm. The company is predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year? Contribution Margin Ratio Break-even Point A)Increase;Decrease B)Decrease;Decrease C)Increase;No effect D)Decrease;No effect

A)Increase;Decrease

Which of the following may appear on a flexible budget performance report?

All of the above may appear on a flexible budget performance report.

Which of the following will usually be found on an income statement prepared using absorption costing?

Contribution Margin: NO Gross Margin: YES

In the cost reconciliation report under the weighted-average method, the "Costs to be accounted for" section contains which of the following items?

Cost of beginning work in process inventory

In the cost reconciliation report under the weighted-average method, the "Total cost accounted for" equals:

Cost of ending work in process inventory + Cost of units transferred out

How would the following costs be classified (product or period) under variable costing at a retail clothing store? Cost of purchasing clothing

Cost of purchasing clothing: Product Sales commissions: period

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing?

Direct material cost

Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type operations such as those that manufacture computers.

False

The cost reconciliation report has two sections: "Costs to be accounted for" followed by "Costs accounted for". The "Costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the cost of units transferred out.

False

The following journal entry would be made in a processing costing system when units that have been completed in the final processing department are transferred to the finished goods warehouse: Finished Goods: DEBIT Materials: Credit

False

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?

It is calculated based on the sales budget and the desired ending inventory.

Which of the following statements is NOT correct concerning the Cash Budget?

It is not necessary to prepare any other budgets before preparing the Cash Budget.

Poorly trained workers could have an unfavorable effect on which of the following variances?

Labor Rate Variance: NO Materials Quantity Variance: YES

All of the following statements are correct when referring to process costing except:

Process costing would be appropriate for a jeweler who makes custom jewelry to order.

The general model for calculating a quantity variance is:

Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).

Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?

The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead.

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?

The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.

In a flexible budget, what will happen to fixed costs as the activity level increases?

The fixed cost per unit will decrease.

When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:

Traceable fixed expenses ÷ Segment CM ratio

Actual overhead costs are not assigned to jobs in a job costing system.

True

Which of the following is true of a company that uses absorption costing?

Unit product costs can change as a result of changes in the number of units manufactured.

Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:

Units transferred to the next department × Cost per equivalent unit

In its first year of operations, Bronfren Corporation produced 800,000 sets and sold 780,000 sets of artificial tan lines. What would have happened to net operating income in this first year under the following costing methods if Bronfren had produced 20,000 fewer sets? (Assume that Bronfren has both variable and fixed production costs.)

Variable costing: No effect Absorption costing: Decrease

In a job-order costing system, manufacturing overhead applied is recorded as a debit to:

Work in Process inventory.

Which of the following journal entries would be used to record direct labor costs in a company having two processing departments (Department A and Department B)?

Work in Process-Department A: DEBIT Work in Process-Department B :DEBIT Salaries and Wages Payable:CREDIT

An unfavorable materials quantity variance indicates that:

actual usage of material exceeds the standard material allowed for output.

Generally speaking, net operating income under variable and absorption costing will:

be equal only when production and sales are equal.

The relative proportion of variable, fixed, and mixed costs in a company is known as the company's:

cost structure.

When computing the cost per equivalent unit, the weighted-average method of process costing considers:

costs incurred during the current period plus cost of beginning work in process inventory.

When using a flexible budget, a decrease in activity within the relevant range:

decreases total costs.

A job-order costing system would be best suited for production of a large quantity of a homogeneous product.

false

The cost reconciliation report has two sections: "Costs to be accounted for" followed by "Costs accounted for". The "Costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the costs added during the period.

false

The cost reconciliation report has two sections: "Costs to be accounted for" followed by "Costs accounted for". The "Costs accounted for" portion of the cost reconciliation report includes the cost of ending work in process inventory and the cost of beginning work in process inventory.

false

The equivalent units in beginning work in process inventory plus the equivalent units in ending work in process inventory equals the units transferred out plus the equivalent units for the work done during the period.

false

Under the weighted-average method, the cost of ending work in process inventory is determined by dividing the equivalent units of production for ending inventory by the cost per equivalent unit for each cost category and then summing the result.

false

When all materials are added at the beginning of the production process, under a weighted-average process costing system the equivalent units for materials is equal to the units completed and transferred out.

false

When computing the cost per equivalent unit, it is necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method.

false

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be:

favorable.

Assume there was no beginning work in process inventory and the ending work in process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be:

less than the units started during the period.

Overapplied manufacturing overhead would result if:

manufacturing overhead costs incurred were less than manufacturing overhead costs charged to production.

If sales volume increases and all other factors remain constant, then the:

margin of safety will increase.

Allocating common fixed expenses to business segments:

may cause managers to erroneously discontinue business segments.

In process costing, a separate work in process account is kept for each:

processing department

When preparing a direct materials budget, the required purchases of raw materials in units equals:

raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.

When unit sales are constant, but the number of units produced fluctuates and everything else remains the same, net operating income under variable costing will:

remain constant.

The production department should generally be responsible for materials price variances that resulted from:

rush orders arising from poor scheduling.

Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores?

the cost of corporate advertising aired during the Super Bowl

Hayworth Corporation has just segmented last year's income statement into its ten product lines. The chief executive officer (CEO) is curious as to what effect dropping one of the product lines at the beginning of last year would have had on overall company profit. What is the best number for the CEO to look at to determine the effect of this elimination on the net operating income of the company as a whole?

the product line's segment margin

A favorable labor rate variance indicates that

the standard rate exceeds the actual rate.

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:

the standard variable overhead rate exceeded the actual rate.

A reason why absorption costing income statements are sometimes difficult to interpret is that:

they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories.

Which of the following is correct? The break-even point occurs on the Cost-Volume-Profit graph where:

total contribution margin equals total fixed expenses.

A flour manufacturer is more likely to use process costing than job-order costing whereas a manufacturer of customized leather jackets is more likely to use job-order costing than process costing.

true

In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs.

true

Job-order costing would be more likely to be used than process costing in situations where many different products or services are produced each period to customer specifications.

true

Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of:

units in beginning work in process and the units started.

Net operating income computed under variable costing would exceed net operating income computed using absorption costing if:

units sold exceed units produced.

Assuming that direct labor is a variable cost, the primary difference between the absorption and variable costing is that:

variable costing treats only direct materials, direct labor, and the variable portion of manufacturing overhead as product costs while absorption costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs.

The costing method that treats all fixed costs as period costs is:

variable costing.

Which of the following would usually be found on a job cost sheet under a normal cost system?

Actual direct material cost: YES Actual manufacturing overhead cost: NO

A company will improve job cost accuracy by using multiple overhead rates even if it cannot identify more than one overhead cost driver.

False

A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes direct costs.

False

A job cost sheet is used to record how much a customer pays for the job once the job is completed.

False

An employee time ticket is used to record points that are earned by employees based on the hours they worked that can be used to pay for coffee, food in the cafeteria, and even in some cases for vacation travel.

False

If the allocation base in the predetermined overhead rate does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs because of the averaging process.

False

Which of the following is unlikely to be classified as a fixed cost with respect to the number of units produced and sold?

Production supplies.

The fact that one department may be labor intensive while another department is machine intensive explains in part why multiple predetermined overhead rates are often used in larger companies.

True

Property taxes on a company's factory building would be classified as a(n):

product cost.

One full-time clerical worker is needed for every 750 accounts receivable. The total wages of the accounts receivable clerks is an example of a:

step-variable cost.

A cost incurred in the past that is not relevant to any current decision is classified as a(n):

sunk cost.

The term that refers to costs incurred in the past that are not relevant to a decision is:

sunk cost.

All of the following can be differential costs except:

sunk costs.

An example of a committed fixed cost would be:

taxes on real estate.

When manufacturing overhead is applied to production, it is added to:

the Work in Process account.

In the standard cost formula Y = a + bX, what does the "X" represent?

the level of activity

Which of the following statements is true? 1. Overhead can be applied slowly as a job is worked on. 2. Overhead can be applied when the job is completed. 3. Overhead should be applied to any job not completed at year-end in order to properly value the work in process inventory.

ALL ARE TRUE

Which of the following is an example of a period cost in a company that makes clothing?

Advertising cost for a new line of clothing.

The cost of electricity for running production equipment is classified as:

Conversion Cost: YES. Period Cost: NO

Direct labor cost is classified as:

Conversion Cost: Yes Prime cost: Yes

The costs of direct materials are classified as:

Conversion cost: NO Manufacturing cost: YES Prime cost: YES

In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the cost of goods manufactured is computed according to which of the following equations?

Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory − Ending work in process inventory

Product costs that have become expenses can be found in:

Costs of goods sold

The journal entry to record applying overhead during the production process is:

Debit:Work in Process Credit:Manufacturing Overhead

Which of the following is NOT a period cost?

Depreciation of factory maintenance equipment.

Wages paid to the supervisor of the warehouse where raw materials and parts are temporarily stored before being used in production is considered an example of:

Direct Labor: NO Period Cost: NO

Which of the following costs is classified as both a prime cost and a conversion cost?

Direct labor.

Which of the following statements is true when referring to fixed costs?

Discretionary fixed costs can often be reduced to zero for short periods of time without seriously impairing the long-run goals of the company.

In a process costing system, overhead is allocated to departments after being applied to units of product.

FALSE

When materials are purchased in a process costing system, a work in process account is debited with the cost of the materials.

FALSE

Generally speaking, when going through the process of computing a predetermined overhead rate, the estimated total manufacturing overhead cost is determined before estimating the amount of the allocation base.

False

If the overhead rate is computed annually based on the actual costs and activity for the year, the manufacturing overhead assigned to any particular job can be computed as soon as the job is completed.

False

In a job-order costing system, costs are traced to individual units of product. The sum total of such traced costs is called the unit product cost.

False

In a process costing system, costs are traced directly to jobs.

False

In absorption costing, nonmanufacturing costs are assigned to units of product.

False

Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job.

False

The amount of overhead applied to a particular job equals the actual amount of overhead caused by the job.

False

The formula for computing the predetermined overhead rate is: Predetermined overhead rate = Estimated total amount of the allocation base ÷ Estimated total manufacturing overhead cost

False

Which of the following production costs, if expressed on a per unit basis, would be most likely to change significantly as the production level varies?

Fixed manufacturing overhead.

When closing overapplied manufacturing overhead to Cost of Goods Sold, which of the following would be true?

Gross margin will increase.

As the level of activity increases, how will a mixed cost in total and per unit behave?

In Total: INCREASE Per Unit: DECREASE

Which of the following statements is not correct concerning multiple overhead rate systems?

In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

A factory supervisor's wages are classified as:

Indirect Labor: YES Fixed manufacturing overhead: YES

Refer to the T-account below: Prepaid Insurance Debit Credit Balance30,000 (8)9,000 Entry (8) could represent which of the following?

Insurance cost incurred on the factory which is added to the Manufacturing Overhead account.

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.

In a job-order costing system, indirect labor cost is usually recorded as a debit to:

Manufacturing Overhead.

Which of the following statements is correct in describing manufacturing overhead?

Manufacturing overhead consists of all manufacturing cost except for prime cost.

Assigning manufacturing overhead to a specific job is complicated by all of the below except:

Manufacturing overhead is incurred only to support some jobs.

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Manufacturing overhead.

In a job-order costing system, which of the following events would trigger recording data on a job cost sheet?

NONE of the choices: 1. the purchase of direct materials 2.the payment of fire insurance on the factory building 3. the payment for product advertising

Refer to the T-account below: Manufacturing Overhead Debit Credit (2)9,000 (12)167,000 (3)15,000 (4)80,000 (5)30,000 (6)25,000 159,000 167,000 Balance 8,000 The ending balance of $8,000 represents which of the following?

Overapplied overhead.

Refer to the T-account below: Manufacturing Overhead Debit Credit (2)4,000 (9)150,000 (3)15,000 (4)80,000 (5)30,000 (6)25,000 154,000 150,000 Balance4,000 Entry (4) could represent which of the following except?

Overhead cost applied to Work in Process.

The fixed portion of the cost of electricity for a manufacturing facility is classified as a:

Period cost: NO Product Cost: YES

In a job-order costing system that is based on machine-hours, which of the following formulas is correct?

Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours

Which of the following is the correct formula to compute the predetermined overhead rate?

Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base

The cost of direct materials is classified as a:

Prime Cost: YES Conversion Cost: NO

In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the "Total raw materials available" is computed by adding together the "Beginning raw materials inventory" and:

Purchases of raw materials

Refer to the T-account below: Raw Materials Debit Credit Balance15,000 (9)75,000 (5)85,000 Balance25,000 Entry (5) could represent which of the following?

Purchases of raw materials.

Contribution margin is:

Sales less variable production, variable selling, and variable administrative expenses.

The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory.

TRUE

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

The amount paid to the individual who stains a chair.

Refer to the T-account below: Work In Process Debit Credit Balance30,000 (12)270,000 (4)90,000 (6)70,000 (9)110,000 Balance30,000 Entry (12) could represent which of the following?

The cost of goods manufactured transferred to Finished Goods.

Which of the following is correct concerning reactions to INCREASES in activity?

Total Variable Cost: INCREASE Variable Cost Per Unit: CONSTANT

Which of the following approaches to preparing an income statement includes a calculation of the gross margin?

Traditional Approach: YES Contribution Approach: NO

A bill of materials is a document that lists the type and quantity of each type of direct material needed to complete a unit of product.

True

Job-order costing systems often use allocation bases that do not reflect how jobs actually use overhead resources.

True

Most countries require some form of absorption costing for external reports.

True

The appeal of using multiple departmental overhead rates is that they presumably provide a more accurate accounting of the costs caused by jobs.

True

The costs attached to products that have not been sold are included in ending inventory on the balance sheet.

True

Which costs will change with a decrease in activity within the relevant range?

Unit fixed costs and total variable cost.

A merchandising company typically will have a high proportion of which type of cost in its cost structure?

Variable

Which of the following statements concerning direct and indirect costs is NOT true?

Whether a particular cost is classified as direct or indirect does not depend on the cost object.

Depreciation on a personal computer used in the marketing department of a manufacturing company would be classified as:

a period cost that is fixed with respect to the company's output.

The salary paid to the president of a company would be classified on the income statement as a(n):

administrative expense.

Manufacturing overhead includes:

all manufacturing costs except direct labor and direct materials.

Differential costs can:

be either fixed or variable.

Direct costs:

can be easily traced to a particular cost object.

Under a job-order costing system, the dollar amount transferred from Work in Process to Finished Goods is the sum of the costs charged to all jobs:

completed during the period.

Fixed costs expressed on a per unit basis:

decrease with increases in activity.

All of the following are examples of product costs except:

depreciation on the company's retail outlets.

Prime cost consists of:

direct materials and direct labor.

If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used.

false

The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n):

indirect material cost.

Materials used in a factory that are not an integral part of the final product, such as cleaning supplies, should be classified as:

manufacturing overhead.

If manufacturing overhead is underapplied, then:

the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred.

In the standard cost formula Y = a + bX, what does the "Y" represent?

total cost

An employee time ticket is an hour-by-hour summary of the employee's activities throughout the day.

true

For an automobile manufacturer, the cost of a driver's side air bag purchased from a supplier and installed in every automobile would best be described as a:

variable cost.

Within the relevant range, a difference between variable costs and fixed costs is:

variable costs per unit are constant and fixed costs per unit fluctuate.