Managerial Accounting Exam 1 (Ch. 14-17)

Which of the following would be accounted for using a job order cost system?

The construction of a new campus building.

If a traditional costing system allocates too much overhead to one product, the firm is likely to experience which of the following problems?

The firm may lose market share to competitiors

Which of the following factors would suggest a switch to activity- based costing?

Overhead costs constitute a significant portion of total costs.

What overhead allocation basis is used by many companies with automated manufacturing processes to reduce product cost distortions?

machine hours

A primary driver of overhead costs in continuous manufacturing operations is

machine hours.

The product cost that is most difficult to associate with a product is

manufacturing overhead

In making the journal entry to assign raw materials costs, a company

often debits two or more work in process accounts.

Donatello Co. has identified an activity cost pool to which it has allocated estimated overhead of $9,600,000. It has determined the expected use of cost drivers for that activity to be 800,000 inspections. Widgets require 200,000 inspections, Gadgets 150,000 inspections, and Targets 450,000 inspections. How much is the overhead assigned to each product?

Widgets $2,400,000, Gadgets $1,800,000, Targets $5,400,000

The total costs accounted for in a production cost report are equal to the

cost of units completed and transferred out plus the cost of ending work in process.

Manufacturing overhead is under-applied if

actual overhead is greater than applied.

On the cost of goods manufactured schedule, depreciation on factory equipment

appears in the manufacturing overhead section.

A production cost report

shows costs charged to a department and costs accounted for.

It is necessary to calculate equivalent units of production in a department because

some units worked on in the department are not fully complete.

To assign overhead costs to an individual product, the activity-based overhead rate is multiplied by

the number of cost drivers used per product.

If a company misestimates product cost it may result in

-incorrect resource allocation among different products -incorrect product pricing -incorrect product profitability

20,900 units in a process that are 70% complete are referred to as:

14,630 equivalent units of ending work in process.

How many steps are involved in activity- based costing?

4

Martin Company had the following department information for the current year: work in process, May 1 (physical units), 8,000; completed and transferred out (physical units), 35,000; and work in process, May 31 (physical units), 13,000. Materials are added at the beginning of the process. What is the total number of equivalent units for materials in May?

48,000

In Coronado Company, there are zero units in beginning work in process, 6600 units started into production, and 520 units in ending work in process 20% completed. The physical units to be accounted for are

6600

Which of the following is a limitation of activity- based costing?

Activity- based costing can be expensive to use.

Cost of goods manufactured is calculated as follows:

Beginning WIP + direct materials used + direct labor + manufacturing overhead - ending WIP.

During June, Crane, Inc. produced a job consisting of 118 widgets with a job cost of $2596. Which of the following is one effect that occurs when the company sells half of the products for $1696?

Cost of Goods Sold increases.

When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is

Dr. Finished Goods Inventory Cr. Work in Process Inventory

The entry to record the acquisition of raw materials on account is

Dr. Raw Materials Inventory Cr. Accounts Payable

Which one of the following is considered a basic similarity between job order cost and process cost systems?

The flow of costs through the accounts.

Which account is credited when a job is completed?

Work in Process Inventory.

Manufacturing overhead is applied to each job

by means of a predetermined overhead rate.

Process cost systems assign costs to:

first assigned to production departments then assign the costs to units of output.

Which of the following is a relevant facility- level cost driver for air conditioning costs in a chiropractor's office?

floor space

The first step in activity-based costing is to

identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.

Cotter pins and lubricants used irregularly in a production process are classified as

indirect materials