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| 1 | |
Product costing system design or selection: |
| | A) | is not an easy task. |
| | B) | requires an understanding of the nature of the business. |
| | C) | should provide useful cost information for strategic and operational decision needs. |
| | D) | should be cost effect in design and selection. |
| | E) | All the above answers are correct. |
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| 2 | |
__________ is a product costing system that accumulates costs and assigns them to specific jobs, customers, projects or contracts. |
| | A) | Process costing |
| | B) | Operational costing |
| | C) | Job costing |
| | D) | None of the above |
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| 3 | |
The motive for normalizing factory overhead cost is to avoid the fluctuations in cost per unit per period resulting from changes in the volume of units: |
| | A) | sold in the period. |
| | B) | produced in the period. |
| | C) | produced and sold in the period. |
| | D) | in beginning inventory for the period. |
| | E) | in ending inventory for the period. |
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| 4 | |
Digger Company uses Materials Inventory account to record both direct and indirect materials. During the month of June, the company has the following cost information:
| Net materials purchase cost | $400,000 | | Indirect materials issued | 40,000 | | Total materials issued | 480,000 | | Beginning materials inventory | 200,000 |
The ending materials inventory cost is: |
| | A) | $440,000 |
| | B) | $120,000 |
| | C) | $360,000 |
| | D) | $80,000 |
| | E) | $200,000 |
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| 5 | |
The two main advantages of using predetermined factory overhead rates are to provide more accurate unit cost information and to: |
| | A) | simplify the accounting process. |
| | B) | provide cost information on a timely basis. |
| | C) | insure transmission of correct data. |
| | D) | extend use of the cost data. |
| | E) | adjust for variances in data sources. |
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| 6 | |
Direct materials and direct labor costs total $240,000, conversion costs total $200,000, and factory overhead costs total $400 per machine hour. If 300 machine hours were used for Job #500, what is the total manufacturing cost for Job #500? |
| | A) | $120,000 |
| | B) | $240,000 |
| | C) | $320,000 |
| | D) | $360,000 |
| | E) | $560,000 |
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| 7 | |
If estimated annual factory overhead is $400,000, estimated annual direct labor hours are 200,000, actual July factory overhead is $41,000, and actual July direct labor hours are 19,000, then overhead is: |
| | A) | $3,000 overapplied. |
| | B) | $900 overapplied. |
| | C) | $1,600 underapplied. |
| | D) | $900 underapplied. |
| | E) | $3,000 underapplied. |
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| 8 | |
No matter which method is used, underapplied or overapplied overhead usually is adjusted only: |
| | A) | at the end of a year. |
| | B) | monthly during the year. |
| | C) | if the difference exceeds $1,000 or one percent of total overhead. |
| | D) | when the company's profit projections require an adjustment. |
| | E) | when directed to do so by the Internal Revenue Service. |
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| 9 | |
Which of the following statements is correct assuming that factory overhead has been underapplied by an insignificant amount of $2,000 for the year? |
| | A) | Debit Cost of Goods Sold for $2,000. |
| | B) | Debit Cost of Goods Sold, Finished Goods Inventory, and WIP Inventory for a prorated portion of the $2,000. |
| | C) | Credit Cost of Goods Sold for $2,000. |
| | D) | Credit Cost of Goods Sold, Finished Goods Inventory, and WIP Inventory for a prorated portion of the $2,000. |
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| 10 | |
Which of the following statements is correct assuming that factory overhead has been overapplied by a significant amount of $10,000 for the year? |
| | A) | Debit Cost of Goods Sold for $10,000. |
| | B) | Debit Cost of Goods Sold, Finished Goods Inventory, and WIP Inventory for a prorated portion of the $10,000. |
| | C) | Credit Cost of Goods Sold for $10,000. |
| | D) | Credit Cost of Goods Sold, Finished Goods Inventory, and WIP Inventory for a prorated portion of the $10,000. |
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| 11 | |
Legal and Wright, a St. Louis land based CPA firm, has the following budget of estimated costs for 2007:
| Compensation of professional staff | $300,000 | | Other office costs | 300,000 |
Direct labors costs (chargeable hours) is 80% of total compensation paid to professional staff.
What is the predetermined overhead rate for Legal and Wright based on direct labor costs? |
| | A) | 200% of direct labor costs |
| | B) | 120% of direct labor costs |
| | C) | 80% of direct labor costs |
| | D) | 150% of direct labor costs |
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| 12 | |
Operating costing is a hybrid cost system that uses __________ to assign direct materials costs and __________ to assign conversion costs to products or services. |
| | A) | job order costing; process costing |
| | B) | a departmental approach; job order costing |
| | C) | a departmental approach; process costing |
| | D) | process costing; job order costing |
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