Question 1

The allocation base is a measure of activity that is used to allocate costs to a cost object.

Accepted Answer

A) True 
 B)False

Question 2

If estimated production overhead in the assembly department is $240,000 and actual overhead is $216,000 and estimated machine hours in the assembly department are 60,000 hours and actual machine hours are 62,000 hours, using normal costing what is the overhead allocation rate?

Accepted Answer

A)  $3.60 per machine hour 
B)  $4 per machine hour 
C)  $3.87 per machine hour 
D)  $3.49 per machine hour 
A)  $3.60 per machine hour 
B)  $4 per machine hour 
C)  $3.87 per machine hour 
D)  $3.49 per machine hour

Question 3

In a process costing system, the cost of normal spoilage is allocated to all units produced as part of overhead.

Accepted Answer

A) True 
 B)False

Question 4

Job costing information requires accountants to make decisions about the type and number of cost pools to use for overhead.

Accepted Answer

A) True 
 B)False

Question 5

If the balance of over or under applied for the period is immaterial, it should be:

Accepted Answer

A)  pro-rated over cost of sales, and finished goods 
B)  assigned to cost of sales 
C)  carried forward to become the opening balance in the next accounting period 
D)  pro-rated over cost of sales, work in process and finished goods 
A)  pro-rated over cost of sales, and finished goods 
B)  assigned to cost of sales 
C)  carried forward to become the opening balance in the next accounting period 
D)  pro-rated over cost of sales, work in process and finished goods

Question 6

In a job costing system the accounting entry to record the payment of factory wages for the month is:

Accepted Answer

A)  debit cost of goods sold; credit bank 
B)  debit work in process; credit overhead control account 
C)  debit factory wages; credit work in process 
D)  debit work in process; credit wages payable 
A)  debit cost of goods sold; credit bank 
B)  debit work in process; credit overhead control account 
C)  debit factory wages; credit work in process 
D)  debit work in process; credit wages payable

Question 7

If percentage of completion in ending inventory is overestimated:

Accepted Answer

A)  the cost per equivalent is understated in this period 
B)  the cost per equivalent unit is overstated in this period 
C)  the cost per equivalent unit is not affected in this period 
D)  understates the cost per equivalent unit in this period only if FIFO method is used 
A)  the cost per equivalent is understated in this period 
B)  the cost per equivalent unit is overstated in this period 
C)  the cost per equivalent unit is not affected in this period 
D)  understates the cost per equivalent unit in this period only if FIFO method is used

Question 8

Cost benefit analysis is used to determine whether to rework a spoiled item.

Accepted Answer

A) True 
 B)False

Question 9

Normal spoilage consists of defective units that arise as part of regular operations.

Accepted Answer

A) True 
 B)False

Question 10

In normal costing overhead is allocated using the estimated allocation rate multiplied by the actual quantity of allocation base.

Accepted Answer

A) True 
 B)False

Question 11

To calculate under or over applied overhead compare the amount of overhead allocated to the actual overhead cost.

Accepted Answer

A) True 
 B)False

Question 12

Scrap is the incidental materials left over from normal manufacturing processes.

Accepted Answer

A) True 
 B)False

Question 13

Bright n Breezy Ltd employs a process costing system. Direct materials are added at the beginning of the process. Relevant information about July's activities follows: $\begin{array}{|c|l|}
\hline \text { 1. July } & \begin{array}{l}
\text { Beginning Inventory 1,500units (60\% complete) } \
\text { DM Cost } \$ 5,925 \
\text { CC Cost } \$ 4,095
\end{array} \
\hline \text { During July } & \begin{array}{l}
15,000 \text { units started } \
\text { DM added } \$ 150,000 \
\text { CC added } \$ 83,520
\end{array} \
\hline \text { 31 July } & \text { Ending Inventory 3,000 units }(40 \%) \
\hline
\end{array}$

Using the FIFO method, the number of equivalent units of conversion costs was:

Accepted Answer

A)  13,800 
B)  15,300 
C)  12,000 
D)  14,700 
A)  13,800 
B)  15,300 
C)  12,000 
D)  14,700

Question 14

Bright n Breezy Ltd employs a process costing system. Direct materials are added at the beginning of the process. Relevant information about July's activities follows: $\begin{array}{|c|l|}
\hline \text { 1. July } & \begin{array}{l}
\text { Beginning Inventory 1,500units (60\% complete) } \
\text { DM Cost } \$ 5,925 \
\text { CC Cost } \$ 4,095
\end{array} \
\hline \text { During July } & \begin{array}{l}
15,000 \text { units started } \
\text { DM added } \$ 150,000 \
\text { CC added } \$ 83,520
\end{array} \
\hline \text { 31 July } & \text { Ending Inventory 3,000 units }(40 \%) \
\hline
\end{array}$

Using the weighted average method, the number of equivalent units for direct material was:

Accepted Answer

A)  13,500. 
B)  14,250 
C)  16,500 
D)  13,500 
A)  13,500. 
B)  14,250 
C)  16,500 
D)  13,500

Question 15

Bright n Breezy Ltd employs a process costing system. Direct materials are added at the beginning of the process. Relevant information about July's activities follows: $\begin{array}{|c|l|}
\hline \text { 1. July } & \begin{array}{l}
\text { Beginning Inventory 1,500units (60\% complete) } \
\text { DM Cost } \$ 5,925 \
\text { CC Cost } \$ 4,095
\end{array} \
\hline \text { During July } & \begin{array}{l}
15,000 \text { units started } \
\text { DM added } \$ 150,000 \
\text { CC added } \$ 83,520
\end{array} \
\hline \text { 31 July } & \text { Ending Inventory 3,000 units }(40 \%) \
\hline
\end{array}$

Using the weighted average method, the cost of the goods completed and transferred out was:

Accepted Answer

A)  $127,575 
B)  $155,925 
C)  $213,300 
D)  $208,035 
A)  $127,575 
B)  $155,925 
C)  $213,300 
D)  $208,035

Question 16

Because the weighted average and FIFO methods treat beginning inventory differently, if a firm has beginning inventory in a process costing system and the FIFO method is used, it will:

Accepted Answer

A)  Always have a higher cost per equivalent unit than the weighted average method for materials 
B)  Always have a lower cost per equivalent unit than the weighted average method for conversion costs 
C)  Always have a higher number of equivalent units of production for conversion costs than weighted the average method 
D)  Always have a lower number of equivalent units of production for conversion costs than the weighted average method 
A)  Always have a higher cost per equivalent unit than the weighted average method for materials 
B)  Always have a lower cost per equivalent unit than the weighted average method for conversion costs 
C)  Always have a higher number of equivalent units of production for conversion costs than weighted the average method 
D)  Always have a lower number of equivalent units of production for conversion costs than the weighted average method

Question 17

The equivalent unit calculation is not required for finished goods.

Accepted Answer

A) True 
 B)False

Question 18

The cost pools used in process costing are typically overhead cost pools.

Accepted Answer

A) True 
 B)False

Question 19

Non-manufacturing costs are treated as period costs.

Accepted Answer

A) True 
 B)False

Question 20

The cost that would not be included as an inventoriable product cost is:

Accepted Answer

A)  Factory manager's salary 
B)  Depreciation of factory equipment 
C)  Sales commissions 
D)  None, i.e. all would be included as inventoriable product costs 
A)  Factory manager's salary 
B)  Depreciation of factory equipment 
C)  Sales commissions 
D)  None, i.e. all would be included as inventoriable product costs

The allocation base is a measure of activity that is used to allocate costs to a cost object.

If estimated production overhead in the assembly department is $240,000 and actual overhead is $216,000 and estimated machine hours in the assembly department are 60,000 hours and actual machine hours are 62,000 hours, using normal costing what is the overhead allocation rate?

In a process costing system, the cost of normal spoilage is allocated to all units produced as part of overhead.

Job costing information requires accountants to make decisions about the type and number of cost pools to use for overhead.

If the balance of over or under applied for the period is immaterial, it should be:

In a job costing system the accounting entry to record the payment of factory wages for the month is:

If percentage of completion in ending inventory is overestimated:

Cost benefit analysis is used to determine whether to rework a spoiled item.

Normal spoilage consists of defective units that arise as part of regular operations.

In normal costing overhead is allocated using the estimated allocation rate multiplied by the actual quantity of allocation base.

To calculate under or over applied overhead compare the amount of overhead allocated to the actual overhead cost.

Scrap is the incidental materials left over from normal manufacturing processes.

Because the weighted average and FIFO methods treat beginning inventory differently, if a firm has beginning inventory in a process costing system and the FIFO method is used, it will:

The equivalent unit calculation is not required for finished goods.

The cost pools used in process costing are typically overhead cost pools.

Non-manufacturing costs are treated as period costs.

The cost that would not be included as an inventoriable product cost is:

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

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Exam 7: Job and Process Costing Systems

The allocation base is a measure of activity that is used to allocate costs to a cost object.

If estimated production overhead in the assembly department is $240,000 and actual overhead is $216,000 and estimated machine hours in the assembly department are 60,000 hours and actual machine hours are 62,000 hours, using normal costing what is the overhead allocation rate?

In a process costing system, the cost of normal spoilage is allocated to all units produced as part of overhead.

Job costing information requires accountants to make decisions about the type and number of cost pools to use for overhead.

If the balance of over or under applied for the period is immaterial, it should be:

In a job costing system the accounting entry to record the payment of factory wages for the month is:

If percentage of completion in ending inventory is overestimated:

Cost benefit analysis is used to determine whether to rework a spoiled item.

Normal spoilage consists of defective units that arise as part of regular operations.

In normal costing overhead is allocated using the estimated allocation rate multiplied by the actual quantity of allocation base.

To calculate under or over applied overhead compare the amount of overhead allocated to the actual overhead cost.

Scrap is the incidental materials left over from normal manufacturing processes.

Because the weighted average and FIFO methods treat beginning inventory differently, if a firm has beginning inventory in a process costing system and the FIFO method is used, it will:

The equivalent unit calculation is not required for finished goods.

The cost pools used in process costing are typically overhead cost pools.

Non-manufacturing costs are treated as period costs.

The cost that would not be included as an inventoriable product cost is:

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters