Question 1

Spoiled units should not typically be reworked because it is not possible to hide the original defect.

Accepted Answer

A) True 
 B)False

Question 2

Goods that are in production but not yet complete are classified as work in process.

Accepted Answer

A) True 
 B)False

Question 3

The weighted average costing method calculates an average unit cost which is applied to finished goods and work in process inventory.

Accepted Answer

A) True 
 B)False

Question 4

A type of opportunity cost associated with spoilage and rework is loss of reputation.

Accepted Answer

A) True 
 B)False

Question 5

A rule of thumb for deciding if overhead over or under applied is a material amount is:

Accepted Answer

A)  if it is more than 5% of total actual overhead costs 
B)  if it is more than 10% of total actual overhead costs 
C)  if it is more than 5% of cost of sales 
D)  if it is more than 10% of cost of sales 
A)  if it is more than 5% of total actual overhead costs 
B)  if it is more than 10% of total actual overhead costs 
C)  if it is more than 5% of cost of sales 
D)  if it is more than 10% of cost of sales

Question 6

Over applied overhead is always material and should be treated accordingly.

Accepted Answer

A) True 
 B)False

Question 7

Spoilage refers to product that is unacceptable and is discarded, reworked or sold at a reduced price.

Accepted Answer

A) True 
 B)False

Question 8

When the nature or level of overhead differs across activities or departments the organisation should use a single overhead cost pool.

Accepted Answer

A) True 
 B)False

Question 9

If manufacturing costs change significantly from period to period weighted average costing will produce the more accurate product cost.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Normal spoilage refers to:

Accepted Answer

A)  defective units that arise as part of regular operations 
B)  warranty costs 
C)  claims on insurance 
D)  obsolete products 
A)  defective units that arise as part of regular operations 
B)  warranty costs 
C)  claims on insurance 
D)  obsolete products

Question 12

When using weighted average process costing:

Accepted Answer

A)  The costs attached to beginning work in process are kept separate from all other costs 
B)  The beginning work in process costs are added to current period costs. 
C)  Units in ending inventory are not included when calculating equivalent units. 
D)  The weighted average cost is used for the current period and future periods. 
A)  The costs attached to beginning work in process are kept separate from all other costs 
B)  The beginning work in process costs are added to current period costs. 
C)  Units in ending inventory are not included when calculating equivalent units. 
D)  The weighted average cost is used for the current period and future periods.

Question 13

The allocation rate in job costing is the dollar amount per unit of allocation base used to allocate overhead to each cost object.

Accepted Answer

A) True 
 B)False

Question 14

Master House Ltd uses a job costing system that allocates overhead as a percentage of direct labour costs. The budget for this year was; direct materials $60,000, direct labour $30,000, overhead $60,000. The actual costs for this year were; direct materials $50,000, direct labour $35,000, overhead $55,000. How much overhead was over/under allocated?

Accepted Answer

A)  $0 
B)  $15,000 over allocated 
C)  $5,000 over allocated 
D)  cannot be determined 
A)  $0 
B)  $15,000 over allocated 
C)  $5,000 over allocated 
D)  cannot be determined

Question 15

Arohata Ltd started 12,000 units during the month of March. 1,200 units were in the beginning work in process inventory and 800 units in the ending work in process inventory. Units completed and transferred out during March will be:

Accepted Answer

A)  12,000 
B)  12,400 
C)  6,200 
D)  10,000 
A)  12,000 
B)  12,400 
C)  6,200 
D)  10,000

Question 16

Job costing uses subsidiary ledgers to track the costs of individual jobs.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a source document used in job costing:

Accepted Answer

A)  materials requisition forms 
B)  time sheet 
C)  job sheet 
D)  employment contract 
A)  materials requisition forms 
B)  time sheet 
C)  job sheet 
D)  employment contract

Question 18

The cost of abnormal spoilage:

Accepted Answer

A)  is charged to general overhead 
B)  is charged to the job 
C)  is recorded as a separate loss 
D)  is included in work in process 
A)  is charged to general overhead 
B)  is charged to the job 
C)  is recorded as a separate loss 
D)  is included in work in process

Question 19

Forthefunofit Ltd uses a process costing system. Direct materials are added at the beginning of the process. During January, Department A had a beginning inventory of 2,000 units, 50% complete for conversion costs. During the month 14,000 units were started and there were 1,000 units in ending inventory, 40% complete for conversion costs. Using FIFO process costing, the equivalent units for direct materials for the month were:

Accepted Answer

A)  13,600 
B)  16,600 
C)  16,000 
D)  14,000 
A)  13,600 
B)  16,600 
C)  16,000 
D)  14,000

Question 20

Tres Dieci Ltd employs a process costing system in which direct materials are added at the beginning of the process. Direct material costs from the prior period for beginning work in process are $6,000. The current period's direct material costs total $60,000. The company began the period with 500 units, 60% complete, started 10,500 units, and finished the period with 1,000 units, 50% complete. Using the weighted average method, the direct material cost per equivalent unit for the period is:

Accepted Answer

A)  $6.00 
B)  $5.71 
C)  $6.60 
D)  $5.46 
A)  $6.00 
B)  $5.71 
C)  $6.60 
D)  $5.46

Spoiled units should not typically be reworked because it is not possible to hide the original defect.

Goods that are in production but not yet complete are classified as work in process.

The weighted average costing method calculates an average unit cost which is applied to finished goods and work in process inventory.

A type of opportunity cost associated with spoilage and rework is loss of reputation.

A rule of thumb for deciding if overhead over or under applied is a material amount is:

Over applied overhead is always material and should be treated accordingly.

Spoilage refers to product that is unacceptable and is discarded, reworked or sold at a reduced price.

When the nature or level of overhead differs across activities or departments the organisation should use a single overhead cost pool.

If manufacturing costs change significantly from period to period weighted average costing will produce the more accurate product cost.

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

Normal spoilage refers to:

When using weighted average process costing:

The allocation rate in job costing is the dollar amount per unit of allocation base used to allocate overhead to each cost object.

Arohata Ltd started 12,000 units during the month of March. 1,200 units were in the beginning work in process inventory and 800 units in the ending work in process inventory. Units completed and transferred out during March will be:

Job costing uses subsidiary ledgers to track the costs of individual jobs.

Which of the following is not a source document used in job costing:

The cost of abnormal spoilage:

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

Exam 7: Job and Process Costing Systems

Spoiled units should not typically be reworked because it is not possible to hide the original defect.

Goods that are in production but not yet complete are classified as work in process.

The weighted average costing method calculates an average unit cost which is applied to finished goods and work in process inventory.

A type of opportunity cost associated with spoilage and rework is loss of reputation.

A rule of thumb for deciding if overhead over or under applied is a material amount is:

Over applied overhead is always material and should be treated accordingly.

Spoilage refers to product that is unacceptable and is discarded, reworked or sold at a reduced price.

When the nature or level of overhead differs across activities or departments the organisation should use a single overhead cost pool.

If manufacturing costs change significantly from period to period weighted average costing will produce the more accurate product cost.

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

Normal spoilage refers to:

When using weighted average process costing:

The allocation rate in job costing is the dollar amount per unit of allocation base used to allocate overhead to each cost object.

Arohata Ltd started 12,000 units during the month of March. 1,200 units were in the beginning work in process inventory and 800 units in the ending work in process inventory. Units completed and transferred out during March will be:

Job costing uses subsidiary ledgers to track the costs of individual jobs.

Which of the following is not a source document used in job costing:

The cost of abnormal spoilage:

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