Question 1

Ideally, inventory costs for a merchant should include:

Accepted Answer

A)  Transportation costs 
B)  Insurance during transportation 
C)  Storage costs 
D)  All of these are correct 
A)  Transportation costs 
B)  Insurance during transportation 
C)  Storage costs 
D)  All of these are correct

Question 2

Which of the following is NOT a period cost?

Accepted Answer

A)  Sales salaries 
B)  Delivery cost of finished goods 
C)  Plant manager's salary 
D)  Administrative utilities 
A)  Sales salaries 
B)  Delivery cost of finished goods 
C)  Plant manager's salary 
D)  Administrative utilities

Question 3

Any over- or underapplied overhead that exists at year-end would generally be closed to:

Accepted Answer

A)  Cost of Services 
B)  Work-in-Process Services 
C)  Overhead 
D)  All of these are correct 
A)  Cost of Services 
B)  Work-in-Process Services 
C)  Overhead 
D)  All of these are correct

Question 4

Post the following cost data to the appropriate T-accounts to trace the flow of costs from the time they are incurred until the product is completed and sold. (Assume that purchases and expenses are credited to Cash.)

Accepted Answer

The answer of Post the following cost data to the...

Question 5

Before any journal entries are made to deal with underapplied overhead, the total cost of jobs is:

Accepted Answer

A)  Not affected 
B)  Overstated 
C)  Understated 
D)  None of these are correct 
A)  Not affected 
B)  Overstated 
C)  Understated 
D)  None of these are correct

Question 6

Which of the following inventory balances is NOT needed when preparing a cost of goods manufactured schedule?

Accepted Answer

A)  Work-in-process beginning inventory balance 
B)  Work-in-process ending inventory balance 
C)  Finished goods beginning inventory balance 
D)  Raw materials ending inventory balance 
A)  Work-in-process beginning inventory balance 
B)  Work-in-process ending inventory balance 
C)  Finished goods beginning inventory balance 
D)  Raw materials ending inventory balance

Question 7

The schedule of cost of goods manufactured for the Cutler Company shows the following balances for the year ended July 31, 2012:   The beginning work-in-process inventory was:

Accepted Answer

A)  $30,000 
B)  $220,000 
C)  $260,000 
D)  $635,000 
A)  $30,000 
B)  $220,000 
C)  $260,000 
D)  $635,000

Question 8

Prepare the journal entries for the following transactions in a transportation company:

Accepted Answer

The answer of Prepare the journal entries for the following...

Question 9

Exhibit 16-5 Adam Company uses the FIFO method in its process costing system. The following information for the Assembly Department was obtained from the accounting records for September (all materials are added at the beginning of the process):
  
-Refer to Exhibit 16-5. What was the cost of ending work-in-process inventory?

Accepted Answer

A)  $26,000 
B)  $24,800 
C)  $18,400 
D)  $17,000 
A)  $26,000 
B)  $24,800 
C)  $18,400 
D)  $17,000

Question 10

UniCom Manufacturing Company uses FIFO process costing. At the beginning of August, there were 500 units in beginning work-in-process that were 40% complete. In Process 1 all direct materials are added at the beginning of the process. The costs for the 500 units include $1,500 for direct materials and $2,000 for direct labor and conversion costs. During August, an additional 2,000 units entered Process 1. Costs incurred during August include $6,200 for direct materials and $19,200 for conversion costs. There were 200 units only 70% complete by the end of the month.
Prepare a production cost report for the month of August.

Accepted Answer

Production Cost Report for UniCom Manufa

Question 11

Raw Materials Inventory is only found in:

Accepted Answer

A)  Merchandising organizations 
B)  Service organizations 
C)  Wholesale organizations 
D)  Manufacturing organizations 
A)  Merchandising organizations 
B)  Service organizations 
C)  Wholesale organizations 
D)  Manufacturing organizations

Question 12

In a process costing system, units to be accounted for in a process are equal to the:

Accepted Answer

A)  Units in the beginning inventory plus the units started or transferred into the process 
B)  Number of units transferred out of the process 
C)  Ending inventory plus the units started or transferred into the process 
D)  Number of units started or transferred into the process 
A)  Units in the beginning inventory plus the units started or transferred into the process 
B)  Number of units transferred out of the process 
C)  Ending inventory plus the units started or transferred into the process 
D)  Number of units started or transferred into the process

Question 13

Which of the following typically would NOT have Work in Process inventory:

Accepted Answer

A)  Manufacturing company 
B)  Merchandising company 
C)  Service company 
D)  All of these would have Work in Process inventory 
A)  Manufacturing company 
B)  Merchandising company 
C)  Service company 
D)  All of these would have Work in Process inventory

Question 14

Smorgasbord Inc. estimated the following for 2012:   The overhead rate for the cutting department is determined on the basis of machine hours. Using the data above, what is the predetermined overhead rate for the cutting department?

Accepted Answer

A)  $2.40 
B)  $4.00 
C)  $4.50 
D)  $6.00 
A)  $2.40 
B)  $4.00 
C)  $4.50 
D)  $6.00

Question 15

A company that produces bottles for a soft drink bottling company would probably use which of the following methods of product costing?

Accepted Answer

A)  Job order costing 
B)  Process costing 
C)  Marginal costing 
D)  Some combination of job order costing and process costing 
A)  Job order costing 
B)  Process costing 
C)  Marginal costing 
D)  Some combination of job order costing and process costing

Question 16

Waterbed Factory has the following information for 2012:   Based on this information, the cost of goods manufactured is:

Accepted Answer

A)  $91,300 
B)  $92,200 
C)  $93,100 
D)  $95,200 
A)  $91,300 
B)  $92,200 
C)  $93,100 
D)  $95,200

Question 17

Which of the following is NOT true about total manufacturing costs?

Accepted Answer

A)  Includes new manufacturing costs incurred during the period 
B)  Represents the level of production during the period 
C)  Includes raw materials, direct labor, and manufacturing overhead costs 
D)  Reflects changes in finished goods inventory 
A)  Includes new manufacturing costs incurred during the period 
B)  Represents the level of production during the period 
C)  Includes raw materials, direct labor, and manufacturing overhead costs 
D)  Reflects changes in finished goods inventory

Question 18

Exhibit 16-2 Dietrich Company has the following data for August:
  
-Refer to Exhibit 16-2. Given the information above, which manufacturing overhead rate results in the least amount of over- or underapplied overhead?

Accepted Answer

A)  80% of direct labor costs 
B)  $4.50 per direct labor hour 
C)  $7 per machine hour 
D)  100% of direct labor costs 
A)  80% of direct labor costs 
B)  $4.50 per direct labor hour 
C)  $7 per machine hour 
D)  100% of direct labor costs

Question 19

When a product is sold in a job order costing system, the costs associated with that product appear:

Accepted Answer

A)  In finished goods inventory 
B)  On the income statement 
C)  On the balance sheet 
D)  None of these are correct 
A)  In finished goods inventory 
B)  On the income statement 
C)  On the balance sheet 
D)  None of these are correct

Question 20

Which of the following does NOT need to exist for process costing to be appropriate?

Accepted Answer

A)  Processes for all products are the same 
B)  Overhead costs are insignificant 
C)  Units produced are alike 
D)  Large volumes are being produced 
A)  Processes for all products are the same 
B)  Overhead costs are insignificant 
C)  Units produced are alike 
D)  Large volumes are being produced

Exam 16: Cost Flows and Business Organizations

Ideally, inventory costs for a merchant should include:

Which of the following is NOT a period cost?

Any over- or underapplied overhead that exists at year-end would generally be closed to:

Post the following cost data to the appropriate T-accounts to trace the flow of costs from the time they are incurred until the product is completed and sold. (Assume that purchases and expenses are credited to Cash.)

Before any journal entries are made to deal with underapplied overhead, the total cost of jobs is:

Which of the following inventory balances is NOT needed when preparing a cost of goods manufactured schedule?

The schedule of cost of goods manufactured for the Cutler Company shows the following balances for the year ended July 31, 2012: The beginning work-in-process inventory was:

Prepare the journal entries for the following transactions in a transportation company:

Raw Materials Inventory is only found in:

In a process costing system, units to be accounted for in a process are equal to the:

Which of the following typically would NOT have Work in Process inventory:

Smorgasbord Inc. estimated the following for 2012: The overhead rate for the cutting department is determined on the basis of machine hours. Using the data above, what is the predetermined overhead rate for the cutting department?

A company that produces bottles for a soft drink bottling company would probably use which of the following methods of product costing?

Waterbed Factory has the following information for 2012: Based on this information, the cost of goods manufactured is:

Which of the following is NOT true about total manufacturing costs?

Exhibit 16-2 Dietrich Company has the following data for August: -Refer to Exhibit 16-2. Given the information above, which manufacturing overhead rate results in the least amount of over- or underapplied overhead?

When a product is sold in a job order costing system, the costs associated with that product appear:

Which of the following does NOT need to exist for process costing to be appropriate?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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