Question 1

As overhead costs are allocated to services in a service firm, the entry would include a:

Accepted Answer

A)  Debit to the overhead account 
B)  Credit to the overhead account 
C)  Debit to the cost of services account 
D)  Credit to the cost of services account 
A)  Debit to the overhead account 
B)  Credit to the overhead account 
C)  Debit to the cost of services account 
D)  Credit to the cost of services account

Question 2

If ending Work-in-Process Inventory is understated,

Accepted Answer

A)  Finished Goods Inventory will be understated 
B)  Cost of Goods Sold will be overstated 
C)  Manufacturing Overhead will be overapplied 
D)  Cost of Goods Sold will be understated 
A)  Finished Goods Inventory will be understated 
B)  Cost of Goods Sold will be overstated 
C)  Manufacturing Overhead will be overapplied 
D)  Cost of Goods Sold will be understated

Question 3

If manufacturing overhead is applied on the basis of direct labor hours and if actual hours worked are less than anticipated, which of the following is true?

Accepted Answer

A)  Manufacturing overhead is probably overapplied 
B)  Manufacturing overhead is probably underapplied 
C)  Applied manufacturing overhead equals actual manufacturing overhead 
D)  None of these are correct 
A)  Manufacturing overhead is probably overapplied 
B)  Manufacturing overhead is probably underapplied 
C)  Applied manufacturing overhead equals actual manufacturing overhead 
D)  None of these are correct

Question 4

Exhibit 16-1 Jack Corporation used a job order costing system to account for jobs in its construction division. During April, the following transactions occurred:
  
-Refer to Exhibit 16-1. Given the information above, the entry to record the depreciation on construction equipment would include a:

Accepted Answer

A)  Credit to Depreciation Expense of $1,600 
B)  Debit to Manufacturing Overhead of $1,600 
C)  Debit to Work-in-Process Inventory of $1,600 
D)  Credit to Manufacturing Overhead of $1,600 
A)  Credit to Depreciation Expense of $1,600 
B)  Debit to Manufacturing Overhead of $1,600 
C)  Debit to Work-in-Process Inventory of $1,600 
D)  Credit to Manufacturing Overhead of $1,600

Question 5

Assume the following information for November:   Assuming uniform application of materials and conversion costs, and no beginning work-in-process inventory, what is the unit cost of production for November?

Accepted Answer

A)  $13.85 
B)  $14.80 
C)  $16.25 
D)  $17.55 
A)  $13.85 
B)  $14.80 
C)  $16.25 
D)  $17.55

Question 6

Berry Corporation began making scented body lotion in March of the current year. There is only one process in the manufacture of this product, and in March the costs of production were $24,600 for materials and $35,730 for processing. During the month, 12,300 pints of materials were placed in production. At the end of March, 1,250 pints of materials were still being processed and were 70% complete. Assume that all materials were added at the beginning of the production process. Given this information, the number of equivalent units for the conversion costs is:

Accepted Answer

A)  875 
B)  11,050 
C)  11,925 
D)  12,300 
A)  875 
B)  11,050 
C)  11,925 
D)  12,300

Question 7

Exhibit 16-4 Timothy Company uses FIFO process costing. Material is added initially while conversion is added evenly throughout the process. The following information is available for the month just ended:
  
-Refer to Exhibit 16-4. How many equivalent units of conversion will be used in calculating product cost per unit?

Accepted Answer

A)  88,800 
B)  87,200 
C)  86,000 
D)  85,800 
A)  88,800 
B)  87,200 
C)  86,000 
D)  85,800

Question 8

A department adds all raw materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work-in-process inventory; 18,000 units were completed and transferred out; and there were 10,000 units in the ending work-in-process inventory that were 40% complete. During July, $308,000 materials costs and $286,000 conversion costs were charged to the department. The product cost per unit of production for materials and conversion costs for the month of July was:
Material Conversion

Accepted Answer

A)  $11.00 $10.20 
B)  $11.00 $13.00 
C)  $14.00 $10.20 
D)  $14.00 $16.00 
A)  $11.00 $10.20 
B)  $11.00 $13.00 
C)  $14.00 $10.20 
D)  $14.00 $16.00

Question 9

Which of the following statements is true?

Accepted Answer

A)  Actual overhead costs are entered as credits to Manufacturing Overhead 
B)  Manufacturing Overhead is debited when overhead is applied 
C)  When the credit balance in Manufacturing Overhead exceeds the debit balance in Manufacturing Overhead, manufacturing overhead has been underapplied 
D)  When the debit balance in Manufacturing Overhead exceeds the credit balance in Manufacturing Overhead, manufacturing overhead has been underapplied 
A)  Actual overhead costs are entered as credits to Manufacturing Overhead 
B)  Manufacturing Overhead is debited when overhead is applied 
C)  When the credit balance in Manufacturing Overhead exceeds the debit balance in Manufacturing Overhead, manufacturing overhead has been underapplied 
D)  When the debit balance in Manufacturing Overhead exceeds the credit balance in Manufacturing Overhead, manufacturing overhead has been underapplied

Question 10

Turco Consulting is providing consulting services to a client. For this consulting assignment, Turco used $500 in supplies and 175 hours of consulting time. Turco charges clients $200 per hour and pays its consultants $115 per hour. Turco assigns overhead to jobs based on a rate of $50 per labor hour. The entry to record the cost of this service when billed would include a:

Accepted Answer

A)  Debit to Cost of Services for $29,375 
B)  Credit to Cost of Services for $29,375 
C)  Debit to Cost of Services for $35,000 
D)  Debit to Work-in-Process Services for $35,000 
A)  Debit to Cost of Services for $29,375 
B)  Credit to Cost of Services for $29,375 
C)  Debit to Cost of Services for $35,000 
D)  Debit to Work-in-Process Services for $35,000

Question 11

The most accurate method of eliminating under- or overapplied manufacturing overhead is to:

Accepted Answer

A)  Close it to Cost of Goods Sold 
B)  Close it to Cost of Goods Manufactured 
C)  Allocate it to the different inventory accounts and Cost of Goods Sold 
D)  Close it to Miscellaneous Expense 
A)  Close it to Cost of Goods Sold 
B)  Close it to Cost of Goods Manufactured 
C)  Allocate it to the different inventory accounts and Cost of Goods Sold 
D)  Close it to Miscellaneous Expense

Question 12

Which of the following types of companies would be LEAST likely to use a process costing system?

Accepted Answer

A)  A tile installation company 
B)  A tire manufacturing company 
C)  A crayon manufacturing company 
D)  A fast food restaurant 
A)  A tile installation company 
B)  A tire manufacturing company 
C)  A crayon manufacturing company 
D)  A fast food restaurant

Question 13

Washington Company has two independent divisions and uses a job order costing system. Washington made the following estimates at the beginning of the year:
  
Manufacturing overhead is applied on the basis of machine hours in Division 1 and on the basis of labor hours in Division 2. During the current month, one job was completed (no jobs were in process at the beginning or end of the month). The following information is available for the completed job:
   Using the information above, compute the following items:

Accepted Answer

Manufacturing overhead is applied on the

Question 14

When relatively inexpensive materials are requisitioned by the production department,

Accepted Answer

A)  Raw Materials Inventory should be debited 
B)  Manufacturing Overhead should be credited 
C)  Work-in-Process Inventory should be debited 
D)  Manufacturing Overhead should be debited 
A)  Raw Materials Inventory should be debited 
B)  Manufacturing Overhead should be credited 
C)  Work-in-Process Inventory should be debited 
D)  Manufacturing Overhead should be debited

Question 15

Costs incurred to manufacture goods during a period can be found in:

Accepted Answer

A)  A cost of goods sold account 
B)  A cost of goods manufactured schedule 
C)  Income statement 
D)  Balance sheet 
A)  A cost of goods sold account 
B)  A cost of goods manufactured schedule 
C)  Income statement 
D)  Balance sheet

Question 16

A company that produces expensive customized machines 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 17

Manufacturing overhead is difficult to connect to products for all but which of the following reasons?

Accepted Answer

A)  Manufacturing overhead costs are not related to the flow of production 
B)  The accounting system is not set up to separate manufacturing overhead from administrative costs 
C)  Total costs are not known until the end of the period 
D)  It is not easily connected to specific products 
A)  Manufacturing overhead costs are not related to the flow of production 
B)  The accounting system is not set up to separate manufacturing overhead from administrative costs 
C)  Total costs are not known until the end of the period 
D)  It is not easily connected to specific products

Question 18

At year-end, a service company has a credit balance in the overhead account. This means that:

Accepted Answer

A)  Overhead has been overapplied to services 
B)  Overhead has been underapplied to services 
C)  Overhead has not been applied to services 
D)  Estimated overhead was more than actual overhead 
A)  Overhead has been overapplied to services 
B)  Overhead has been underapplied to services 
C)  Overhead has not been applied to services 
D)  Estimated overhead was more than actual overhead

Question 19

Conversion costs consist of:

Accepted Answer

A)  Direct materials and direct labor 
B)  Direct materials and overhead 
C)  Direct labor and overhead 
D)  Direct materials, direct labor, and overhead 
A)  Direct materials and direct labor 
B)  Direct materials and overhead 
C)  Direct labor and overhead 
D)  Direct materials, direct labor, and overhead

Question 20

The actual costs of indirect materials are:

Accepted Answer

A)  Charged to products in the same manner as direct materials 
B)  Debited to Manufacturing Overhead 
C)  Insignificant, so they can be ignored in product costing 
D)  Credited to Manufacturing Overhead 
A)  Charged to products in the same manner as direct materials 
B)  Debited to Manufacturing Overhead 
C)  Insignificant, so they can be ignored in product costing 
D)  Credited to Manufacturing Overhead

As overhead costs are allocated to services in a service firm, the entry would include a:

If ending Work-in-Process Inventory is understated,

If manufacturing overhead is applied on the basis of direct labor hours and if actual hours worked are less than anticipated, which of the following is true?

Exhibit 16-1 Jack Corporation used a job order costing system to account for jobs in its construction division. During April, the following transactions occurred: -Refer to Exhibit 16-1. Given the information above, the entry to record the depreciation on construction equipment would include a:

Assume the following information for November: Assuming uniform application of materials and conversion costs, and no beginning work-in-process inventory, what is the unit cost of production for November?

Which of the following statements is true?

The most accurate method of eliminating under- or overapplied manufacturing overhead is to:

Which of the following types of companies would be LEAST likely to use a process costing system?

When relatively inexpensive materials are requisitioned by the production department,

Costs incurred to manufacture goods during a period can be found in:

A company that produces expensive customized machines would probably use which of the following methods of product costing?

Manufacturing overhead is difficult to connect to products for all but which of the following reasons?

At year-end, a service company has a credit balance in the overhead account. This means that:

Conversion costs consist of:

The actual costs of indirect materials are:

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

Filters

Exam 16: Cost Flows and Business Organizations

As overhead costs are allocated to services in a service firm, the entry would include a:

If ending Work-in-Process Inventory is understated,

If manufacturing overhead is applied on the basis of direct labor hours and if actual hours worked are less than anticipated, which of the following is true?

Exhibit 16-1 Jack Corporation used a job order costing system to account for jobs in its construction division. During April, the following transactions occurred: -Refer to Exhibit 16-1. Given the information above, the entry to record the depreciation on construction equipment would include a:

Assume the following information for November: Assuming uniform application of materials and conversion costs, and no beginning work-in-process inventory, what is the unit cost of production for November?

Which of the following statements is true?

The most accurate method of eliminating under- or overapplied manufacturing overhead is to:

Which of the following types of companies would be LEAST likely to use a process costing system?

When relatively inexpensive materials are requisitioned by the production department,

Costs incurred to manufacture goods during a period can be found in:

A company that produces expensive customized machines would probably use which of the following methods of product costing?

Manufacturing overhead is difficult to connect to products for all but which of the following reasons?

At year-end, a service company has a credit balance in the overhead account. This means that:

Conversion costs consist of:

The actual costs of indirect materials are:

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

Filters