Question 1

Each cost pool:

Accepted Answer

A) utilizes a separate cost driver rate. 
B) is a subset of total labor costs. 
C) can be associated with several normal levels of activity. 
D) All of the above are correct. 
A) utilizes a separate cost driver rate. 
B) is a subset of total labor costs. 
C) can be associated with several normal levels of activity. 
D) All of the above are correct. A

Question 2

An indirect cost will be traced to the cost object.

Accepted Answer

A) True 
 B)False  False

Question 3

Job order costing:

Accepted Answer

A) can only be used in manufacturing. 
B) records the flow of costs for each customer. 
C) allocates an equal amount of cost to each unit made during a time period. 
D) is commonly used when each unit of output is identical. 
A) can only be used in manufacturing. 
B) records the flow of costs for each customer. 
C) allocates an equal amount of cost to each unit made during a time period. 
D) is commonly used when each unit of output is identical. B

Question 4

In a job order costing system,a cost driver rate is used to apply direct manufacturing costs to a specific product.

Accepted Answer

A) True 
 B)False

Question 5

The predetermined overhead cost driver rate is calculated using ________ overhead costs.

Accepted Answer

A) actual 
B) allocated 
C) direct 
D) estimated 
A) actual 
B) allocated 
C) direct 
D) estimated

Question 6

Lois Manufacturing is a small clothing manufacturer using machine hours as the single cost driver to allocate manufacturing overhead costs to the various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the Harford County School Uniform job.
 
Required:
a.For Lois Manufacturing,determine the annual manufacturing overhead cost driver rate.
b.Determine the amount of manufacturing overhead costs estimated for the Harford County job.
c.Determine the bid price for the Harford County's job.

Accepted Answer

a. Overhead cost driver rate =

Question 7

The costs grouped in a cost pool should be driven by the same activity.

Accepted Answer

A) True 
 B)False

Question 8

Wood Manufacturing is a small textile manufacturer using machine-hours as the single, plant-wide predetermined cost driver rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job:  
-What amount of manufacturing overhead costs will be allocated to the Winfield job?

Accepted Answer

A) $270 
B) $720 
C) $450 
D) $30,000 
A) $270 
B) $720 
C) $450 
D) $30,000

Question 9

Roland Company uses a manufacturing process that has two distinct stages: P1 and P2.Raw material is consumed in P1 at the beginning of the process.No additional material is required in the second stage of the process (in P2).The following information pertains to the production of 10,000 units of output in March 2012:
   
Required:
a.Determine the direct material cost per unit of output.
b.Determine the conversion cost per unit of output for Stage P1 and Stage P2.

Accepted Answer

a. Direct material cost per un

Question 10

A cost that depends on the amount of resource that is used is referred to as a

Accepted Answer

A) fixed cost. 
B) variable cost. 
C) direct cost. 
D) indirect cost. 
A) fixed cost. 
B) variable cost. 
C) direct cost. 
D) indirect cost.

Question 11

Costing system distortions relate to the handling of indirect costs.

Accepted Answer

A) True 
 B)False

Question 12

Poseidon Company produces customized sailboats.The company uses a job order costing system.Its plant has three production departments: cutting,machining,and assembly.The estimated manufacturing overhead cost and direct labor cost for each department for 2011 follow:
Cutting Machining Assembly
 
In May 2011,the company received an invitation from Duluth Sailing Company to bid on an order of five luxury sailboats that must be delivered by the end of September 2011.This Duluth Job would require direct manufacturing costs in the three departments as follows:
 
Required:
a. Assume that a single,plantwide predetermined manufacturing cost driver rate based on direct labor cost is used.Determine the manufacturing cost driver rate and manufacturing overhead costs applied to the Duluth Job.
b. Assume that separate,departmental predetermined manufacturing cost driver rates based on direct labor cost are used in each department.Determine the departmental manufacturing cost driver rates and manufacturing overhead costs applied to the Duluth job.
c. Assume that Poseidon has a policy to add a 60% markup to estimated job costs to arrive at the bid price. Determine the bid price for the Duluth job using:
1.a plantwide manufacturing overhead cost driver rate; and
2.departmental manufacturing overhead cost driver rates.
d. Review the bid prices computed in (c).Why do the two bids differ?
e. What are the possible consequences of overbidding a job? Underbidding a job?

Accepted Answer

a. Plantwide overhead cost rate is 150%

Question 13

Rupe Company has two departments: Machining and Assembly. The following estimates are for the coming year:  
-A predetermined manufacturing cost driver rate for the Machining Department based on the number of machine hours in that department is:

Accepted Answer

A) $ 4 per machine hour. 
B) $10 per machine hour. 
C) $20 per machine hour. 
D) $40 per direct labor hour. 
A) $ 4 per machine hour. 
B) $10 per machine hour. 
C) $20 per machine hour. 
D) $40 per direct labor hour.

Question 14

If overhead cost driver rates are calculated monthly,distortions might occur because of:

Accepted Answer

A) rental costs paid monthly. 
B) property tax payments made in July and December. 
C) routine, monthly preventive maintenance costs that benefit future months. 
D) property tax payments made in July and December,and routine,monthly preventative maintenance costs that benefit future months. 
A) rental costs paid monthly. 
B) property tax payments made in July and December. 
C) routine, monthly preventive maintenance costs that benefit future months. 
D) property tax payments made in July and December,and routine,monthly preventative maintenance costs that benefit future months.

Question 15

Apple Valley Corporation uses a job order cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are:  
The actual material and labor costs charged to Job #432 are as follows:   Apple Valley applies manufacturing overhead costs to jobs on the basis of direct labor cost using departmental rates determined at the beginning of the year.
-For Department A,the manufacturing overhead cost driver rate is:

Accepted Answer

A) 33% of direct labor costs. 
B) 66% of direct labor costs. 
C) 300% of direct labor costs. 
D) None of the above is correct. 
A) 33% of direct labor costs. 
B) 66% of direct labor costs. 
C) 300% of direct labor costs. 
D) None of the above is correct.

Question 16

Sheppard Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine hours in the Machining Department and on the basis of direct labor hours in the Assembly Department. At the beginning of 2011, the following estimates were provided for the coming year:   The accounting records of the company show the following data for Job #316:  
-What amount of manufacturing overhead costs will be allocated to Job #316?

Accepted Answer

A) $439 
B) $502 
C) $595 
D) $532 
A) $439 
B) $502 
C) $595 
D) $532

Question 17

Sheppard Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine hours in the Machining Department and on the basis of direct labor hours in the Assembly Department. At the beginning of 2011, the following estimates were provided for the coming year:   The accounting records of the company show the following data for Job #316:  
-What are the total manufacturing costs of Job #316?

Accepted Answer

A) $715 
B) $880 
C) $1,595 
D) $1,000 
A) $715 
B) $880 
C) $1,595 
D) $1,000

Question 18

In a normal job order costing system even though the cost driver rate is based on estimates,overhead costs are applied to products based on actual levels of activity.

Accepted Answer

A) True 
 B)False

Question 19

In a manufacturing environment,an indirect cost such as ________ would usually be allocated to a cost object.

Accepted Answer

A) utilities 
B) raw materials 
C) labor of employees who operate manufacturing equipment 
D) labor of administrative secretaries 
A) utilities 
B) raw materials 
C) labor of employees who operate manufacturing equipment 
D) labor of administrative secretaries

Question 20

In the manufacture of cans of beans,all of the following would likely be allocated to a cost object except:

Accepted Answer

A) utilities. 
B) supervisory labor. 
C) depreciation on equipment used to can multiple products. 
D) beans. 
A) utilities. 
B) supervisory labor. 
C) depreciation on equipment used to can multiple products. 
D) beans.

Each cost pool:

An indirect cost will be traced to the cost object.

Job order costing:

In a job order costing system,a cost driver rate is used to apply direct manufacturing costs to a specific product.

The predetermined overhead cost driver rate is calculated using ________ overhead costs.

The costs grouped in a cost pool should be driven by the same activity.

A cost that depends on the amount of resource that is used is referred to as a

Costing system distortions relate to the handling of indirect costs.

Rupe Company has two departments: Machining and Assembly. The following estimates are for the coming year: -A predetermined manufacturing cost driver rate for the Machining Department based on the number of machine hours in that department is:

If overhead cost driver rates are calculated monthly,distortions might occur because of:

In a normal job order costing system even though the cost driver rate is based on estimates,overhead costs are applied to products based on actual levels of activity.

In a manufacturing environment,an indirect cost such as ________ would usually be allocated to a cost object.

In the manufacture of cans of beans,all of the following would likely be allocated to a cost object except:

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Financial Control

Filters

Exam 4: Accumulating and Assigning Costs to Products

Each cost pool:

An indirect cost will be traced to the cost object.

Job order costing:

In a job order costing system,a cost driver rate is used to apply direct manufacturing costs to a specific product.

The predetermined overhead cost driver rate is calculated using ________ overhead costs.

The costs grouped in a cost pool should be driven by the same activity.

A cost that depends on the amount of resource that is used is referred to as a

Costing system distortions relate to the handling of indirect costs.

Rupe Company has two departments: Machining and Assembly. The following estimates are for the coming year: -A predetermined manufacturing cost driver rate for the Machining Department based on the number of machine hours in that department is:

If overhead cost driver rates are calculated monthly,distortions might occur because of:

In a normal job order costing system even though the cost driver rate is based on estimates,overhead costs are applied to products based on actual levels of activity.

In a manufacturing environment,an indirect cost such as ________ would usually be allocated to a cost object.

In the manufacture of cans of beans,all of the following would likely be allocated to a cost object except:

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Financial Control

Filters