Question 1

To smooth fluctuating levels of output, separate indirect-cost rates should be calculated for each month.

Accepted Answer

A) True 
 B)False

Question 2

The proration approach to allocating overapplied or underapplied overhead adjusts individual job-cost records.

Accepted Answer

A) True 
 B)False

Question 3

A job-cost sheet details the ________.

Accepted Answer

A)  direct materials purchased and paid 
B)  direct labor costs incurred 
C)  indirect labor costs incurred 
D)  actual indirect overhead costs incurred 
A)  direct materials purchased and paid 
B)  direct labor costs incurred 
C)  indirect labor costs incurred 
D)  actual indirect overhead costs incurred

Question 4

Which of the following companies will use a process costing system?

Accepted Answer

A)  an oil refining company 
B)  a manufacturer of ships 
C)  a custom kitchen cabinet company 
D)  an advertising firm 
A)  an oil refining company 
B)  a manufacturer of ships 
C)  a custom kitchen cabinet company 
D)  an advertising firm

Question 5

A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.

Accepted Answer

A) True 
 B)False

Question 6

A local accounting firm employs 27 full-time professionals. The budgeted annual compensation per employee is $40,500. The average chargeable time is 420 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis.
Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $781,500, and the firm expects to have 75 clients during the coming year.
If ten clients are lost and the workforce stays at 27 employees, then the direct labor cost rate per hour:

Accepted Answer

A)  $34.71 per hour 
B)  $24.81 per hour 
C)  $40.05 per hour 
D)  $21.89 per hour 
A)  $34.71 per hour 
B)  $24.81 per hour 
C)  $40.05 per hour 
D)  $21.89 per hour

Question 7

Which of the following differentiates job costing from process costing?

Accepted Answer

A)  Job costing is used when each unit of output is identical, and process costing deals with unique products. 
B)  Job costing is used when each unit of output is identical and not produced in batches, and process costing deals with unique products produced on large scale. 
C)  Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches. 
D)  Job costing is used by manufacturing industries, and process costing is used by service industries. 
A)  Job costing is used when each unit of output is identical, and process costing deals with unique products. 
B)  Job costing is used when each unit of output is identical and not produced in batches, and process costing deals with unique products produced on large scale. 
C)  Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches. 
D)  Job costing is used by manufacturing industries, and process costing is used by service industries.

Question 8

Whether a company chooses to use either a job ob costing system or process costing system depends on the nature of the product or service - whether the products or services are heterogeneous or homogeneous.

Accepted Answer

A) True 
 B)False

Question 9

River Falls Manufacturing uses a normal cost system and had the following data available for 2018:
 
The ending balance of work-in-process inventory is ________.

Accepted Answer

A)  $418,350 
B)  $119,350 
C)  $127,000 
D)  $426,000 
A)  $418,350 
B)  $119,350 
C)  $127,000 
D)  $426,000

Question 10

Sky High Company has two departments, X and Y. The following estimates are for the coming year:
 
The budgeted indirect-cost driver rate for Y based on the number of machine-hours is in excess of X by ________. (Round interim and the final answer to the nearest cent.)

Accepted Answer

A)  $6.50 per machine-hour 
B)  $21.50 per machine-hour 
C)  $1.50 per machine-hour 
D)  $16.50 per machine-hour 
A)  $6.50 per machine-hour 
B)  $21.50 per machine-hour 
C)  $1.50 per machine-hour 
D)  $16.50 per machine-hour

Question 11

Excellent Products, Inc., uses a budgeted factory overhead rate to apply overhead to production. The following data are available for the year ended December 31, 2018.
   
Required:
a.Determine the budgeted factory overhead rate based on direct labor-hours.
b.What is the applied overhead based on direct labor-hours?
c.Is overhead overapplied or underapplied? Explain.

Accepted Answer

a.$675,000/12,500 hrs. = $54.0

Question 12

What are three possible ways to dispose of underallocated or overallocated overhead costs at the end of a fiscal year? Briefly comment on the theoretical correctness or incorrectness of each method.

Accepted Answer

One way to dispose of underallocated or

Question 13

For normal costing, even though the indirect-cost rate is based on actual, indirect costs are allocated to products based on the normal capacity of the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 14

An increase in direct labor cost per unit ________.

Accepted Answer

A)  increases the fixed cost 
B)  increases profits 
C)  increases the variable cost 
D)  increases overhead costs 
A)  increases the fixed cost 
B)  increases profits 
C)  increases the variable cost 
D)  increases overhead costs

Question 15

Advantage Inc. employs 29 professional cleaners. Budgeted costs total $1,955,000 of which $1,702,000 is direct costs. Budgeted indirect costs are $839,500 and actual indirect costs were $795,600. Budgeted professional labor-hours are 1,150,000 and actual hours were 1,221,875. What is the budgeted direct cost-allocation rate?

Accepted Answer

A)  $1.70 per hour 
B)  $1.60 per hour 
C)  $0.73 per hour 
D)  $1.48 per hour 
A)  $1.70 per hour 
B)  $1.60 per hour 
C)  $0.73 per hour 
D)  $1.48 per hour

Question 16

The approach often used when dealing with small amounts of underallocated or overallocated overhead is the ________.

Accepted Answer

A)  adjusted allocation-rate approach 
B)  proration approach 
C)  write-off to cost of goods sold approach 
D)  adjusted write-off approach 
A)  adjusted allocation-rate approach 
B)  proration approach 
C)  write-off to cost of goods sold approach 
D)  adjusted write-off approach

Question 17

Filippucci Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) is different from the actual amount incurred ($225,000).
  
-Which account is credited to write off the difference between allocated and actual overhead using the proration approach?

Accepted Answer

A)  Work-in Process Control 
B)  Manufacturing Overhead Allocated 
C)  Finished Goods Control 
D)  Manufacturing Overhead Control 
A)  Work-in Process Control 
B)  Manufacturing Overhead Allocated 
C)  Finished Goods Control 
D)  Manufacturing Overhead Control

Question 18

Sky High Company has two departments, X and Y. The following estimates are for the coming year:
 
A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is ________.

Accepted Answer

A)  $25.00 per direct labor-hour 
B)  $12.60 per direct labor-hour 
C)  $27.50 per direct labor-hour 
D)  $16.50 per direct labor-hour 
A)  $25.00 per direct labor-hour 
B)  $12.60 per direct labor-hour 
C)  $27.50 per direct labor-hour 
D)  $16.50 per direct labor-hour

Question 19

A local accounting firm employs 24 full-time professionals. The budgeted annual compensation per employee is $45,000. The average chargeable time is 420 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis.
Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $790,000, and the firm expects to have 90 clients during the coming year.
What is the budgeted direct labor cost rate per hour? (Round the final answer to the nearest cent.)

Accepted Answer

A)  $28.57 per hour 
B)  $20.90 per hour 
C)  $4.46 per hour 
D)  $107.14 per hour 
A)  $28.57 per hour 
B)  $20.90 per hour 
C)  $4.46 per hour 
D)  $107.14 per hour

Question 20

The following information was gathered for Longview Company for the year ended December 31, 2018:
   
Assume that direct labor-hours are the cost-allocation base.
Required:
a.Compute the budgeted factory overhead rate.
b.Compute the factory overhead applied.
c.Compute the amount of over/underapplied overhead.

Accepted Answer

a.$600,000/75,000 hrs. = $8.00

To smooth fluctuating levels of output, separate indirect-cost rates should be calculated for each month.

The proration approach to allocating overapplied or underapplied overhead adjusts individual job-cost records.

A job-cost sheet details the ________.

Which of the following companies will use a process costing system?

A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.

Which of the following differentiates job costing from process costing?

Whether a company chooses to use either a job ob costing system or process costing system depends on the nature of the product or service - whether the products or services are heterogeneous or homogeneous.

River Falls Manufacturing uses a normal cost system and had the following data available for 2018: The ending balance of work-in-process inventory is ________.

Sky High Company has two departments, X and Y. The following estimates are for the coming year: The budgeted indirect-cost driver rate for Y based on the number of machine-hours is in excess of X by ________. (Round interim and the final answer to the nearest cent.)

What are three possible ways to dispose of underallocated or overallocated overhead costs at the end of a fiscal year? Briefly comment on the theoretical correctness or incorrectness of each method.

For normal costing, even though the indirect-cost rate is based on actual, indirect costs are allocated to products based on the normal capacity of the cost-allocation base.

An increase in direct labor cost per unit ________.

The approach often used when dealing with small amounts of underallocated or overallocated overhead is the ________.

Filippucci Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) is different from the actual amount incurred ($225,000). -Which account is credited to write off the difference between allocated and actual overhead using the proration approach?

Sky High Company has two departments, X and Y. The following estimates are for the coming year: A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 4: Job Costing

To smooth fluctuating levels of output, separate indirect-cost rates should be calculated for each month.

The proration approach to allocating overapplied or underapplied overhead adjusts individual job-cost records.

A job-cost sheet details the ________.

Which of the following companies will use a process costing system?

A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.

Which of the following differentiates job costing from process costing?

Whether a company chooses to use either a job ob costing system or process costing system depends on the nature of the product or service - whether the products or services are heterogeneous or homogeneous.

River Falls Manufacturing uses a normal cost system and had the following data available for 2018: The ending balance of work-in-process inventory is ________.

Sky High Company has two departments, X and Y. The following estimates are for the coming year: The budgeted indirect-cost driver rate for Y based on the number of machine-hours is in excess of X by ________. (Round interim and the final answer to the nearest cent.)

What are three possible ways to dispose of underallocated or overallocated overhead costs at the end of a fiscal year? Briefly comment on the theoretical correctness or incorrectness of each method.

For normal costing, even though the indirect-cost rate is based on actual, indirect costs are allocated to products based on the normal capacity of the cost-allocation base.

An increase in direct labor cost per unit ________.

The approach often used when dealing with small amounts of underallocated or overallocated overhead is the ________.

Filippucci Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) is different from the actual amount incurred ($225,000). -Which account is credited to write off the difference between allocated and actual overhead using the proration approach?

Sky High Company has two departments, X and Y. The following estimates are for the coming year: A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters