Question 1

Allocating indirect costs to departments based on the relative revenue earned by those departments is done based on which of the following criterion?

Accepted Answer

A)  direct hours utilized 
B)  benefits received 
C)  material resources used 
D)  cause-and-effect relationships 
A)  direct hours utilized 
B)  benefits received 
C)  material resources used 
D)  cause-and-effect relationships

Question 2

Companies often use multiple cost-allocation bases to allocate indirect costs because different indirect costs have different cost drivers.

Accepted Answer

A) True 
 B)False

Question 3

Grounds-maintenance costs incurred during the summer months will distort indirect-cost rates that are computed monthly.

Accepted Answer

A) True 
 B)False

Question 4

Jacobs Company manufactures refrigerators. The company uses a budgeted indirect-cost rate for its manufacturing operations and during 2018 allocated $1,000,000 to work-in-process inventory. Actual overhead incurred was $1,100,000.
   
Required:
a.Prepare a journal entry to write off the difference between allocated and actual overhead directly to Cost of Goods Sold. Be sure your journal entry closes the related overhead accounts.
b.Prepare a journal entry that prorates the write-off of the difference between allocated and actual overhead using ending account balances. Be sure your journal entry closes the related overhead accounts.

Accepted Answer

a.11ecb4bd_6364_9ef9_8164_d90d

Question 5

Manufacturing overhead costs incurred for the month are:
 
Which account is debited assuming utilities and repairs were on account?

Accepted Answer

A)  Manufacturing Overhead Control, 89,000 
B)  Utilities Overhead Control, 45,000 
C)  Accumulated Depreciation Control, 27,000 
D)  Accounts Payable Control, 62,000 
A)  Manufacturing Overhead Control, 89,000 
B)  Utilities Overhead Control, 45,000 
C)  Accumulated Depreciation Control, 27,000 
D)  Accounts Payable Control, 62,000

Question 6

If indirect-cost 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)  salary hikes at the beginning of the financial year 
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)  salary hikes at the beginning of the financial year

Question 7

Sedgwick County Hospital uses an indirect job-costing system for all patients. In June, the budgeted nursing care charges for each department and budgeted allocation bases of nursing days are as follows:
   
Patient Ms. Graves spent six days in critical care and eight days in special care during June. The remainder of the 30-day month was spent in the general care area.
Required:
a. Determine the budgeted overhead rate for each department.
b. What are the total charges to Ms. Graves if she was in the facility the entire month?

Accepted Answer

a.11ecb4bd_d972_2dbf_8164_abc9

Question 8

Oil refining companies primarily use job costing to estimate costs.

Accepted Answer

A) True 
 B)False

Question 9

Using job costing would not be appropriate in the shipping industry.

Accepted Answer

A) True 
 B)False

Question 10

A job that shows low profitability may be the result of ________.

Accepted Answer

A)  excessive usage of direct materials 
B)  inefficient direct manufacturing labor 
C)  overpricing the job 
D)  insurance claim of the damaged goods 
A)  excessive usage of direct materials 
B)  inefficient direct manufacturing labor 
C)  overpricing the job 
D)  insurance claim of the damaged goods

Question 11

The formula for the predetermined indirect cost rate is:

Accepted Answer

A)  Budgeted annual indirect costs divided by actual quantity of cost-allocation base 
B)  Budgeted annual indirect costs divided by budgeted annual quantity of cost-allocation base 
C)  Actual annual indirect costs divided by budgeted annual quantity of cost-allocation base 
D)  Actual annual indirect costs divided by actual annual quantity of cost-allocation base 
A)  Budgeted annual indirect costs divided by actual quantity of cost-allocation base 
B)  Budgeted annual indirect costs divided by budgeted annual quantity of cost-allocation base 
C)  Actual annual indirect costs divided by budgeted annual quantity of cost-allocation base 
D)  Actual annual indirect costs divided by actual annual quantity of cost-allocation base

Question 12

Normal costing assigns indirect costs based on an actual indirect-cost rate.

Accepted Answer

A) True 
 B)False

Question 13

In a costing system, ________.

Accepted Answer

A)  cost tracing allocates indirect costs 
B)  cost allocation assigns direct costs 
C)  a cost-allocation base can be either financial or nonfinancial 
D)  a cost object should be a product and not a department or a geographic territory 
A)  cost tracing allocates indirect costs 
B)  cost allocation assigns direct costs 
C)  a cost-allocation base can be either financial or nonfinancial 
D)  a cost object should be a product and not a department or a geographic territory

Question 14

For each item below indicate the source documents that would most likely authorize the journal entry in a job-costing system.
Required:
a.direct materials purchased
b.direct materials used
c.direct manufacturing labor
d.indirect manufacturing labor
e.finished goods control
f.cost of goods sold

Accepted Answer

a.purchase invoice
b.Materials

Question 15

The actual indirect-cost rate is calculated by dividing actual total indirect costs by the budgeted total quantity of the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 16

In the service sector, to achieve timely reporting on the profitability of an engagement, a company will use ________.

Accepted Answer

A)  budgeted rates for all direct costs 
B)  budgeted rates for indirect costs 
C)  actual costing 
D)  budgeted rates for some direct costs and indirect costs 
A)  budgeted rates for all direct costs 
B)  budgeted rates for indirect costs 
C)  actual costing 
D)  budgeted rates for some direct costs and indirect costs

Question 17

Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $18 per direct labor-hour. The following data are obtained from the accounting records for October 2018:
 
The actual amount of manufacturing overhead costs incurred in October 2018 totals ________.

Accepted Answer

A)  $277,500 
B)  $116,000 
C)  $162,000 
D)  $123,000 
A)  $277,500 
B)  $116,000 
C)  $162,000 
D)  $123,000

Question 18

Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?

Accepted Answer

A)  $15.00 
B)  $54.00 
C)  $195.00 
D)  $180.00 
A)  $15.00 
B)  $54.00 
C)  $195.00 
D)  $180.00

Question 19

Which account would be credited if the following labor wages were incurred in a furniture manufacturing company?

Accepted Answer

A)  Work-in-Process Control, 31,000 
B)  Manufacturing Overhead Control, 31,000 
C)  Wages Payable Control, 31,000 
D)  Accounts Payable Control, 31,000 
A)  Work-in-Process Control, 31,000 
B)  Manufacturing Overhead Control, 31,000 
C)  Wages Payable Control, 31,000 
D)  Accounts Payable Control, 31,000

Question 20

When calculating indirect cost rates, the longer the time period, the greater the
influence of seasonal patterns on the amount of costs.

Accepted Answer

A) True 
 B)False

Allocating indirect costs to departments based on the relative revenue earned by those departments is done based on which of the following criterion?

Companies often use multiple cost-allocation bases to allocate indirect costs because different indirect costs have different cost drivers.

Grounds-maintenance costs incurred during the summer months will distort indirect-cost rates that are computed monthly.

Manufacturing overhead costs incurred for the month are: Which account is debited assuming utilities and repairs were on account?

If indirect-cost rates are calculated monthly, distortions might occur because of ________.

Oil refining companies primarily use job costing to estimate costs.

Using job costing would not be appropriate in the shipping industry.

A job that shows low profitability may be the result of ________.

The formula for the predetermined indirect cost rate is:

Normal costing assigns indirect costs based on an actual indirect-cost rate.

In a costing system, ________.

For each item below indicate the source documents that would most likely authorize the journal entry in a job-costing system. Required: a.direct materials purchased b.direct materials used c.direct manufacturing labor d.indirect manufacturing labor e.finished goods control f.cost of goods sold

The actual indirect-cost rate is calculated by dividing actual total indirect costs by the budgeted total quantity of the cost-allocation base.

In the service sector, to achieve timely reporting on the profitability of an engagement, a company will use ________.

Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?

Which account would be credited if the following labor wages were incurred in a furniture manufacturing company?

When calculating indirect cost rates, the longer the time period, the greater the influence of seasonal patterns on the amount of costs.

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

Allocating indirect costs to departments based on the relative revenue earned by those departments is done based on which of the following criterion?

Companies often use multiple cost-allocation bases to allocate indirect costs because different indirect costs have different cost drivers.

Grounds-maintenance costs incurred during the summer months will distort indirect-cost rates that are computed monthly.

Manufacturing overhead costs incurred for the month are: Which account is debited assuming utilities and repairs were on account?

If indirect-cost rates are calculated monthly, distortions might occur because of ________.

Oil refining companies primarily use job costing to estimate costs.

Using job costing would not be appropriate in the shipping industry.

A job that shows low profitability may be the result of ________.

The formula for the predetermined indirect cost rate is:

Normal costing assigns indirect costs based on an actual indirect-cost rate.

In a costing system, ________.

For each item below indicate the source documents that would most likely authorize the journal entry in a job-costing system. Required: a.direct materials purchased b.direct materials used c.direct manufacturing labor d.indirect manufacturing labor e.finished goods control f.cost of goods sold

The actual indirect-cost rate is calculated by dividing actual total indirect costs by the budgeted total quantity of the cost-allocation base.

In the service sector, to achieve timely reporting on the profitability of an engagement, a company will use ________.

Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?

Which account would be credited if the following labor wages were incurred in a furniture manufacturing company?

When calculating indirect cost rates, the longer the time period, the greater the influence of seasonal patterns on the amount of costs.

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