Question 1

Cost system design/selection should consider all but which one of the following?

Accepted Answer

A) Cost/benefit of system design/selection and operation. 
B) A firm's strategy and management information needs. 
C) Customer needs. 
D) Nature of the business, product, or service. 
A) Cost/benefit of system design/selection and operation. 
B) A firm's strategy and management information needs. 
C) Customer needs. 
D) Nature of the business, product, or service. C

Question 2

Scrap can be classified according to which of the following? $\begin{array}{lll}&\begin{array}{c}
\text { Specific } \
\text { Job }
\end{array} & \begin{array}{c}
\text { Common } \
\text { to all Jobs }
\end{array} \\
\text { A) } & \text { Yes } & \text { No } \
\text { B) } & \text { No } & \text { Yes } \
\text { C) } & \text { No } & \text { No } \
\text { D) } & \text { Yes } & \text { Yes }
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) None of the above 
A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) None of the above D

Question 3

Volume-based cost accounting systems often do a poor job of product costing because they:

Accepted Answer

A) Use only volume-based cost drivers. 
B) Fail to recognize the impact of overhead in product cost. 
C) Often do not reflect changes in major cost categories caused by plant automation. 
D) Too often use an allocation base that does not have a cause-effect relationship to resource usage. 
E) Product costs involve both fixed and variable costs 
A) Use only volume-based cost drivers. 
B) Fail to recognize the impact of overhead in product cost. 
C) Often do not reflect changes in major cost categories caused by plant automation. 
D) Too often use an allocation base that does not have a cause-effect relationship to resource usage. 
E) Product costs involve both fixed and variable costs D

Question 4

Which of the following industries is more suitable for using a job costing system?

Accepted Answer

A) Chemical plants. 
B) Petroleum product manufacturing. 
C) Medical clinics. 
D) Cement manufacturing. 
E) Food processing. 
A) Chemical plants. 
B) Petroleum product manufacturing. 
C) Medical clinics. 
D) Cement manufacturing. 
E) Food processing.

Question 5

Beckner Inc. is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 133,000 and estimated factory overhead is $784,700. The following information is for September. Job X was completed during September, while Job Y was started but not finished.$\begin{array}{lr}
\text { September 1, inventories: }\
\text { Materials }&\$24,000\
\text { Work-in-process (All Job X) } & 53,400 \
\text { Finished goods } & 105,600\
\text { Materials purchases }&\$157,000\
\text { Direct materials requisitioned: }\
\text { Job X } & \$5 74,000 \
\text { Job Y } &68,000 \\text { Direct labor hours: } & \
\text { Job X } & 7,000 \
\text { Job Y } & 5,500\\text { Labor costs incurred: }\
\text { Direct labor ( } \$ 6.00 \text { per hour) }&\$75,000\
\text { Indirect labor } & 24,200 \
\text { Factory supervisory salaries } & 11,100 \
\text { Rental costs: } &\\text { Factory }&\$9,300\
\text { Administrative offices }&3,200\\text { Total equipment depreciation costs: }\
\text { Factory } & \$  10,400 \
\text { Administrative offices } & 2,800 \
\text { Indirect materials used } & \$  17,800
\end{array}$Cost of goods manufactured for September is:

Accepted Answer

A) $105,600 
B) $157,300 
C) $169,400 
D) $145,500 
E) $210,700 
A) $105,600 
B) $157,300 
C) $169,400 
D) $145,500 
E) $210,700

Question 6

Which of the following can produce unit product costs that fluctuate significantly?

Accepted Answer

A) Actual costing system. 
B) Standard costing system. 
C) Normal costing system. 
D) Industry costing system. 
E) None of the above. 
A) Actual costing system. 
B) Standard costing system. 
C) Normal costing system. 
D) Industry costing system. 
E) None of the above.

Question 7

C.M.Fly, owner of Falcon Aircraft Co., is preparing the accounting record for the year just ended.During the year, he had projected that the company would produce 300 Falcon Aircraft for its clients with a factory overhead cost of $150,000,000.However, business was better than expected and the company was able to produce 400 aircraft at factory overhead cost of $175,000,000.What is the amount per unit that Falcon Aircraft has over or underapplied factory overhead?

Accepted Answer

A) $62,500 overapplied. 
B) $62,500 underapplied. 
C) $125,000 overapplied. 
D) $125,000 underapplied. 
E) None of the abovE.1) $150,000,000/300 = $500,000 estimated overhead per Falcon Aircraft 
A) $62,500 overapplied. 
B) $62,500 underapplied. 
C) $125,000 overapplied. 
D) $125,000 underapplied. 
E) None of the abovE.1) $150,000,000/300 = $500,000 estimated overhead per Falcon Aircraft

Question 8

A normal costing system uses actual costs for direct materials and direct labor, and:

Accepted Answer

A) Actual costs for factory overhead. 
B) Estimated factory overhead costs based on material cost. 
C) Estimated factory overhead costs based on labor cost. 
D) Estimated costs for factory overhead. 
E) Charges actual factory overhead as a lump sum. 
A) Actual costs for factory overhead. 
B) Estimated factory overhead costs based on material cost. 
C) Estimated factory overhead costs based on labor cost. 
D) Estimated costs for factory overhead. 
E) Charges actual factory overhead as a lump sum.

Question 9

Jackson Inc. listed the following data for 2019:$\begin{array}{lr}
\text { Budgeted factory overhead } & \$ 1,271,000 \
\text { Budgeted direct labor hours } & 82,000 \
\text { Budgeted machine hours } & 41,000 \
\text { Actual factory overhead } & 1,201,000 \
\text { Actual direct labor hours } & 86,300 \
\text { Actual machine hours } & 39,400
\end{array}$If overhead is applied based on direct labor hours, overapplied/underapplied overhead is:

Accepted Answer

A) $136,650 overapplied. 
B) $136,650 underapplied. 
C) $174,775 underapplied. 
D) $174,775 overapplied. 
E) $-0-. 
A) $136,650 overapplied. 
B) $136,650 underapplied. 
C) $174,775 underapplied. 
D) $174,775 overapplied. 
E) $-0-.

Question 10

Sutherland Company listed the following data for 2019:$\begin{array}{lr}
\text { Budgeted factory overhead } & \$ 2,100,000 \
\text { Budgeted direct labor hours } & 89,000 \
\text { Budgeted machine hours } & 51,000 \
\text { Actual factory overhead } & 2,201,000 \
\text { Actual direct labor hours } & 83,700 \
\text { Actual machine hours } & 48,900
\end{array}$If overhead is applied based on machine hours, the overapplied/underapplied overhead is:

Accepted Answer

A) $187,298 underapplied. 
B) $187,298 overapplied. 
C) $176,358 underapplied. 
D) $176,358 overapplied. 
E) $-0-. 
A) $187,298 underapplied. 
B) $187,298 overapplied. 
C) $176,358 underapplied. 
D) $176,358 overapplied. 
E) $-0-.

Question 11

Ramirez Company uses a predetermined overhead rate.Overhead for the next twelve months is estimated to be $500,000.Ramirez applies overhead as a percentage of direct labor cost.Direct labor costs are estimated to be $625,000 for the next year.During the year actual direct labor costs amounted to $600,000 and the actual overhead was as follows: $$\begin{array} { l r } 
\text { Maintenance } & \$ 50,000 \
\text { Indirect materials } & 25,000 \
\text { Indirect labor } & 80,000 \
\text { Factory Rent } & 90,000 \
\text { Depreciation } & 70,000 \
\text { Payroll taxes } & 80,000 \
\text { Other } & \underline { 80,000 } \
\text { Total } & \$ 475,000
\end{array}$$ Required:
(1) Calculate the over/under-applied overhead for the year.
(2) Prepare the journal entry to close the overhead accounts, assuming that the over/under-applied overhead is closed to cost of goods sold.

Accepted Answer

(1) Application rate = $500,000/$625,000

Question 12

ABC Company listed the following data for the current year:$\begin{array}{lr}
\text { Budgeted factory overhead } & \$ 1,044,000 \
\text { Budgeted direct labor hours } & 69,600 \
\text { Budgeted machine hours } & 24,000 \
\text { Actual factory overhead } & 1,037,400 \
\text { Actual labor hours } & 72,600 \
\text { Actual machine hours } & 23,600
\end{array}$If overhead is applied based on machine hours, the overapplied/underapplied overhead is:

Accepted Answer

A) $15,300 underapplied. 
B) $15,300 overapplied. 
C) $10,800 underapplied. 
D) $10,800 overapplied. 
E) $-0-. 
A) $15,300 underapplied. 
B) $15,300 overapplied. 
C) $10,800 underapplied. 
D) $10,800 overapplied. 
E) $-0-.

Question 13

Badour Inc. is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours were 114,000 and estimated factory overhead was $695,400. The following information was for September. Job X was completed during September, while Job Y was started but not finished.$\begin{array}{lr}
\text { September 1, inventories: }\
\text { Materials }&\$9,000\
\text { Work-in-process (All Job X) } & 37,400 \
\text { Finished goods } & 80,400\
\text { Materials purchases }&\$125,000\
\text { Direct materials requisitioned: }\
\text { Job X } & \$5 4,500 \
\text { Job Y } &40,000 \\text { Direct labor hours: } & \
\text { Job X } & 5,000 \
\text { Job Y } & 4,500\\text { Labor costs incurred: }\
\text { Direct labor ( } \$ 6.00 \text { per hour) }&\$57,000\
\text { Indirect labor } & 16,200 \
\text { Factory supervisory salaries } & 7,200 \
\text { Rental costs: } &\\text { Factory }&\$8,400\
\text { Administrative offices }&2,200\\text { Total equipment depreciation costs: }\
\text { Factory } & \$  9,000 \
\text { Administrative offices } &  1,900 \
\text { Indirect materials used } & \$  14,400
\end{array}$The total cost of Job X is:

Accepted Answer

A) $152,400. 
B) $128,200. 
C) $151,900. 
D) $129,600. 
E) $140,800. 
A) $152,400. 
B) $128,200. 
C) $151,900. 
D) $129,600. 
E) $140,800.

Question 14

All of the following items are debited to the Work-in-Process Inventory account except:

Accepted Answer

A) Cost of the completed goods being transferred out of the plant. 
B) Direct labor cost consumed/incurred. 
C) Direct materials cost consumed/used. 
D) Applied factory overhead cost. 
A) Cost of the completed goods being transferred out of the plant. 
B) Direct labor cost consumed/incurred. 
C) Direct materials cost consumed/used. 
D) Applied factory overhead cost.

Question 15

Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 125% of direct labor cost. Selected data concerning the past year's operation of the company are presented below.$\begin{array}{lrrr} 
& \text { January 1 } & \text { December 31 } \
\text { Direct materials } & \$  77,000 & \$ 40,000 \
\text { Work in process } & 66,000 & 42,000 \
\text { Finished goods } & 115,000 & 100,000\
\text { Other information }\
\text { Direct materials purchases } && \$ 324,000 \
\text { Cost of goods available for sale } && 950,000 \
\text { Actual factory overhead costs } && 260,000
\end{array}$The amount of underapplied or overapplied overhead is:

Accepted Answer

A) $60,000 overapplied. 
B) $60,000 underapplied. 
C) $10,000 overapplied. 
D) $10,000 underapplied. 
E) $0. 
A) $60,000 overapplied. 
B) $60,000 underapplied. 
C) $10,000 overapplied. 
D) $10,000 underapplied. 
E) $0.

Question 16

Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 125% of direct labor cost. Selected data concerning the past year's operation of the company are presented below.$\begin{array}{lrrr} 
& \text { January 1 } & \text { December 31 } \
\text { Direct materials } & \$  77,000 & \$ 40,000 \
\text { Work in process } & 66,000 & 42,000 \
\text { Finished goods } & 115,000 & 100,000\
\text { Other information }\
\text { Direct materials purchases } && \$ 324,000 \
\text { Cost of goods available for sale } && 950,000 \
\text { Actual factory overhead costs } && 260,000
\end{array}$The total manufacturing costs for the year are:

Accepted Answer

A) $850,000. 
B) $348,000. 
C) $867,000. 
D) $835,000. 
E) $811,000. 
A) $850,000. 
B) $348,000. 
C) $867,000. 
D) $835,000. 
E) $811,000.

Question 17

Job costing in the printing industry often has the following general framework.Job cost equals:

Accepted Answer

A) direct materials cost plus direct labor plus applied overhead based on machine hours 
B) direct materials cost plus conversion costs applied on the basis of labor hours 
C) direct materials cost, plus outside purchase costs, plus cost applied on the basis of labor hours. 
D) materials purchases, labor incurred and applied overhead based on labor hours. 
E) none of the above. 
A) direct materials cost plus direct labor plus applied overhead based on machine hours 
B) direct materials cost plus conversion costs applied on the basis of labor hours 
C) direct materials cost, plus outside purchase costs, plus cost applied on the basis of labor hours. 
D) materials purchases, labor incurred and applied overhead based on labor hours. 
E) none of the above.

Question 18

All of the following are examples of companies using job costing systems except:

Accepted Answer

A) FedEx. 
B) Paramount Pictures. 
C) Jiffy Lube International. 
D) International Paper. 
E) A professional service firm. 
A) FedEx. 
B) Paramount Pictures. 
C) Jiffy Lube International. 
D) International Paper. 
E) A professional service firm.

Question 19

When completed units are transferred to the warehouse:

Accepted Answer

A) Cost of Goods Sold account is debited. 
B) Cost of Goods Manufactured account is debited. 
C) Finished Goods Inventory account is debited. 
D) Work-in-Process Inventory account is debited. 
E) Finished Goods Inventory account is credited. 
A) Cost of Goods Sold account is debited. 
B) Cost of Goods Manufactured account is debited. 
C) Finished Goods Inventory account is debited. 
D) Work-in-Process Inventory account is debited. 
E) Finished Goods Inventory account is credited.

Question 20

In job costing, the job might consist of:

Accepted Answer

A) a single product. 
B) a batch of identical products. 
C) a batch of similar products. 
D) a single, well-defined project. 
E) a single product, a batch of products, or a single well-defined project. 
A) a single product. 
B) a batch of identical products. 
C) a batch of similar products. 
D) a single, well-defined project. 
E) a single product, a batch of products, or a single well-defined project.

Cost system design/selection should consider all but which one of the following?

Scrap can be classified according to which of the following? Specific Job Common to all Jobs A) Yes No B) No Yes C) No No D) Yes Yes

Volume-based cost accounting systems often do a poor job of product costing because they:

Which of the following industries is more suitable for using a job costing system?

Which of the following can produce unit product costs that fluctuate significantly?

A normal costing system uses actual costs for direct materials and direct labor, and:

All of the following items are debited to the Work-in-Process Inventory account except:

Job costing in the printing industry often has the following general framework.Job cost equals:

All of the following are examples of companies using job costing systems except:

When completed units are transferred to the warehouse:

In job costing, the job might consist of:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 4: Job Costing

Cost system design/selection should consider all but which one of the following?

Scrap can be classified according to which of the following? Specific Job Common to all Jobs A) Yes No B) No Yes C) No No D) Yes Yes

Volume-based cost accounting systems often do a poor job of product costing because they:

Which of the following industries is more suitable for using a job costing system?

Which of the following can produce unit product costs that fluctuate significantly?

A normal costing system uses actual costs for direct materials and direct labor, and:

All of the following items are debited to the Work-in-Process Inventory account except:

Job costing in the printing industry often has the following general framework.Job cost equals:

All of the following are examples of companies using job costing systems except:

When completed units are transferred to the warehouse:

In job costing, the job might consist of:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters