Question 1

A high level of customisation relates to which of the following cost systems?

Accepted Answer

A)  Mass services costing system 
B)  Job costing system 
C)  Process costing system 
D)  Hybrid costing system 
A)  Mass services costing system 
B)  Job costing system 
C)  Process costing system 
D)  Hybrid costing system

Question 2

Maximus Catering allocates costs to client catering assignments based on direct labour hours.Estimated overhead costs were $750 000 and estimated direct labour hours were 60 000 for the upcoming year.At year's end,it was noted that actual overhead costs were $700 000 and actual direct labour hours were 55 000.
Required:
A. Calculate the predetermined wverhead rate.
B. How much dverhead wauld be applied to a catering as5igmnent that req?uired 12 direct labour hours?
C. How much total cverhead was applied during the year?
D. By how much was averhead aver- or underagplied for the year? Be sure to indicate whether it was cver- or underagplied.

Accepted Answer

A. Predetermined rate @#LAT-DLM& 000 @#LAT-DLM& 60 000 @#LAT-DLM& per

Question 3

Minimus Cleaning allocates costs to client catering assignments based on cleaning machine hours.Estimated overhead costs were $900 000 and estimated direct labour hours were 50 000 for the upcoming year.At year's end,it was noted that actual overhead costs were $800 000 and actual direct labour hours were 40 000.
Required:
A. Calculate the predetermined wverhead rate.
B. How much dverhead wauld be applied to a catering as5igmnent that req?uired 23 direct labour hours?
C. How much total cverhead was applied during the year?
D. By how much was averhead aver- or underagplied for the year? Be sure to indicate whether it was over- or underagplied.

Accepted Answer

A. Predetermined rate @#LAT-DLM& per clearing mach

Question 4

Aronson & Associates LLP
Aronson & Associates LLP, an accounting firm, assigns overhead to clients based on direct labour hours. The following information is available for the month of March:
$\begin{array}{ll}
\text { Estimated direct labour hours } & 4000 \text { hours } \
\text { Estimated overhead costs } & \$ 8000 \
\text { Actual direct labour hours } & 4200 \text { hours } \
\text { Actual overhead costs } & \$ 8190
\end{array}$

-The predetermined overhead rate for the month of March is:

Accepted Answer

A)  $2.00 per direct labour hour 
B)  $ .50 per direct labour hour 
C)  $1.95 per direct labour hour 
D)  $1.90 per direct labour hour 
A)  $2.00 per direct labour hour 
B)  $ .50 per direct labour hour 
C)  $1.95 per direct labour hour 
D)  $1.90 per direct labour hour

Question 5

What is the overhead applied rate if the driver is direct labour hours (please assume 4000 estimated direct labour hours)?

Accepted Answer

A)  $3.50 
B)  $3.00 
C)  $4.50 
D)  $4.00 
A)  $3.50 
B)  $3.00 
C)  $4.50 
D)  $4.00

Question 6

What should determine whether an allocation base is a good cost driver in a service organisation?

Accepted Answer

A)  Whether or not it satisfactorily links to the service cost object 
B)  Whether or not it links the service cost to the service cost object 
C)  Whether or not the base can be measured with absolute accuracy 
D)  Whether or not the service cost being allocated is large 
A)  Whether or not it satisfactorily links to the service cost object 
B)  Whether or not it links the service cost to the service cost object 
C)  Whether or not the base can be measured with absolute accuracy 
D)  Whether or not the service cost being allocated is large

Question 7

Explain how professional services,mass services and service shops relate to other costing systems existing in product organisations.

Accepted Answer

Professional services firms focus on hig

Question 8

How is service costing different to traditional product costing?

Accepted Answer

The primary difference between service c

Question 9

What are service shop organisations? Please provide examples of such organisations.

Accepted Answer

Service shop organisations exhibit chara

Question 10

How might retail organisations utilise service costing principles?

Accepted Answer

Retail organisations might deal in the a

Question 11

A mass services firm is characterised by:

Accepted Answer

A)  low contact time. 
B)  medium contact time. 
C)  high contact time. 
D)  high customisation. 
A)  low contact time. 
B)  medium contact time. 
C)  high contact time. 
D)  high customisation.

Question 12

Which of the following statements is correct?

Accepted Answer

A)  Overhead consists of only indirect labour in service costing. 
B)  Direct material costs are the dominant cost type in service costing. 
C)  Overheads are less important for service costing than production costing. 
D)  Indirect materials can arise in service organisations. 
A)  Overhead consists of only indirect labour in service costing. 
B)  Direct material costs are the dominant cost type in service costing. 
C)  Overheads are less important for service costing than production costing. 
D)  Indirect materials can arise in service organisations.

Question 13

J & J Products uses operational costing.One of their customers has requested 1000 units of an identical product.J & J estimates the following will be incurred to fulfil the customer order:
$\begin{array}{llcc}
  \text {Total direct materials  } &\$2000\
 \text { Total direct labour hours } & \text {  50 hours}\
 \text {Direct lahnur cost mor hours  } & \text { \$ 20  per hous  } \
\end{array}$
 
In addition,J & J allocates overhead based on direct labour cost.At the beginning of this year,they estimated overhead costs would total $800 000 and direct labour would cost a total of $3 200 000.
Required:
A. What will be the predetermined cverhead rate used during the year?
B. What will be the tatal manufacturing casts for the above customer's arder?

Accepted Answer

A. Predetermined wVerhead rate @#LAT-DLM& 000 @#LAT-DLM& per

Question 14

Companies that produce large numbers of standardised products within a particular batch would most likely use which type of costing?

Accepted Answer

A)  Process costing 
B)  Job costing 
C)  Operations costing 
D)  Normal costing 
A)  Process costing 
B)  Job costing 
C)  Operations costing 
D)  Normal costing

Question 15

Lewis and Partners tracks costs for individual tax return clients separately.Direct labour cost drives its service overhead costs.During the month of September,the following data were available for Client #156:
Direct labour$\quad $ $\quad $400 hours at $\$ 15$ per hour
If total overhead costs during the month totalled $10 000 when a total of $30 000 in direct labour costs were incurred,what will be the overhead allocated to Client #156?

Accepted Answer

A)  $1000 
B)  $3000 
C)  $750 
D)  $2000 
A)  $1000 
B)  $3000 
C)  $750 
D)  $2000

Question 16

Stacey Clothing
Stacey Clothing assigns overhead to clients based on total labour hours. The following information is available for the month of June:
$\begin{array}{ll}
\text { Estimated direct labour hours } & 4000 \text { hours } \
\text { Estimated indirect labour hours } & 2000 \text { hours } \
\text { Estimated overhead costs } & \$ 18000 \
\text { Actual total labour hours } & 6400 \text { hours } \
\text { Actual overhead costs } & \$ 17500
\end{array}$

-The amount of applied overhead for June will be:

Accepted Answer

A)  $18 900 
B)  $17 500 
C)  $18 000 
D)  $19 200 
A)  $18 900 
B)  $17 500 
C)  $18 000 
D)  $19 200

Question 17

Mass services most closely relates to which of the following cost systems?

Accepted Answer

A)  Shop services costing system 
B)  Job costing system 
C)  Process costing system 
D)  Hybrid costing system 
A)  Shop services costing system 
B)  Job costing system 
C)  Process costing system 
D)  Hybrid costing system

Question 18

Stacey Clothing
Stacey Clothing assigns overhead to clients based on total labour hours. The following information is available for the month of June:
$\begin{array}{ll}
\text { Estimated direct labour hours } & 4000 \text { hours } \
\text { Estimated indirect labour hours } & 2000 \text { hours } \
\text { Estimated overhead costs } & \$ 18000 \
\text { Actual total labour hours } & 6400 \text { hours } \
\text { Actual overhead costs } & \$ 17500
\end{array}$

-The predetermined overhead rate for the month of June is:

Accepted Answer

A)  $4.50 per labour hour 
B)  $9.00 per labour hour 
C)  $3.00 per labour hour 
D)  $1.90 per labour hour 
A)  $4.50 per labour hour 
B)  $9.00 per labour hour 
C)  $3.00 per labour hour 
D)  $1.90 per labour hour

Question 19

Aronson & Associates LLP
Aronson & Associates LLP, an accounting firm, assigns overhead to clients based on direct labour hours. The following information is available for the month of March:
$\begin{array}{ll}
\text { Estimated direct labour hours } & 4000 \text { hours } \
\text { Estimated overhead costs } & \$ 8000 \
\text { Actual direct labour hours } & 4200 \text { hours } \
\text { Actual overhead costs } & \$ 8190
\end{array}$

-By how much was overhead over- or underapplied for the month of March?

Accepted Answer

A)  $210 overapplied 
B)  $400 overapplied 
C)  $190 underapplied 
D)  $390 underapplied 
A)  $210 overapplied 
B)  $400 overapplied 
C)  $190 underapplied 
D)  $390 underapplied

Question 20

Aronson & Associates LLP
Aronson & Associates LLP, an accounting firm, assigns overhead to clients based on direct labour hours. The following information is available for the month of March:
$\begin{array}{ll}
\text { Estimated direct labour hours } & 4000 \text { hours } \
\text { Estimated overhead costs } & \$ 8000 \
\text { Actual direct labour hours } & 4200 \text { hours } \
\text { Actual overhead costs } & \$ 8190
\end{array}$

-The amount of applied overhead for March will be:

Accepted Answer

A)  $7800 
B)  $8400 
C)  $8610 
D)  $8000 
A)  $7800 
B)  $8400 
C)  $8610 
D)  $8000

A high level of customisation relates to which of the following cost systems?

What is the overhead applied rate if the driver is direct labour hours (please assume 4000 estimated direct labour hours)?

What should determine whether an allocation base is a good cost driver in a service organisation?

Explain how professional services,mass services and service shops relate to other costing systems existing in product organisations.

How is service costing different to traditional product costing?

What are service shop organisations? Please provide examples of such organisations.

How might retail organisations utilise service costing principles?

A mass services firm is characterised by:

Which of the following statements is correct?

Companies that produce large numbers of standardised products within a particular batch would most likely use which type of costing?

Mass services most closely relates to which of the following cost systems?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

Cost Behaviour

Job Costing and Overhead Costing Systems

Process Costing Systems

Departmental Overhead Costing

Activity-Based Costing

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investmentdecisions

Fixed and Rolling Budgets for Planning and Decision Making

Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Decentralisation and Modern Performance Management Systems the Balanced Scorecard

Accounting for Sustainability Social Reporting,environmental Reporting and Management Accounting

Filters

Exam 6: Service and Operations Costing

A high level of customisation relates to which of the following cost systems?

What is the overhead applied rate if the driver is direct labour hours (please assume 4000 estimated direct labour hours)?

What should determine whether an allocation base is a good cost driver in a service organisation?

Explain how professional services,mass services and service shops relate to other costing systems existing in product organisations.

How is service costing different to traditional product costing?

What are service shop organisations? Please provide examples of such organisations.

How might retail organisations utilise service costing principles?

A mass services firm is characterised by:

Which of the following statements is correct?

Companies that produce large numbers of standardised products within a particular batch would most likely use which type of costing?

Mass services most closely relates to which of the following cost systems?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

Cost Behaviour

Job Costing and Overhead Costing Systems

Process Costing Systems

Departmental Overhead Costing

Activity-Based Costing

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investmentdecisions

Fixed and Rolling Budgets for Planning and Decision Making

Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Decentralisation and Modern Performance Management Systems the Balanced Scorecard

Accounting for Sustainability Social Reporting,environmental Reporting and Management Accounting

Filters