Question 1

The budgeted direct-labor cost rate includes ________ in the calculation.

Accepted Answer

A) budgeted total costs in indirect cost pool 
B) budgeted total direct-labor costs in the denominator 
C) budgeted total direct-labor costs in the numerator 
D) budgeted total direct-labor hours in the numerator 
A) budgeted total costs in indirect cost pool 
B) budgeted total direct-labor costs in the denominator 
C) budgeted total direct-labor costs in the numerator 
D) budgeted total direct-labor hours in the numerator

Question 2

Direct costs of a cost object are costs related to a particular cost object that can be allocated to that cost object in an economically feasible (cost-effective)way.

Accepted Answer

A) True 
 B)False

Question 3

At the end of the year, the direct costs traced to jobs using the budgeted rates will equal actual direct costs.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

Indirect materials that are requisitioned increase the Materials Control account.

Accepted Answer

A) True 
 B)False

Question 6

The ________ approach carries the underallocated or overallocated amounts to overhead accounts in the following year.

Accepted Answer

A) adjusted allocation-rate 
B) proration 
C) write-off to cost of goods sold 
D) None of these answers are correct. 
A) adjusted allocation-rate 
B) proration 
C) write-off to cost of goods sold 
D) None of these answers are correct.

Question 7

Costs that are subject to short-run fluctuations for given jobs are:

Accepted Answer

A) actual costs 
B) budgeted direct costs 
C) budgeted indirect costs 
D) normal costs 
A) actual costs 
B) budgeted direct costs 
C) budgeted indirect costs 
D) normal costs

Question 8

Job costing is commonly used to estimate costs in beverage production.

Accepted Answer

A) True 
 B)False

Question 9

Annual cost rates are preferred over actual cost rates for all of the following reasons EXCEPT:

Accepted Answer

A) budgeted costs allow managers to have cost information on a timely basis 
B) budgeted costs may be subject to short-run fluctuations 
C) budgeted indirect-cost rates are known prior to the inception of a new job 
D) budgeted-cost rates can be used to allocate direct or indirect costs 
A) budgeted costs allow managers to have cost information on a timely basis 
B) budgeted costs may be subject to short-run fluctuations 
C) budgeted indirect-cost rates are known prior to the inception of a new job 
D) budgeted-cost rates can be used to allocate direct or indirect costs

Question 10

Job costing and process costing systems share the same objective of estimating product costs.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Answer the following questions using the information below:
Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost 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 is the bid price for the Winfield High School job if the company uses a 40% markup of total manufacturing costs?

Accepted Answer

A) $2,310 
B) $588 
C) $1,680 
D) $2,058 
A) $2,310 
B) $588 
C) $1,680 
D) $2,058

Question 13

Which of the following statements about normal costing is true?

Accepted Answer

A) Direct costs and indirect costs are traced using an actual rate. 
B) Direct costs and indirect costs are traced using budgeted rates. 
C) Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate. 
D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate. 
A) Direct costs and indirect costs are traced using an actual rate. 
B) Direct costs and indirect costs are traced using budgeted rates. 
C) Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate. 
D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.

Question 14

In a job-costing system the cost object is an individual unit, batch, or lot of a distinct product or service.

Accepted Answer

A) True 
 B)False

Question 15

What is the appropriate journal entry if direct materials of $20,000 and indirect materials of $3,000 are sent to the manufacturing plant floor?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 16

A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 17

Indirect manufacturing costs are debited to Manufacturing Overhead Control.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following questions using the information below:
Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 20X3:
  
-What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour?

Accepted Answer

A) $27.00; $4.17 
B) $29.80; $5.40 
C) $32.40; $5.00 
D) $27.00; $5.00 
A) $27.00; $4.17 
B) $29.80; $5.40 
C) $32.40; $5.00 
D) $27.00; $5.00

Question 19

A company may choose to use budgeted rates to allocate direct labor accounts if direct labor costs are difficult to trace to jobs as they are completed.

Accepted Answer

A) True 
 B)False

Question 20

When the allocated amount of indirect costs are less than the actual amount, indirect costs have been:

Accepted Answer

A) overabsorbed 
B) underapplied 
C) underallocated 
D) Both underapplied and underallocated are correct. 
A) overabsorbed 
B) underapplied 
C) underallocated 
D) Both underapplied and underallocated are correct.

Exam 4: Job Costing

The budgeted direct-labor cost rate includes ________ in the calculation.

Direct costs of a cost object are costs related to a particular cost object that can be allocated to that cost object in an economically feasible (cost-effective)way.

At the end of the year, the direct costs traced to jobs using the budgeted rates will equal actual direct costs.

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

Indirect materials that are requisitioned increase the Materials Control account.

The ________ approach carries the underallocated or overallocated amounts to overhead accounts in the following year.

Costs that are subject to short-run fluctuations for given jobs are:

Job costing is commonly used to estimate costs in beverage production.

Annual cost rates are preferred over actual cost rates for all of the following reasons EXCEPT:

Job costing and process costing systems share the same objective of estimating product costs.

A job-cost sheet details the:

Which of the following statements about normal costing is true?

In a job-costing system the cost object is an individual unit, batch, or lot of a distinct product or service.

What is the appropriate journal entry if direct materials of $20,000 and indirect materials of $3,000 are sent to the manufacturing plant floor?

A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.

Indirect manufacturing costs are debited to Manufacturing Overhead Control.

A company may choose to use budgeted rates to allocate direct labor accounts if direct labor costs are difficult to trace to jobs as they are completed.

When the allocated amount of indirect costs are less than the actual amount, indirect costs have been:

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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, Time, and the Theory of Constraints

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

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