Question 1

Which of the following statements about actual costing and normal costing is true?

Accepted Answer

A) Manufacturing costs of a job are available earlier under actual costing. 
B) Corrective actions can be implemented sooner under normal costing. 
C) Manufacturing costs are available earlier under normal costing. 
D) Both B and C are correct. 
A) Manufacturing costs of a job are available earlier under actual costing. 
B) Corrective actions can be implemented sooner under normal costing. 
C) Manufacturing costs are available earlier under normal costing. 
D) Both B and C are correct.

Question 2

O'Reilly Enterprises manufactures digital video equipment. For each unit $2,950 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labor hour. Calculate the cost of each unit.

Accepted Answer

A) $4,950 
B) $9,950 
C) $8,450 
D) $11,950 
A) $4,950 
B) $9,950 
C) $8,450 
D) $11,950

Question 3

Answer the following questions using the information below:
Philadelphia Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2010:
  
-The amount of manufacturing overhead allocated to all jobs during June 2010 totals:

Accepted Answer

A) $38,500 
B) $52,500 
C) $55,000 
D) $100,000 
A) $38,500 
B) $52,500 
C) $55,000 
D) $100,000

Question 4

Answer the following questions using the information below:
Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are:
   The actual material and labor costs charged to Job #432 were as follows:
   Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year.
-For Department B, the manufacturing overhead allocation rate is:

Accepted Answer

A) 50% 
B) 100% 
C) 200% 
D) 300% 
A) 50% 
B) 100% 
C) 200% 
D) 300%

Question 5

In the service sector:

Accepted Answer

A) direct labor costs are always easy to trace to jobs 
B) a budgeted direct-labor cost rate may be used to apply direct labor to jobs 
C) normal costing may not be used 
D) overhead is generally applied using an actual cost-allocation rate 
A) direct labor costs are always easy to trace to jobs 
B) a budgeted direct-labor cost rate may be used to apply direct labor to jobs 
C) normal costing may not be used 
D) overhead is generally applied using an actual cost-allocation rate

Question 6

________ is the process of distributing indirect costs to products.

Accepted Answer

A) Cost allocation 
B) Job cost recording 
C) Cost pooling 
D) Cost tracing 
A) Cost allocation 
B) Job cost recording 
C) Cost pooling 
D) Cost tracing

Question 7

Answer the following questions using the information below:
Joni's Kitty Supplies applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct manufacturing labor-hours at $20 per hour; and a 20% markup rate on total manufacturing costs.
-Manufacturing overhead cost estimates for this special order total:

Accepted Answer

A) $10,000 
B) $30,000 
C) $36,000 
D) None of these answers is correct. 
A) $10,000 
B) $30,000 
C) $36,000 
D) None of these answers is correct.

Question 8

Fixed costs remain constant at $400,000 per month. During high-output months variable costs are $320,000, and during low-output months variable costs are $80,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 16,000 for high-output months and 4,000 for low-output months?

Accepted Answer

A) $45.00 per hour; $120.00 per hour 
B) $45.00 per hour; $45.00 per hour 
C) $25.00 per hour; $20.00 per hour 
D) $56.20 per hour; $120.00 per hour 
A) $45.00 per hour; $120.00 per hour 
B) $45.00 per hour; $45.00 per hour 
C) $25.00 per hour; $20.00 per hour 
D) $56.20 per hour; $120.00 per hour

Question 9

Assigning direct costs to a cost object is called:

Accepted Answer

A) cost allocation 
B) cost assignment 
C) cost pooling 
D) cost tracing 
A) cost allocation 
B) cost assignment 
C) cost pooling 
D) cost tracing

Question 10

A ________ is a grouping of individual indirect cost items.

Accepted Answer

A) cost allocation base 
B) cost assignment 
C) cost pool 
D) job-costing system 
A) cost allocation base 
B) cost assignment 
C) cost pool 
D) job-costing system

Question 11

Answer the following questions using the information below:
Wayland Manufacturing uses a normal cost system and had the following data available for 2010:
      
-The ending balance of direct materials inventory is:

Accepted Answer

A) $92,000 
B) $174,000 
C) $82,000 
D) $108,000 
A) $92,000 
B) $174,000 
C) $82,000 
D) $108,000

Question 12

The Salaries Payable Control account has underlying subsidiary ledgers.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Hammond and Jarrett provide tax consulting for estates and trusts. Their job-costing system has a single direct-cost category (professional labor)and a single indirect-cost pool (research support). The indirect-cost pool contains all the costs except direct personnel costs. All budgeted indirect costs are allocated to individual jobs using actual professional labor-hours.
Required:
a. Discuss the reasons a consulting firm might use a normal costing system rather than an actual costing system.
b. What might be some reasons for the firm to change from a one-pool to a multiple-pool allocation concept?

Accepted Answer

a. Budget rates are normally used becaus

Question 15

Isabelle, Inc., uses a budgeted factory overhead rate to apply overhead to production. The following data are available for the year ended December 31, 20X5.
   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.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Maddow 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 Patterson High School Science Olympiad Jacket job.
   Required:
a. For Maddow Manufacturing, determine the annual manufacturing overhead cost-allocation rate.
b. Determine the amount of manufacturing overhead costs allocated to the Patterson High School job.
c. Determine the estimated total manufacturing costs for the Patterson High School job.

Accepted Answer

a. Manufacturing overhead cost

Question 18

Actual (rather than allocated)manufacturing overhead costs are included in the:

Accepted Answer

A) Work-in-Process Control account 
B) Finished Goods Control account 
C) Manufacturing Overhead Control account 
D) Both A and B are correct. 
A) Work-in-Process Control account 
B) Finished Goods Control account 
C) Manufacturing Overhead Control account 
D) Both A and B are correct.

Question 19

Companies typically wait for accurate information regarding actual manufacturing overhead costs before pricing a job.

Accepted Answer

A) True 
 B)False

Question 20

A materials-requisition record is an example of a source document.

Accepted Answer

A) True 
 B)False

Which of the following statements about actual costing and normal costing is true?

O'Reilly Enterprises manufactures digital video equipment. For each unit $2,950 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labor hour. Calculate the cost of each unit.

In the service sector:

________ is the process of distributing indirect costs to products.

Assigning direct costs to a cost object is called:

A ________ is a grouping of individual indirect cost items.

Answer the following questions using the information below: Wayland Manufacturing uses a normal cost system and had the following data available for 2010: -The ending balance of direct materials inventory is:

The Salaries Payable Control account has underlying subsidiary ledgers.

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

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

Actual (rather than allocated)manufacturing overhead costs are included in the:

Companies typically wait for accurate information regarding actual manufacturing overhead costs before pricing a job.

A materials-requisition record is an example of a source document.

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

Filters

Exam 4: Job Costing

Which of the following statements about actual costing and normal costing is true?

O'Reilly Enterprises manufactures digital video equipment. For each unit $2,950 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labor hour. Calculate the cost of each unit.

In the service sector:

________ is the process of distributing indirect costs to products.

Assigning direct costs to a cost object is called:

A ________ is a grouping of individual indirect cost items.

Answer the following questions using the information below: Wayland Manufacturing uses a normal cost system and had the following data available for 2010: -The ending balance of direct materials inventory is:

The Salaries Payable Control account has underlying subsidiary ledgers.

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

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

Actual (rather than allocated)manufacturing overhead costs are included in the:

Companies typically wait for accurate information regarding actual manufacturing overhead costs before pricing a job.

A materials-requisition record is an example of a source document.

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

Filters