Question 1

Cost pools are defined as groupings of individual cost items which can range from broad, company-wide categories to very narrow categories.

Accepted Answer

A) True 
 B)False

Question 2

Describe job-costing and process-costing systems. Explain when it would be appropriate to use each.

Accepted Answer

Job costing accumulates costs for differ

Question 3

Which of the following includes both traced direct costs and allocated indirect costs?

Accepted Answer

A)  cost tracing 
B)  cost pools 
C)  assigned costs 
D)  cost allocation 
E)  cost recording 
A)  cost tracing 
B)  cost pools 
C)  assigned costs 
D)  cost allocation 
E)  cost recording

Question 4

The main advantage of using budgeted cost rates rather than actual cost rates is

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)  actual indirect-cost rates are affected by work done on other jobs. 
E)  budgeted rates are just as accurate and require less effort. 
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)  actual indirect-cost rates are affected by work done on other jobs. 
E)  budgeted rates are just as accurate and require less effort.

Question 5

General Hospital uses a job-costing system for all patients. In March the Critical Care and Special Care facilities had cost allocation bases of 4,000 nursing days and 3,000 nursing days, respectively. The nursing care charges for each department for the month were $2,106,000 and $1,500,000, respectively. The General Care area had costs of $2,700,000 and 7,500 nursing days for the month.
Patient Jim Hansen spent 5 days in Critical Care, 4 days in Special Care and 21 days in General Care during March.
Required:
a. Determine the cost allocation rate for each department.
b. What are the total charges to Mr. Hansen if he was in the facility the entire month of March?

Accepted Answer

a. Overhead rate Critical Care

Question 6

Transferring costs from pools to jobs is called

Accepted Answer

A)  cost allocation. 
B)  cost control. 
C)  cost pool. 
D)  cost factoring. 
E)  cost processing. 
A)  cost allocation. 
B)  cost control. 
C)  cost pool. 
D)  cost factoring. 
E)  cost processing.

Question 7

For normal costing, even though the budgeted indirect-cost rate is based on estimates, indirect costs are allocated to products based on actual levels of the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 8

Camden Company gathered the following information for the year ended December 31:   Clyde Company uses a job costing system.
What is the indirect cost allocation rate for the year be using direct labour hours as the allocation base?

Accepted Answer

A)  $1.11 per direct labour hour 
B)  $0.90 per direct labour hour 
C)  $1.20 per direct labour hour 
D)  $0.60 per direct labour hour 
E)  $0.47 per direct labour hour 
A)  $1.11 per direct labour hour 
B)  $0.90 per direct labour hour 
C)  $1.20 per direct labour hour 
D)  $0.60 per direct labour hour 
E)  $0.47 per direct labour hour

Question 9

Answer the following question(s) using the information below.
Sunny Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect cost allocation rate of $15 per direct labour hour. The following data are obtained from the accounting records for June 2012:
  
-The actual amount of manufacturing overhead costs incurred in June 2012 totals

Accepted Answer

A)  $557,000. 
B)  $200,000. 
C)  $110,000. 
D)  $80,000. 
E)  $105,000. 
A)  $557,000. 
B)  $200,000. 
C)  $110,000. 
D)  $80,000. 
E)  $105,000.

Question 10

In normal costing the budgeted or standard rate are the same.

Accepted Answer

A) True 
 B)False

Question 11

What is the budgeted indirect cost allocation rate per unit of the allocation base for the professional liability insurance?

Accepted Answer

A)  $16.67 
B)  $25.00 
C)  $1.67 
D)  $26.67 
E)  $12.50 
A)  $16.67 
B)  $25.00 
C)  $1.67 
D)  $26.67 
E)  $12.50

Question 12

What would be the percentage change in the budgeted direct cost rate if they consider hiring one more employee, as part of the office staff?

Accepted Answer

A)  3.0% 
B)  2.0% 
C)  1.0% 
D)  0.5% 
E)  0% 
A)  3.0% 
B)  2.0% 
C)  1.0% 
D)  0.5% 
E)  0%

Question 13

The following data were taken from the records of a manufacturing company. The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base. Calculate the rate using machine hours as the allocation base.

Accepted Answer

A)  $60.67 
B)  $10.67 
C)  $7.89 
D)  $4.05 
E)  $3.84 
A)  $60.67 
B)  $10.67 
C)  $7.89 
D)  $4.05 
E)  $3.84

Question 14

An accounting firm provides tax consulting for estates and trusts. Their job costing system has a single direct cost category (professional labour) 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 labour hours.
Required:
a. Discuss the reasons a consulting firm might use normal costing in its job system rather than actual costing.
b. What might be some ways for the firm to change from a one pool allocation concept?

Accepted Answer

a. Budget rates are normally used becaus

Question 15

Direct costs are allocated to the cost object using a cost-allocation method.

Accepted Answer

A) True 
 B)False

Question 16

Use the information below to answer the following question(s).
Because the Abernathy Company used a budgeted indirect cost allocation rate for its manufacturing operations, the amount allocated ($200,000) was different from the actual amount incurred ($225,000).
Before disposition of under/overallocated overhead, the following information was available:
  
-What is the journal entry used to write-off the difference between allocated and actual overhead using the proration approach?

Accepted Answer

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

Question 17

The balance in the manufacturing overhead allocated account, is carried over to the balance sheet for the subsequent year, to properly track all costs for job costing.

Accepted Answer

A) True 
 B)False

Question 18

Correct the following journal entry, and explain your changes.
   To record the cost of machinery repair labour.

Accepted Answer

It is correct to charge the machinery re

Cost pools are defined as groupings of individual cost items which can range from broad, company-wide categories to very narrow categories.

Describe job-costing and process-costing systems. Explain when it would be appropriate to use each.

Which of the following includes both traced direct costs and allocated indirect costs?

The main advantage of using budgeted cost rates rather than actual cost rates is

Transferring costs from pools to jobs is called

For normal costing, even though the budgeted indirect-cost rate is based on estimates, indirect costs are allocated to products based on actual levels of the cost-allocation base.

Camden Company gathered the following information for the year ended December 31: Clyde Company uses a job costing system. What is the indirect cost allocation rate for the year be using direct labour hours as the allocation base?

In normal costing the budgeted or standard rate are the same.

What is the budgeted indirect cost allocation rate per unit of the allocation base for the professional liability insurance?

What would be the percentage change in the budgeted direct cost rate if they consider hiring one more employee, as part of the office staff?

The following data were taken from the records of a manufacturing company. The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base. Calculate the rate using machine hours as the allocation base.

Direct costs are allocated to the cost object using a cost-allocation method.

The balance in the manufacturing overhead allocated account, is carried over to the balance sheet for the subsequent year, to properly track all costs for job costing.

Correct the following journal entry, and explain your changes. To record the cost of machinery repair labour.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 4: Job Costing

Cost pools are defined as groupings of individual cost items which can range from broad, company-wide categories to very narrow categories.

Describe job-costing and process-costing systems. Explain when it would be appropriate to use each.

Which of the following includes both traced direct costs and allocated indirect costs?

The main advantage of using budgeted cost rates rather than actual cost rates is

Transferring costs from pools to jobs is called

For normal costing, even though the budgeted indirect-cost rate is based on estimates, indirect costs are allocated to products based on actual levels of the cost-allocation base.

Camden Company gathered the following information for the year ended December 31: Clyde Company uses a job costing system. What is the indirect cost allocation rate for the year be using direct labour hours as the allocation base?

In normal costing the budgeted or standard rate are the same.

What is the budgeted indirect cost allocation rate per unit of the allocation base for the professional liability insurance?

What would be the percentage change in the budgeted direct cost rate if they consider hiring one more employee, as part of the office staff?

The following data were taken from the records of a manufacturing company. The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base. Calculate the rate using machine hours as the allocation base.

Direct costs are allocated to the cost object using a cost-allocation method.

The balance in the manufacturing overhead allocated account, is carried over to the balance sheet for the subsequent year, to properly track all costs for job costing.

Correct the following journal entry, and explain your changes. To record the cost of machinery repair labour.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters