Question 1

In general terms the process of assigning costs to a particular product or service is called

Accepted Answer

A) a cost allocation system. 
B) a cost assignment system. 
C) a job costing system. 
D) a process costing system. 
E) a cost recording system. 
A) a cost allocation system. 
B) a cost assignment system. 
C) a job costing system. 
D) a process costing system. 
E) a cost recording system. B

Question 2

Fixed costs remain constant at $200,000 per month.During high-output months variable costs are $160,000,and during low-output months variable costs are $40,000.What are the respective high and low indirect cost allocation rates if professional labour-hours are 8,000 for high-output months and 2,000 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 
E) $25.00 per hour;$100.00 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 
E) $25.00 per hour;$100.00 per hour A

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

Normal costing refers to

Accepted Answer

A) the average cost. 
B) costs within the relevant range. 
C) costs that behave like other similar costs. 
D) costs included in normal pools. 
E) allocating indirect costs at budgeted rates. 
A) the average cost. 
B) costs within the relevant range. 
C) costs that behave like other similar costs. 
D) costs included in normal pools. 
E) allocating indirect costs at budgeted rates.

Question 5

A job costing system assigns costs to a distinct unit or set of units of a product or service.

Accepted Answer

A) True 
 B)False

Question 6

Which method(s)for dealing with under/over allocated overhead provides the most accurate inventory and cost of goods sold account balances when the amount is material?

Accepted Answer

A) proration approach 
B) adjusted allocation-rate approach 
C) immediate write-off to cost of goods sold 
D) either proration or adjusted allocation-rate approach 
E) either the proration approach or the immediate write-off to cost of goods sold 
A) proration approach 
B) adjusted allocation-rate approach 
C) immediate write-off to cost of goods sold 
D) either proration or adjusted allocation-rate approach 
E) either the proration approach or the immediate write-off to cost of goods sold

Question 7

Use the information below to answer the following question(s).
Capable Carts manufactures custom carts for a variety of uses.The following data have been recorded for Job 892,which was recently completed.Direct materials used cost $6,300,the budgeted direct materials were $5,900.There were 180 direct labour hours worked on this job at a direct labour wage rate of $20 per hour;the budgeted direct labour wage rate was $21 per hour.There were 75 machine hours used on this job.The budgeted and actual indirect cost allocation rates are $32 and $29 per machine hour used,respectively.
-What is the total manufacturing cost of Job 892 using normal costing?

Accepted Answer

A) $9,900 
B) $12,300 
C) $12,080 
D) $12,255 
E) $12,075 
A) $9,900 
B) $12,300 
C) $12,080 
D) $12,255 
E) $12,075

Question 8

A local engineering firm is bidding on a design project for a new client.The total budgeted direct labour costs for the firm are $800,000.The total budgeted indirect costs are $1,200,000.It is estimated that there are 16,000 billable hours in total.
Required:
a.What is the budgeted direct labour cost rate?
b.What is the budgeted indirect cost allocation rate assuming direct labour cost is the cost allocation base?
c.What should be the engineering firm bid on the project if the direct labour hours are estimated at 500 hours?

Accepted Answer

a.$800,000/16,000 = $50/hour
b

Question 9

Which of the following would most likely be a direct cost in a manufacturing company?

Accepted Answer

A) supervision and engineering 
B) utilities 
C) repairs 
D) utilities and repairs 
E) raw materials 
A) supervision and engineering 
B) utilities 
C) repairs 
D) utilities and repairs 
E) raw materials

Question 10

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 11

Last week Job # WPP 298 was charged: DM of $4,606;DL of $1,579;and,MOH of $3,960 based on machine hours.The materials requisition record for this week showed an additional purchase of 10 brackets at a unit cost of $16;the direct labour costs were the same as the first week;and,the total machine hours for both weeks are now 140 hours at $45 per machine hour.Calculate the revised total job cost.(direct materials + direct labour + manufacturing overhead).

Accepted Answer

A) $10,145 
B) $11,884 
C) $12,645 
D) $18,184 
E) $14,224 
A) $10,145 
B) $11,884 
C) $12,645 
D) $18,184 
E) $14,224

Question 12

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).These were the respective ending balances in the Manufacturing Overhead Allocated and Manufacturing Overhead control accounts.
Before disposition of under/overallocated overhead,the following information was available:
  
-What is the journal entry Abernathy Company should use to write-off the difference between allocated and actual overhead directly to cost of goods sold?

Accepted Answer

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

Question 13

Use the information below to answer the following question(s).
The following data were taken from the records of Big Sky Ltd. ,a manufacturing company.The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base.
  
-What is the actual indirect cost rate at Big Sky Ltd.using direct labour hours as the allocation base?

Accepted Answer

A) $384.00 
B) $7.68 
C) $18.00 
D) $19.00 
E) $138.89 
A) $384.00 
B) $7.68 
C) $18.00 
D) $19.00 
E) $138.89

Question 14

Use the information below to answer the following question(s).
A Hospital uses a job cost system for all surgery patients.In February,the pre-operating room (PRE-OP)and operating room (OR)had budgeted allocation bases of 1,000 nursing hours and 500 nursing hours,respectively,and budgeted nursing overhead charges were $28,000 and $22,000,respectively.The hospital ward rooms for surgery patients had budgeted overhead costs of $200,000 and 2,500 nursing hours for the month.PRE-OP,OR and the hospital ward have separate indirect cost pools.The hospital uses a budgeted overhead rate for applying overhead to patient stays.
For patient Jones,actual hours incurred were six and eight hours,respectively,in the PRE-OP and OR rooms.He was in the hospital for 5 days (120 hours).Other costs related to Jones were:
  
-What is the budgeted overhead rate for the hospital floor for surgery?

Accepted Answer

A) $28.00 
B) $44.00 
C) $45.75 
D) $47.75 
E) $80.00 
A) $28.00 
B) $44.00 
C) $45.75 
D) $47.75 
E) $80.00

Question 15

Use the information below to answer the following question(s).
Because the Beckworth Company used a budgeted indirect cost allocation rate for its manufacturing operations,the amount allocated ($190,000)was different from the actual amount incurred ($175,000).These were the respective ending balances in the Manufacturing Overhead Allocated and Manufacturing Overhead control accounts.
Before disposition of under/overallocated overhead,the following information was available:
  
-What is the journal entry Beckworth Company should use to write-off the difference between allocated and actual overhead directly to cost of goods sold?

Accepted Answer

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

Question 16

In a costing system

Accepted Answer

A) cost tracing allocates indirect costs. 
B) cost allocation assigns direct costs. 
C) there may never be more than one indirect cost pool. 
D) a cost object should be a product and not a department or a geographic territory. 
E) a cost allocation base can be either financial or nonfinancial. 
A) cost tracing allocates indirect costs. 
B) cost allocation assigns direct costs. 
C) there may never be more than one indirect cost pool. 
D) a cost object should be a product and not a department or a geographic territory. 
E) a cost allocation base can be either financial or nonfinancial.

Question 17

Fixed and variable costs may be allocated to a cost object.

Accepted Answer

A) True 
 B)False

Question 18

A machine shop has direct materials cost of $1,800,000 direct labour of $4,200,000 (direct labour rate is $50 per hour)and budgeted indirect manufacturing costs of $850,000.Management believes that indirect manufacturing costs increase with direct labour hours.What is the budgeted indirect manufacturing cost rate?

Accepted Answer

A) $2.12 
B) $2.33 
C) $4.94 
D) $10.12 
E) $17.00 
A) $2.12 
B) $2.33 
C) $4.94 
D) $10.12 
E) $17.00

Question 19

The new manager of the insurance division does not understand how the company can have so many overhead rates for assigning costs to the activities of the company's life insurance underwriters.There is one rate schedule for average assignable costs when agents write standard policies.There is another rate schedule which the agents must complete when they write special policies,and these policies are costed out differently from those that are categorized as standard policies.
Required:
Why might the company have different costing systems with different overhead rates for the standard and specialized policies?

Accepted Answer

Because the standard policies are writte

Question 20

Larry's Appliance Shop operates retail stores that sell appliances.The cost objects are the individual sales of a given type of appliance and sales support.For refrigerators in July,the following costs were recorded:
   
Required:
a.Which of the costs will be subject to direct cost tracing?
b.What is the total cost for refrigerators?
c.What is the total cost of the Sales Support for refrigerators?

Accepted Answer

a.Professional sales staff com

In general terms the process of assigning costs to a particular product or service is called

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

Normal costing refers to

A job costing system assigns costs to a distinct unit or set of units of a product or service.

Which method(s)for dealing with under/over allocated overhead provides the most accurate inventory and cost of goods sold account balances when the amount is material?

Which of the following would most likely be a direct cost in a manufacturing company?

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

In a costing system

Fixed and variable costs may be allocated to a cost object.

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

Analysis of Cost Behaviour

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

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 4: Job Costing

In general terms the process of assigning costs to a particular product or service is called

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

Normal costing refers to

A job costing system assigns costs to a distinct unit or set of units of a product or service.

Which method(s)for dealing with under/over allocated overhead provides the most accurate inventory and cost of goods sold account balances when the amount is material?

Which of the following would most likely be a direct cost in a manufacturing company?

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

In a costing system

Fixed and variable costs may be allocated to a cost object.

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

Analysis of Cost Behaviour

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

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters