Question 1

The objective of allocating indirect costs is to measure the underlying usage of indirect resources by jobs.

Accepted Answer

A) True 
 B)False

Question 2

XYZ Company uses a normal job costing system.The direct labour rate is $27 per hour;and,the budgeted indirect cost allocation rate is $20 and uses direct labour hours as the cost allocation base.
 
What amount should be added to Work-in-Process control?

Accepted Answer

A) $12,000 
B) $47,000 
C) $59,000 
D) $76,000 
E) $85,000 
A) $12,000 
B) $47,000 
C) $59,000 
D) $76,000 
E) $85,000

Question 3

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 in the current year:
  
-The actual amount of manufacturing overhead costs incurred in June 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 4

Use the information below to answer the following question(s).
A dental office is in the process of changing their costing system.Their system currently uses a single direct cost pool (professional labour)and a single indirect cost pool (staff support).The direct categories in the new,refined costing system include:
1.Professional partner labour.Average total annual compensation of the two partners is $100,000;and,each partner has 2,000 hours of budgeted billable time.
2.Dental assistant labour.Average total annual compensation of the four assistants is $22,500 each,and each assistant has 2,000 hours of budgeted billable time.
3.Office staff.Average total annual compensation of the two staff members is $15,000 each,and each has 2,000 hours of budgeted billable time.
The indirect category in the new refined costing system includes professional liability insurance.The budgeted indirect amount is $200,000,and the allocation base is budgeted professional labour hours.The dentist and dental assistants are considered professional labour hours.
-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 5

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 6

Northern Manufacturing uses a predetermined manufacturing overhead rate to allocate
overhead to individual jobs.At the beginning of the year,the company expected to incur the following:
   
Required:
1.Compute Northerns's indirect cost allocation rate based on labour cost.
2.Compute Northerns's indirect cost allocation rate based on machine hours.
3.How much overhead was allocated during the year if the allocation base was machine hours?
4.How much manufacturing overhead was incurred during the year?

Accepted Answer

1.
 @#IMG-DLM& 
2.
 @#IMG-DLM& 
3.
 @#IMG-DLM& 4.A

Question 7

Maddow Manufacturing is a small textile manufacturer using machine-hours for 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 8

The cost driver of an indirect cost is often used as the cost allocation base.

Accepted Answer

A) True 
 B)False

Question 9

The difference between the actual costing and normal costing methods is that actual costing uses a budgeted indirect cost rate while normal costing uses an actual indirect cost rate.

Accepted Answer

A) True 
 B)False

Question 10

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 11

A company employs 25 full-time staff.The company spent $75,000 in advertising in the year (this amount is a period cost with a constant amount spent each year).Budgeted indirect manufacturing costs total $250,000 and the direct labour rate is $15 per hour.Budgeted labour hours were 500,000,and actual labour hours were 524,000.Actual indirect overhead was $274,600.
What are the actual and normal indirect-cost rates respectively?

Accepted Answer

A) $0.52 and $0.50 
B) $0.50 and $0.52 
C) $0.55 and $0.48 
D) $0.67 and $0.65 
E) $0.65 and $0.67 
A) $0.52 and $0.50 
B) $0.50 and $0.52 
C) $0.55 and $0.48 
D) $0.67 and $0.65 
E) $0.65 and $0.67

Question 12

In normal costing the manufacturing overhead control and manufacturing overhead allocated accounts in the general ledger respectively,refer to

Accepted Answer

A) the record of actual overhead costs,and the record of overhead allocated to specific jobs using budgeted rates × actual base units. 
B) the record of total budgeted overhead costs and the record of actual overhead allocated to date. 
C) the record of actual overhead costs,and the record of overhead allocated to specific jobs using actual rates × budgeted base units. 
D) the record of total budgeted overhead costs,and the record of overhead allocated to specific jobs using budgeted rates × actual base units. 
E) the record of actual overhead costs,and the record of overhead allocated to specific jobs using budgeted rates × budgeted base units. 
A) the record of actual overhead costs,and the record of overhead allocated to specific jobs using budgeted rates × actual base units. 
B) the record of total budgeted overhead costs and the record of actual overhead allocated to date. 
C) the record of actual overhead costs,and the record of overhead allocated to specific jobs using actual rates × budgeted base units. 
D) the record of total budgeted overhead costs,and the record of overhead allocated to specific jobs using budgeted rates × actual base units. 
E) the record of actual overhead costs,and the record of overhead allocated to specific jobs using budgeted rates × budgeted base units.

Question 13

Use the information below to answer the following question(s).
World Engines Ltd.manufactures custom engines for use in the lawn and garden equipment industry.The company allocates manufacturing overhead based on machine hours.Selected data for costs incurred for Job 787 are as follows:
  
-What is the total manufacturing cost of Job 787 using normal costing?

Accepted Answer

A) $17,100 
B) $14,960 
C) $12,800 
D) $15,500 
E) $14,300 
A) $17,100 
B) $14,960 
C) $12,800 
D) $15,500 
E) $14,300

Question 14

Underallocated indirect costs cannot occur when normal costing is used.

Accepted Answer

A) True 
 B)False

Question 15

Actual costing allocates indirect costs based on the predetermined indirect-cost rates multiplied by the actual quantities of the cost-allocation bases.

Accepted Answer

A) True 
 B)False

Question 16

Use the information below to answer the following question(s).
A dental office is in the process of changing their costing system.Their system currently uses a single direct cost pool (professional labour)and a single indirect cost pool (staff support).The direct categories in the new,refined costing system include:
1.Professional partner labour.Average total annual compensation of the two partners is $100,000;and,each partner has 2,000 hours of budgeted billable time.
2.Dental assistant labour.Average total annual compensation of the four assistants is $22,500 each,and each assistant has 2,000 hours of budgeted billable time.
3.Office staff.Average total annual compensation of the two staff members is $15,000 each,and each has 2,000 hours of budgeted billable time.
The indirect category in the new refined costing system includes professional liability insurance.The budgeted indirect amount is $200,000,and the allocation base is budgeted professional labour hours.The dentist and dental assistants are considered professional labour hours.
-What would be the new budgeted direct cost rate if they decided to give all of the dental assistants a 10% raise?

Accepted Answer

A) $13.000 per hour 
B) $12.375 per hour 
C) $11.250 per hour 
D) $9.875 per hour 
E) $9.125 per hour 
A) $13.000 per hour 
B) $12.375 per hour 
C) $11.250 per hour 
D) $9.875 per hour 
E) $9.125 per hour

Question 17

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 actual 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 18

John wants to identify the total cost for computing the corporate tax return he prepared for his client.Labour is the only direct cost at $50 per hour.Indirect costs are $60 per labour hour.What is the total direct cost,indirect cost,and job cost,respectively,if 15 hours are spent preparing the tax return?

Accepted Answer

A) $700,$850,$1,550 
B) $750,$800,$1,550 
C) $750,$900,$1,650 
D) $800,$640,$1,440 
E) $800,$900,$1,440 
A) $700,$850,$1,550 
B) $750,$800,$1,550 
C) $750,$900,$1,650 
D) $800,$640,$1,440 
E) $800,$900,$1,440

Question 19

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 was the total OR cost for patient Jones?

Accepted Answer

A) $2,418 
B) $2,514 
C) $2,250 
D) $2,602 
E) $2,474 
A) $2,418 
B) $2,514 
C) $2,250 
D) $2,602 
E) $2,474

Question 20

Using normal costing the amount of supervisory salaries to allocate is determined by calculating

Accepted Answer

A) actual direct-cost rates times actual quantities of direct-cost inputs. 
B) actual indirect-cost rates times actual quantities of cost-allocation bases. 
C) actual direct-cost rates times budgeted quantities of input. 
D) budgeted indirect-cost rates times actual quantities of cost-allocation bases. 
E) budgeted indirect-cost rates times budgeted quantities of cost-allocation bases. 
A) actual direct-cost rates times actual quantities of direct-cost inputs. 
B) actual indirect-cost rates times actual quantities of cost-allocation bases. 
C) actual direct-cost rates times budgeted quantities of input. 
D) budgeted indirect-cost rates times actual quantities of cost-allocation bases. 
E) budgeted indirect-cost rates times budgeted quantities of cost-allocation bases.

The objective of allocating indirect costs is to measure the underlying usage of indirect resources by jobs.

XYZ Company uses a normal job costing system.The direct labour rate is $27 per hour;and,the budgeted indirect cost allocation rate is $20 and uses direct labour hours as the cost allocation base. What amount should be added to Work-in-Process control?

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

The cost driver of an indirect cost is often used as the cost allocation base.

The difference between the actual costing and normal costing methods is that actual costing uses a budgeted indirect cost rate while normal costing uses an actual indirect cost rate.

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

In normal costing the manufacturing overhead control and manufacturing overhead allocated accounts in the general ledger respectively,refer to

Underallocated indirect costs cannot occur when normal costing is used.

Actual costing allocates indirect costs based on the predetermined indirect-cost rates multiplied by the actual quantities of the cost-allocation bases.

Using normal costing the amount of supervisory salaries to allocate is determined by calculating

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

The objective of allocating indirect costs is to measure the underlying usage of indirect resources by jobs.

XYZ Company uses a normal job costing system.The direct labour rate is $27 per hour;and,the budgeted indirect cost allocation rate is $20 and uses direct labour hours as the cost allocation base. What amount should be added to Work-in-Process control?

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

The cost driver of an indirect cost is often used as the cost allocation base.

The difference between the actual costing and normal costing methods is that actual costing uses a budgeted indirect cost rate while normal costing uses an actual indirect cost rate.

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

In normal costing the manufacturing overhead control and manufacturing overhead allocated accounts in the general ledger respectively,refer to

Underallocated indirect costs cannot occur when normal costing is used.

Actual costing allocates indirect costs based on the predetermined indirect-cost rates multiplied by the actual quantities of the cost-allocation bases.

Using normal costing the amount of supervisory salaries to allocate is determined by calculating

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