Question 1

Ideally,if a department has more than one cost-allocation base for overhead costs,it should ________.

Accepted Answer

A)  use only one cost-allocation base with the highest amount of overhead costs 
B)  use only two cost-allocation bases with the highest amount of overhead costs 
C)  accumulate a separate cost pool for each cost-allocation base and put the overhead costs into the appropriate cost pool 
D)  determine the budgeted overhead rate using the budgeted overhead costs and the budgeted amount of only one cost driver 
A)  use only one cost-allocation base with the highest amount of overhead costs 
B)  use only two cost-allocation bases with the highest amount of overhead costs 
C)  accumulate a separate cost pool for each cost-allocation base and put the overhead costs into the appropriate cost pool 
D)  determine the budgeted overhead rate using the budgeted overhead costs and the budgeted amount of only one cost driver

Question 2

An unfavorable production volume variance decreases the manufacturing costs shown on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

Wininger Incorporated reported the following information about the production and sale of its only product during the first month of operations:
$$\begin{array} { l l } 
 \text {Selling price per unit  }&\$ 300\
\text {Sales }&\$ 480,000\
\text { Direct materials used}&\$ 220,000\
\text {Direct labor }&\$200,000 \
\text {Variable factory overhead}&\$60,000 \
\text {Fixed factory overhead }&\$80,000 \
\text {Variable selling and administrative expenses  }&\$20,000 \
\text {Fixed selling and administrative expenses }&\$ 10,000\
\text {Ending inventory, Direct Materials }& 0\
\text {Ending inventory, Work-in-process }& 0\
\text {Ending inventory, Finished Goods }&400 \text { units } \
\end{array}$$
Under variable costing,the product cost per unit is ________.

Accepted Answer

A)  $160 
B)  $170 
C)  $200 
D)  $240 
A)  $160 
B)  $170 
C)  $200 
D)  $240

Question 4

When the actual overhead costs exceed the amount of applied overhead costs,the overhead costs are ________.At the end of the accounting period,accountants dispose of the underapplied or overapplied overhead using ________ or ________.

Accepted Answer

A)  overapplied; proration; immediate write-off 
B)  underapplied; proration; immediate write-off 
C)  overapplied; flexible budget variance; proration 
D)  underapplied; flexible budget variance; immediate write-off 
A)  overapplied; proration; immediate write-off 
B)  underapplied; proration; immediate write-off 
C)  overapplied; flexible budget variance; proration 
D)  underapplied; flexible budget variance; immediate write-off

Question 5

The proration method of disposing of an overhead variance prorates the variance among three accounts that include Direct Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

Accepted Answer

A) True 
 B)False

Question 6

In absorption costing,costs are separated into two categories of ________.

Accepted Answer

A)  fixed costs and variable costs 
B)  variable costs and manufacturing costs 
C)  fixed costs and manufacturing costs 
D)  manufacturing costs and nonmanufacturing costs 
A)  fixed costs and variable costs 
B)  variable costs and manufacturing costs 
C)  fixed costs and manufacturing costs 
D)  manufacturing costs and nonmanufacturing costs

Question 7

Under variable costing,________ is NOT an inventoriable cost.

Accepted Answer

A)  direct materials 
B)  variable manufacturing overhead 
C)  variable selling and administrative expenses 
D)  direct labor 
A)  direct materials 
B)  variable manufacturing overhead 
C)  variable selling and administrative expenses 
D)  direct labor

Question 8

Campbell Company gathered the following information for the year ended December 31,2015:
 $\begin{array}{ll}
\text { Units produced } & 45,000 \
\text { Units expected to be produced } & 45,000 \
\text { Units sold } & 43,200 \
\text { Direct labor } & \$ 137,200 \
\text { Direct materials used } & \$ 126,400 \
\text { Fixed selling and administrative expenses } & \$ 51,000 \
\text { Variable selling and administrative expenses } & \$ 58,000 \
\text { Fixed manufacturing overhead } & \$ 83,250 \
\text { Variable manufacturing overhead } & \$ 73,900 \
\text { Direct materials inventory, December 31, 2015 } & 0 \
\text { Direct materials inventory, December 31, 2014 } & 0 \
\text { Work-in-process inventory, December 31, 2015 } & 0 \
\text { Work-in-process inventory, December 31, 2014 } & 0 \
\text { Finished goods inventory, December 31, 2014 } & 0
\end{array}$ 
Required: 
A) Under absorption costing, what is the cost of the finished goods inventory on December 31, 2015?
B) Under variable costing, what is the cost of the finished goods inventory on December 31, 2015?

Accepted Answer

A)($126,400 + $137,200 + $73,9

Question 9

When the actual volume is less than the expected volume,the fixed overhead costs are ________.

Accepted Answer

A)  favorable 
B)  overapplied 
C)  overbudgeted 
D)  underapplied 
A)  favorable 
B)  overapplied 
C)  overbudgeted 
D)  underapplied

Question 10

In absorption costing,sales revenue less cost of goods sold is equal to ________.

Accepted Answer

A)  contribution margin 
B)  operating margin 
C)  operating income 
D)  gross margin 
A)  contribution margin 
B)  operating margin 
C)  operating income 
D)  gross margin

Question 11

Green Company had the following information:
$\begin{array}{ll}
\text { Budgeted factory overhead costs }&\$144,500\
\text { Actual factory overhead costs }&\$151,980\
\text { Budgeted direct labor hours } & 34,000 \
\text { Actural direct labor hours } & 30.400
\end{array}$
Assume direct labor hours are the cost driver for factory overhead costs.The budgeted factory overhead rate is ________.

Accepted Answer

A)  $4.25 per direct labor hour 
B)  $4.45 per direct labor hour 
C)  $4.63 per direct labor hour 
D)  $4.84 per direct labor hour 
A)  $4.25 per direct labor hour 
B)  $4.45 per direct labor hour 
C)  $4.63 per direct labor hour 
D)  $4.84 per direct labor hour

Question 12

Kaprelian Company reported the following information about the production and sale of its only product during the first month of operations:
$$\begin{array} { l l } 
 \text {Selling price per unit  }&\$ 300\
\text {Sales }&\$ 480,000\
\text { Direct materials used}&\$ 220,000\
\text {Direct labor }&\$200,000 \
\text {Variable factory overhead}&\$60,000 \
\text {Fixed factory overhead }&\$80,000 \
\text {Variable selling and administrative expenses  }&\$20,000 \
\text {Fixed selling and administrative expenses }&\$ 10,000\
\text {Ending inventory, Direct Materials }& 0\
\text {Ending inventory, Work-in-process }& 0\
\text {Ending inventory, Finished Goods }&400 \text { units } \
\end{array}$$
Under variable costing,the variable manufacturing cost of goods sold is ________.

Accepted Answer

A)  $256,000 
B)  $272,000 
C)  $320,000 
D)  $384,000 
A)  $256,000 
B)  $272,000 
C)  $320,000 
D)  $384,000

Question 13

To compute contribution margin under variable costing,we deduct ________ and ________ from sales.

Accepted Answer

A)  variable manufacturing costs; fixed manufacturing costs 
B)  variable selling costs; fixed manufacturing costs 
C)  variable administrative costs; fixed manufacturing overhead costs 
D)  variable manufacturing costs; variable selling and administrative costs 
A)  variable manufacturing costs; fixed manufacturing costs 
B)  variable selling costs; fixed manufacturing costs 
C)  variable administrative costs; fixed manufacturing overhead costs 
D)  variable manufacturing costs; variable selling and administrative costs

Question 14

The budgeted factory overhead rate is computed as ________.

Accepted Answer

A)  actual factory overhead costs divided by actual production in units 
B)  actual factory overhead costs divided by actual cost driver activity 
C)  budgeted factory overhead costs divided by actual cost driver activity 
D)  budgeted factory overhead costs divided by budgeted cost-allocation base level 
A)  actual factory overhead costs divided by actual production in units 
B)  actual factory overhead costs divided by actual cost driver activity 
C)  budgeted factory overhead costs divided by actual cost driver activity 
D)  budgeted factory overhead costs divided by budgeted cost-allocation base level

Question 15

In absorption costing,production volume does NOT affect the ________.

Accepted Answer

A)  amount of fixed overhead costs applied to products 
B)  amount of variable overhead costs applied to products 
C)  budgeted amount of fixed overhead costs 
D)  amount of direct materials costs applied to products 
A)  amount of fixed overhead costs applied to products 
B)  amount of variable overhead costs applied to products 
C)  budgeted amount of fixed overhead costs 
D)  amount of direct materials costs applied to products

Question 16

The proration method of disposing of overhead variances prorates the variance based on the beginning of the reporting period account balances in Cost of Goods Sold,Work-in-Process Inventory and Finished Goods Inventory.

Accepted Answer

A) True 
 B)False

Question 17

The production volume variance is calculated by the difference between actual volume and applied volume.

Accepted Answer

A) True 
 B)False

Question 18

Central Company reported the following information about the production and sale of its only product during the first month of operations:
$\begin{array}{ll}
\text { Selling price per unit } & \$ 225,00 \
\text { Sales } & \$ 360,000 \
\text { Direct materials used } & \$ 176,000 \
\text { Direct labor } & \$ 100,000\\text { Variable factory overhead } & \$ 44,000 \
\text { Fixed factory overhead } & \$ 80,000 \
\text { Variable selling and administrative expenses } & \$ 20,000 \
\text { Fixed selling and administrative expenses } & \$ 10,000 \
\text { Production volume variance } & 0 \
\text { Ending inventory, Direct Materials } & 0 \
\text { Ending inventory, Work-in-process } & 0\
\text { Ending inventory, Finished Goods }&400 \text { units }
\end{array}$
Under absorption costing,what is the operating income or loss?

Accepted Answer

A)  $(6,000) 
B)  $(70,000) 
C)  $10,000 
D)  $20,000 
A)  $(6,000) 
B)  $(70,000) 
C)  $10,000 
D)  $20,000

Question 19

The variable-costing income statement uses the contribution-approach format.

Accepted Answer

A) True 
 B)False

Question 20

The difference in variable costing operating income and absorption costing operating income equals ________.

Accepted Answer

A)  the change in Work-In-Process Inventories times the budgeted fixed overhead rate 
B)  the change in Finished Goods Inventories times the budgeted fixed overhead rate 
C)  the change in Raw Materials Inventories times the budgeted variable overhead rate 
D)  the change in Work-In-Process Inventories times the budgeted variable overhead rate 
A)  the change in Work-In-Process Inventories times the budgeted fixed overhead rate 
B)  the change in Finished Goods Inventories times the budgeted fixed overhead rate 
C)  the change in Raw Materials Inventories times the budgeted variable overhead rate 
D)  the change in Work-In-Process Inventories times the budgeted variable overhead rate

Ideally,if a department has more than one cost-allocation base for overhead costs,it should ________.

An unfavorable production volume variance decreases the manufacturing costs shown on the income statement.

When the actual overhead costs exceed the amount of applied overhead costs,the overhead costs are .At the end of the accounting period,accountants dispose of the underapplied or overapplied overhead using or .

The proration method of disposing of an overhead variance prorates the variance among three accounts that include Direct Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

In absorption costing,costs are separated into two categories of ________.

Under variable costing,________ is NOT an inventoriable cost.

When the actual volume is less than the expected volume,the fixed overhead costs are ________.

In absorption costing,sales revenue less cost of goods sold is equal to ________.

To compute contribution margin under variable costing,we deduct and from sales.

The budgeted factory overhead rate is computed as ________.

In absorption costing,production volume does NOT affect the ________.

The proration method of disposing of overhead variances prorates the variance based on the beginning of the reporting period account balances in Cost of Goods Sold,Work-in-Process Inventory and Finished Goods Inventory.

The production volume variance is calculated by the difference between actual volume and applied volume.

The variable-costing income statement uses the contribution-approach format.

The difference in variable costing operating income and absorption costing operating income equals ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 13: Accounting for Overhead Costs

Ideally,if a department has more than one cost-allocation base for overhead costs,it should ________.

An unfavorable production volume variance decreases the manufacturing costs shown on the income statement.

When the actual overhead costs exceed the amount of applied overhead costs,the overhead costs are ________.At the end of the accounting period,accountants dispose of the underapplied or overapplied overhead using ________ or ________.

The proration method of disposing of an overhead variance prorates the variance among three accounts that include Direct Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

In absorption costing,costs are separated into two categories of ________.

Under variable costing,________ is NOT an inventoriable cost.

When the actual volume is less than the expected volume,the fixed overhead costs are ________.

In absorption costing,sales revenue less cost of goods sold is equal to ________.

To compute contribution margin under variable costing,we deduct ________ and ________ from sales.

The budgeted factory overhead rate is computed as ________.

In absorption costing,production volume does NOT affect the ________.

The proration method of disposing of overhead variances prorates the variance based on the beginning of the reporting period account balances in Cost of Goods Sold,Work-in-Process Inventory and Finished Goods Inventory.

The production volume variance is calculated by the difference between actual volume and applied volume.

The variable-costing income statement uses the contribution-approach format.

The difference in variable costing operating income and absorption costing operating income equals ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

When the actual overhead costs exceed the amount of applied overhead costs,the overhead costs are .At the end of the accounting period,accountants dispose of the underapplied or overapplied overhead using or .

To compute contribution margin under variable costing,we deduct and from sales.