Question 1

Which of the following would probably not be a cost driver in a manufacturing environment?

Accepted Answer

A)  Machine hours 
B)  Direct labor hours 
C)  Direct labor cost 
D)  Indirect labor hours 
A)  Machine hours 
B)  Direct labor hours 
C)  Direct labor cost 
D)  Indirect labor hours D

Question 2

When is it appropriate to use process costing? Describe how costs are accumulated and assigned to products.

Accepted Answer

It is appropriate to use process costing when a company's products are made in a continuous flow production process and when the units that are produced within a particular process are all identical. All product costs are accumulated together and then divided evenly among the equivalent units produced in that process.

Question 3

Nunez Products Inc. Nunez Products Inc. uses process costing. The following information was available for the current year:
  Refer to the Nunez Products Inc. information above. If Nunez uses the first-in, first-out (FIFO) method of computing equivalent units and assigning product costs, what is the cost per equivalent unit? (round to nearest penny)

Accepted Answer

A)  $5.89 
B)  $8.00 
C)  $8.12 
D)  $8.04 
A)  $5.89 
B)  $8.00 
C)  $8.12 
D)  $8.04 B

Question 4

Which of the following statements is true with respect to cost drivers?

Accepted Answer

A)  Overhead costs should only have one cost driver. 
B)  In labor intensive companies, direct labor hours often serves as the cost driver. 
C)  When using a cost driver, the same amount of overhead will be allocated to all products. 
D)  Cost drivers are only used to allocate machine hours. 
A)  Overhead costs should only have one cost driver. 
B)  In labor intensive companies, direct labor hours often serves as the cost driver. 
C)  When using a cost driver, the same amount of overhead will be allocated to all products. 
D)  Cost drivers are only used to allocate machine hours.

Question 5

What should determine whether an allocation base is a good cost driver?

Accepted Answer

A)  Whether or not the base can be measured in terms of "hours". 
B)  Whether or not the base can be applied plantwide. 
C)  Whether or not the base is unique to the overhead being allocated. 
D)  Whether or not there is a cause-and-effect relationship between the base and the overhead cost. 
A)  Whether or not the base can be measured in terms of "hours". 
B)  Whether or not the base can be applied plantwide. 
C)  Whether or not the base is unique to the overhead being allocated. 
D)  Whether or not there is a cause-and-effect relationship between the base and the overhead cost.

Question 6

Howell Manufacturers had no units in process at the beginning of the year. During the current year, 40,000 units were started. There were 5,000 units in work-in-process at the end of the year. These units were 35% complete. How many total equivalent units were completed during the year?

Accepted Answer

A)  38,250 equivalent units 
B)  36,750 equivalent units 
C)  43,250 equivalent units 
D)  41,750 equivalent units 
A)  38,250 equivalent units 
B)  36,750 equivalent units 
C)  43,250 equivalent units 
D)  41,750 equivalent units

Question 7

Danville Manufacturing The Danville Manufacturing Company has two service departments and two production departments. The following data are available for 2011.
  The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied, respectively.
Assuming that Danville Manufacturing Company allocates service department 1 costs first, the amount of service department 2 costs allocated to production department 1 under the step-down method would be:

Accepted Answer

A)  $3,200 
B)  $4,000 
C)  $3,000 
D)  $2,400 
A)  $3,200 
B)  $4,000 
C)  $3,000 
D)  $2,400

Question 8

Wintergreen Products allocates overhead based on direct labor hours. During 2011 overhead was overapplied by $4,000. Assuming that the year-end adjustment to clear out the overapplied overhead has not yet been done, which of the following statements is most likely trueif there are no ending inventories?

Accepted Answer

A)  Direct material costs are understated 
B)  Direct labor costs are understated 
C)  Cost of goods sold is overstated 
D)  Net income is overstated 
A)  Direct material costs are understated 
B)  Direct labor costs are understated 
C)  Cost of goods sold is overstated 
D)  Net income is overstated

Question 9

For each of the following organizations, indicate which type of costing system would be the most appropriate: job costing (JC), operations costing (OC), or process costing (PC).

Accepted Answer

The answer of For each of the following organizations, indicate...

Question 10

Which of the following statements is correct?

Accepted Answer

A)  Overhead consists of a limited variety of costs that should have the same cost driver. 
B)  Overhead consists of a wide variety of costs that should have the same cost driver. 
C)  Overhead consists of a variety of costs that may potentially have different cost drivers. 
D)  Overhead consists of a limited variety of costs that must each have a unique cost driver. 
A)  Overhead consists of a limited variety of costs that should have the same cost driver. 
B)  Overhead consists of a wide variety of costs that should have the same cost driver. 
C)  Overhead consists of a variety of costs that may potentially have different cost drivers. 
D)  Overhead consists of a limited variety of costs that must each have a unique cost driver.

Question 11

Peace Products Inc. Peace Products Inc. uses process costing. The following information was available for the current year:
  Refer to the Peace Products Inc. information above. If Peace uses the first-in, first-out (FIFO) method of computing equivalent units and assigning product costs, what is the cost of goods transferred out during the year?

Accepted Answer

A)  $517,350 
B)  $539,400 
C)  $544,620 
D)  $565,300 
A)  $517,350 
B)  $539,400 
C)  $544,620 
D)  $565,300

Question 12

Which of the following statements regarding plantwide overhead rates is true?

Accepted Answer

A)  Plantwide overhead rates based on the direct labor hours or machine time works well for all company. 
B)  Plantwide overhead rates must use machine hours as their cost driver. 
C)  As the number of diverse products a company makes increases, the likelihood that a company will replace a plantwide overhead rate with a departmental overhead rate increases. 
D)  Plantwide overhead rates are usually more costly to prepare than a departmental overhead rate. 
A)  Plantwide overhead rates based on the direct labor hours or machine time works well for all company. 
B)  Plantwide overhead rates must use machine hours as their cost driver. 
C)  As the number of diverse products a company makes increases, the likelihood that a company will replace a plantwide overhead rate with a departmental overhead rate increases. 
D)  Plantwide overhead rates are usually more costly to prepare than a departmental overhead rate.

Question 13

Reliable Manufacturers had no units in process at the beginning of the year. During the current year, 140,000 units were started. There were 15,000 units in work-in-process at the end of the year. These units were 40% complete. If total production costs for the year were $393,000 what should be the cost per equivalent unit?

Accepted Answer

A)  $3.00 
B)  $3.14 
C)  $2.69 
D)  $2.93 
A)  $3.00 
B)  $3.14 
C)  $2.69 
D)  $2.93

Question 14

Which of the following companies would be the most likely to adopt a job order costing system?

Accepted Answer

A)  Beverage manufacturer 
B)  Oil Refinery 
C)  Custom Home Contractor 
D)  Clothing manufacturer 
A)  Beverage manufacturer 
B)  Oil Refinery 
C)  Custom Home Contractor 
D)  Clothing manufacturer

Question 15

Which costs should be included in the calculation of the cost per equivalent unit using the FIFO method of process costing?

Accepted Answer

A)  Current period costs only 
B)  Current period costs plus those from beginning work-in-process inventory 
C)  Current period costs less those from beginning work-in-process inventory 
D)  Current period costs less those from ending work-in-process inventory 
A)  Current period costs only 
B)  Current period costs plus those from beginning work-in-process inventory 
C)  Current period costs less those from beginning work-in-process inventory 
D)  Current period costs less those from ending work-in-process inventory

Question 16

Aster Manufacturing uses the weighted-average method of process costing. The following information was available for the current year:
   Required:

Accepted Answer

The answer of Aster Manufacturing uses the weighted-average method of...

Question 17

An allocation base that causes overhead costs to be incurred is called a(n):

Accepted Answer

A)  revenue driver. 
B)  predetermined driver. 
C)  cost driver. 
D)  applied driver. 
A)  revenue driver. 
B)  predetermined driver. 
C)  cost driver. 
D)  applied driver.

Question 18

Triangle Catering assigns overhead to specific jobs based on direct labor hours. At the beginning of the current year, estimated overhead costs were $650,000 and estimated direct labor hours were 50,000. By the end of the year, actual overhead costs were calculated to be $685,000 and actual direct labor hours were 55,000.
Required:

Accepted Answer

The answer of Triangle Catering assigns overhead to specific jobs...

Question 19

When using job-order costing, which of the following costs is least likely to be known in a timely manner for decision-making purposes?

Accepted Answer

A)  Direct labor costs 
B)  Administrative salaries 
C)  Direct materials costs 
D)  Manufacturing overhead costs 
A)  Direct labor costs 
B)  Administrative salaries 
C)  Direct materials costs 
D)  Manufacturing overhead costs

Question 20

Lee Manufacturing uses process costing. The following information is available for the current year:   If Lee uses the FIFO method of process costing, which units are assumed to be the first ones finished during the year?

Accepted Answer

A)  The 1,600 units in ending inventory 
B)  The 10,000 units that were started in the current period 
C)  The 1,000 units in beginning inventory 
D)  The 12,000 units that were available in the current period 
A)  The 1,600 units in ending inventory 
B)  The 10,000 units that were started in the current period 
C)  The 1,000 units in beginning inventory 
D)  The 12,000 units that were available in the current period

Which of the following would probably not be a cost driver in a manufacturing environment?

When is it appropriate to use process costing? Describe how costs are accumulated and assigned to products.

Which of the following statements is true with respect to cost drivers?

What should determine whether an allocation base is a good cost driver?

Howell Manufacturers had no units in process at the beginning of the year. During the current year, 40,000 units were started. There were 5,000 units in work-in-process at the end of the year. These units were 35% complete. How many total equivalent units were completed during the year?

For each of the following organizations, indicate which type of costing system would be the most appropriate: job costing (JC), operations costing (OC), or process costing (PC).

Which of the following statements is correct?

Which of the following statements regarding plantwide overhead rates is true?

Which of the following companies would be the most likely to adopt a job order costing system?

Which costs should be included in the calculation of the cost per equivalent unit using the FIFO method of process costing?

Aster Manufacturing uses the weighted-average method of process costing. The following information was available for the current year: Required:

An allocation base that causes overhead costs to be incurred is called a(n):

When using job-order costing, which of the following costs is least likely to be known in a timely manner for decision-making purposes?

Lee Manufacturing uses process costing. The following information is available for the current year: If Lee uses the FIFO method of process costing, which units are assumed to be the first ones finished during the year?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Activity-Based Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

Filters

Exam 3: Job Costing, Process Costing, and Operations Costing

Which of the following would probably not be a cost driver in a manufacturing environment?

When is it appropriate to use process costing? Describe how costs are accumulated and assigned to products.

Which of the following statements is true with respect to cost drivers?

What should determine whether an allocation base is a good cost driver?

Howell Manufacturers had no units in process at the beginning of the year. During the current year, 40,000 units were started. There were 5,000 units in work-in-process at the end of the year. These units were 35% complete. How many total equivalent units were completed during the year?

For each of the following organizations, indicate which type of costing system would be the most appropriate: job costing (JC), operations costing (OC), or process costing (PC).

Which of the following statements is correct?

Which of the following statements regarding plantwide overhead rates is true?

Which of the following companies would be the most likely to adopt a job order costing system?

Which costs should be included in the calculation of the cost per equivalent unit using the FIFO method of process costing?

Aster Manufacturing uses the weighted-average method of process costing. The following information was available for the current year: Required:

An allocation base that causes overhead costs to be incurred is called a(n):

When using job-order costing, which of the following costs is least likely to be known in a timely manner for decision-making purposes?

Lee Manufacturing uses process costing. The following information is available for the current year: If Lee uses the FIFO method of process costing, which units are assumed to be the first ones finished during the year?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Activity-Based Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

Filters