Question 1

The flow of manufacturing overheads is:
Raw materials $\rightarrow$ WIP $\rightarrow$ Finished Goods $\rightarrow$ COGS

Accepted Answer

A) True 
 B)False  True

Question 2

As production takes place, all manufacturing costs are debited to the:

Accepted Answer

A)  work in process inventory account. 
B)  manufacturing overhead account. 
C)  cost of goods sold account. 
D)  finished goods account. 
A)  work in process inventory account. 
B)  manufacturing overhead account. 
C)  cost of goods sold account. 
D)  finished goods account. A

Question 3

If the work in process inventory has increased during the period, which of the following statements is definitely true?

Accepted Answer

A)  Cost of goods sold will be greater than cost of goods manufactured. 
B)  Cost of goods manufactured will be greater than cost of goods sold. 
C)  Total manufacturing costs for the period will be greater than cost of goods manufactured. 
D)  Total manufacturing costs for the period will be less than cost of goods manufactured. 
A)  Cost of goods sold will be greater than cost of goods manufactured. 
B)  Cost of goods manufactured will be greater than cost of goods sold. 
C)  Total manufacturing costs for the period will be greater than cost of goods manufactured. 
D)  Total manufacturing costs for the period will be less than cost of goods manufactured. C

Question 4

In some organisations downstream costs are treated as product-related.

Accepted Answer

A) True 
 B)False

Question 5

The debit side of the manufacturing overhead account is used to accumulate:

Accepted Answer

A)  actual manufacturing overhead costs as they are incurred throughout the accounting period. 
B)  overhead applied, to work in process inventory. 
C)  predetermined overhead. 
D)  overapplied overhead. 
A)  actual manufacturing overhead costs as they are incurred throughout the accounting period. 
B)  overhead applied, to work in process inventory. 
C)  predetermined overhead. 
D)  overapplied overhead.

Question 6

Which of the following factors influences management's approach to process costing?

Accepted Answer

A)  The degree to which products are identical in their consumption of direct materials 
B)  The existence of work in process inventory at the end of the accounting period 
C)  The degree to which products are identical in their specific production processes 
D)  All of the given answers 
A)  The degree to which products are identical in their consumption of direct materials 
B)  The existence of work in process inventory at the end of the accounting period 
C)  The degree to which products are identical in their specific production processes 
D)  All of the given answers

Question 7

Explain the difference between direct labour costs and indirect labour costs. How would this information be captured on a timesheet by an employee?

Accepted Answer

Direct labour is the employee time spent

Question 8

Select the relevant information from the following, and calculate the cost of goods available for sale:  
Total manufacturing costs were $5390.
Cost of goods available for sale is:

Accepted Answer

A)  $5300 
B)  $5320 
C)  $5920 
D)  None of the given answers 
A)  $5300 
B)  $5320 
C)  $5920 
D)  None of the given answers

Question 9

Manufacturing overhead:

Accepted Answer

A)  consists of direct material and direct labour costs. 
B)  is easily traced to jobs. 
C)  should not be assigned to individual jobs because it bears no obvious relationship to them. 
D)  is a heterogeneous pool of indirect production costs that can include gas and electricity costs and depreciation. 
A)  consists of direct material and direct labour costs. 
B)  is easily traced to jobs. 
C)  should not be assigned to individual jobs because it bears no obvious relationship to them. 
D)  is a heterogeneous pool of indirect production costs that can include gas and electricity costs and depreciation.

Question 10

For a particular period, Petersen's opening and closing work in process balances were $20 000 and $14 000 respectively. Direct materials used was $200 000 and overhead applied was $130 000. Cost of goods manufactured was $490 000. What was the amount of direct labour cost incurred for the period?

Accepted Answer

A)  $148 000 
B)  $154 000 
C)  $160 000 
D)  $504 000 
A)  $148 000 
B)  $154 000 
C)  $160 000 
D)  $504 000

Question 11

Under AASB102 Inventories the cost of inventory must include

Accepted Answer

A)  administration and selling costs. 
B)  transportation and handling costs. 
C)  storage costs. 
D)  abnormal wastage costs. 
A)  administration and selling costs. 
B)  transportation and handling costs. 
C)  storage costs. 
D)  abnormal wastage costs.

Question 12

Snoozo Moozo manufactures bed frames and mattresses that are custom-made to a person's height and weight. It is a publicly listed company and therefore must comply with any applicable Australian accounting standards. Which of the following statements is most correct?

Accepted Answer

A)  Snoozo Moozo should use job costing as it is more applicable to their production process. 
B)  Snoozo Moozo should use process costing as it is more applicable to their production process. 
C)  Snoozo Moozo should use process costing as it is more applicable to their production process and it is required under applicable accounting standards. 
D)  Snoozo Moozo may use either job costing or processing cost, as both are acceptable under applicable accounting standards and both methods can result in accurate production costs. 
A)  Snoozo Moozo should use job costing as it is more applicable to their production process. 
B)  Snoozo Moozo should use process costing as it is more applicable to their production process. 
C)  Snoozo Moozo should use process costing as it is more applicable to their production process and it is required under applicable accounting standards. 
D)  Snoozo Moozo may use either job costing or processing cost, as both are acceptable under applicable accounting standards and both methods can result in accurate production costs.

Question 13

In comparison to job-order costing, process costing is by far the most accurate costing system.

Accepted Answer

A) True 
 B)False

Question 14

Leisure Life manufactures a variety of sporting equipment. The firm's predetermined overhead application rate was 150 per cent of direct labour cost. Job 104 included direct material of $20 000 and total costs were $25 000. The manufacturing overhead applied to Job 104 to date is

Accepted Answer

A)  $5000. 
B)  $2000. 
C)  $3000. 
D)  $2500. 
A)  $5000. 
B)  $2000. 
C)  $3000. 
D)  $2500.

Question 15

The schedule of cost of goods sold includes any underapplied/overapplied overhead.

Accepted Answer

A) True 
 B)False

Question 16

If manufacturing overhead is overapplied for the period, a method to bring the balance of the manufacturing overhead account to zero would be:

Accepted Answer

A)  debit cost of goods sold, credit manufacturing overhead. 
B)  debit work in process inventory, credit manufacturing overhead. 
C)  debit manufacturing overhead, credit raw materials inventory. 
D)  debit manufacturing overhead, credit cost of goods sold. 
A)  debit cost of goods sold, credit manufacturing overhead. 
B)  debit work in process inventory, credit manufacturing overhead. 
C)  debit manufacturing overhead, credit raw materials inventory. 
D)  debit manufacturing overhead, credit cost of goods sold.

Question 17

The following data apply to Stratford Ltd  
Predetermined overhead rate-200 per cent of direct labour cost
Calculate the amount of direct labour cost incurred during the year.

Accepted Answer

A)  $20 000 
B)  $18 000 
C)  $10 000 
D)  None of the given answers 
A)  $20 000 
B)  $18 000 
C)  $10 000 
D)  None of the given answers

Question 18

In which of the following industries could process costing be used?

Accepted Answer

A)  Petroleum refining 
B)  Food processing 
C)  Paper mills 
D)  All of the given answers 
A)  Petroleum refining 
B)  Food processing 
C)  Paper mills 
D)  All of the given answers

Question 19

Which of the following statements is most complete and correct?

Accepted Answer

A)  Job costing traces costs to departments and process costing traces costs to products. 
B)  Job costing develops the cost of products and process costing develops the costs of processes. 
C)  Both job and process costing develop the cost of products. 
D)  Both job and process costing are concerned with the cost of departments. 
A)  Job costing traces costs to departments and process costing traces costs to products. 
B)  Job costing develops the cost of products and process costing develops the costs of processes. 
C)  Both job and process costing develop the cost of products. 
D)  Both job and process costing are concerned with the cost of departments.

Question 20

The following data apply to Easy Chairs Ltd  
Calculate the cost of goods manufactured during the year.

Accepted Answer

A)  $420 000 
B)  $405 000 
C)  $385 000 
D)  $370 000 
A)  $420 000 
B)  $405 000 
C)  $385 000 
D)  $370 000

Exam 4: Product Costing Systems

The flow of manufacturing overheads is: Raw materials →\rightarrow→ WIP →\rightarrow→ Finished Goods →\rightarrow→ COGS

As production takes place, all manufacturing costs are debited to the:

If the work in process inventory has increased during the period, which of the following statements is definitely true?

In some organisations downstream costs are treated as product-related.

The debit side of the manufacturing overhead account is used to accumulate:

Which of the following factors influences management's approach to process costing?

Explain the difference between direct labour costs and indirect labour costs. How would this information be captured on a timesheet by an employee?

Select the relevant information from the following, and calculate the cost of goods available for sale: Total manufacturing costs were $5390. Cost of goods available for sale is:

Manufacturing overhead:

For a particular period, Petersen's opening and closing work in process balances were $20 000 and $14 000 respectively. Direct materials used was $200 000 and overhead applied was $130 000. Cost of goods manufactured was $490 000. What was the amount of direct labour cost incurred for the period?

Under AASB102 Inventories the cost of inventory must include

Snoozo Moozo manufactures bed frames and mattresses that are custom-made to a person's height and weight. It is a publicly listed company and therefore must comply with any applicable Australian accounting standards. Which of the following statements is most correct?

In comparison to job-order costing, process costing is by far the most accurate costing system.

Leisure Life manufactures a variety of sporting equipment. The firm's predetermined overhead application rate was 150 per cent of direct labour cost. Job 104 included direct material of $20 000 and total costs were $25 000. The manufacturing overhead applied to Job 104 to date is

The schedule of cost of goods sold includes any underapplied/overapplied overhead.

If manufacturing overhead is overapplied for the period, a method to bring the balance of the manufacturing overhead account to zero would be:

The following data apply to Stratford Ltd Predetermined overhead rate-200 per cent of direct labour cost Calculate the amount of direct labour cost incurred during the year.

In which of the following industries could process costing be used?

Which of the following statements is most complete and correct?

The following data apply to Easy Chairs Ltd Calculate the cost of goods manufactured during the year.

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

The flow of manufacturing overheads is: Raw materials $\rightarrow$ WIP $\rightarrow$ Finished Goods $\rightarrow$ COGS