Question 1

With job costing, a job cost sheet is used to record the manufacturing overheads allocated, when finishing a specific job.

Accepted Answer

A) True 
 B)False

Question 2

The following information relates to Wells Fargo for July 2008:  
Assuming underapplied or overapplied overhead is transferred to cost of goods sold at the end of the period, which of the following would be the entry to the cost of goods sold account?

Accepted Answer

A)  $80 000 debit 
B)  $80 000 credit 
C)  $40 000 credit 
D)  $40 000 debit 
A)  $80 000 debit 
B)  $80 000 credit 
C)  $40 000 credit 
D)  $40 000 debit

Question 3

Manufacturers differ from retailers in that they have three inventory accounts in the balance sheet as opposed to one.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following costs should managers focus on when making long term strategic pricing decisions?

Accepted Answer

A)  Marketing costs 
B)  Design costs 
C)  Research and development costs 
D)  All of the above 
A)  Marketing costs 
B)  Design costs 
C)  Research and development costs 
D)  All of the above

Question 5

Product costs may be used for which of the following purposes?
i. Valuation of inventories
ii. Management decision making
iii. Pricing decisions
iv. Cost control

Accepted Answer

A)  i and ii 
B)  ii, iii and iv 
C)  i, ii and iii 
D)  All of the given answers 
A)  i and ii 
B)  ii, iii and iv 
C)  i, ii and iii 
D)  All of the given answers

Question 6

Which of the following statements about product costing is false?

Accepted Answer

A)  Product costs may differ depending on the decision context. 
B)  Organisations should aim to have only one product costing system. 
C)  In designing a product costing system, managers need to make a careful assessment of costs and benefits associated with each element of the product cost. 
D)  Both current costs and future costs are relevant for managerial decisions. 
A)  Product costs may differ depending on the decision context. 
B)  Organisations should aim to have only one product costing system. 
C)  In designing a product costing system, managers need to make a careful assessment of costs and benefits associated with each element of the product cost. 
D)  Both current costs and future costs are relevant for managerial decisions.

Question 7

Which of the following statements is not correct regarding work in process?

Accepted Answer

A)  Work in process is partially completed inventory. 
B)  Work in process consists of direct labour, direct material and allocated manufacturing overhead. 
C)  Work in process is debited as product costs are incurred. 
D)  Work in process is credited when goods are sold. 
A)  Work in process is partially completed inventory. 
B)  Work in process consists of direct labour, direct material and allocated manufacturing overhead. 
C)  Work in process is debited as product costs are incurred. 
D)  Work in process is credited when goods are sold.

Question 8

If the manufacturing overhead account has a credit balance, then

Accepted Answer

A)  manufacturing overhead is overapplied. 
B)  manufacturing overhead is underapplied. 
C)  cost of goods sold is understated. 
D)  manufacturing overhead is underapplied AND cost of goods sold is understated. 
A)  manufacturing overhead is overapplied. 
B)  manufacturing overhead is underapplied. 
C)  cost of goods sold is understated. 
D)  manufacturing overhead is underapplied AND cost of goods sold is understated.

Question 9

Job costing and process costing
Differentiate between the types of manufacturing environments that would be suited to:
i. job costing and
ii. process costing
Include two examples of manufacturers that would fit each of these two environments.

Accepted Answer

i. Job costing is typically used in manu

Question 10

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

Accepted Answer

A)  $62 500 
B)  $67 500 
C)  $70 500 
D)  $72 500 
A)  $62 500 
B)  $67 500 
C)  $70 500 
D)  $72 500

Question 11

Which of the following statements is false?
i. Job costing accumulates costs by jobs or batches.
ii. Process costing accumulates costs by departments or processes.
iii. Process costing accumulates costs for specific time periods.
iv. Job costing accumulates costs by departments.

Accepted Answer

A)  i and ii 
B)  ii 
C)  iv 
D)  iii and iv 
A)  i and ii 
B)  ii 
C)  iv 
D)  iii and iv

Question 12

When overheads are over-allocated, the actual overheads incurred are greater than those allocated.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements correctly completes this sentence? 'For a manufacturing firm, when goods are completed and ready for sale .....'

Accepted Answer

A)  the firm's total assets are increased. 
B)  the firm's total assets are decreased. 
C)  there is no change in the value of the firm's assets. 
D)  the firm's work in process inventory is increased. 
A)  the firm's total assets are increased. 
B)  the firm's total assets are decreased. 
C)  there is no change in the value of the firm's assets. 
D)  the firm's work in process inventory is increased.

Question 14

Bambie Ltd. applies overheads based on direct labour hours. The company has budgeted 50 000 direct labour hours at a cost of $10 per hour, and manufacturing overhead of $750 000 in the assembly division for the year. The actual direct labour hours used for the year turns out to be 47 000 hours. What is the applied overhead for the year?

Accepted Answer

A)  $705 000 
B)  $70 500 
C)  $750 000 
D)  500 000 
A)  $705 000 
B)  $70 500 
C)  $750 000 
D)  500 000

Question 15

Howard Corporation has a job order costing system. The following debits (credits) appear in the firm's work in process account for the month of June:  
Overhead is applied at 90 per cent of direct labour cost. There is only one job still in process at the end of June, and this job has been charged with $2250 factory overhead. What was the amount of direct materials charged to that job?

Accepted Answer

A)  $2250 
B)  $2500 
C)  $4250 
D)  $9000 
A)  $2250 
B)  $2500 
C)  $4250 
D)  $9000

Question 16

In the valuation of inventory at the end of an accounting period, the following costs are included:

Accepted Answer

A)  manufacturing costs. 
B)  manufacturing and upstream costs. 
C)  manufacturing and downstream costs. 
D)  manufacturing, upstream and downstream costs. 
A)  manufacturing costs. 
B)  manufacturing and upstream costs. 
C)  manufacturing and downstream costs. 
D)  manufacturing, upstream and downstream costs.

Question 17

If a manufacturing firm ends the year with underapplied overhead, one method of treatment is

Accepted Answer

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

Question 18

Valuing inventories using net realisable value method requires managers to:

Accepted Answer

A)  estimate sales value of the components of the merchandise, less any anticipated conversion costs. 
B)  estimate costs of the merchandise based on the most recent job cost sheets. 
C)  estimate sales value of the merchandise less any anticipated costs of completing and selling the products. 
D)  estimate sales value of the merchandise, disregarding any anticipated costs of completing and selling the products. 
A)  estimate sales value of the components of the merchandise, less any anticipated conversion costs. 
B)  estimate costs of the merchandise based on the most recent job cost sheets. 
C)  estimate sales value of the merchandise less any anticipated costs of completing and selling the products. 
D)  estimate sales value of the merchandise, disregarding any anticipated costs of completing and selling the products.

Question 19

Which of the following would appear on the credit side of the overhead account?

Accepted Answer

A)  Actual overhead cost incurred in the period 
B)  Overhead applied (charged) to production 
C)  Underapplied overhead for the period 
D)  Overhead applied (charged) to production AND underapplied overhead for the period 
A)  Actual overhead cost incurred in the period 
B)  Overhead applied (charged) to production 
C)  Underapplied overhead for the period 
D)  Overhead applied (charged) to production AND underapplied overhead for the period

Question 20

The amount of overhead applied to jobs using a predetermined (budgeted) rate is rarely equal to the actual cost of overhead incurred for a period. Which of the following is not a valid explanation for this?

Accepted Answer

A)  Actual spending for overhead is not equal to budgeted spending for overhead. 
B)  Actual use of the overhead allocation base is not equal to the budgeted use of the allocation base. 
C)  Budget estimates of overhead were unrealistically low. 
D)  Direct costs were unexpectedly high. 
A)  Actual spending for overhead is not equal to budgeted spending for overhead. 
B)  Actual use of the overhead allocation base is not equal to the budgeted use of the allocation base. 
C)  Budget estimates of overhead were unrealistically low. 
D)  Direct costs were unexpectedly high.

With job costing, a job cost sheet is used to record the manufacturing overheads allocated, when finishing a specific job.

The following information relates to Wells Fargo for July 2008: Assuming underapplied or overapplied overhead is transferred to cost of goods sold at the end of the period, which of the following would be the entry to the cost of goods sold account?

Manufacturers differ from retailers in that they have three inventory accounts in the balance sheet as opposed to one.

Which of the following costs should managers focus on when making long term strategic pricing decisions?

Product costs may be used for which of the following purposes? i. Valuation of inventories ii. Management decision making iii. Pricing decisions iv. Cost control

Which of the following statements about product costing is false?

Which of the following statements is not correct regarding work in process?

If the manufacturing overhead account has a credit balance, then

Job costing and process costing Differentiate between the types of manufacturing environments that would be suited to: i. job costing and ii. process costing Include two examples of manufacturers that would fit each of these two environments.

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

Which of the following statements is false? i. Job costing accumulates costs by jobs or batches. ii. Process costing accumulates costs by departments or processes. iii. Process costing accumulates costs for specific time periods. iv. Job costing accumulates costs by departments.

When overheads are over-allocated, the actual overheads incurred are greater than those allocated.

Which of the following statements correctly completes this sentence? 'For a manufacturing firm, when goods are completed and ready for sale .....'

In the valuation of inventory at the end of an accounting period, the following costs are included:

If a manufacturing firm ends the year with underapplied overhead, one method of treatment is

Valuing inventories using net realisable value method requires managers to:

Which of the following would appear on the credit side of the overhead account?

The amount of overhead applied to jobs using a predetermined (budgeted) rate is rarely equal to the actual cost of overhead incurred for a period. Which of the following is not a valid explanation for this?

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

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Exam 4: Product Costing Systems

With job costing, a job cost sheet is used to record the manufacturing overheads allocated, when finishing a specific job.

The following information relates to Wells Fargo for July 2008: Assuming underapplied or overapplied overhead is transferred to cost of goods sold at the end of the period, which of the following would be the entry to the cost of goods sold account?

Manufacturers differ from retailers in that they have three inventory accounts in the balance sheet as opposed to one.

Which of the following costs should managers focus on when making long term strategic pricing decisions?

Product costs may be used for which of the following purposes? i. Valuation of inventories ii. Management decision making iii. Pricing decisions iv. Cost control

Which of the following statements about product costing is false?

Which of the following statements is not correct regarding work in process?

If the manufacturing overhead account has a credit balance, then

Job costing and process costing Differentiate between the types of manufacturing environments that would be suited to: i. job costing and ii. process costing Include two examples of manufacturers that would fit each of these two environments.

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

Which of the following statements is false? i. Job costing accumulates costs by jobs or batches. ii. Process costing accumulates costs by departments or processes. iii. Process costing accumulates costs for specific time periods. iv. Job costing accumulates costs by departments.

When overheads are over-allocated, the actual overheads incurred are greater than those allocated.

Which of the following statements correctly completes this sentence? 'For a manufacturing firm, when goods are completed and ready for sale .....'

In the valuation of inventory at the end of an accounting period, the following costs are included:

If a manufacturing firm ends the year with underapplied overhead, one method of treatment is

Valuing inventories using net realisable value method requires managers to:

Which of the following would appear on the credit side of the overhead account?

The amount of overhead applied to jobs using a predetermined (budgeted) rate is rarely equal to the actual cost of overhead incurred for a period. Which of the following is not a valid explanation for this?

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