Test 1

Budgets are a way for managers to communicate their
hiring practices,
decision-making.
control.
plans.

plans.

What position is typically responsible for financial accounting, managerial accounting, and tax reporting?
Audit committee
Controller
Treasurer
CFO

Controller

The primary goal of managerial accounting is to provide information to
creditors.
internal decision - makers,
shareholders.
both shareholders and creditors.

internal decision - makers,

The focus of management accounting is on
internal reporting.
external reporting.
auditing.
tax preparation.

internal reporting

The IMA. issues which of the following certifications?
CPA
CFP
CIA
CMA

CMA

Managerial accountants may be responsible for
communicating results,
providing decision support,
analyzing data,
all of the above.

all of the above.

Which statement is true?
Management uses reports created for internal parties.
Management uses financial information to analyze costs.
Management uses financial information to plan internal operations.
All of the above are true.

All of the above are true.

The ability to meet the needs of the present without compromising the needs of the future is often referred to as
total quality management,
the bottom line,
just-in-time.
sustainability

sustainability

What is the name of the professional association for managerial accountants?
Professional Accountants Association
Association of Management Accountants
Institute of Management Accountants
Institute of Professional Accountants

Institute of Management Accountants

__________ gathers, summarizes, and reports on the financial impact of changes to business operations.
Planning
Controlling
Managerial accounting
Directing

Managerial accounting

Manufacturers consider selling and administrative costs to be
period costs,
prime costs,
conversion costs,
inventoriable costs.

period costs,

An example of direct labor would be which of the following?
Wages of factory security
Salary of a production manager
Wages of assembly line personnel
Salary of the vice - president of operations

Wages of assembly line personnel

A snow removal business would be classified as a
merchandising company,
service company,
simple company,
manufacturing company.

service company,

The three basic components of inventoriable product costs are direct materials, direct labor, and
manufacturing overhead,
work in process,
cost of goods manufactured,
cost of goods sold.

manufacturing overhead,

Which of the following is true?
Total fixed costs increase as production volume increases.
Total fixed costs decrease as production volume decreases.
Total variable costs stay constant as production volume increases.
Total variable costs increase as production volume increases.

Total variable costs increase as production volume increase;

Direct materials for a company were $500,000: manufacturing overhead was $250,000; and direct labor was $770,000. Conversion costs would total?
$750,000.
$1,520,000.
$1,020,000.
$1,270,000.

$1,020,000. 770,000 + 250,000 = $1,020,000

Which of the following types of information differs between alternatives and can affect the future?
Historical
Relevant
Irrelevant
Predictable

Relevant

Plowin' Supply plans to make 15,000 tractors at its plant. Fixed costs are $600,000 and variable costs are $200 per tractor. What is the average cost per tractor?
$75
$200
$240
$40

$240 600,000 / 15,000 = 40 +200 = 240

Which one of the following costs would be considered a direct cost of serving a particular customer at a McDonald's restaurant?
The cost of heating the restaurant
The depreciation on the restaurant building
The salary of the restaurant manager
The cost of the hamburger patty in the sandwich the customer ordered

The cost of the hamburger patty in the sandwich the customer ordered

Which of the following is not an example of an indirect cost incurred in manufacturing automobiles?
Cost of the automobile engines
Plant supervisor salary
Plant utilities
Machinery depreciation in the factory

Cost of the automobile engines

At a manufacturing company, inventory flows from work in process inventory, to raw materials inventory, to finished goods inventory. (True/False)

False

Ryan's Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost $235,000
Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The predetermined manufacturing overhead rate per machine hour is closest to
$10.44.
$10.84.
$11.75.
$12.20.

$11.75.

If manufacturing overhead has been over-allocated during the period, then
the jobs produced during the period have been costed correctly,
the jobs produced during the period have been overcosted.
the jobs produced during the period have been undercosted.
none of the above.

the jobs produced during the period have been overcosted.

Management can use job cost information for each of the following except
bidding on custom jobs.
determining the profitability of different jobs.
determining cost of goods sold.
all of the listed choices are possible uses of job cost information.

all of the listed choices are possible uses of job cost information.

Ryan's Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost $235,000
Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The amount of manufacturing overhead allocated for the year based on machine hours would have been
$235,000.
$264,375.
$244,000
$239,500.

$264,375.

In a job costing system, all of the following statements about materials are correct except for which of the following:
All materials are always classified as direct materials.
Materials that cannot be traced to a particular job are treated as manufacturing overhead.
A materials requisition is used to request materials needed from the storeroom.
The job cost record for a job will contain all direct material used for that particular job.

All materials are always classified as direct materials.

Cost of goods sold is debited and finished goods inventory is credited for
transfer of goods to the finished goods storeroom.
purchase of goods on account.
the sale of goods to a customer.
transfer of materials into work in process inventory.

the sale of goods to a customer.

Manufacturers follow four steps to implement a manufacturing overhead allocation system. Which step is not performed before the year begins?
Select an allocation base and estimate the total amount that will be used during the year.
Allocate some manufacturing overhead to each individual job.
Estimate total manufacturing overhead costs for the coming year.
Calculate a predetermined manufacturing overhead rate.

Allocate some manufacturing overhead to each individual job.

Which of the following companies would be most likely to use a job costing system rather than a process costing system?
Steel manufacturer
CPA firm
Beverage bottler
Paint manufacturer

CPA firm

What is a document that accumulates job costs called?
Production schedule
Bill of materials
A job cost record
Labor time record

Bill of materials

Kramer Company manufactures coffee tables and uses an activity - based costing system to allocate all manufacturing conversion costs. Each coffee tables consists of 20 separate parts totaling $240 in direct
materials, and requires 5.0 hours of machine time to produce. Additional information follows:
Activity-
Materials handling
Machining
Assembling
Packaging
Allocation Base
Number of parts
Machine hours
Number of parts
Number of finished units
Cost Allocation Rate
$2.00 per part
$2.75 per machine hour
$1.00 per part
$3.00 per finished unit
What is the cost of assembling per coffee table'
$20.00
$15.00
$7.75
$40.00

20.00

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on
the extent to which the activities are used.
types of activities used by the product.
both A andB.
none of the above.

both A andB.

The eight wastes of traditional operations includes all of the following except
overproduction.
defects.
waiting.
utilizing people to their full potential.

utilizing people to their full potential.

Which of the following is true about lean thinking?
Finished goods are produced ahead of customers' orders to protect against running out of finished goods inventory.
Raw materials are purchased in large quantities.
Customer orders drive the production process.
Inventory levels are maintained at high levels.

Customer orders drive the production process.

Indications that a product cost system needs revision include
the company uses a single - allocation - base system developed long ago.
managers lose bids they expected to win and win bids they expected to lose,
employees do not believe the cost numbers are accurate,
all of the above.

all of the above.

Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?
Internal failure costs
Backflush costing
External failure costs
Just - in - time

Just - in - time

Which of the following is a result of cost distortion?
Undercosting of all products
Overcosting of all products
Accurate costing of all products
Overcosting of some products and undercosting of other products

Overcosting of some products and undercosting of other products

James Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental
overhead rate of $35 per machine hour, while the Sanding Department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the
two departments:
Assembly Sanding
Actual results Department Department
Direct labor hours used 8 5
Machine hours used 10 7
The cost for direct labor is $30 per direct labor hour and the cost of the direct materials used by Job 603 is $1,400.
How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates'

$450

Four basic steps are used in an ABC system. List the proper order of these steps, which are currency scrambled below
a. Identify the primary activities and estimate a total cost pool for each.
b. Allocate the costs to the cost object using the activity cost allocation rates.
c. Select an allocation base for each activity.
d. Calculate an activity cost allocation rate for each activity.

a, c,d,b

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company's external failure costs would most likely
increase,
remain the same,
decrease.
Unable to predict

decrease.

Which one of the following items is not one of the three primary manager responsibilities?
Planning
Directing
Adjusting
Controlling

Adjusting

Which of the following is not one of the IMA's overarching ethical principles?
Responsibility
Honesty
Fairness
Creativity

Creativity

The management strategy designed to eliminate waste is called a(n)
lean thinking-
activity - based costing,
traditional thinking,
full costing.

lean thinking-

London Plastics has monthly fixed costs of $84,000, while its variable costs are $4.00 per unit. If the sales price of a unit is $15.00 and London Plastics sell 14,000 units, the company's average fixed costs per
unit will be
$10.00 per unit.
$11.00 per unit.
$4.00 per unit.
$6.00 per unit.

$6.00 per unit.

What ethical standard is being violated when you tell a friend that the company you work for is going to report lower than expected earnings next week?
Credibility
Integrity
Confidentiality
Competence

Confidentiality

The primary goal of managerial accounting is to provide information to
creditors.
shareholders.
internal decision - makers.
both shareholders and creditors.

internal decision - makers.

IFRS stands for
International Financial Reporting Standards.
Important Foreign Registering Systems.
International and Foreign Registering Standards.
International and Foreign Reporting Systems.

International Financial Reporting Standards.

Fun Stuff Manufacturing produces frisbees using a three - step sequential process that includes molding, coloring and finishing. When the frisbees and associated costs are transferred from the molding process
to the coloring process, which account is debited?
WIP inventory - finishing
WIP inventor - coloring
WIP inventory - molding
Raw materials inventory

WIP inventor - coloring

Before the year began, Murphy Manufacturing estimated that manufacturing overhead for the year would be $175,500 and that 13,000 direct labor hours would be worked. Actual results for the year included
the following:
Actual manufacturing overhead cost $184,000
Actual direct labor hours 14,500
The predetermined manufacturing overhead rate per direct labor hour is closest to
$13.50.
$14.15.
$12.10.
$12.69.

$13.50.

The cost of inspection at various stages of production is an example of a(n)
external failure cost,
prevention cost,
internal failure cost,
appraisal cost.

appraisal cost.

When deciding to buy a new computer, all of the following should be considered except for the
software that comes with the new c
cost of the old computer,
warranty on the new computer,
cost of the new computer.

cost of the old computer,

Inventoriable product costs for a manufactured product include
the costs of direct materials and direct labor only.
the costs of direct materials, direct labor and manufacturing overhead.
marketing and research and development costs.
none of the above.

the costs of direct materials, direct labor and manufacturing overhead.

Country Furniture Company manufactures furniture at its Akron. Ohio, factory. Some of its costs from the past year include:
Depreciation on sales office $ 9,000
Depreciation on factory equipment 16,000
Factory supervisor salary 50,500
Sales commissions 23,000
Lubricants used in factory equipment 3,000
Insurance costs for factory 21,000
Wages paid to maintenance workers 115,000
Fabric used to upholster furniture 10.000
Freight - in (on raw materials) 3,000
Costs of delivery to customers 9,000
Wages paid to assembly - line workers 155,500
Lumber used to build product 82,000
Utilities in factory 54,500
Utilities in sales office 26,500
Direct labor costs for Country Furniture Company totaled
$321,000.
$115,000.
$155,500.
$344,000.

$155,500.

For which of the following do we prepare calculations for equivalent units?
Neither direct materials nor conversion costs
Both direct materials and conversion costs
Both direct labor and manufacturing overhead
Both direct labor and direct materials

Both direct materials and conversion costs

When manufacturing products, direct labor and direct materials are classified as
period costs and expensed when incurred,
product costs and expensed when incurred,
period costs and expensed when the goods are sold,
product costs and expensed when the goods are sold.

product costs and expensed when the goods are sold.

Manufacturers consider selling and aotoinistrative costs to be
conversion costs,
inventoriable costs,
prime costs,
period costs.

period costs.

Testing ways to increase the strength of your product would be classified as which part of the value chain?
Production
Distribution
Research and development
Design

Research and development

The benefits of using the ABC costing system are higher if the company
has high indirect costs,
produces only one product.
has high indirect costs and produces many different products that use differing amounts of resources,
produces many different products that use differing amounts of resources.

has high indirect costs and produces many different products that use differing amounts of resources

Jasper Carts manufactures custom carts for a variety of uses. The following data have been recorded for Job 651, which was recently completed. Direct materials used cost $7,200. There were 175 direct labor
hours worked on this job at a direct labor wage rate of $22 per hour. There were 82 machine hours used on this job. The predetermined overhead rate is $30 per machine hour used.
What is the total manufacturing cost of Job 651?
$7,457
$2,460
$3,850
$13,510

$13,510

Which of the following does ABC take into account?
The extent to which the manufacturing activities are used by the product
The types of manufacturing activities used by the product
Both A and B
Neither A nor B

Both A and B

Ryan's Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost $300,000
Actual manufacturing overhead cost $290,000
Estimated machine hours 20,000
Actual machine hours 22,000
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The manufacturing overhead for the year would have been
$40,000 over allocated.
$10,000 under allocated.
$10,000 over allocated.
$40,000 under allocated.

$40,000 overallocated.

The difference between the sales price and the job cost is
cost or goods sold,
net income,
operating income,
gross profit.

gross profit.

Ryan Fabrication allocates manufacturing overhead to each job using departmental overhead rates. Ryan's operations are divided into a metal casting department and a metal finishing department. The
casting department uses a departmental overhead rate of $52 per machine hour, while the finishing department uses a departmental overhead rate of $28 per direct labor hour. Job A216 used the following
direct labor hours and machine hours in the two departments:
Casting Finishing
Actual results Department Department
Direct labor hours used 5 12
Machine hours used 4 3
The cost for direct labor is $32 per direct labor hour and the cost of the direct materials used by Job A216 is $1,800.
How much manufacturing overhead would be allocated to Job A216 using the deoartmental overhead rates?
$1,360
$454
$596
$544

$544

Which of the following product costing systems is normally used to assign costs to goods that are mass produced?
Process costing
LIFO costing
Job costing
Fixed costing

Process costing

At Onyx Incorporated, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include:
WIP beginning (70% for conversion) 15,200 units
Units started 150,000 units
Units completed and transferred out 120,000 units
WIP ending (50% for conversion) 45,200 units
Beginning WIP direct materials $52,500
Beginning WIP conversion costs $25,200
Costs of materials added $443,100
Costs of conversion added $260,000
What are the total equivalent units for conversion costs?
130,460
165,200
142,600
151,640

142,600

Chicago Steel's operating activities for the year are listed below.
Beginning inventory $ 1,000,000
Ending inventory $ 350,000
Purchases $ 750,000
Sales revenue $ 1,500,000
Operating expenses $ 700,000
What is the cost of goods sold for the year?
$50,000
$750,000
$1,400,000
$1,750,000

$1,400,000

Cost of goods sold is debited and finished goods inventory is credited for
transfer of materials into work in process inventory,
purchase of goods on account,
transfer of goods to the finished goods storeroom,
the sale of goods to a customer.

the sale of goods to a customer.

Which of the following types of information differs between alternatives and can affect the future?
Relevant
Predictable
Historical
Irrelevant

Relevant

Which product costing system would better account for a unique product?
Product costing system
Overhead costing system
Process costing system
Job costing system

Job costing system

Color Wheel has 3,500 gallons of paint in WIP inventory, with 75% of materials already added. The paint is 60% through the process. Assuming all conversion costs are added evenly throughout the process,
what are the equivalent units for conversion costs?
2,625
525
2,100
0

2,100

A_is used to accumulate the costs of a job.
bill of materials
labor time record
materials inventory requisition form
job cost record

job cost record

In process costing,________ is are found by taking the number of partially completed physical units and multiplying it by the percentage of the process completed.
conversion costs
equivalent units
fixed manufacturing overhead costs
cost of goods sold

equivalent units

The document many process costing companies use to summarize the entire five - step process on one schedule is called the
bill of materials,
production cost report,
conversion report,
income costing statement.

production cost report,

A(n)________ cost is one whose total amount changes in direct proportion to a change in volume.
mixed
fixed
variable
irrelevant

variable

The cost of lighting the factory would be classified as__________when determining the cost of a manufactured product.
a period cost
an indirect cost
a direct cost
none of the above

an indirect cost

Which of the following types of companies has raw materials, work in process and finished goods inventory?
Retailers
Service companies
Wholesalers
Manufacturers

Manufacturers

Which of the following is an example of a cost item that should be classified as an external failure cost?
Cost of a lost unit
Cost to redesign product
Tooling changes
Warranty claims

Warranty claims

Under allocated manufacturing overhead results when
actual overhead is greater than allocated overhead,
actual overhead is greater than expected,
estimated overhead is greater than actual overhead,
production is greater than last year.

actual overhead is greater than allocated overhead,

Test 1 - Subjecto.com

Test 1

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Total word count: 3128
Pages: 11

Calculate the Price

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275 words
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Budgets are a way for managers to communicate their
hiring practices,
decision-making.
control.
plans.

plans.

What position is typically responsible for financial accounting, managerial accounting, and tax reporting?
Audit committee
Controller
Treasurer
CFO

Controller

The primary goal of managerial accounting is to provide information to
creditors.
internal decision – makers,
shareholders.
both shareholders and creditors.

internal decision – makers,

The focus of management accounting is on
internal reporting.
external reporting.
auditing.
tax preparation.

internal reporting

The IMA. issues which of the following certifications?
CPA
CFP
CIA
CMA

CMA

Managerial accountants may be responsible for
communicating results,
providing decision support,
analyzing data,
all of the above.

all of the above.

Which statement is true?
Management uses reports created for internal parties.
Management uses financial information to analyze costs.
Management uses financial information to plan internal operations.
All of the above are true.

All of the above are true.

The ability to meet the needs of the present without compromising the needs of the future is often referred to as
total quality management,
the bottom line,
just-in-time.
sustainability

sustainability

What is the name of the professional association for managerial accountants?
Professional Accountants Association
Association of Management Accountants
Institute of Management Accountants
Institute of Professional Accountants

Institute of Management Accountants

__________ gathers, summarizes, and reports on the financial impact of changes to business operations.
Planning
Controlling
Managerial accounting
Directing

Managerial accounting

Manufacturers consider selling and administrative costs to be
period costs,
prime costs,
conversion costs,
inventoriable costs.

period costs,

An example of direct labor would be which of the following?
Wages of factory security
Salary of a production manager
Wages of assembly line personnel
Salary of the vice – president of operations

Wages of assembly line personnel

A snow removal business would be classified as a
merchandising company,
service company,
simple company,
manufacturing company.

service company,

The three basic components of inventoriable product costs are direct materials, direct labor, and
manufacturing overhead,
work in process,
cost of goods manufactured,
cost of goods sold.

manufacturing overhead,

Which of the following is true?
Total fixed costs increase as production volume increases.
Total fixed costs decrease as production volume decreases.
Total variable costs stay constant as production volume increases.
Total variable costs increase as production volume increases.

Total variable costs increase as production volume increase;

Direct materials for a company were $500,000: manufacturing overhead was $250,000; and direct labor was $770,000. Conversion costs would total?
$750,000.
$1,520,000.
$1,020,000.
$1,270,000.

$1,020,000. 770,000 + 250,000 = $1,020,000

Which of the following types of information differs between alternatives and can affect the future?
Historical
Relevant
Irrelevant
Predictable

Relevant

Plowin’ Supply plans to make 15,000 tractors at its plant. Fixed costs are $600,000 and variable costs are $200 per tractor. What is the average cost per tractor?
$75
$200
$240
$40

$240 600,000 / 15,000 = 40 +200 = 240

Which one of the following costs would be considered a direct cost of serving a particular customer at a McDonald’s restaurant?
The cost of heating the restaurant
The depreciation on the restaurant building
The salary of the restaurant manager
The cost of the hamburger patty in the sandwich the customer ordered

The cost of the hamburger patty in the sandwich the customer ordered

Which of the following is not an example of an indirect cost incurred in manufacturing automobiles?
Cost of the automobile engines
Plant supervisor salary
Plant utilities
Machinery depreciation in the factory

Cost of the automobile engines

At a manufacturing company, inventory flows from work in process inventory, to raw materials inventory, to finished goods inventory. (True/False)

False

Ryan’s Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost $235,000
Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The predetermined manufacturing overhead rate per machine hour is closest to
$10.44.
$10.84.
$11.75.
$12.20.

$11.75.

If manufacturing overhead has been over-allocated during the period, then
the jobs produced during the period have been costed correctly,
the jobs produced during the period have been overcosted.
the jobs produced during the period have been undercosted.
none of the above.

the jobs produced during the period have been overcosted.

Management can use job cost information for each of the following except
bidding on custom jobs.
determining the profitability of different jobs.
determining cost of goods sold.
all of the listed choices are possible uses of job cost information.

all of the listed choices are possible uses of job cost information.

Ryan’s Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost $235,000
Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The amount of manufacturing overhead allocated for the year based on machine hours would have been
$235,000.
$264,375.
$244,000
$239,500.

$264,375.

In a job costing system, all of the following statements about materials are correct except for which of the following:
All materials are always classified as direct materials.
Materials that cannot be traced to a particular job are treated as manufacturing overhead.
A materials requisition is used to request materials needed from the storeroom.
The job cost record for a job will contain all direct material used for that particular job.

All materials are always classified as direct materials.

Cost of goods sold is debited and finished goods inventory is credited for
transfer of goods to the finished goods storeroom.
purchase of goods on account.
the sale of goods to a customer.
transfer of materials into work in process inventory.

the sale of goods to a customer.

Manufacturers follow four steps to implement a manufacturing overhead allocation system. Which step is not performed before the year begins?
Select an allocation base and estimate the total amount that will be used during the year.
Allocate some manufacturing overhead to each individual job.
Estimate total manufacturing overhead costs for the coming year.
Calculate a predetermined manufacturing overhead rate.

Allocate some manufacturing overhead to each individual job.

Which of the following companies would be most likely to use a job costing system rather than a process costing system?
Steel manufacturer
CPA firm
Beverage bottler
Paint manufacturer

CPA firm

What is a document that accumulates job costs called?
Production schedule
Bill of materials
A job cost record
Labor time record

Bill of materials

Kramer Company manufactures coffee tables and uses an activity – based costing system to allocate all manufacturing conversion costs. Each coffee tables consists of 20 separate parts totaling $240 in direct
materials, and requires 5.0 hours of machine time to produce. Additional information follows:
Activity-
Materials handling
Machining
Assembling
Packaging
Allocation Base
Number of parts
Machine hours
Number of parts
Number of finished units
Cost Allocation Rate
$2.00 per part
$2.75 per machine hour
$1.00 per part
$3.00 per finished unit
What is the cost of assembling per coffee table’
$20.00
$15.00
$7.75
$40.00

20.00

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on
the extent to which the activities are used.
types of activities used by the product.
both A andB.
none of the above.

both A andB.

The eight wastes of traditional operations includes all of the following except
overproduction.
defects.
waiting.
utilizing people to their full potential.

utilizing people to their full potential.

Which of the following is true about lean thinking?
Finished goods are produced ahead of customers’ orders to protect against running out of finished goods inventory.
Raw materials are purchased in large quantities.
Customer orders drive the production process.
Inventory levels are maintained at high levels.

Customer orders drive the production process.

Indications that a product cost system needs revision include
the company uses a single – allocation – base system developed long ago.
managers lose bids they expected to win and win bids they expected to lose,
employees do not believe the cost numbers are accurate,
all of the above.

all of the above.

Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?
Internal failure costs
Backflush costing
External failure costs
Just – in – time

Just – in – time

Which of the following is a result of cost distortion?
Undercosting of all products
Overcosting of all products
Accurate costing of all products
Overcosting of some products and undercosting of other products

Overcosting of some products and undercosting of other products

James Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental
overhead rate of $35 per machine hour, while the Sanding Department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the
two departments:
Assembly Sanding
Actual results Department Department
Direct labor hours used 8 5
Machine hours used 10 7
The cost for direct labor is $30 per direct labor hour and the cost of the direct materials used by Job 603 is $1,400.
How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates’

$450

Four basic steps are used in an ABC system. List the proper order of these steps, which are currency scrambled below
a. Identify the primary activities and estimate a total cost pool for each.
b. Allocate the costs to the cost object using the activity cost allocation rates.
c. Select an allocation base for each activity.
d. Calculate an activity cost allocation rate for each activity.

a, c,d,b

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company’s external failure costs would most likely
increase,
remain the same,
decrease.
Unable to predict

decrease.

Which one of the following items is not one of the three primary manager responsibilities?
Planning
Directing
Adjusting
Controlling

Adjusting

Which of the following is not one of the IMA’s overarching ethical principles?
Responsibility
Honesty
Fairness
Creativity

Creativity

The management strategy designed to eliminate waste is called a(n)
lean thinking-
activity – based costing,
traditional thinking,
full costing.

lean thinking-

London Plastics has monthly fixed costs of $84,000, while its variable costs are $4.00 per unit. If the sales price of a unit is $15.00 and London Plastics sell 14,000 units, the company’s average fixed costs per
unit will be
$10.00 per unit.
$11.00 per unit.
$4.00 per unit.
$6.00 per unit.

$6.00 per unit.

What ethical standard is being violated when you tell a friend that the company you work for is going to report lower than expected earnings next week?
Credibility
Integrity
Confidentiality
Competence

Confidentiality

The primary goal of managerial accounting is to provide information to
creditors.
shareholders.
internal decision – makers.
both shareholders and creditors.

internal decision – makers.

IFRS stands for
International Financial Reporting Standards.
Important Foreign Registering Systems.
International and Foreign Registering Standards.
International and Foreign Reporting Systems.

International Financial Reporting Standards.

Fun Stuff Manufacturing produces frisbees using a three – step sequential process that includes molding, coloring and finishing. When the frisbees and associated costs are transferred from the molding process
to the coloring process, which account is debited?
WIP inventory – finishing
WIP inventor – coloring
WIP inventory – molding
Raw materials inventory

WIP inventor – coloring

Before the year began, Murphy Manufacturing estimated that manufacturing overhead for the year would be $175,500 and that 13,000 direct labor hours would be worked. Actual results for the year included
the following:
Actual manufacturing overhead cost $184,000
Actual direct labor hours 14,500
The predetermined manufacturing overhead rate per direct labor hour is closest to
$13.50.
$14.15.
$12.10.
$12.69.

$13.50.

The cost of inspection at various stages of production is an example of a(n)
external failure cost,
prevention cost,
internal failure cost,
appraisal cost.

appraisal cost.

When deciding to buy a new computer, all of the following should be considered except for the
software that comes with the new c
cost of the old computer,
warranty on the new computer,
cost of the new computer.

cost of the old computer,

Inventoriable product costs for a manufactured product include
the costs of direct materials and direct labor only.
the costs of direct materials, direct labor and manufacturing overhead.
marketing and research and development costs.
none of the above.

the costs of direct materials, direct labor and manufacturing overhead.

Country Furniture Company manufactures furniture at its Akron. Ohio, factory. Some of its costs from the past year include:
Depreciation on sales office $ 9,000
Depreciation on factory equipment 16,000
Factory supervisor salary 50,500
Sales commissions 23,000
Lubricants used in factory equipment 3,000
Insurance costs for factory 21,000
Wages paid to maintenance workers 115,000
Fabric used to upholster furniture 10.000
Freight – in (on raw materials) 3,000
Costs of delivery to customers 9,000
Wages paid to assembly – line workers 155,500
Lumber used to build product 82,000
Utilities in factory 54,500
Utilities in sales office 26,500
Direct labor costs for Country Furniture Company totaled
$321,000.
$115,000.
$155,500.
$344,000.

$155,500.

For which of the following do we prepare calculations for equivalent units?
Neither direct materials nor conversion costs
Both direct materials and conversion costs
Both direct labor and manufacturing overhead
Both direct labor and direct materials

Both direct materials and conversion costs

When manufacturing products, direct labor and direct materials are classified as
period costs and expensed when incurred,
product costs and expensed when incurred,
period costs and expensed when the goods are sold,
product costs and expensed when the goods are sold.

product costs and expensed when the goods are sold.

Manufacturers consider selling and aotoinistrative costs to be
conversion costs,
inventoriable costs,
prime costs,
period costs.

period costs.

Testing ways to increase the strength of your product would be classified as which part of the value chain?
Production
Distribution
Research and development
Design

Research and development

The benefits of using the ABC costing system are higher if the company
has high indirect costs,
produces only one product.
has high indirect costs and produces many different products that use differing amounts of resources,
produces many different products that use differing amounts of resources.

has high indirect costs and produces many different products that use differing amounts of resources

Jasper Carts manufactures custom carts for a variety of uses. The following data have been recorded for Job 651, which was recently completed. Direct materials used cost $7,200. There were 175 direct labor
hours worked on this job at a direct labor wage rate of $22 per hour. There were 82 machine hours used on this job. The predetermined overhead rate is $30 per machine hour used.
What is the total manufacturing cost of Job 651?
$7,457
$2,460
$3,850
$13,510

$13,510

Which of the following does ABC take into account?
The extent to which the manufacturing activities are used by the product
The types of manufacturing activities used by the product
Both A and B
Neither A nor B

Both A and B

Ryan’s Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost $300,000
Actual manufacturing overhead cost $290,000
Estimated machine hours 20,000
Actual machine hours 22,000
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The manufacturing overhead for the year would have been
$40,000 over allocated.
$10,000 under allocated.
$10,000 over allocated.
$40,000 under allocated.

$40,000 overallocated.

The difference between the sales price and the job cost is
cost or goods sold,
net income,
operating income,
gross profit.

gross profit.

Ryan Fabrication allocates manufacturing overhead to each job using departmental overhead rates. Ryan’s operations are divided into a metal casting department and a metal finishing department. The
casting department uses a departmental overhead rate of $52 per machine hour, while the finishing department uses a departmental overhead rate of $28 per direct labor hour. Job A216 used the following
direct labor hours and machine hours in the two departments:
Casting Finishing
Actual results Department Department
Direct labor hours used 5 12
Machine hours used 4 3
The cost for direct labor is $32 per direct labor hour and the cost of the direct materials used by Job A216 is $1,800.
How much manufacturing overhead would be allocated to Job A216 using the deoartmental overhead rates?
$1,360
$454
$596
$544

$544

Which of the following product costing systems is normally used to assign costs to goods that are mass produced?
Process costing
LIFO costing
Job costing
Fixed costing

Process costing

At Onyx Incorporated, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include:
WIP beginning (70% for conversion) 15,200 units
Units started 150,000 units
Units completed and transferred out 120,000 units
WIP ending (50% for conversion) 45,200 units
Beginning WIP direct materials $52,500
Beginning WIP conversion costs $25,200
Costs of materials added $443,100
Costs of conversion added $260,000
What are the total equivalent units for conversion costs?
130,460
165,200
142,600
151,640

142,600

Chicago Steel’s operating activities for the year are listed below.
Beginning inventory $ 1,000,000
Ending inventory $ 350,000
Purchases $ 750,000
Sales revenue $ 1,500,000
Operating expenses $ 700,000
What is the cost of goods sold for the year?
$50,000
$750,000
$1,400,000
$1,750,000

$1,400,000

Cost of goods sold is debited and finished goods inventory is credited for
transfer of materials into work in process inventory,
purchase of goods on account,
transfer of goods to the finished goods storeroom,
the sale of goods to a customer.

the sale of goods to a customer.

Which of the following types of information differs between alternatives and can affect the future?
Relevant
Predictable
Historical
Irrelevant

Relevant

Which product costing system would better account for a unique product?
Product costing system
Overhead costing system
Process costing system
Job costing system

Job costing system

Color Wheel has 3,500 gallons of paint in WIP inventory, with 75% of materials already added. The paint is 60% through the process. Assuming all conversion costs are added evenly throughout the process,
what are the equivalent units for conversion costs?
2,625
525
2,100
0

2,100

A_is used to accumulate the costs of a job.
bill of materials
labor time record
materials inventory requisition form
job cost record

job cost record

In process costing,________ is are found by taking the number of partially completed physical units and multiplying it by the percentage of the process completed.
conversion costs
equivalent units
fixed manufacturing overhead costs
cost of goods sold

equivalent units

The document many process costing companies use to summarize the entire five – step process on one schedule is called the
bill of materials,
production cost report,
conversion report,
income costing statement.

production cost report,

A(n)________ cost is one whose total amount changes in direct proportion to a change in volume.
mixed
fixed
variable
irrelevant

variable

The cost of lighting the factory would be classified as__________when determining the cost of a manufactured product.
a period cost
an indirect cost
a direct cost
none of the above

an indirect cost

Which of the following types of companies has raw materials, work in process and finished goods inventory?
Retailers
Service companies
Wholesalers
Manufacturers

Manufacturers

Which of the following is an example of a cost item that should be classified as an external failure cost?
Cost of a lost unit
Cost to redesign product
Tooling changes
Warranty claims

Warranty claims

Under allocated manufacturing overhead results when
actual overhead is greater than allocated overhead,
actual overhead is greater than expected,
estimated overhead is greater than actual overhead,
production is greater than last year.

actual overhead is greater than allocated overhead,

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