Question 1

When preparing a flexible budget for factory overhead costs, what will occur to fixed costs (on a per-unit basis) as production increases?

Accepted Answer

A) Fixed costs per unit will increase. 
B) Fixed costs are not considered in flexible budgeting. 
C) Fixed costs per unit will decrease. 
D) Fixed costs per unit will remain unchanged. 
A) Fixed costs per unit will increase. 
B) Fixed costs are not considered in flexible budgeting. 
C) Fixed costs per unit will decrease. 
D) Fixed costs per unit will remain unchanged.

Question 2

Jarcly Manufacturing Company uses activity-based costing. The factory overhead budget for the coming period is $1,053,000, consisting of the following:   The potential allocation bases and their estimated amounts were as follows:   
a.Determine the overhead rate for each cost pool, using the most appropriate allocation base for each pool.
b.Job 80130 required $45,000 for direct materials, $20,000 for direct labor, 2,000 direct labor hours, 800 machine hours, five setups, and four design changes. Determine the cost of Job 80130.

Accepted Answer

The answer of Jarcly Manufacturing Company uses activity-based costing. The...

Question 3

The entry to apply factory overhead to jobs includes:

Accepted Answer

A) a debit to Applied Factory Overhead. 
B) a debit to Work in Process. 
C) a credit to Work in Process. 
D) a debit to Cost of Goods Sold. 
A) a debit to Applied Factory Overhead. 
B) a debit to Work in Process. 
C) a credit to Work in Process. 
D) a debit to Cost of Goods Sold.

Question 4

Factory overhead includes:

Accepted Answer

A) Indirect labor but not indirect materials. 
B) All manufacturing costs except direct materials and direct labor. 
C) All manufacturing costs. 
D) Indirect materials but not indirect labor. 
A) Indirect labor but not indirect materials. 
B) All manufacturing costs except direct materials and direct labor. 
C) All manufacturing costs. 
D) Indirect materials but not indirect labor.

Question 5

A cost driver is:

Accepted Answer

A) An overhead or activity rate. 
B) A basis used to allocate each of the activity cost pools. 
C) The estimated cost of each activity pool. 
D) Used only to allocate non-volume-related costs. 
A) An overhead or activity rate. 
B) A basis used to allocate each of the activity cost pools. 
C) The estimated cost of each activity pool. 
D) Used only to allocate non-volume-related costs.

Question 6

Spencer Company had overapplied factory overhead of $5,000 last year. Which of the following statements is not true?

Accepted Answer

A) A higher level of production may have been achieved than budgeted for. 
B) The Work in Process account was overcharged for the costs of factory overhead incurred during the period. 
C) The actual factory overhead expenses may have been less than budgeted for the operating level achieved. 
D) Assuming the amount is not material enough to distort net income, Cost of Goods Sold should be increased by this amount. 
A) A higher level of production may have been achieved than budgeted for. 
B) The Work in Process account was overcharged for the costs of factory overhead incurred during the period. 
C) The actual factory overhead expenses may have been less than budgeted for the operating level achieved. 
D) Assuming the amount is not material enough to distort net income, Cost of Goods Sold should be increased by this amount.

Question 7

The method of analyzing cost behavior that uses two data points to first determine the variable cost per unit and then the total fixed cost is the:

Accepted Answer

A) Method of least squares. 
B) Scattergraph method. 
C) High-low method. 
D) Observation method. 
A) Method of least squares. 
B) Scattergraph method. 
C) High-low method. 
D) Observation method.

Question 8

Fixed factory overhead costs include:

Accepted Answer

A) Property taxes. 
B) Plant manager's salary. 
C) Factory insurance. 
D) All of the these are correct. 
A) Property taxes. 
B) Plant manager's salary. 
C) Factory insurance. 
D) All of the these are correct.

Question 9

The method of analyzing the behavior of semivariable costs that relies heavily on the ability of an observer to detect a pattern of cost behavior by reviewing past cost and volume data is the:

Accepted Answer

A) High-low method. 
B) Method of least squares. 
C) Scattergraph method. 
D) Observation method. 
A) High-low method. 
B) Method of least squares. 
C) Scattergraph method. 
D) Observation method.

Question 10

Which of the following costs would be included in factory overhead in the manufacture of a student's desk?

Accepted Answer

A) The wages of the operator of the machine that bends the metal legs of the desk into shape. 
B) The wages of the forklift operator who moves finished desks to the finished goods warehouse. 
C) The cost of the plastic used to form the writing surface. 
D) The wages of the worker who assembles the components. 
A) The wages of the operator of the machine that bends the metal legs of the desk into shape. 
B) The wages of the forklift operator who moves finished desks to the finished goods warehouse. 
C) The cost of the plastic used to form the writing surface. 
D) The wages of the worker who assembles the components.

Question 11

Flexible budgeting is a reporting system wherein the:

Accepted Answer

A) Budget shows estimated costs at different levels of production volume. 
B) Budget standards may be adjusted at will. 
C) Reporting dates vary according to the levels of activity reported upon. 
D) Statements included in the budget report vary from period to period. 
A) Budget shows estimated costs at different levels of production volume. 
B) Budget standards may be adjusted at will. 
C) Reporting dates vary according to the levels of activity reported upon. 
D) Statements included in the budget report vary from period to period.

Question 12

Domino Bakery has the following budget at 1,000,000 dozen donuts baked:   (1) Compute the cost per dozen donuts at 1,000,000 dozen.
(2) Develop the budget for 1,200,000 dozen donuts.
(3) Compute the cost per dozen donuts at 1,200,000 dozen.
(4) Explain why the difference in the cost per dozen occurs at the different levels of volume.

Accepted Answer

(1) Cost per dozen = $930,000/1,000,000

Question 13

A major disadvantage of the scattergraph method of analyzing cost behavior is:

Accepted Answer

A) It bases its solution on only two observations. 
B) It results in its analyzed cost being treated as either fixed or variable, based on which type of behavior it more closely resembles. 
C) Two persons could draw different lines through the data points. 
D) It enables non-representative points, called outliers, to be identified. 
A) It bases its solution on only two observations. 
B) It results in its analyzed cost being treated as either fixed or variable, based on which type of behavior it more closely resembles. 
C) Two persons could draw different lines through the data points. 
D) It enables non-representative points, called outliers, to be identified.

Question 14

Factory overhead for the Praeger Company has been estimated as follows:   Production for the month was 90 percent of the budget, and actual factory overhead totaled $175,000.
Calculate: 
a.The predetermined factory overhead rate.
b.The under- or overapplied factory overhead.

Accepted Answer

The answer of Factory overhead for the Praeger Company has...

Question 15

You have been hired by Thompson Waterfall Manufacturing. Your first task is examine different distribution methods for applying factory overhead to the various production orders that are processed during a year.
The following information was taken from the annual budget:   
a.Determine the following factory overhead application rates under each of the following methods:(1)Direct labor cost(2)Direct labor hours(3)Machine hours
b.Prepare a schedule showing the prime cost and total cost of Order 329 with the factory overhead costs applied on each of the three bases; Job Cost Sheet 329 shows the following: raw materials, $6,200; direct labor, 6,000 hours and $29,000; machine hours, 2,800.

Accepted Answer

The answer of You have been hired by Thompson Waterfall...

Question 16

Fixed overhead cost includes all of the following except:

Accepted Answer

A) Electricity to heat and light the factory. 
B) Depreciation on machinery computed based on the units of production basis. 
C) The plant manager's salary. 
D) The salary of the security guard at the front door. 
A) Electricity to heat and light the factory. 
B) Depreciation on machinery computed based on the units of production basis. 
C) The plant manager's salary. 
D) The salary of the security guard at the front door.

Question 17

The Jason Manufacturing Company has two production departments (millwright and assembly) and three service departments (general factory administration, factory maintenance, and factory development). A summary of costs and other data for each department, prior to allocation of service department costs for the year ended March 30, appears below. The costs of the general factory administration department, factory maintenance department, and factory development department are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively.   Assuming that Jason elects to use the sequential method to distribute service department costs (starting with factory development), what would be the amount of factory development that would be allocated to the factory maintenance department?

Accepted Answer

A) $ 9,100. 
B) $ 4,350. 
C) $29,640. 
D) $0. 
A) $ 9,100. 
B) $ 4,350. 
C) $29,640. 
D) $0.

Question 18

Victoria is a budget analyst at Young Industries. She used the least squares regression method to separate the plant's monthly utilities cost into its fixed and variable components. The results were as follows: Y = 3,250 + .054 X
X = the number of units produced
R2 = .892
How should Victoria interpret the R2 of .892?

Accepted Answer

A) The equation is a better predictor of fixed costs than of variable costs 89.2% of the time. 
B) The equation will accurately predict utility costs 89.2% of the time. 
C) Fixed costs make up 89.2% of the total semi-variable cost in any given month. 
D) The number of units produced explains 89.2% of the variation in the plant utilities cost. 
A) The equation is a better predictor of fixed costs than of variable costs 89.2% of the time. 
B) The equation will accurately predict utility costs 89.2% of the time. 
C) Fixed costs make up 89.2% of the total semi-variable cost in any given month. 
D) The number of units produced explains 89.2% of the variation in the plant utilities cost.

Question 19

In a factory, all of the following would be considered service departments except:

Accepted Answer

A) Inspection and Packing 
B) Assembly 
C) Power 
D) Human Resources 
A) Inspection and Packing 
B) Assembly 
C) Power 
D) Human Resources

Question 20

Dean Corporation has two service departments, Power and Maintenance, and two production departments, Painting and Polishing. The following data have been estimated for next year's operations:   Requirements:
(1) Distribute the service department costs using the sequential distribution method. Distribute the Power Department first.
(2) Prepare the journal entries to distribute the costs of the service departments to the production departments given the results of your calculations.

Accepted Answer

(1) Sequential Distribution Me

When preparing a flexible budget for factory overhead costs, what will occur to fixed costs (on a per-unit basis) as production increases?

The entry to apply factory overhead to jobs includes:

Factory overhead includes:

A cost driver is:

Spencer Company had overapplied factory overhead of $5,000 last year. Which of the following statements is not true?

The method of analyzing cost behavior that uses two data points to first determine the variable cost per unit and then the total fixed cost is the:

Fixed factory overhead costs include:

The method of analyzing the behavior of semivariable costs that relies heavily on the ability of an observer to detect a pattern of cost behavior by reviewing past cost and volume data is the:

Which of the following costs would be included in factory overhead in the manufacture of a student's desk?

Flexible budgeting is a reporting system wherein the:

A major disadvantage of the scattergraph method of analyzing cost behavior is:

Factory overhead for the Praeger Company has been estimated as follows: Production for the month was 90 percent of the budget, and actual factory overhead totaled $175,000. Calculate: a.The predetermined factory overhead rate. b.The under- or overapplied factory overhead.

Fixed overhead cost includes all of the following except:

In a factory, all of the following would be considered service departments except:

Introduction to Cost Accounting

Accounting for Materials

Accounting for Labor

Process Cost Accounting General Procedures

Process Cost Accounting Additional Procedures

Master Budget and Flexible Budgeting

Standard Cost Accounting Materials, Labor, and Factory Overhead

Cost Accounting for Service Businesses

Cost Analysis for Management Decision Making

Filters

Exam 4: Accounting for Factory Overhead

When preparing a flexible budget for factory overhead costs, what will occur to fixed costs (on a per-unit basis) as production increases?

The entry to apply factory overhead to jobs includes:

Factory overhead includes:

A cost driver is:

Spencer Company had overapplied factory overhead of $5,000 last year. Which of the following statements is not true?

The method of analyzing cost behavior that uses two data points to first determine the variable cost per unit and then the total fixed cost is the:

Fixed factory overhead costs include:

The method of analyzing the behavior of semivariable costs that relies heavily on the ability of an observer to detect a pattern of cost behavior by reviewing past cost and volume data is the:

Which of the following costs would be included in factory overhead in the manufacture of a student's desk?

Flexible budgeting is a reporting system wherein the:

A major disadvantage of the scattergraph method of analyzing cost behavior is:

Factory overhead for the Praeger Company has been estimated as follows: Production for the month was 90 percent of the budget, and actual factory overhead totaled $175,000. Calculate: a.The predetermined factory overhead rate. b.The under- or overapplied factory overhead.

Fixed overhead cost includes all of the following except:

In a factory, all of the following would be considered service departments except:

Introduction to Cost Accounting

Accounting for Materials

Accounting for Labor

Process Cost Accounting General Procedures

Process Cost Accounting Additional Procedures

Master Budget and Flexible Budgeting

Standard Cost Accounting Materials, Labor, and Factory Overhead

Cost Accounting for Service Businesses

Cost Analysis for Management Decision Making

Filters