Question 1

The ability to present an income statement in a contribution format is one of the primary advantages of the absorption costing approach.

Accepted Answer

A) True 
 B)False  False

Question 2

For each of the following independent manufacturing situations, indicate whether job-order or process costing is more appropriate and why.

Accepted Answer

The answer of For each of the following independent manufacturing...

Question 3

What is the purpose for using predetermined overhead rates?

Accepted Answer

A)  Delays in product costing can be avoided 
B)  Variation in cost assignment due to seasonality can be prevented 
C)  Variation in cost assignment due to short-term variations in volume can be prevented 
D)  Use of predetermined overhead rates serves all the above purposes 
A)  Delays in product costing can be avoided 
B)  Variation in cost assignment due to seasonality can be prevented 
C)  Variation in cost assignment due to short-term variations in volume can be prevented 
D)  Use of predetermined overhead rates serves all the above purposes D

Question 4

Which of the following costs are treated as part of the cost of product?

Accepted Answer

A)  Wages of plant security guards 
B)  Insurance on the plant building and equipment 
C)  Depreciation on the kitchen sink in the plant cafeteria 
D)  All of the above are product costs 
A)  Wages of plant security guards 
B)  Insurance on the plant building and equipment 
C)  Depreciation on the kitchen sink in the plant cafeteria 
D)  All of the above are product costs

Question 5

Casey Company manufactures a product that passes through two processes: Mixing and Packaging. The costs incurred for the Mixing Department for September follow:
   During Sept., 75,000 units were completed and transferred to Packaging. The following costs were incurred by the Mixing Department during September:
   There were 9,000 units that were 70 percent complete remaining in the Mixing Department at Sept. 30. Use the weighted average method and round unit costs to 2 decimal places.
Required:
a. Determine the equivalent units in process for September.
b. Determine the Total Costs To Account For in September.
c. Determine the costs per equivalent unit assuming all costs are added uniformly during the mixing process.
d. Determine the Accounting for Total Costs.

Accepted Answer

The answer of Casey Company manufactures a product that passes...

Question 6

Texas Company manufactures a product through a process where all manufacturing costs are added uniformly. Information for October beginning work-in-process follows.
   Costs incurred during October:
   During October, 50,000 units were completed. Also, 5,000 units that were 50 percent complete remained in process at the end of the day on October 31.
Calculate the cost of goods completed and the cost assigned to ending inventory.

Accepted Answer

Equivalent units in process consisted of

Question 7

Justin Company had the following data for the current fiscal period:
   Materials are added at the beginning of the process. Beginning work-in-process was 40 percent complete as to conversion. Ending work-in-process was 70 percent complete as to conversion.
Calculate the number of units completed and transferred out during the period?

Accepted Answer

The answer of Justin Company had the following data for...

Question 8

The cost per equivalent unit for materials using the weighted average method is calculated as:

Accepted Answer

A)  Total materials costs in process during the period divided by equivalent units in process for materials 
B)  Materials costs added during the period divided by equivalent units in process for materials 
C)  Total materials costs to account for divided by the number of equivalent units completed for materials 
D)  Materials costs added during the period divided by the number of equivalent units completed for materials 
A)  Total materials costs in process during the period divided by equivalent units in process for materials 
B)  Materials costs added during the period divided by equivalent units in process for materials 
C)  Total materials costs to account for divided by the number of equivalent units completed for materials 
D)  Materials costs added during the period divided by the number of equivalent units completed for materials

Question 9

Fixed non-manufacturing costs are classified as period costs under variable costing, but not under absorption costing.

Accepted Answer

A) True 
 B)False

Question 10

Northern Company manufactures a product that passes through two processes. The following information is available for the first department for August:
●Beginning work-in-process consisted of 12,000 units that were 85 percent complete with respect to conversion.
●Ending work-in-process consisted of 7,500 units that were 30 percent complete with respect to conversion.
●70,500 units were started in process during the month.
●All materials are added at the beginning of the process.
Required:
a. Prepare a detailed summary of units in process during the month.
b. Compute equivalent units in process for Materials and Conversion using the weighted average method.

Accepted Answer

The answer of Northern Company manufactures a product that passes...

Question 11

All depreciation on factory assets is recorded as an expense of the period.

Accepted Answer

A) True 
 B)False

Question 12

In financial accounting, the term period costs refers to all expired costs not related to the manufacturing function, and product costs refers to all costs incurred during the period related to the manufacturing function.

Accepted Answer

A) True 
 B)False

Question 13

Given is selected information from Nathaniel's Service Shop's June Income Statement and Statement of Cost of Goods Manufactured:
  Nathaniel's Service Shop's finished goods inventory, on June 1, was:

Accepted Answer

A)  40,000 
B)  30,000 
C)  35,000 
D)  20,000 
A)  40,000 
B)  30,000 
C)  35,000 
D)  20,000

Question 14

Which of the following statements most accurately describes financial accounting's view of period costs?

Accepted Answer

A)  Period costs are all costs incurred in the current financial reporting period. 
B)  Period costs are all direct costs incurred in the current financial reporting period. 
C)  Period costs are all non-manufacturing expenses incurred in the current financial reporting period. 
D)  Period costs are a component of fully absorbed costs. 
A)  Period costs are all costs incurred in the current financial reporting period. 
B)  Period costs are all direct costs incurred in the current financial reporting period. 
C)  Period costs are all non-manufacturing expenses incurred in the current financial reporting period. 
D)  Period costs are a component of fully absorbed costs.

Question 15

The following information is available for Rhonda, Inc. for the month of January:
   Materials are added at the beginning of the process.
Calculate the cost per equivalent unit in process for conversion using the weighted average method.

Accepted Answer

Equivalent units in process for conversi

Question 16

Variable costing is not accepted for external financial reporting.

Accepted Answer

A) True 
 B)False

Question 17

For which of the following manufactured products would process costing be more appropriate?

Accepted Answer

A)  Modular homes 
B)  Luxury liners 
C)  Nylon fiber production 
D)  Special order printing 
A)  Modular homes 
B)  Luxury liners 
C)  Nylon fiber production 
D)  Special order printing

Question 18

When goods are transferred from the factory to the finished goods warehouse, Work-In-Process is reduced and Cost of Goods Sold Expense is recorded.

Accepted Answer

A) True 
 B)False

Question 19

E&J Auto Body Shop estimated overhead cost for the coming year will be $15,000 and 5,000 direct labor hours will be worked. The amount of overhead cost applied by E&J Auto Body Shop to one of its jobs if the jobs required 10 direct labors hours to complete, would be:

Accepted Answer

A)  $150 
B)  $ 30 
C)  $ 50 
D)  $ 15 
A)  $150 
B)  $ 30 
C)  $ 50 
D)  $ 15

Question 20

Which of the following types of costs are classified as period costs under absorption costing, but not under variable costing?

Accepted Answer

A)  All non-manufacturing costs 
B)  Only fixed non-manufacturing costs 
C)  The cost of purchasing long-lived assets for use in manufacturing 
D)  None of the above 
A)  All non-manufacturing costs 
B)  Only fixed non-manufacturing costs 
C)  The cost of purchasing long-lived assets for use in manufacturing 
D)  None of the above

The ability to present an income statement in a contribution format is one of the primary advantages of the absorption costing approach.

For each of the following independent manufacturing situations, indicate whether job-order or process costing is more appropriate and why.

What is the purpose for using predetermined overhead rates?

Which of the following costs are treated as part of the cost of product?

The cost per equivalent unit for materials using the weighted average method is calculated as:

Fixed non-manufacturing costs are classified as period costs under variable costing, but not under absorption costing.

All depreciation on factory assets is recorded as an expense of the period.

In financial accounting, the term period costs refers to all expired costs not related to the manufacturing function, and product costs refers to all costs incurred during the period related to the manufacturing function.

Given is selected information from Nathaniel's Service Shop's June Income Statement and Statement of Cost of Goods Manufactured: Nathaniel's Service Shop's finished goods inventory, on June 1, was:

Which of the following statements most accurately describes financial accounting's view of period costs?

The following information is available for Rhonda, Inc. for the month of January: Materials are added at the beginning of the process. Calculate the cost per equivalent unit in process for conversion using the weighted average method.

Variable costing is not accepted for external financial reporting.

For which of the following manufactured products would process costing be more appropriate?

When goods are transferred from the factory to the finished goods warehouse, Work-In-Process is reduced and Cost of Goods Sold Expense is recorded.

E&J Auto Body Shop estimated overhead cost for the coming year will be $15,000 and 5,000 direct labor hours will be worked. The amount of overhead cost applied by E&J Auto Body Shop to one of its jobs if the jobs required 10 direct labors hours to complete, would be:

Which of the following types of costs are classified as period costs under absorption costing, but not under variable costing?

Managerial Accounting: Tools for Decision Making

Cost Behavior, Activity Analysis, and Cost Estimation

Cost-Volume-Profit Analysis and Planning

Relevant Costs and Benefits for Decision Making

Activity-Based Costing, Customer Profitability, and Activity-Based Management

Additional Topics in Product Costing

Pricing and Other Product Management Decisions

Operational Budgeting and Profit Planning

Standard Costs and Performance Reports

Segment Reporting, Transfer Pricing, and Balanced Scorecard

Capital Budgeting Decisions

Appendix: Managerial Analysis of Financial Statements

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Exam 5: Product Costing: Job and Process Operations

The ability to present an income statement in a contribution format is one of the primary advantages of the absorption costing approach.

For each of the following independent manufacturing situations, indicate whether job-order or process costing is more appropriate and why.

What is the purpose for using predetermined overhead rates?

Which of the following costs are treated as part of the cost of product?

The cost per equivalent unit for materials using the weighted average method is calculated as:

Fixed non-manufacturing costs are classified as period costs under variable costing, but not under absorption costing.

All depreciation on factory assets is recorded as an expense of the period.

In financial accounting, the term period costs refers to all expired costs not related to the manufacturing function, and product costs refers to all costs incurred during the period related to the manufacturing function.

Given is selected information from Nathaniel's Service Shop's June Income Statement and Statement of Cost of Goods Manufactured: Nathaniel's Service Shop's finished goods inventory, on June 1, was:

Which of the following statements most accurately describes financial accounting's view of period costs?

The following information is available for Rhonda, Inc. for the month of January: Materials are added at the beginning of the process. Calculate the cost per equivalent unit in process for conversion using the weighted average method.

Variable costing is not accepted for external financial reporting.

For which of the following manufactured products would process costing be more appropriate?

When goods are transferred from the factory to the finished goods warehouse, Work-In-Process is reduced and Cost of Goods Sold Expense is recorded.

E&J Auto Body Shop estimated overhead cost for the coming year will be $15,000 and 5,000 direct labor hours will be worked. The amount of overhead cost applied by E&J Auto Body Shop to one of its jobs if the jobs required 10 direct labors hours to complete, would be:

Which of the following types of costs are classified as period costs under absorption costing, but not under variable costing?

Managerial Accounting: Tools for Decision Making

Cost Behavior, Activity Analysis, and Cost Estimation

Cost-Volume-Profit Analysis and Planning

Relevant Costs and Benefits for Decision Making

Activity-Based Costing, Customer Profitability, and Activity-Based Management

Additional Topics in Product Costing

Pricing and Other Product Management Decisions

Operational Budgeting and Profit Planning

Standard Costs and Performance Reports

Segment Reporting, Transfer Pricing, and Balanced Scorecard

Capital Budgeting Decisions

Appendix: Managerial Analysis of Financial Statements

Filters