Question 1

Each department is regarded as a distinct accounting entity when interdepartmental transfers are present in an organisation.

Accepted Answer

A) True 
 B)False

Question 2

The budgeted indirect-cost driver rate for the Machining Department based on the number of machine-hours in that department is:

Accepted Answer

A) $5 per machine-hour 
B) $10 per machine-hour 
C) $20 per machine-hour 
D) None of these answers are correct. 
A) $5 per machine-hour 
B) $10 per machine-hour 
C) $20 per machine-hour 
D) None of these answers are correct.

Question 3

Answer the following questions using the information below:
Injection Molding Ltd manufactures plastic moldings for car seats.Its costing system utilises two cost categories,direct materials and conversion costs.Each product must pass through Department A and Department B.Direct materials are added at the beginning of production.Conversion costs are allocated evenly throughout production.
 Data for Department A for Febuary 2018 are:

$\begin{array}{ll}
\text { Work-in-process, beginning inventory, } 40 \% \text { converted } & 200 \text { units } \
\text { Units started during February } & 600 \text { units } \
\text { Work in proces, ending inventory } & 100 \text { units }
\end{array}$

Costs for Department A for Febuary 2018 are:
$\begin{array}{lc}
\text {Work-in-process, beginning inventory:}\
\text {Direct materials}&&\$ 100000 \ 
\text { Conversion costs } & \$ 100000 \
\text { Direct materials costs added during February } & \$ 1000000 \
\text { Conversion costs added during February } & \$ 1250000
\end{array}$

-How many units were completed and transferred out of Department A during February?

Accepted Answer

A) 800 units 
B) 600 units 
C) 700 units 
D) 100 units 
A) 800 units 
B) 600 units 
C) 700 units 
D) 100 units

Question 4

When using a normal costing system,manufacturing overhead is allocated using the ________ manufacturing overhead rate and the ________ quantity of the allocation base.

Accepted Answer

A) actual;actual 
B) budgeted;budgeted 
C) actual;budgeted 
D) budgeted;actual 
A) actual;actual 
B) budgeted;budgeted 
C) actual;budgeted 
D) budgeted;actual

Question 5

All of the following are true of plant utility costs EXCEPT:

Accepted Answer

A) it is an indirect cost. 
B) the cost increases the Work-in-Process Control account. 
C) the cost increases the Manufacturing Overhead Control account. 
D) the source document is the utility bill. 
A) it is an indirect cost. 
B) the cost increases the Work-in-Process Control account. 
C) the cost increases the Manufacturing Overhead Control account. 
D) the source document is the utility bill.

Question 6

A common problem reported by companies using variable costing is the difficulty of classifying costs into fixed or variable categories.

Accepted Answer

A) True 
 B)False

Question 7

Actual costing is a method of job costing that allocates an indirect cost based on the actual indirect-cost rate times the actual quantity of the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 8

What is the total amount debited to the Work-in-Process account during the month of June?

Accepted Answer

A) $2 450 000 
B) $2 000 000 
C) $2 270 000 
D) $450 000 
A) $2 450 000 
B) $2 000 000 
C) $2 270 000 
D) $450 000

Question 9

Which one of the following statements is true?

Accepted Answer

A) In a job-costing system,individual jobs use different quantities of production resources. 
B) In a process-costing system,each unit uses approximately the same amount of resources. 
C) An averaging process is used to calculate unit costs in a job-costing system. 
D) Both A and B are correct. 
A) In a job-costing system,individual jobs use different quantities of production resources. 
B) In a process-costing system,each unit uses approximately the same amount of resources. 
C) An averaging process is used to calculate unit costs in a job-costing system. 
D) Both A and B are correct.

Question 10

________ costing is a cost management system that measures the cost of products,services and customers.

Accepted Answer

A) Process 
B) Job 
C) Normal 
D) All of these answers are correct. 
A) Process 
B) Job 
C) Normal 
D) All of these answers are correct.

Question 11

Answer the following questions using the information below:
Healesville Animates produces and sells a luxury animal pillow for $40.00 per unit.In the first month of operation,3000 units were produced and 2250 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
 $$\begin{array} { l l } 
\text { Variable manufacturing costs } & \$ 19 \text { per unit } \
\text { Variable marketing costs } & \$ 1 \text { per unit } \
\text { Fixed manufacturing costs } & \$ 30000 \text { per month } \
\text { Administrative expenses, all fixed } & \$ 6000 \text { per month } \
\text { Ending inventories: } & \
\text { Direct materials } & - 0 - \
\text { WIP } & - 0 - \
\text { Finished goods } & 750 \text { units }
\end{array}$$
-Under variable costing,if a manager's bonus is tied to operating profit,then increasing inventory levels compared to last year would result in:

Accepted Answer

A) increasing the manager's bonus 
B) decreasing the manager's bonus 
C) not affecting the manager's bonus 
D) being unable to determine the manager's bonus using only the above information 
A) increasing the manager's bonus 
B) decreasing the manager's bonus 
C) not affecting the manager's bonus 
D) being unable to determine the manager's bonus using only the above information

Question 12

Why are some costs,such as an automotive repair garage service manager's salary,not traced to a particular motor vehicle repair job?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Much of an automotive repair garage serv

Question 13

Activity-based costing has more applicability in a process-costing system than in a job-costing environment.

Accepted Answer

A) True 
 B)False

Question 14

Answer the following questions using the information below:
Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 280000 \
\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \
\text { Ind irect labour } & \$ 20000 \
\text { Plant facility rent } & \$ 60000 \
\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \
\text { Sales commissions } & \$ 40000 \
\text { Administrative expenses } & \$ 50000
\end{array}$$
-The amount of manufacturing overhead allocated to all jobs during June 2018 totals:

Accepted Answer

A) $110 000. 
B) $105 000. 
C) $77 000. 
D) $200 000. 
A) $110 000. 
B) $105 000. 
C) $77 000. 
D) $200 000.

Question 15

In a job-costing system,explain why it is necessary to apply indirect costs to production through the use of a manufacturing overhead cost-allocation rate.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

First,actual manufacturing overhead cost

Question 16

What is the appropriate journal entry if $150 000 of materials were purchased on account for the month of August?
 A)
$\begin{array} { l c c } 
\text {  Manufacturing Allocated } & 150000 \
\text { Accounts Receivable Control } && 150000 \
\end{array}$

B)
$\begin{array} { l c c } 
\text {  Manufacturing Overhead Control } & 150000 \
\text { Accounts Receivable Control } && 150000 \
\end{array}$

C)
$\begin{array} { l c c } 
\text {  Materials Control } & 150000 & \
\text { Accounts Payable Control } & & 150000 \
\end{array}$

D)
$\begin{array} { l c c } 
\text {  Work-in-Process Control } & 150000 & \
\text { Accounts Payable Control } & & 150000
\end{array}$

Accepted Answer

The answer of What is the appropriate journal entry if...

Question 17

Answer the following questions using the information below:
Botany Bay Boatbuilders uses departmental cost driver rates to allocate manufacturing overhead costs to products.Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labour-hours in the Assembly Department.At the beginning of 2010,the following estimates were provided for the coming year:
 $$\begin{array}{l}
\begin{array} { l l l } 
& \text { Machining } & \text { Assembly } \
\text { Direct labour-hours } & 30000&60000  \
\text { Machine-hours } & 80000&20000 & \
\text { Direct labour cost } & \$ 500000 & \$ 900000 \
\text { Manufacturing overhead costs } & \$ 420000 & \$ 240000
\end{array}\\
\text { The accounting records of the company show the following data for Job \#316: }
\end{array}$$

$\begin{array}{lcc}
& \text { Machining } & \text { Assembly } \ 
\text { Direct labour-hours } & 120 & 70 \
\text { Machine-hours } & 60 & 5\
\text { Direct material cost } & \$ 300 & \$ 200 \
\text { Direct labour cost } & \$ 100  & \$ 400  
\end{array}$
-What amount of manufacturing overhead costs will be allocated to Job #316?

Accepted Answer

A) $532 
B) $502 
C) $595 
D) $439 
A) $532 
B) $502 
C) $595 
D) $439

Question 18

In each period,job costing divides the total cost of producing an identical or similar product by the total number of units produced to obtain a per-unit cost.

Accepted Answer

A) True 
 B)False

Question 19

An example of a DENOMINATOR REASON for calculating annual indirect-cost rates includes:

Accepted Answer

A) higher heating bills in the winter. 
B) higher levels of output demanded during the summer months from an ice cream factory. 
C) semi-annual insurance payments in March and September. 
D) All of these answers are correct. 
A) higher heating bills in the winter. 
B) higher levels of output demanded during the summer months from an ice cream factory. 
C) semi-annual insurance payments in March and September. 
D) All of these answers are correct.

Question 20

Manufacturing costs estimated for Job #432 total:

Accepted Answer

A) $55 000. 
B) $65 000. 
C) $70 000. 
D) $75 000. 
A) $55 000. 
B) $65 000. 
C) $70 000. 
D) $75 000.

Each department is regarded as a distinct accounting entity when interdepartmental transfers are present in an organisation.

The budgeted indirect-cost driver rate for the Machining Department based on the number of machine-hours in that department is:

When using a normal costing system,manufacturing overhead is allocated using the manufacturing overhead rate and the quantity of the allocation base.

All of the following are true of plant utility costs EXCEPT:

A common problem reported by companies using variable costing is the difficulty of classifying costs into fixed or variable categories.

Actual costing is a method of job costing that allocates an indirect cost based on the actual indirect-cost rate times the actual quantity of the cost-allocation base.

What is the total amount debited to the Work-in-Process account during the month of June?

Which one of the following statements is true?

________ costing is a cost management system that measures the cost of products,services and customers.

Why are some costs,such as an automotive repair garage service manager's salary,not traced to a particular motor vehicle repair job? _ _

Activity-based costing has more applicability in a process-costing system than in a job-costing environment.

In a job-costing system,explain why it is necessary to apply indirect costs to production through the use of a manufacturing overhead cost-allocation rate. _ _

In each period,job costing divides the total cost of producing an identical or similar product by the total number of units produced to obtain a per-unit cost.

An example of a DENOMINATOR REASON for calculating annual indirect-cost rates includes:

Manufacturing costs estimated for Job #432 total:

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

Exam 6: Estimating the Costs of Products and Inventory

Each department is regarded as a distinct accounting entity when interdepartmental transfers are present in an organisation.

The budgeted indirect-cost driver rate for the Machining Department based on the number of machine-hours in that department is:

When using a normal costing system,manufacturing overhead is allocated using the ________ manufacturing overhead rate and the ________ quantity of the allocation base.

All of the following are true of plant utility costs EXCEPT:

A common problem reported by companies using variable costing is the difficulty of classifying costs into fixed or variable categories.

Actual costing is a method of job costing that allocates an indirect cost based on the actual indirect-cost rate times the actual quantity of the cost-allocation base.

What is the total amount debited to the Work-in-Process account during the month of June?

Which one of the following statements is true?

________ costing is a cost management system that measures the cost of products,services and customers.

Activity-based costing has more applicability in a process-costing system than in a job-costing environment.

In each period,job costing divides the total cost of producing an identical or similar product by the total number of units produced to obtain a per-unit cost.

An example of a DENOMINATOR REASON for calculating annual indirect-cost rates includes:

Manufacturing costs estimated for Job #432 total:

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

When using a normal costing system,manufacturing overhead is allocated using the manufacturing overhead rate and the quantity of the allocation base.