Question 1

Process costing is used to assign manufacturing costs to unique batches of a product.

Accepted Answer

A) True 
 B)False

Question 2

The CEO of Gulf Coast Refining Corporation wants to know why his golfing partner,the chief financial officer of a large construction company,calculates his costs by the job,but his own corporation calculates costs by large units rather than by individual barrels of oil.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Oil refineries use process costing to ca

Question 3

When a job is complete:

Accepted Answer

A) Work-in-Process Control is debited. 
B) the cost of the job is transferred to Manufacturing Overhead Control. 
C) Finished Goods Control is credited. 
D) actual direct materials,actual direct manufacturing labour and allocated manufacturing overhead.will comprise the total cost of the job 
A) Work-in-Process Control is debited. 
B) the cost of the job is transferred to Manufacturing Overhead Control. 
C) Finished Goods Control is credited. 
D) actual direct materials,actual direct manufacturing labour and allocated manufacturing overhead.will comprise the total cost of the job

Question 4

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 overhead accounts are closed or become zero at the end of each year.

Accepted Answer

A) True 
 B)False

Question 5

A job-cost sheet details the:

Accepted Answer

A) direct labour costs incurred. 
B) direct materials purchased and paid for. 
C) indirect labour costs incurred. 
D) actual indirect overhead costs incurred. 
A) direct labour costs incurred. 
B) direct materials purchased and paid for. 
C) indirect labour costs incurred. 
D) actual indirect overhead costs incurred.

Question 6

The _______________method merges unit costs from different accounting periods,obscuring period-to-period comparisons.

Accepted Answer

A) weighted-average 
B) FIFO 
C) process costing 
D) job costing 
A) weighted-average 
B) FIFO 
C) process costing 
D) job costing

Question 7

When production deviates from the denominator level,a production-volume variance always exists under absorption costing.

Accepted Answer

A) True 
 B)False

Question 8

The ending balance in the Finished Goods Control account represents the costs of all jobs that:

Accepted Answer

A) have been completed but not sold. 
B) have not been completed. 
C) have been completed and sold to customers. 
D) are reported on the income statement. 
A) have been completed but not sold. 
B) have not been completed. 
C) have been completed and sold to customers. 
D) are reported on the income statement.

Question 9

Lexington Company produces baseball bats and cricket paddles.It has two departments that process all products.During July,the beginning work in process in the cutting department was half completed as to conversion,and complete as to direct materials.The beginning inventory included $40 000 for materials and $60 000 for conversion costs.Ending work-in-process inventory in the cutting department was 40% complete.Direct materials are added at the beginning of the process.
Beginning work in process in the finishing department was 80% complete as to conversion.Direct materials for finishing the units are added near the end of the process.Beginning inventories included for transferred-in costs and $28 000 for conversion costs.Ending inventory was 30% complete.Additional information about the two departments follows:
 $$\begin{array} { | l | r | r | } 
\hline & \text { Cutting } & \text { Finishing } \
\hline \text { Epginning work-in-process units } & 20000 & 24000 \
\hline \text { Units started this period } & 60000 & \
\hline \text { Units transferred this period } & 64000 & 68000 \
\hline \text { Ending work-in-process units } & & 20000 \
\hline & & \
\hline \text { Material costs added } & \$ 48000 & \$ 34000 \
\hline \text { Conversion costs } & \text { 28 000 } & \text { 68 500 } \
\hline \text { Trensferred-out cost } & \text { 128000 } & \
\hline
\end{array}$$ 
Required:
Prepare a production cost worksheet,using FIFO for the finishing department.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Production Cost Worksheet Finishing Depa

Question 10

The difference between actual costing and normal costing is:

Accepted Answer

A) normal costing uses actual direct-cost rates. 
B) actual costing uses actual quantities of cost-allocation bases. 
C) actual costing uses actual quantities of direct-cost inputs. 
D) normal costing uses budgeted indirect-cost rates. 
A) normal costing uses actual direct-cost rates. 
B) actual costing uses actual quantities of cost-allocation bases. 
C) actual costing uses actual quantities of direct-cost inputs. 
D) normal costing uses budgeted indirect-cost rates.

Question 11

Activity-based costing has less applicability in a process-costing environment because:

Accepted Answer

A) the use of activity-based costing makes the computational process more difficult. 
B) the products tend to be similar and thus use the resources in a similar manner. 
C) cost control in process costing is achieved by controlling the cost of the various processes rather than the individual activities. 
D) Both B and C are correct. 
A) the use of activity-based costing makes the computational process more difficult. 
B) the products tend to be similar and thus use the resources in a similar manner. 
C) cost control in process costing is achieved by controlling the cost of the various processes rather than the individual activities. 
D) Both B and C are correct.

Question 12

Why have many companies switched from absorption costing to variable costing for internal reporting?
Variant question

Accepted Answer

A) To increase bonuses for managers 
B) So the denominator level is more accurate 
C) To reduce the undesirable incentive to build up inventories 
D) To comply with external reporting requirements 
A) To increase bonuses for managers 
B) So the denominator level is more accurate 
C) To reduce the undesirable incentive to build up inventories 
D) To comply with external reporting requirements

Question 13

When comparing the operating profits between absorption costing and variable costing,and beginning finished inventory exceeds ending finished inventory,it may be assumed that:

Accepted Answer

A) variable costing operating profit exceeds absorption costing operating profit 
B) variable cost per unit is less than fixed cost per unit 
C) there is an unfavourable production-volume variance 
D) sales increased during the period 
A) variable costing operating profit exceeds absorption costing operating profit 
B) variable cost per unit is less than fixed cost per unit 
C) there is an unfavourable production-volume variance 
D) sales increased during the period

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 more ____________________ that products are,the more suitable process-costing becomes.

Accepted Answer

A) obsolete 
B) innovative 
C) homogeneous 
D) heterogeneous 
A) obsolete 
B) innovative 
C) homogeneous 
D) heterogeneous

Question 15

A materials-requisition record is an example of a source document.

Accepted Answer

A) True 
 B)False

Question 16

The basic source document for direct manufacturing labour is the:

Accepted Answer

A) materials-requisition record. 
B) job-cost record. 
C) labour-time record. 
D) All of these answers are correct. 
A) materials-requisition record. 
B) job-cost record. 
C) labour-time record. 
D) All of these answers are correct.

Question 17

A company would use multiple cost-allocation bases:

Accepted Answer

A) because there is more than one way to allocate overhead. 
B) because this is a simpler approach than using one cost-allocation base. 
C) if managers believe that using multiple cost-allocation bases is the only acceptable method. 
D) if managers believed the benefits exceeded the additional costs of that costing system. 
A) because there is more than one way to allocate overhead. 
B) because this is a simpler approach than using one cost-allocation base. 
C) if managers believe that using multiple cost-allocation bases is the only acceptable method. 
D) if managers believed the benefits exceeded the additional costs of that costing system.

Question 18

A company may choose to use budgeted rates to allocate direct labour accounts if direct labour costs are difficult to trace to jobs as they are completed.

Accepted Answer

A) True 
 B)False

Question 19

Answer the following questions using the information below:
Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes:
The budgeted denominator level is 800 units.
Units produced total 1000 units.
Units sold total 950 units.
Beginning inventory was zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 20

The actual costs of all individual overhead categories are recorded in the Manufacturing Overhead Control account.

Accepted Answer

A) True 
 B)False

Process costing is used to assign manufacturing costs to unique batches of a product.

The CEO of Gulf Coast Refining Corporation wants to know why his golfing partner,the chief financial officer of a large construction company,calculates his costs by the job,but his own corporation calculates costs by large units rather than by individual barrels of oil. _ _

When a job is complete:

A job-cost sheet details the:

The _______________method merges unit costs from different accounting periods,obscuring period-to-period comparisons.

When production deviates from the denominator level,a production-volume variance always exists under absorption costing.

The ending balance in the Finished Goods Control account represents the costs of all jobs that:

The difference between actual costing and normal costing is:

Activity-based costing has less applicability in a process-costing environment because:

Why have many companies switched from absorption costing to variable costing for internal reporting? Variant question

When comparing the operating profits between absorption costing and variable costing,and beginning finished inventory exceeds ending finished inventory,it may be assumed that:

A materials-requisition record is an example of a source document.

The basic source document for direct manufacturing labour is the:

A company would use multiple cost-allocation bases:

A company may choose to use budgeted rates to allocate direct labour accounts if direct labour costs are difficult to trace to jobs as they are completed.

The actual costs of all individual overhead categories are recorded in the Manufacturing Overhead Control account.

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

Process costing is used to assign manufacturing costs to unique batches of a product.

When a job is complete:

A job-cost sheet details the:

The _______________method merges unit costs from different accounting periods,obscuring period-to-period comparisons.

When production deviates from the denominator level,a production-volume variance always exists under absorption costing.

The ending balance in the Finished Goods Control account represents the costs of all jobs that:

The difference between actual costing and normal costing is:

Activity-based costing has less applicability in a process-costing environment because:

Why have many companies switched from absorption costing to variable costing for internal reporting? Variant question

When comparing the operating profits between absorption costing and variable costing,and beginning finished inventory exceeds ending finished inventory,it may be assumed that:

A materials-requisition record is an example of a source document.

The basic source document for direct manufacturing labour is the:

A company would use multiple cost-allocation bases:

A company may choose to use budgeted rates to allocate direct labour accounts if direct labour costs are difficult to trace to jobs as they are completed.

The actual costs of all individual overhead categories are recorded in the Manufacturing Overhead Control account.

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