Question 1

Which of the following is TRUE about conversion costs?
Variant question

Accepted Answer

A) It include direct materials. 
B) In process costing they are usually considered to be added evenly throughout the production process. 
C) It include all the factors of production. 
D) Both B and C are correct. 
A) It include direct materials. 
B) In process costing they are usually considered to be added evenly throughout the production process. 
C) It include all the factors of production. 
D) Both B and C are correct.

Question 2

Variable costing regards fixed manufacturing overhead as a(n):

Accepted Answer

A) product cost. 
B) period cost. 
C) inventoriable cost. 
D) administrative cost. 
A) product cost. 
B) period cost. 
C) inventoriable cost. 
D) administrative cost.

Question 3

The budgeted indirect-cost rate is calculated:

Accepted Answer

A) at the end of each quarter. 
B) during the year. 
C) at the end of the year. 
D) at the beginning of the year. 
A) at the end of each quarter. 
B) during the year. 
C) at the end of the year. 
D) at the beginning of the year.

Question 4

Answer the following questions using the information below:
Jindabyne Pillows produces and sells a decorative pillow for $75.00 per unit.In the first month of operation,2000 units were produced and 1750 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
 $$\begin{array} { l l } 
\text { Variable manufacturing costs } & \$ 20.00 \text { per urit } \
\text { Variable marketing costs } & \$ 3.00 \text { per urit } \
\text { Fixed manufacturing costs } & \$ 7.00 \text { per unit } \
\text { Administrative expenses, all fixed } & \$ 15.00 \text { per unit } \
\text { Ending inventories: } & \
\text { Direct materials } & - 0 - \
\text { WIP } & - 0 - \
\text { Finished goods } & 250 \text { units }
\end{array}$$
-What is contribution margin using variable costing?

Accepted Answer

A) $96 250 
B) $91 000 
C) $104 000 
D) $110 000 
A) $96 250 
B) $91 000 
C) $104 000 
D) $110 000

Question 5

A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.

Accepted Answer

A) True 
 B)False

Question 6

Answer the following questions using the information below:
Wagga Wagga Textiles is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the Tumut Brass Band band jacket job.
 $$\begin{array} { l c c } 
\text { Company } & \text { Tumut Brass } & \text { Band Job } \
\text { Direct materials } & \$ 40000 & \$ 1000 \
\text { Direct labour } & \$ 10000 & \$ 200 \
\text { Manufacturing overhead costs } & & \$ 30000 \
\text { Machine-hours } & 100000 \mathrm { mh } & 900 \mathrm { mh }
\end{array}$$
-What is the bid price for the Tumut Brass Band job if the company uses a 40% markup of total manufacturing costs?

Accepted Answer

A) $1680 
B) $2310 
C) $588 
D) $2058 
A) $1680 
B) $2310 
C) $588 
D) $2058

Question 7

Ruggles Company has provided the following data for the year ended September 30,2013.
   
Required:
a.Determine operating profit using the variable-costing approach.
b.Determine operating profit using the absorption-costing approach.
c.Explain why operating profit is not the same under the two approaches.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.24 000 × $50 = $1 200 000 sales
($525

Question 8

For a given job the direct costs associated with the job are:

Accepted Answer

A) actual overhead. 
B) direct manufacturing labour. 
C) direct material. 
D) Both direct material and direct manufacturing labour are correct. 
A) actual overhead. 
B) direct manufacturing labour. 
C) direct material. 
D) Both direct material and direct manufacturing labour are correct.

Question 9

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

Accepted Answer

A) fewer production workdays in a month. 
B) payment of estimated taxes four times a year. 
C) higher heating costs during the winter. 
D) Both B and C are correct. 
A) fewer production workdays in a month. 
B) payment of estimated taxes four times a year. 
C) higher heating costs during the winter. 
D) Both B and C are correct.

Question 10

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

Accepted Answer

A) Absorption costing 
B) Fixed costing 
C) Mixed costing 
D) Variable costing 
A) Absorption costing 
B) Fixed costing 
C) Mixed costing 
D) Variable costing

Question 11

When does an unfavourable production-volume variance occur?
Variant question

Accepted Answer

A) Production exceeds the denominator level 
B) Production exceeds unit sales 
C) The denominator level exceeds production 
D) Unit sales exceed production 
A) Production exceeds the denominator level 
B) Production exceeds unit sales 
C) The denominator level exceeds production 
D) Unit sales exceed production

Question 12

What amount of direct materials costs is assigned to the ending Work-in-Process account for June?

Accepted Answer

A) $168 571.50 
B) $236 850 
C) $283 552.50 
D) $259 530 
A) $168 571.50 
B) $236 850 
C) $283 552.50 
D) $259 530

Question 13

When indirect materials are requisitioned,the ________ account is increased.

Accepted Answer

A) Work-in-Process Control 
B) Accounts Payable Control 
C) Manufacturing Overhead Control 
D) Materials Control 
A) Work-in-Process Control 
B) Accounts Payable Control 
C) Manufacturing Overhead Control 
D) Materials Control

Question 14

Four Seasons Company makes snow blowers.Materials are added at the beginning of the process and conversion costs are uniformly incurred.At the beginning of September,work-in-process is 40% complete and at the end of the month it is 60% complete.Other data for the month include:
 $$\begin{array} { | l | r | } 
\hline \text {Beginning work-in-process inventory } & \text { 1600 units } \
\hline \text { Units started } & \text { 2000 units } \
\hline \text { Units placed in finished goods } & 3200 \text { units } \
\hline\
\hline \text { Conversion costs } & \$ 200000 \
\hline \text { Cost of direct materials } & \$ 260 \text { 000 } \
\hline \text { Beginning work-in-process costs: } & \
\hline \text { Materials } & \$ 154000 \
\hline \text { Conversion } & \$ B 2080 \
\hline
\end{array}$$ 
Required:
a.Prepare a production cost worksheet with supporting schedules using the weighted-average method of process costing.
b.Prepare journal entries to record transferring of materials to processing and from processing to finished goods.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.
PRODUCT

Question 15

During 2018,Laker & Lock Corporation incurred manufacturing expenses of $20 000 000 to produce finished units.At year-end,it was determined that 370 000 units were sold while 30 000 units remained in ending inventory.
Required:
a.What is the cost of producing one unit?
b.What is the amount that will be reported on the income statement for cost of goods sold?
c.What is the amount that will be reported on the balance sheet for ending inventory?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.$20 000 000 / 400 000 = $50.

Question 16

Which of the following statements about actual costing and normal costing is TRUE?

Accepted Answer

A) Manufacturing costs of a job are available earlier under actual costing. 
B) Manufacturing costs are available earlier under normal costing. 
C) Corrective actions can be implemented sooner under normal costing. 
D) Both B and C are correct. 
A) Manufacturing costs of a job are available earlier under actual costing. 
B) Manufacturing costs are available earlier under normal costing. 
C) Corrective actions can be implemented sooner under normal costing. 
D) Both B and C are correct.

Question 17

Manufacturing overhead costs allocated to Job #432 total:

Accepted Answer

A) $30 000. 
B) $36 000. 
C) $24 000. 
D) $12 000. 
A) $30 000. 
B) $36 000. 
C) $24 000. 
D) $12 000.

Question 18

Injection Molding Ltd manufactures plastic moldings for car seats.Its costing system uses 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:
$\begin{array}{lc}
\text {Work-in-process, beginning inventory:}\
\text {Direct materials}&\$ 100000 \ 
\text { Conversion costs } & \$ 100000 \
\quad\quad\text { Direct materials costs added during February }& & \$ 1000000 \
\quad\quad\text { Conversion costs added during February } && \$ 1250000
\end{array}$
 
What were the equivalent units of direct materials and conversion costs,respectively,at the end of February? Assume Injection Molding Ltd uses the weighted-average process-costing method.

Accepted Answer

A) 800;730 
B) 800;800 
C) 600;500 
D) 800;700 
A) 800;730 
B) 800;800 
C) 600;500 
D) 800;700

Question 19

What does the way on which managers estimate costs depend on?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The way in which managers estimate costs

Question 20

____________________ spreads under-allocated overhead or over-allocated overhead among ending work- in-process inventory,finished goods inventory and cost of goods sold.

Accepted Answer

A) Proration 
B) Allocation 
C) Attribution 
D) Normalization 
A) Proration 
B) Allocation 
C) Attribution 
D) Normalization

Which of the following is TRUE about conversion costs? Variant question

Variable costing regards fixed manufacturing overhead as a(n):

The budgeted indirect-cost rate is calculated:

A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.

For a given job the direct costs associated with the job are:

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

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

When does an unfavourable production-volume variance occur? Variant question

What amount of direct materials costs is assigned to the ending Work-in-Process account for June?

When indirect materials are requisitioned,the ________ account is increased.

Which of the following statements about actual costing and normal costing is TRUE?

Manufacturing overhead costs allocated to Job #432 total:

What does the way on which managers estimate costs depend on? _ _

____________________ spreads under-allocated overhead or over-allocated overhead among ending work- in-process inventory,finished goods inventory and cost of goods sold.

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

Which of the following is TRUE about conversion costs? Variant question

Variable costing regards fixed manufacturing overhead as a(n):

The budgeted indirect-cost rate is calculated:

A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.

For a given job the direct costs associated with the job are:

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

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

When does an unfavourable production-volume variance occur? Variant question

What amount of direct materials costs is assigned to the ending Work-in-Process account for June?

When indirect materials are requisitioned,the ________ account is increased.

Which of the following statements about actual costing and normal costing is TRUE?

Manufacturing overhead costs allocated to Job #432 total:

What does the way on which managers estimate costs depend on? _____________________________________________________________________________________________ _____________________________________________________________________________________________

____________________ spreads under-allocated overhead or over-allocated overhead among ending work- in-process inventory,finished goods inventory and cost of goods sold.

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

What does the way on which managers estimate costs depend on? _ _