Question 1

A distinct feature of the FIFO process-costing method is that the:

Accepted Answer

A) work done on ending inventory is kept separate from the work done during the current period in the calculation of equivalent units and is usually not included in the calculation. 
B) work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units. 
C) work done on beginning inventory before the current period is blended with the work done during the current period in the calculation of equivalent units. 
D) FIFO process-costing method is only minimally different from the weighted-average process-costing method. 
A) work done on ending inventory is kept separate from the work done during the current period in the calculation of equivalent units and is usually not included in the calculation. 
B) work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units. 
C) work done on beginning inventory before the current period is blended with the work done during the current period in the calculation of equivalent units. 
D) FIFO process-costing method is only minimally different from the weighted-average process-costing method.

Question 2

A single indirect-cost rate based on direct manufacturing labour-hours for the entire plant is:
$$\begin{array} { l c c c } 
& \text { Machining } & { \text { Assembly } } \
\text { Direct manufacturing labour-hours } & 15000 & 75000 & \
\text { Machine-hours } & 60000 & 30000 & \
\text { Manufacturing overhead } & \$ 300000 &  { \$ 600000 }
\end{array}$$

Accepted Answer

A) $8 per direct labour-hour 
B) $10 per direct labour-hour 
C) $20 per direct labour-hour 
D) None of these answers are correct. 
A) $8 per direct labour-hour 
B) $10 per direct labour-hour 
C) $20 per direct labour-hour 
D) None of these answers are correct.

Question 3

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.
-Operating profit using absorption costing will be ________ operating profit if using variable costing.

Accepted Answer

A) $450 higher than 
B) $1350 lower than 
C) the same as 
D) $900 higher than 
A) $450 higher than 
B) $1350 lower than 
C) the same as 
D) $900 higher than

Question 4

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.
-Non-financial measures such as comparing units in ending inventory this period to units in ending inventory last period can help reduce build-up of excess inventory.

Accepted Answer

A) True 
 B)False

Question 5

All of the following are true of the Work-in-Process Control account EXCEPT that:

Accepted Answer

A) it is an asset account. 
B) the balance equals the sum of amounts from all in-process individual job-cost records. 
C) it tracks job costs from beginning through completion. 
D) it tracks all direct material purchases. 
A) it is an asset account. 
B) the balance equals the sum of amounts from all in-process individual job-cost records. 
C) it tracks job costs from beginning through completion. 
D) it tracks all direct material purchases.

Question 6

What will be the result if the unit level of inventory increases during an accounting period?
Variant question

Accepted Answer

A) Operating profit will be the same under absorption costing and variable costing. 
B) More operating profit will be reported under absorption costing than variable costing. 
C) Less operating profit will be reported under absorption costing than variable costing. 
D) The exact effect on operating profit cannot be determined. 
A) Operating profit will be the same under absorption costing and variable costing. 
B) More operating profit will be reported under absorption costing than variable costing. 
C) Less operating profit will be reported under absorption costing than variable costing. 
D) The exact effect on operating profit cannot be determined.

Question 7

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:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 280000 \
\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \
\text { Ind irect labour } & \$ 20000 \
\text { Plant facility rent } & \$ 60000 \
\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \
\text { Sales commissions } & \$ 40000 \
\text { Administrative expenses } & \$ 50000
\end{array}$$
-Which of the following systems separate costs into cost categories according to when costs are introduced into the process?
Variant question

Accepted Answer

A) Normal costing 
B) Variable costing 
C) Absorption costing 
D) Process-costing 
A) Normal costing 
B) Variable costing 
C) Absorption costing 
D) Process-costing

Question 8

Answer the following questions using the information below:
Leongatha Motors produces and sells an auto part for $30.00 per unit.In 2010,100 000 parts were produced and 75 000 units were sold.Other information for the year includes:
 $$\begin{array} { l c } 
\text { Direct materials } & \$ 12.00 \text { per unit } \
\text { Direct manufacturing labour } & \$ 2.25 \text { per unit } \
\text { Variable manufacturing costs } & \$ 0.75 \text { per unit } \
\text { Sales commissions } & \$ 3.00 \text { per part } \
\text { Fixed manufacturing costs } & \$ 375000 \text { per year } \
\text { Administrative expenses, all fixed } & \$ 135000 \text { per year }
\end{array}$$
-What is the inventoriable cost per unit using variable costing?

Accepted Answer

A) $14.25 
B) $15.00 
C) $18.00 
D) $21.75 
A) $14.25 
B) $15.00 
C) $18.00 
D) $21.75

Question 9

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:
 $$\begin{array} { l l } 
\text { Variable manufacturing costs } & \$ 19 \text { per unit } \
\text { Variable marketing costs } & \$ 1 \text { per unit } \
\text { Fixed manufacturing costs } & \$ 30000 \text { per month } \
\text { Administrative expenses, all fixed } & \$ 6000 \text { per month } \
\text { Ending inventories: } & \
\text { Direct materials } & - 0 - \
\text { WIP } & - 0 - \
\text { Finished goods } & 750 \text { units }
\end{array}$$
-What is operating profit when using absorption costing?

Accepted Answer

A) ($11 750) 
B) $16 500 
C) $18 750 
D) $4000 
A) ($11 750) 
B) $16 500 
C) $18 750 
D) $4000

Question 10

Cost of units completed and hence _______________ can differ materially between the weighted-average and FIFO methods

Accepted Answer

A) operating profit 
B) sales 
C) gross margin 
D) inventory turnover 
A) operating profit 
B) sales 
C) gross margin 
D) inventory turnover

Question 11

Answer the following questions using the information below:
The Sleepyhead Chair Company manufactures a standard recliner.During February,the firm's Assembly Department started production of 75 000 chairs.During the month,the firm completed 85 000 chairs and transferred them to the Finishing Department.The firm ended the month with 10 000 chairs in ending inventory.All direct materials costs are added at the beginning of the production cycle.Weighted-average costing is used by Sleepyhead.
-Transferred-in costs are treated as if they are:

Accepted Answer

A) a separate direct material added at the beginning of the process. 
B) direct labour costs added at the beginning of the process. 
C) costs of beginning inventory added at the beginning of the process. 
D) conversion costs added at the beginning of the process. 
A) a separate direct material added at the beginning of the process. 
B) direct labour costs added at the beginning of the process. 
C) costs of beginning inventory added at the beginning of the process. 
D) conversion costs added at the beginning of the process.

Question 12

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.
-Under variable costing,managers can increase operating profit by simply producing more inventory at the end of the accounting period even if that inventory never gets sold.

Accepted Answer

A) True 
 B)False

Question 13

The accounting (for a bakery)entry to record the transfer of rolls from the mixing department to the baking department is:
Work in Process-Mixing Department
Work in Process-Baking Department

Accepted Answer

A) True 
 B)False

Question 14

Companies have recently been able to reduce inventory levels because:

Accepted Answer

A) there is better sharing of information between suppliers and manufacturers. 
B) just-in-time production strategies are being implemented. 
C) production quotas are being implemented. 
D) Both A and B are correct. 
A) there is better sharing of information between suppliers and manufacturers. 
B) just-in-time production strategies are being implemented. 
C) production quotas are being implemented. 
D) Both A and B are correct.

Question 15

Answer the following questions using the information below:
Wangaratta Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes:
The budgeted denominator level is 1000 units.
Units produced total 750 units.
Units sold total 600 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Operating profit using absorption costing will be ________ than operating profit if using variable costing.

Accepted Answer

A) $2400 lower 
B) $3600 lower 
C) $900 higher 
D) $2400 higher 
A) $2400 lower 
B) $3600 lower 
C) $900 higher 
D) $2400 higher

Question 16

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 proration approach to allocating overapplied or underapplied overhead adjusts individual job-cost records.

Accepted Answer

A) True 
 B)False

A distinct feature of the FIFO process-costing method is that the:

A single indirect-cost rate based on direct manufacturing labour-hours for the entire plant is: Machining Assembly Direct manufacturing labour-hours 15000 75000 Machine-hours 60000 30000 Manufacturing overhead \ 300000 \ 600000

All of the following are true of the Work-in-Process Control account EXCEPT that:

What will be the result if the unit level of inventory increases during an accounting period? Variant question

Cost of units completed and hence _______________ can differ materially between the weighted-average and FIFO methods

The accounting (for a bakery)entry to record the transfer of rolls from the mixing department to the baking department is: Work in Process-Mixing Department Work in Process-Baking Department

Companies have recently been able to reduce inventory levels because:

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

A distinct feature of the FIFO process-costing method is that the:

A single indirect-cost rate based on direct manufacturing labour-hours for the entire plant is: Machining Assembly Direct manufacturing labour-hours 15000 75000 Machine-hours 60000 30000 Manufacturing overhead \ 300000 \ 600000

All of the following are true of the Work-in-Process Control account EXCEPT that:

What will be the result if the unit level of inventory increases during an accounting period? Variant question

Cost of units completed and hence _______________ can differ materially between the weighted-average and FIFO methods

The accounting (for a bakery)entry to record the transfer of rolls from the mixing department to the baking department is: Work in Process-Mixing Department Work in Process-Baking Department

Companies have recently been able to reduce inventory levels because:

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