Question 1

Unit costs do not fluctuate between periods.Therefore,transferred units may contain batches accumulated at different unit costs.

Accepted Answer

A) True 
 B)False

Question 2

Answer the following questions using the information below:
Jackson Cabinetry Pty Ltd manufactures standard sized modular cabinet units for kitchens and other applications within the home.Its costing system utilises two cost categories,direct materials and conversion costs.Each product must pass through the rough cut department and the finish department.Direct materials are added at the beginning of production.Conversion costs are allocated evenly throughout production.
Data for Finish Department for March 2018 are:
 $\begin{array}{ll}
\text { Work-in-process, be ginning inventory, } 25 \% \text { converted } & 1000 \text { units } \
\text { Units started during February } & 1400 \text { units } \
\text { Work in process, end ing inventory } & 300 \text { units }
\end{array}$

$\text { Costs for Finish department for March } 2018 \text { are: }$
$\begin{array}{ll}
\text { Work-in-process, be ginning inventory: } & \
\text { Direct materials } & \$ 150000 \
\text { Conversion costs } & \$ 100000 \
\text { Direct materials costs added during February } & \$ 210000 \
\text { Conversion costs added during February } & \$ 800000
\end{array}$

-How many units were completed and transferred out of the finish department during March?

Accepted Answer

A) 1400 units 
B) 1000 units 
C) 2100 units 
D) Unknown 
A) 1400 units 
B) 1000 units 
C) 2100 units 
D) Unknown

Question 3

Answer the following questions using the information below:
Cronulla Products uses a normal cost system and had the following data available for 2018:
 $$\begin{array} { l c } 
\text { Direct materials purchased on account } & \$ 74000 \
\text { Direct materials requisitioned } & 41000 \
\text { Direct labour cost incurred } & 65000 \
& \
\text { Factory overhead incurred } & 73000 \
\text { Cost of goods completed } & 146000 \
\text { Cost of goods sold } & 128000 \
& \
& 13000 \
\text { Be ginning direct materials inventory } & 32000 \
\text { Beginning WIP inventory } & 29000 \
\text { Beginning firished goods inventory } & \
\text { Overhead application rate, } & 125 \text { percent }
\end{array}$$
-The ending balance of finished goods inventory is:

Accepted Answer

A) $146 000. 
B) $29 000. 
C) $47 000. 
D) $18 000. 
A) $146 000. 
B) $29 000. 
C) $47 000. 
D) $18 000.

Question 4

Which of the following manufactured products would not use process costing?

Accepted Answer

A) Custom built houses 
B) 19-inch television sets 
C) 767 jet aircraft 
D) Both A and C are correct. 
A) Custom built houses 
B) 19-inch television sets 
C) 767 jet aircraft 
D) Both A and C are correct.

Question 5

A major advantage of using the FIFO process-costing method is that:

Accepted Answer

A) in contrast with the weighted-average method,FIFO is considered GAAP. 
B) FIFO provides managers with information about changes in the costs per unit from one period to the next. 
C) FIFO makes the unit cost calculations simpler. 
D) All of these answers are correct. 
A) in contrast with the weighted-average method,FIFO is considered GAAP. 
B) FIFO provides managers with information about changes in the costs per unit from one period to the next. 
C) FIFO makes the unit cost calculations simpler. 
D) All of these answers are correct.

Question 6

A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 7

List and describe the five steps in process costing.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Step 1 involves summarising the physical

Question 8

One reason indirect costs may be overapplied is because:

Accepted Answer

A) the actual allocation base quantity exceeds the budgeted quantity. 
B) requisitioned direct materials exceed budgeted material costs. 
C) budgeted indirect costs exceed actual indirect costs. 
D) Both A and B are correct. 
A) the actual allocation base quantity exceeds the budgeted quantity. 
B) requisitioned direct materials exceed budgeted material costs. 
C) budgeted indirect costs exceed actual indirect costs. 
D) Both A and B are correct.

Question 9

If actual indirect-cost rates were calculated monthly rather than annually,then for the month of February with only 28 days:

Accepted Answer

A) variable indirect-cost rates would be lower. 
B) monthly output would be higher. 
C) total indirect-cost rates would be higher. 
D) fixed indirect-cost rates would be lower. 
A) variable indirect-cost rates would be lower. 
B) monthly output would be higher. 
C) total indirect-cost rates would be higher. 
D) fixed indirect-cost rates would be lower.

Question 10

A job-cost record is a source document,but individual items of the job-cost record may also have source documents.

Accepted Answer

A) True 
 B)False

Question 11

General Fabricators assembles its product in several departments.It has two departments that process all units.During October,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 $12 000 for materials and $3000 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 75% complete as to conversion.Direct materials are added at the end of the process.Beginning inventories included $16 000 for transferred-in costs and $20 000 for conversion costs.Ending inventory was 25% complete.Additional information about the two departments follows:
 $$\begin{array} { | l | r | r | } 
\hline & \text { Cutting } & \text { Finishing } \
\hline \text {Beginning work-in-process units } & 20000 & 20000 \
\hline \text { Units started this period } & 40000 & 50000 \
\hline \text { Units transferred this period } & 50000 & \
\hline \text { Ending work-in-process units } & 10000 & 20000 \
\hline \text { Material costs added } & \$ 48000 & \$ 28000 \
\hline \text { Direct manufacturing labour } & \$ 16000 & \$ 40000 \
\hline \text { Other conversion costs } & \$ 8000 & \$ 24000 \
\hline
\end{array}$$ 
Required:
Prepare a production cost worksheet using weighted average for the cutting department and FIFO for the finishing department.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

None

Question 12

Where do managers and accountants collect most of the cost information from that goes into their systems?
Variant question

Accepted Answer

A) An information databank 
B) Source documents 
C) Computer programs 
D) Time surveys 
A) An information databank 
B) Source documents 
C) Computer programs 
D) Time surveys

Question 13

Parramatta Company has two departments,X and Y.Overhead is applied based on direct labour cost in Department X and machine-hours in Department Y.The following additional information is available:
 $$\begin{array}{l}
\begin{array} { l c r } 
\text { Budgeted Amounts } & \text { Department X } & \text { Department Y } \
\text { Direct labour cost } & \$ 180000 & \$ 165000 \
\text { Factory overhead } & \$ 225000 & \$ 180000 \
\text { Machine-hours } & 51000 \mathrm { mh } & 40000 \mathrm { mh }
\end{array}\\
\begin{array} { l c c } 
\text { Actual data for Job } \# \mathbf { 1 0 } & \text { Department } X & \text { Department } Y \
\text { Direct materials requisitioned } & \$ 10000 & \$ 16000 \
\text { Direct labour cost } & \$ 11000 & \$ 14000 \
\text { Machine-hours } & 5000 \mathrm { mh } & 3000 \mathrm { mh }
\end{array}
\end{array}$$ 
Required:
a.Compute the budgeted factory overhead rate for Department X.
b.Compute the budgeted factory overhead rate for Department Y.
c.What is the total overhead cost of Job #10?
d.If Job #10 consists of 50 units of product,what is the unit cost of this job?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.$225 000/$180 000 = 125%
b.$180 000/40

Question 14

When a bakery transfers goods from the Baking Department to the Decorating Department,the accounting entry is:

Accepted Answer

A) Work in Process - Decorating Department Accounts Payable 
B) Work in Process - Baking Department
Accounts Payable 
C) Work in Process - Decorating Department
Work in Process - Baking Department 
D) Work in Process - Baking Department
Work in Process - Decorating Department 
A) Work in Process - Decorating Department Accounts Payable 
B) Work in Process - Baking Department
Accounts Payable 
C) Work in Process - Decorating Department
Work in Process - Baking Department 
D) Work in Process - Baking Department
Work in Process - Decorating Department

Question 15

Answer the following questions using the information below:
The Rest-a-Lot 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 80 000 chairs,and transferred them to the Finishing Department.The firm ended the month with 10 000 chairs in ending inventory.There were 15 000 chairs in beginning inventory.All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process.The FIFO method of process costing is used by Rest-a-Lot.Beginning work in process was 30% complete as to conversion costs,while ending work in process was 80% complete as to conversion costs.
 Beginning inventory:

$\begin{array}{ll}
\text { Direct materials } & \$ 24000 \
\text { Conversion costs } & \$ 35000
\end{array}$

Manufacturing costs added during the ocounting period:

$\begin{array} { l l } \text { Direct materials } & \$ 168000 \ \text { Conversion costs } & \$ 278000 \end{array}$
-What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February?

Accepted Answer

A) $22 500 
B) $22 400 
C) $19 200 
D) $25 600 
A) $22 500 
B) $22 400 
C) $19 200 
D) $25 600

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:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 280000 \
\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \
\text { Ind irect labour } & \$ 20000 \
\text { Plant facility rent } & \$ 60000 \
\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \
\text { Sales commissions } & \$ 40000 \
\text { Administrative expenses } & \$ 50000
\end{array}$$
-Explain under-allocated and over-allocated indirect costs.
_____________________________________________________________________________________________
____________________________________________________________________________________________

Accepted Answer

Under-allocated indirect costs occur whe

Question 17

If indirect-cost rates are calculated monthly,distortions might occur because of:

Accepted Answer

A) property tax payments made in July and December. 
B) routine monthly preventive-maintenance costs that benefit future months. 
C) rental costs paid monthly. 
D) Both B and C are correct. 
A) property tax payments made in July and December. 
B) routine monthly preventive-maintenance costs that benefit future months. 
C) rental costs paid monthly. 
D) Both B and C are correct.

Question 18

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 income under variable costing will always be the same as the income under absorption costing.

Accepted Answer

A) True 
 B)False

Question 19

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 actual amount of manufacturing overhead costs incurred in June 2018 totals:

Accepted Answer

A) $200 000. 
B) $557 000. 
C) $110 000. 
D) $80 000. 
A) $200 000. 
B) $557 000. 
C) $110 000. 
D) $80 000.

Question 20

Payment of the total manufacturing payroll decreases the:

Accepted Answer

A) Manufacturing Overhead Control account 
B) Wages Payable Control account 
C) Work-in-Process Control account 
D) None of these answers are correct. 
A) Manufacturing Overhead Control account 
B) Wages Payable Control account 
C) Work-in-Process Control account 
D) None of these answers are correct.

Unit costs do not fluctuate between periods.Therefore,transferred units may contain batches accumulated at different unit costs.

Which of the following manufactured products would not use process costing?

A major advantage of using the FIFO process-costing method is that:

A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.

List and describe the five steps in process costing. _ _

One reason indirect costs may be overapplied is because:

If actual indirect-cost rates were calculated monthly rather than annually,then for the month of February with only 28 days:

A job-cost record is a source document,but individual items of the job-cost record may also have source documents.

Where do managers and accountants collect most of the cost information from that goes into their systems? Variant question

When a bakery transfers goods from the Baking Department to the Decorating Department,the accounting entry is:

If indirect-cost rates are calculated monthly,distortions might occur because of:

Payment of the total manufacturing payroll decreases the:

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

Unit costs do not fluctuate between periods.Therefore,transferred units may contain batches accumulated at different unit costs.

Which of the following manufactured products would not use process costing?

A major advantage of using the FIFO process-costing method is that:

A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.

List and describe the five steps in process costing. _____________________________________________________________________________________________ _____________________________________________________________________________________________

One reason indirect costs may be overapplied is because:

If actual indirect-cost rates were calculated monthly rather than annually,then for the month of February with only 28 days:

A job-cost record is a source document,but individual items of the job-cost record may also have source documents.

Where do managers and accountants collect most of the cost information from that goes into their systems? Variant question

When a bakery transfers goods from the Baking Department to the Decorating Department,the accounting entry is:

If indirect-cost rates are calculated monthly,distortions might occur because of:

Payment of the total manufacturing payroll decreases the:

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

List and describe the five steps in process costing. _ _