Question 1

The numbers of vendors,products,and engineering change orders are examples of

Accepted Answer

A)  beneficial relationships. 
B)  potential cost drivers. 
C)  inputs to processing time. 
D)  unavoidable overhead costs. 
A)  beneficial relationships. 
B)  potential cost drivers. 
C)  inputs to processing time. 
D)  unavoidable overhead costs.

Question 2

(Direct Materials + Direct Labor + Overhead)/ Total Number of Units Produced = Product Unit Cost.

Accepted Answer

A) True 
 B)False

Question 3

Both product costs and period costs could appear on the income statement.

Accepted Answer

A) True 
 B)False

Question 4

In which one of the following accounts would all three product costs not be found?

Accepted Answer

A)  Work in Process Inventory 
B)  Materials Inventory 
C)  Finished Goods Inventory 
D)  Cost of Goods Sold 
A)  Work in Process Inventory 
B)  Materials Inventory 
C)  Finished Goods Inventory 
D)  Cost of Goods Sold

Question 5

Indirect costs can be conveniently traced to a cost object.

Accepted Answer

A) True 
 B)False

Question 6

Overhead has been underapplied when the

Accepted Answer

A)  Overhead account has a credit balance. 
B)  Overhead account has a debit balance. 
C)  company has overspent in the overhead cost area. 
D)  adjusting entry to account for the underapplied overhead involves a credit to Cost of Goods Sold. 
A)  Overhead account has a credit balance. 
B)  Overhead account has a debit balance. 
C)  company has overspent in the overhead cost area. 
D)  adjusting entry to account for the underapplied overhead involves a credit to Cost of Goods Sold.

Question 7

The following information has been made available to you.Assume that overhead is applied on the basis of direct labor hours.
 $\begin{array}{lr}
\text { Estimated overhead } & \$ 1,638,000 \
\text { Estimated direct labor hours } & 390,000 \
\text { Actual direct labor hours } & 442,000 \
\text { Actual overhead } & \$ 1,862,000
\end{array}$
 
a. Compute the predetermined overhead rate.
b. Compute the amount of applied overhead for the year.
c. Compute the amount of underapplied or overapplied overhead.

Accepted Answer

a.$1,638,000 (estimated overhead costs)/

Question 8

All manufacturing costs incurred and assigned to products that are being produced are classified as

Accepted Answer

A)  variable costs. 
B)  allocated costs. 
C)  product costs. 
D)  overhead costs. 
A)  variable costs. 
B)  allocated costs. 
C)  product costs. 
D)  overhead costs.

Question 9

As actual overhead costs are incurred,the Overhead account is debited.

Accepted Answer

A) True 
 B)False

Question 10

Overhead can be traced to products once the products are completed.

Accepted Answer

A) True 
 B)False

Question 11

Calculate the amount of overhead costs applied to production if the predetermined overhead rate is $4 per direct labor hour and 1,200 direct labor hours were worked.

Accepted Answer

$4 * 1,200

Question 12

The changes in Work in Process Inventory and total manufacturing costs for a period are used to compute cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a typical example of a variable cost?

Accepted Answer

A)  Sales commissions 
B)  Rent 
C)  Depreciation 
D)  Salaries 
A)  Sales commissions 
B)  Rent 
C)  Depreciation 
D)  Salaries

Question 14

The controller for Drisau Company is trying to decide whether or not the company should switch from the traditional approach of overhead cost allocation to the activity-based costing approach.She has gathered the following overhead data on the company's two products: estimated total overhead,$180,000 (consisting of the $70,000 for setups and $110,000 for assembly); estimated direct labor hours (Product A,6,000; Product B,3,000); estimated number of setups (Product A,750; Product B,1,250); estimated number of machine hours used in assembly (Product A,3,000; Product B,5,000); estimated number of units produced (Product A,500; Product B,200).
Using the traditional approach:
a. Calculate the predetermined overhead rate using direct labor hours as the cost driver.
b. Compute the amount of overhead costs applied to each product in total and per unit.

Accepted Answer

a.$180,000 ÷ 9,000 direct labor hours =

Question 15

Cost of goods manufactured is equal to

Accepted Answer

A)  Direct Materials + Direct Labor + Overhead. 
B)  Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory. 
C)  Beginning Work in Process Inventory + Period Costs - Ending Work in Process Inventory. 
D)  Beginning Work in Process Inventory + Product Costs. 
A)  Direct Materials + Direct Labor + Overhead. 
B)  Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory. 
C)  Beginning Work in Process Inventory + Period Costs - Ending Work in Process Inventory. 
D)  Beginning Work in Process Inventory + Product Costs.

Question 16

The costs listed below are related to a manufacturer of all-natural ice cream.In the space provided,indicate whether the cost should be classified as direct materials (DM),direct labor (DL),or overhead (OH).
_____
a. Maintenance on factory building
_____
b. Cream
_____
c. Mixing department wages
_____
d. Vanilla
_____
e. Factory supervisor's salary
_____
_____ f. Machine oil for mixing machines
_____ g. Sugar
_____ h. Machine operator wages
_____ i. Factory maintenance labor
_____ j. Depreciation on factory equipment

Accepted Answer

a.OH
b.DM

Question 17

In the traditional manufacturing environment,overhead costs cannot be traced directly to products.

Accepted Answer

A) True 
 B)False

Question 18

Product unit cost is computed by dividing cost of goods sold by the number of units sold.

Accepted Answer

A) True 
 B)False

Question 19

Materials and supplies that cannot be traced conveniently to specific products are called

Accepted Answer

A)  indirect materials. 
B)  raw materials. 
C)  minor materials. 
D)  direct materials. 
A)  indirect materials. 
B)  raw materials. 
C)  minor materials. 
D)  direct materials.

Question 20

To reconcile total manufacturing costs with the total cost of goods manufactured during the period,

Accepted Answer

A)  subtract out all period costs from total manufacturing costs to arrive at cost of goods manufactured. 
B)  add beginning and subtract ending finished goods inventory to total manufacturing costs. 
C)  you must know how many goods were sold during the period. 
D)  add beginning and subtract ending work in process inventory to total manufacturing costs. 
A)  subtract out all period costs from total manufacturing costs to arrive at cost of goods manufactured. 
B)  add beginning and subtract ending finished goods inventory to total manufacturing costs. 
C)  you must know how many goods were sold during the period. 
D)  add beginning and subtract ending work in process inventory to total manufacturing costs.

Exam 16: Cost Concepts and Cost Allocation

The numbers of vendors,products,and engineering change orders are examples of

(Direct Materials + Direct Labor + Overhead)/ Total Number of Units Produced = Product Unit Cost.

Both product costs and period costs could appear on the income statement.

In which one of the following accounts would all three product costs not be found?

Indirect costs can be conveniently traced to a cost object.

Overhead has been underapplied when the

All manufacturing costs incurred and assigned to products that are being produced are classified as

As actual overhead costs are incurred,the Overhead account is debited.

Overhead can be traced to products once the products are completed.

Calculate the amount of overhead costs applied to production if the predetermined overhead rate is $4 per direct labor hour and 1,200 direct labor hours were worked.

The changes in Work in Process Inventory and total manufacturing costs for a period are used to compute cost of goods manufactured.

Which of the following is a typical example of a variable cost?

Cost of goods manufactured is equal to

In the traditional manufacturing environment,overhead costs cannot be traced directly to products.

Product unit cost is computed by dividing cost of goods sold by the number of units sold.

Materials and supplies that cannot be traced conveniently to specific products are called

To reconcile total manufacturing costs with the total cost of goods manufactured during the period,

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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