Question 1

The Overhead account is used to accumulate actual overhead costs.

Accepted Answer

A) True 
 B)False

Question 2

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 @#LAT-DLM& 1,200

Question 3

Fixed costs per unit are constant along a defined range of activity.

Accepted Answer

A) True 
 B)False

Question 4

Some period costs can be found in inventory accounts on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

The beginning finished goods inventory for Boston Co.was $401,050.Goods completed during the year were costed at $783,700.The ending finished goods inventory was dangerously low,having been reduced to $127,700.The cost of goods sold for the year for Boston Co.was

Accepted Answer

A)  $800,150. 
B)  $1,057,050. 
C)  $656,000. 
D)  $928,600. 
A)  $800,150. 
B)  $1,057,050. 
C)  $656,000. 
D)  $928,600.

Question 6

Variable costs per unit change in an inversely proportional rate to changes in volume.

Accepted Answer

A) True 
 B)False

Question 7

Conversion costs consist of

Accepted Answer

A)  direct materials and direct labor. 
B)  direct labor and overhead. 
C)  direct materials and overhead. 
D)  direct labor and indirect labor. 
A)  direct materials and direct labor. 
B)  direct labor and overhead. 
C)  direct materials and overhead. 
D)  direct labor and indirect labor.

Question 8

The entry to record the application of overhead costs includes a debit to the Overhead account.

Accepted Answer

A) True 
 B)False

Question 9

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.

Question 10

Fill in the missing data for Company C:
 $\begin{array}{|l|r|}
\hline & \text { Company C } \
\hline \text { Direct materials used } & \$ 6,000 \
\hline \text { Direct labor cost } & \text { (a) } \
\hline \text { Overhead } & 7,000 \
\hline \text { Total manufacturing costs } & 18,000 \
\hline \text { Work in process inventory, Jan. } 1 & 2,000 \
\hline \text { Work in process inventory, Dec. } 31 & \text { (b) } \
\hline \text { Sales revenue } & 30,000 \
\hline \text { Finished goods inventory, Jan. } 1 & 7,000 \
\hline \text { Cost of goods manufactured } & \text { (c) } \
\hline \text { Cost of goods available for sale } &23,000 \
\hline \text { Finished goods inventory, Dec. } 31 & \text { (d) }\
\hline \text { Cost of goods sold } &  18,000 \
\hline \text { Gross margin } & \text { (e) }  \
\hline \text { Operating expenses } & \text { (f) }  \
\hline \text { Operating income } &  3,000 \
\hline
\end{array}$

Accepted Answer

a.$5,000
b.$4,000
c.

Question 11

Overhead costs are traced to products in the same way that direct materials and direct labor are traced.

Accepted Answer

A) True 
 B)False

Question 12

If the estimated cost driver level is overstated,the

Accepted Answer

A)  predetermined overhead rate will be understated. 
B)  predetermined overhead rate will be overstated. 
C)  product cost will be overstated. 
D)  cost pool will be understated. 
A)  predetermined overhead rate will be understated. 
B)  predetermined overhead rate will be overstated. 
C)  product cost will be overstated. 
D)  cost pool will be understated.

Question 13

As units are completed,their costs are transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

Accepted Answer

A) True 
 B)False

Question 14

Period cost and product cost are synonymous terms.

Accepted Answer

A) True 
 B)False

Question 15

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 16

A manufacturing company applies overhead based on direct labor hours.At the beginning of the year,it estimated that overhead costs would be $720,000 and direct labor hours would be 90,000.Actual overhead costs incurred were $754,400,and actual direct labor hours were 92,000.What is the amount of overapplied or underapplied overhead at the end of the year?

Accepted Answer

A)  $34,400 overapplied 
B)  $18,400 overapplied 
C)  $34,400 underapplied 
D)  $18,400 underapplied 
A)  $34,400 overapplied 
B)  $18,400 overapplied 
C)  $34,400 underapplied 
D)  $18,400 underapplied

Question 17

The following are costs for a selected period: direct materials put into production,$94,000; direct labor cost of converting materials into product,$200,000; total indirect costs of manufacturing the product,$40,000.What is the per unit cost of manufacturing 20,000 units in this period?

Accepted Answer

A)  $4.70 
B)  $16.70 
C)  $8.70 
D)  $12.70 
A)  $4.70 
B)  $16.70 
C)  $8.70 
D)  $12.70

Question 18

Direct materials are the only materials in a product.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an example of indirect materials?

Accepted Answer

A)  Wood in a desk 
B)  Nails in a desk 
C)  Screws in a desk 
D)  Lubricants for machinery 
A)  Wood in a desk 
B)  Nails in a desk 
C)  Screws in a desk 
D)  Lubricants for machinery

Question 20

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.

Exam 16: Cost Concepts and Cost Allocation

The Overhead account is used to accumulate actual overhead costs.

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.

Fixed costs per unit are constant along a defined range of activity.

Some period costs can be found in inventory accounts on the balance sheet.

The beginning finished goods inventory for Boston Co.was $401,050.Goods completed during the year were costed at $783,700.The ending finished goods inventory was dangerously low,having been reduced to $127,700.The cost of goods sold for the year for Boston Co.was

Variable costs per unit change in an inversely proportional rate to changes in volume.

Conversion costs consist of

The entry to record the application of overhead costs includes a debit to the Overhead account.

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

Overhead costs are traced to products in the same way that direct materials and direct labor are traced.

If the estimated cost driver level is overstated,the

As units are completed,their costs are transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

Period cost and product cost are synonymous terms.

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

The following are costs for a selected period: direct materials put into production,$94,000; direct labor cost of converting materials into product,$200,000; total indirect costs of manufacturing the product,$40,000.What is the per unit cost of manufacturing 20,000 units in this period?

Direct materials are the only materials in a product.

Which of the following is not an example of indirect materials?

Overhead has been underapplied when the

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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