Question 1

Wages of machine operators and other workers involved in actually shaping the product are classified as direct labor costs.

Accepted Answer

A) True 
 B)False

Question 2

Total manufacturing costs and the change in Finished Goods Inventory are used to compute cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following financial statements is unique to a production-oriented company?

Accepted Answer

A)  Balance sheet 
B)  Statement of cash flows 
C)  Income statement 
D)  Statement of cost of goods manufactured 
A)  Balance sheet 
B)  Statement of cash flows 
C)  Income statement 
D)  Statement of cost of goods manufactured

Question 4

The Sorrel Pharmaceuticals Corporation manufactures a variety of drugs that are marketed internationally.Inventories on May 31 and June 30 were as follows:
 $$\begin{array} { |l c c| } 
\hline& \mathbf { \text { May } 31} & \mathbf { \text { Juna 30} } \
\text { Materials Inventary } & 3 5 4 , 1 0 0  &  3 2 7 , 4 0 0 \
\text { Wark in Process Inventary } & 112,600 & 116,400 \
\text { Finished Goods Inventary } & 138,500 & 142,800 \
\hline
\end{array}$$ 
Purchases of materials for June were $142,600.Direct labor costs were incurred and computed on the basis of 27,000 hours at $8 per hour.Actual overhead costs incurred in June were as follows: operating supplies used,$5,700; janitorial and materials handling labor,$38,100; employee benefits,$110,800; heat,light,and power,$50,000; factory depreciation,$8,400; property taxes,$8,000; and expired portion of insurance premiums,$12,000.Net sales for June were $992,700.Selling and administrative expenses were $165,000.
Prepare a statement of cost of goods manufactured for the month ended June 30.

Accepted Answer

The answer of The Sorrel Pharmaceuticals Corporation manufactures a variety...

Question 5

Property taxes and equipment depreciation are examples of indirect manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 6

The key to the preparation of an income statement for a manufacturing company is proper determination of the cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

All labor costs can be directly traced to finished products.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

In accounting for an immaterial amount of overapplied overhead,which of the following is part of the adjusting entry?

Accepted Answer

A)  A debit to the Work in Process Inventory account 
B)  A debit to the Overhead account 
C)  A debit to the Cost of Goods Sold account 
D)  A credit to the Overhead account 
A)  A debit to the Work in Process Inventory account 
B)  A debit to the Overhead account 
C)  A debit to the Cost of Goods Sold account 
D)  A credit to the Overhead account

Question 11

Which of the following is the formula used to compute a product's unit cost?

Accepted Answer

A)  (Direct Materials + Direct Labor) / Number of Units Produced 
B)  (Direct Materials + Direct Labor + Overhead) / Number of Units Produced 
C)  (Direct Labor + Overhead) / Number of Units Produced 
D)  (Indirect Materials + Indirect Labor + Overhead) / Number of Units Produced 
A)  (Direct Materials + Direct Labor) / Number of Units Produced 
B)  (Direct Materials + Direct Labor + Overhead) / Number of Units Produced 
C)  (Direct Labor + Overhead) / Number of Units Produced 
D)  (Indirect Materials + Indirect Labor + Overhead) / Number of Units Produced

Question 12

An example of a period cost is

Accepted Answer

A)  advertising costs. 
B)  indirect materials. 
C)  product design costs. 
D)  direct materials. 
A)  advertising costs. 
B)  indirect materials. 
C)  product design costs. 
D)  direct materials.

Question 13

The overhead rate is equal to the total estimated overhead costs divided by the actual cost driver level.

Accepted Answer

A) True 
 B)False

Question 14

Total estimated overhead costs should be divided by actual direct labor hours to compute an overhead rate per direct labor hour.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not considered important in the proper allocation of overhead costs?

Accepted Answer

A)  Forecasting production activity 
B)  Estimating total overhead costs 
C)  Selecting an appropriate activity base 
D)  Estimating the selling price of the product 
A)  Forecasting production activity 
B)  Estimating total overhead costs 
C)  Selecting an appropriate activity base 
D)  Estimating the selling price of the product

Question 16

When a company calculates its product unit cost using estimated costs,it is using which cost measurement method?

Accepted Answer

A)  Standard costing 
B)  Actual costing 
C)  Full costing 
D)  Normal costing 
A)  Standard costing 
B)  Actual costing 
C)  Full costing 
D)  Normal costing

Question 17

If overhead has been overapplied during the period,the adjusting entry could include a credit to the Cost of Goods Sold account.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not included in the purchase cost of merchandise inventory?

Accepted Answer

A)  Purchase discounts 
B)  Overhead costs 
C)  Freight-in costs 
D)  Purchase returns and allowances 
A)  Purchase discounts 
B)  Overhead costs 
C)  Freight-in costs 
D)  Purchase returns and allowances

Question 19

Predetermined overhead rates generally are useful for all but which of the following?

Accepted Answer

A)  Price determination 
B)  Estimating production levels 
C)  Inventory valuation 
D)  Product costing 
A)  Price determination 
B)  Estimating production levels 
C)  Inventory valuation 
D)  Product costing

Question 20

Period costs are not considered when costing products for inventory.

Accepted Answer

A) True 
 B)False

Exam 16: Cost Concepts and Cost Allocation

Wages of machine operators and other workers involved in actually shaping the product are classified as direct labor costs.

Total manufacturing costs and the change in Finished Goods Inventory are used to compute cost of goods sold.

Which of the following financial statements is unique to a production-oriented company?

Property taxes and equipment depreciation are examples of indirect manufacturing costs.

The key to the preparation of an income statement for a manufacturing company is proper determination of the cost of goods manufactured.

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

All labor costs can be directly traced to finished products.

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

In accounting for an immaterial amount of overapplied overhead,which of the following is part of the adjusting entry?

Which of the following is the formula used to compute a product's unit cost?

An example of a period cost is

The overhead rate is equal to the total estimated overhead costs divided by the actual cost driver level.

Total estimated overhead costs should be divided by actual direct labor hours to compute an overhead rate per direct labor hour.

Which of the following is not considered important in the proper allocation of overhead costs?

When a company calculates its product unit cost using estimated costs,it is using which cost measurement method?

If overhead has been overapplied during the period,the adjusting entry could include a credit to the Cost of Goods Sold account.

Which of the following is not included in the purchase cost of merchandise inventory?

Predetermined overhead rates generally are useful for all but which of the following?

Period costs are not considered when costing products for inventory.

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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