Question 1

Product costs could be reported as assets.

Accepted Answer

A) True 
 B)False

Question 2

Inventoriable cost is a synonym of period cost.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 5

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 6

Period costs flow through three types of inventory accounts before becoming part of the cost of goods sold amount.

Accepted Answer

A) True 
 B)False

Question 7

The factory personnel whose wages are traceable directly to a product include

Accepted Answer

A)  maintenance personnel. 
B)  support personnel. 
C)  factory supervisors. 
D)  employees who help to shape the product. 
A)  maintenance personnel. 
B)  support personnel. 
C)  factory supervisors. 
D)  employees who help to shape the product.

Question 8

In a manufacturing environment, direct labor costs initially flow

Accepted Answer

A)  into the Materials Inventory account. 
B)  directly to Cost of Goods Sold. 
C)  into the Work in Process Inventory account. 
D)  into the Finished Goods Inventory account. 
A)  into the Materials Inventory account. 
B)  directly to Cost of Goods Sold. 
C)  into the Work in Process Inventory account. 
D)  into the Finished Goods Inventory account.

Question 9

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 10

Which of the following is an activity that causes changes in the amount of a cost pool?

Accepted Answer

A)  Cost element 
B)  Cost function 
C)  Cost driver 
D)  Cost allocation 
A)  Cost element 
B)  Cost function 
C)  Cost driver 
D)  Cost allocation

Question 11

The following information has been made available to you. Assume that overhead is applied on the basis of direct labor hours.
   
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 overh

Question 12

Normal costing is the sum of actual direct materials, actual direct labor, and actual overhead.

Accepted Answer

A) True 
 B)False

Question 13

Manufacturing costs behave as variable or fixed costs.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Overhead costs are not

Accepted Answer

A)  allocated to the Work in Process Inventory account. 
B)  charged directly to the Finished Goods Inventory account. 
C)  assigned to specific products. 
D)  considered product costs. 
A)  allocated to the Work in Process Inventory account. 
B)  charged directly to the Finished Goods Inventory account. 
C)  assigned to specific products. 
D)  considered product costs.

Question 16

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 17

Cost allocation requires pooling of overhead costs and the selection of a cost driver.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Standard costing is based on actual direct materials and direct labor plus estimated overhead.

Accepted Answer

A) True 
 B)False

Question 20

Salaries of supervisory production personnel should be classified as direct labor costs.

Accepted Answer

A) True 
 B)False

Exam 19: Cost Concepts and Cost Allocation

Product costs could be reported as assets.

Inventoriable cost is a synonym of period cost.

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

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

Cost of goods manufactured is equal to

Period costs flow through three types of inventory accounts before becoming part of the cost of goods sold amount.

The factory personnel whose wages are traceable directly to a product include

In a manufacturing environment, direct labor costs initially flow

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

Which of the following is an activity that causes changes in the amount of a cost pool?

The following information has been made available to you. Assume that overhead is applied on the basis of direct labor hours. 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.

Normal costing is the sum of actual direct materials, actual direct labor, and actual overhead.

Manufacturing costs behave as variable or fixed costs.

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

Overhead costs are not

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

Cost allocation requires pooling of overhead costs and the selection of a cost driver.

Standard costing is based on actual direct materials and direct labor plus estimated overhead.

Salaries of supervisory production personnel should be classified as direct labor costs.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-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

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