Question 1

Actual overhead plus overapplied overhead equals applied overhead.

Accepted Answer

A) True 
 B)False

Question 2

Overhead is said to be underapplied when actual overhead costs exceed the amount applied to production.

Accepted Answer

A) True 
 B)False

Question 3

Cost of Goods Sold is decreased for underapplied overhead.

Accepted Answer

A) True 
 B)False

Question 4

Completed but unsold units for a manufacturing firm would be included in which of the following accounts?

Accepted Answer

A)  Pending-Sale Inventory 
B)  Finished Goods Inventory 
C)  Work in Process Inventory 
D)  Materials Inventory 
A)  Pending-Sale Inventory 
B)  Finished Goods Inventory 
C)  Work in Process Inventory 
D)  Materials Inventory

Question 5

A materials request form is prepared whenever the purchasing department orders materials.

Accepted Answer

A) True 
 B)False

Question 6

Because it is invisible, direct labor cannot be traced to products.

Accepted Answer

A) True 
 B)False

Question 7

When the activity base used in calculating the predetermined overhead rate is units of output, which of the following also must be known before overhead can be applied to a particular job?

Accepted Answer

A)  Actual overhead incurred during the period 
B)  Estimated direct labor hours for all jobs during the period 
C)  Actual units produced for that job 
D)  Actual units produced for all jobs during the period 
A)  Actual overhead incurred during the period 
B)  Estimated direct labor hours for all jobs during the period 
C)  Actual units produced for that job 
D)  Actual units produced for all jobs during the period

Question 8

Raisin Company's overhead cost was overapplied by $1,500 in the current year. The estimated overhead was $170,000, and the applied overhead was $166,000. Compute the actual overhead.

Accepted Answer

A)  $164,500 
B)  $169,500 
C)  $168,500 
D)  $171,500 
A)  $164,500 
B)  $169,500 
C)  $168,500 
D)  $171,500

Question 9

Costs such as salary of supervisors and other support personnel, which are accounted for as overhead costs, are called

Accepted Answer

A)  direct labor. 
B)  sales assistance. 
C)  indirect labor. 
D)  variable labor. 
A)  direct labor. 
B)  sales assistance. 
C)  indirect labor. 
D)  variable labor.

Question 10

Sleney Company applies overhead on the basis of direct labor dollars, using a rate of $1.65 per labor dollar. How much overhead would be applied to products in January if $15,200 of labor costs were incurred and 2,200 labor hours were worked?

Accepted Answer

A)  $33,440 
B)  $25,080 
C)  $3,630 
D)  $15,200 
A)  $33,440 
B)  $25,080 
C)  $3,630 
D)  $15,200

Question 11

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. Compute the predetermined overhead rate per direct labor hour.

Accepted Answer

A)  $7.83 
B)  $8.38 
C)  $8.20 
D)  $8.00 
A)  $7.83 
B)  $8.38 
C)  $8.20 
D)  $8.00

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

Total manufacturing costs include all direct materials used as well as all direct labor costs and overhead costs incurred for a period.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a value-adding cost?

Accepted Answer

A)  Depreciation on personnel department equipment 
B)  Depreciation on factory equipment 
C)  Depreciation on office equipment 
D)  Depreciation on sales department equipment 
A)  Depreciation on personnel department equipment 
B)  Depreciation on factory equipment 
C)  Depreciation on office equipment 
D)  Depreciation on sales department equipment

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The product is the cost object when assigning indirect product costs.

Accepted Answer

A) True 
 B)False

Question 17

The cost of goods manufactured is added to the beginning balance of Finished Goods Inventory to obtain the total cost of goods available for sale during the period.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Which of the following would not be included in the cost of a manufactured product?

Accepted Answer

A)  Cost to ship products to a customer 
B)  Cost of factory machinery used in production 
C)  Cost to design the product 
D)  Plant supervisor's salary 
A)  Cost to ship products to a customer 
B)  Cost of factory machinery used in production 
C)  Cost to design the product 
D)  Plant supervisor's salary

Question 20

Which of the following is not a reason to classify costs as either product or period costs?

Accepted Answer

A)  To determine unit manufacturing costs 
B)  To determine if the costs are fixed or variable 
C)  To analyze costs for control purposes 
D)  To report production costs on the income statement 
A)  To determine unit manufacturing costs 
B)  To determine if the costs are fixed or variable 
C)  To analyze costs for control purposes 
D)  To report production costs on the income statement

Exam 19: Cost Concepts and Cost Allocation

Actual overhead plus overapplied overhead equals applied overhead.

Overhead is said to be underapplied when actual overhead costs exceed the amount applied to production.

Cost of Goods Sold is decreased for underapplied overhead.

Completed but unsold units for a manufacturing firm would be included in which of the following accounts?

A materials request form is prepared whenever the purchasing department orders materials.

Because it is invisible, direct labor cannot be traced to products.

When the activity base used in calculating the predetermined overhead rate is units of output, which of the following also must be known before overhead can be applied to a particular job?

Raisin Company's overhead cost was overapplied by $1,500 in the current year. The estimated overhead was $170,000, and the applied overhead was $166,000. Compute the actual overhead.

Costs such as salary of supervisors and other support personnel, which are accounted for as overhead costs, are called

Sleney Company applies overhead on the basis of direct labor dollars, using a rate of $1.65 per labor dollar. How much overhead would be applied to products in January if $15,200 of labor costs were incurred and 2,200 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.

Total manufacturing costs include all direct materials used as well as all direct labor costs and overhead costs incurred for a period.

Which of the following is a value-adding cost?

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

The product is the cost object when assigning indirect product costs.

The cost of goods manufactured is added to the beginning balance of Finished Goods Inventory to obtain the total cost of goods available for sale during the period.

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

Which of the following would not be included in the cost of a manufactured product?

Which of the following is not a reason to classify costs as either product or period 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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