Question 1

The two-stage cost allocation process allocates costs to multiple cost pools and then to individual cost objects using different allocation bases.

Accepted Answer

A) True 
 B)False

Question 2

For Case (C)above,what is the amount Transferred In (TI)? $$\begin{array} { | l | r | r | r | } 
\hline & \text { Case } ( A ) & \text { Case } ( B ) & \text { Case } ( C ) \
\hline \text { Beginning Balance (BB) } & ? & \$ 23,000 & \$ 7,900 \
\hline \text { Ending Balance (EB) } & \$ 67,000 & 19,200 & 8,300 \
\hline \text { Transterred In (T) } & 149,600 & 97,700 & ? \
\hline \text { Transterred Out } ( T O ) & 164,600 & ? & 21,100 \
\hline
\end{array}$$

Accepted Answer

A)  $12,800. 
B)  $20,700. 
C)  $21,500. 
D)  $29,400. 
A)  $12,800. 
B)  $20,700. 
C)  $21,500. 
D)  $29,400.

Question 3

Which of the following statements doesnot reflect one of the fundamental themes underlying the design of cost systems for managerial purposes?

Accepted Answer

A)  Cost systems should have a decision focus. 
B)  Different cost information is used for different purposes. 
C)  Cost information for managerial purposes must meet the cost-benefit principle. 
D)  The primary purpose of cost systems is to gather information to value inventory. 
A)  Cost systems should have a decision focus. 
B)  Different cost information is used for different purposes. 
C)  Cost information for managerial purposes must meet the cost-benefit principle. 
D)  The primary purpose of cost systems is to gather information to value inventory.

Question 4

Flambe Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.At the beginning of the most recently completed year,the company estimated the machine-hours for the upcoming year at 22,000 machine-hours.The estimated variable manufacturing overhead was $8.65 per machine-hour and the estimated total fixed manufacturing overhead was $609,400.The predetermined overhead rate for the recently completed year was closest to:

Accepted Answer

A)  $36.35 per machine-hour. 
B)  $27.70 per machine-hour. 
C)  $33.32 per machine-hour. 
D)  $8.65 per machine-hour. 
A)  $36.35 per machine-hour. 
B)  $27.70 per machine-hour. 
C)  $33.32 per machine-hour. 
D)  $8.65 per machine-hour.

Question 5

Why might a company use direct labor cost as an overhead allocation base rather than using direct labor hours?

Accepted Answer

Direct labor cost would be a better choi

Question 6

The following information has been gathered for Foxmoor Industries for its fiscal year ending December 31: What is the predetermined factory overhead rate per machine hour?
$$\begin{array} { | l | r | } 
\hline \text { Estimated factory ouerhead costs } & \$ 1,500,000 \
\hline \text { Actual factory overhead costs } & \$ 1,776,400 \
\hline \text { Estimated labor hours } & 48,000 \
\hline \text { Actual labor hours } & 51,700 \
\hline \text { Estimated labor costs } & \$ 756,000 \
\hline \text { Actual labor costs } & \$ 840,125 \
\hline \text { Estimated machine hours } & 96,000 \
\hline \text { Actual machine hours } & 102,600 \
\hline
\end{array}$$

Accepted Answer

A)  $15.625. 
B)  $14.620. 
C)  $18.504. 
D)  $17.314. 
A)  $15.625. 
B)  $14.620. 
C)  $18.504. 
D)  $17.314.

Question 7

Which of the following is the correct formula to compute the predetermined overhead rate?

Accepted Answer

A)  Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. 
B)  Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. 
C)  Actual total manufacturing overhead costs divided by estimated total units in the allocation base. 
D)  Estimated total manufacturing overhead costs divided by actual total units in the allocation base. 
A)  Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. 
B)  Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. 
C)  Actual total manufacturing overhead costs divided by estimated total units in the allocation base. 
D)  Estimated total manufacturing overhead costs divided by actual total units in the allocation base.

Question 8

Markham Corporation uses a job-order costing system.The following data are for last year: Markham applies overhead using a predetermined rate based on direct labor-hours.What predetermined overhead rate was used last year?
$$\begin{array} { | l | r | } 
\hline \text { Estimated direct labor-hours } & 12,000 \
\hline \text { Estimated manufacturing overhead costs } & \$ 39,000 \
\hline \text { Actual direct labor-hours } & 11,000 \
\hline \text { Actual manufacturing overhead costs } & \$ 37,000 \
\hline
\end{array}$$

Accepted Answer

A)  $3.55 per direct labor-hour. 
B)  $3.25 per direct labor-hour. 
C)  $3.08 per direct labor-hour. 
D)  $3.36 per direct labor-hour. 
A)  $3.55 per direct labor-hour. 
B)  $3.25 per direct labor-hour. 
C)  $3.08 per direct labor-hour. 
D)  $3.36 per direct labor-hour.

Question 9

The selection of an appropriate cost allocation base is more important for single-stage cost allocation systems than for two-stage cost allocation systems.

Accepted Answer

A) True 
 B)False

Question 10

For Case (C)above,what is the Beginning Balance (BB)? $$\begin{array} { | l | r | r | r | } 
\hline & \text { Case } ( A ) & \text { Case } ( B ) & \text { Case } ( C ) \
\hline \text { Beginning Balance (BB) } & 64,800 & \$ 59,840 & ? \
\hline \text { Ending Balance (EB) } & 61,300 & ? & 13,800 \
\hline \text { Transterred In } ( T ) ) & 189,100 & 79,530 & 65,200 \
\hline \text { Transterred Out } ( T O ) & ? & 76,420 & 67,300 \
\hline
\end{array}$$

Accepted Answer

A)  $15,900. 
B)  $2,100. 
C)  $11,700. 
D)  $13,800. 
A)  $15,900. 
B)  $2,100. 
C)  $11,700. 
D)  $13,800.

Question 11

If a company has three cost pools,it should have three different cost allocation bases.

Accepted Answer

A) True 
 B)False

Question 12

Describe the two-stage allocation method.When is it important to use a two-stage approach rather than a single-stage approach?

Accepted Answer

The two-stage allocation method splits t

Question 13

The loan department of a financial corporation makes loans to businesses.The costs of processing these loans are often several thousand dollars.All loans are initially evaluated using the same financial analysis software,but some require outside services such as appraisals and legal services.Which is the most appropriate costing system for the loan department?

Accepted Answer

A)  Job-order costing. 
B)  Process costing. 
C)  Operation costing. 
D)  Batch costing. 
A)  Job-order costing. 
B)  Process costing. 
C)  Operation costing. 
D)  Batch costing.

Question 14

The term "product" often refers to an organization's output and includes both tangible items (e.g. ,chair,desk,etc. )and intangible items (e.g. ,services provided)

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is (are)true regarding product costing? (A)Individual product costs are relevant for managerial decision-making but irrelevant for preparing the financial statements.(B)A common decision facing managers is determining the price at which to sell their products or provide their services.

Accepted Answer

A)  Only A is true. 
B)  Only B is true. 
C)  Both A and B are true. 
D)  Neither A nor B is true. 
A)  Only A is true. 
B)  Only B is true. 
C)  Both A and B are true. 
D)  Neither A nor B is true.

Question 16

The management of Marysville Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 48,000 machine-hours.In addition,capacity is 53,000 machine-hours and the actual activity for the year is 47,700 machine-hours.All of the manufacturing overhead is fixed and is $1,144,800 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year.Job J42O,which required 40 machine-hours,is one of the jobs worked on during the year.Required:
a.Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base.b.Determine how much overhead would be applied to Job J42O if the predetermined overhead rate is based on estimated amount of the allocation base.c.Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity.d.Determine how much overhead would be applied to Job J42O if the predetermined overhead rate is based on the amount of the allocation base at capacity.

Accepted Answer

The answer of The management of Marysville Corporation would like...

Question 17

The basic cost flow model is:

Accepted Answer

A)  EB + BB = TI + TO. 
B)  BB + EB = TI + TO. 
C)  EB - BB = TI - TO. 
D)  EB - BB = TO - TI. 
A)  EB + BB = TI + TO. 
B)  BB + EB = TI + TO. 
C)  EB - BB = TI - TO. 
D)  EB - BB = TO - TI.

Question 18

For Case (A)above,what is the Beginning Balance (BB)? $$\begin{array} { | l | r | r | r | } 
\hline & \text { Case } ( A ) & \text { Case } ( B ) & \text { Case } ( C ) \
\hline \text { Beginning Balance (BB) } & ? & \$ 23,000 & \$ 7,900 \
\hline \text { Ending Balance (EB) } & \$ 67,000 & 19,200 & 8,300 \
\hline \text { Transterred In (T) } & 149,600 & 97,700 & ? \
\hline \text { Transterred Out } ( T O ) & 164,600 & ? & 21,100 \
\hline
\end{array}$$

Accepted Answer

A)  $52,000. 
B)  $82,000. 
C)  $67,000. 
D)  $97,600. 
A)  $52,000. 
B)  $82,000. 
C)  $67,000. 
D)  $97,600.

Question 19

Silverton Manufacturing Company builds highly sophisticated engine parts for cars competing in stock racing and drag racing.The company uses a normal costing system that applies factory overhead on the basis of direct labor-hours.For 2016,the company estimated that it would incur $256,000 in factory overhead costs and 16,000 direct labor-hours.The April 1,2016,balance in inventory accounts follow:
 $$\begin{array} { | l | r | } 
\hline \text { Materials Inventory } & \$ 54,000 \
\hline \text { Work-ir-Process Inventory } ( \mathrm { Y } 12 ) & \$ 21,000 \
\hline \text { Finished Goods Inventory } ( Z 11 ) & \$ 108,000 \
\hline
\end{array}$$
Job Y12 is the only job in process on April 1,2016.The following transactions were recorded for the month of April:
a.Purchased materials on account,$180,000.b.Issued $182,000 of materials to production,$8,000 of which was for indirect materials.Cost of direct materials issued:
 $$\begin{array} { | l | r | } 
\hline \text { Job } Y 12 & \$ 46,000 \
\hline \text { Job D20 } & 84,000 \
\hline \text { Job E33 } & 44,000 \
\hline
\end{array}$$
 c.Incurred and paid payroll cost of $40,920;Direct labor cost ($20/hour;total 1,196 hours):
 
 d.Recognized depreciation for the month:
Manufacturing asset $4,400
Selling and administrative asset 3,400
e.Paid advertising expenses $12,000.
f.Incurred factory utility costs 2,600.
g.Incurred other factory overhead costs 3,200.
h.Applied factory overhead to production on the basis of direct labor-hours.
i.Completed Job Y12 during the month and transferred it to the finished goods warehouse
.j.Sold Job Z11 on account for $118,000.
k.Received $50,000 of collections on account from customers during the month.
Required:
(1)Calculate the company's predetermined overhead rate.
(2)Prepare journal entries for the April transactions.Record job-specific items in individual Work-in-Process accounts.
(3)What was the balance of the Materials Inventory account on April 30,2016?
(4)What was the balance of the Work-in-Process Inventory control account on April 30?

Accepted Answer

1. Predetermined overhead rate: $16.00 p

Question 20

The following information has been gathered for the Harrell Manufacturing Company for its fiscal year ending December 31: What is the predetermined manufacturing overhead rate,assuming direct labor cost is used as the activity base?
$$\begin{array} { | l | r | } 
\hline \text { Actual manufacturing overhead costs } & \$ 212,500 \
\hline \text { Actual direct labor hours } & 54,900 \
\hline \text { Actual direct labor costs } & \$ 445,000 \
\hline \text { Estimated manufacturing overhead costs } & \$ 210,000 \
\hline \text { Estimated direct labor } & \$ 434,000 \
\hline \text { Estimated direct labor hours } & 56,000 \
\hline
\end{array}$$

Accepted Answer

A)  48.4%. 
B)  47.2%. 
C)  49.0%. 
D)  47.8%. 
A)  48.4%. 
B)  47.2%. 
C)  49.0%. 
D)  47.8%.

The two-stage cost allocation process allocates costs to multiple cost pools and then to individual cost objects using different allocation bases.

For Case (C)above,what is the amount Transferred In (TI)? Case (A) Case (B) Case (C) Beginning Balance (BB) ? \ 23,000 \ 7,900 Ending Balance (EB) \ 67,000 19,200 8,300 Transterred In (T) 149,600 97,700 ? Transterred Out (TO) 164,600 ? 21,100

Which of the following statements doesnot reflect one of the fundamental themes underlying the design of cost systems for managerial purposes?

Why might a company use direct labor cost as an overhead allocation base rather than using direct labor hours?

Which of the following is the correct formula to compute the predetermined overhead rate?

The selection of an appropriate cost allocation base is more important for single-stage cost allocation systems than for two-stage cost allocation systems.

For Case (C)above,what is the Beginning Balance (BB)? Case (A) Case (B) Case (C) Beginning Balance (BB) 64,800 \ 59,840 ? Ending Balance (EB) 61,300 ? 13,800 Transterred In (T)) 189,100 79,530 65,200 Transterred Out (TO) ? 76,420 67,300

If a company has three cost pools,it should have three different cost allocation bases.

Describe the two-stage allocation method.When is it important to use a two-stage approach rather than a single-stage approach?

The term "product" often refers to an organization's output and includes both tangible items (e.g. ,chair,desk,etc. )and intangible items (e.g. ,services provided)

The basic cost flow model is:

For Case (A)above,what is the Beginning Balance (BB)? Case (A) Case (B) Case (C) Beginning Balance (BB) ? \ 23,000 \ 7,900 Ending Balance (EB) \ 67,000 19,200 8,300 Transterred In (T) 149,600 97,700 ? Transterred Out (TO) 164,600 ? 21,100

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters

Exam 6: Fundamentals of Product and Service Costing

The two-stage cost allocation process allocates costs to multiple cost pools and then to individual cost objects using different allocation bases.

For Case (C)above,what is the amount Transferred In (TI)? Case (A) Case (B) Case (C) Beginning Balance (BB) ? \ 23,000 \ 7,900 Ending Balance (EB) \ 67,000 19,200 8,300 Transterred In (T) 149,600 97,700 ? Transterred Out (TO) 164,600 ? 21,100

Which of the following statements doesnot reflect one of the fundamental themes underlying the design of cost systems for managerial purposes?

Why might a company use direct labor cost as an overhead allocation base rather than using direct labor hours?

Which of the following is the correct formula to compute the predetermined overhead rate?

The selection of an appropriate cost allocation base is more important for single-stage cost allocation systems than for two-stage cost allocation systems.

For Case (C)above,what is the Beginning Balance (BB)? Case (A) Case (B) Case (C) Beginning Balance (BB) 64,800 \ 59,840 ? Ending Balance (EB) 61,300 ? 13,800 Transterred In (T)) 189,100 79,530 65,200 Transterred Out (TO) ? 76,420 67,300

If a company has three cost pools,it should have three different cost allocation bases.

Describe the two-stage allocation method.When is it important to use a two-stage approach rather than a single-stage approach?

The term "product" often refers to an organization's output and includes both tangible items (e.g. ,chair,desk,etc. )and intangible items (e.g. ,services provided)

The basic cost flow model is:

For Case (A)above,what is the Beginning Balance (BB)? Case (A) Case (B) Case (C) Beginning Balance (BB) ? \ 23,000 \ 7,900 Ending Balance (EB) \ 67,000 19,200 8,300 Transterred In (T) 149,600 97,700 ? Transterred Out (TO) 164,600 ? 21,100

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters