Exam 6: Fundamentals of Product and Service Costing

A company is considering the use of a single-stage cost allocation process.Under what conditions would this choice be justified?

Beal Company uses direct labor cost as a basis for computing its predetermined overhead rate.In computing the predetermined overhead rate for 2012,the company misclassified a portion of direct labor cost as indirect labor.The effect of this misclassification will be to:

Which of the following statements is true?

The only purpose of cost information is to determine the individual product cost on a per unit basis in order to value inventory.Product costing is one purpose of many for determining individual product cost on a per unit basis.

The following information has been gathered for Cheatham Law Offices for its fiscal year ending December 31: What is the predetermined office overhead rate per billable labor dollar?

Individual product costs are relevant for managerial decision-making but irrelevant for preparing the financial statements.The individual product costs are relevant for both financial statement purposes and the purpose of decision-making.

When a manufacturing company has a highly automated manufacturing plant producing many different products,what is probably the most appropriate basis of applying overhead costs to work-in-process?

The basic cost flow model applies only to physical units and not to costs.This inventory equation applies to both physical units and the costs associated with the physical units.

The selection of an appropriate cost allocation base is more important for single-stage cost allocation systems than for two-stage cost allocation systems.A correctly chosen allocation base is equally important for any allocation system.

Techniques,Inc.uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs.The following information has been collected for the previous year: Techniques used 25,000 direct labor hours and 50,000 machine hours during the previous year.What is the predetermined overhead rate per direct labor hour?

Acme,Inc.has estimated overhead to be $300,000 and labor hours to be 30,000.Actual overhead turned out to be $310,000 when 30,500 labor hours were worked.The predetermined overhead rate would be:

The basic cost flow model is:

Cost management systems should be designed to report the same costs to each decision-maker.The system should be designed to report the cost needed by each decision maker.This cost is not necessarily the same for each.

For Case (C)above,what is the Transferred-Out (TO)?

Lexie Lou Industries applies manufacturing overhead to its cost objects on the basis of 75% of direct material cost.If Job 17X had $72,000 of manufacturing overhead applied to it during May,the direct materials assigned to Job 17X was:

For Case (B)above,what is the Ending Balance (EB)?

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?

The UVW Manufacturing Company produces a single uniform product throughout the year.Which of the following product costing systems should be used by UVW?

The Transfers In (TI)costs in the basic cost flow model of a manufacturing firm are direct materials,direct labor,and manufacturing overhead.These are the three main categories of manufacturing inputs.

For Case (C)above,what is the amount Transferred In (TI)?