Question 1

Overhead has been underapplied when the:

Accepted Answer

A)  manufacturing overhead account has a debit balance. 
B)  manufacturing overhead account has a credit balance. 
C)  company has underspent in the manufacturing overhead cost area. 
D)  adjusting entry for the underapplied overhead involves a credit to cost of sales. 
A)  manufacturing overhead account has a debit balance. 
B)  manufacturing overhead account has a credit balance. 
C)  company has underspent in the manufacturing overhead cost area. 
D)  adjusting entry for the underapplied overhead involves a credit to cost of sales. A

Question 2

The type of product costing system used by a company is determined by the:

Accepted Answer

A)  production process. 
B)  plant supervisor. 
C)  project manager. 
D)  chief executive officer. 
A)  production process. 
B)  plant supervisor. 
C)  project manager. 
D)  chief executive officer. A

Question 3

Which of the following statements concerning activity-based costing (ABC)is not true?

Accepted Answer

A)  ABC can be applied in service businesses as well as in manufacturing businesses. 
B)  It has been introduced to overcome distortions in costing multiple products which occur when a single base is used to apply overhead to products. 
C)  ABC is cheaper and less time consuming to implement than traditional costing systems. 
D)  Overhead costs are accumulated by activities and then assigned to cost objects using a different cost driver for each activity. 
A)  ABC can be applied in service businesses as well as in manufacturing businesses. 
B)  It has been introduced to overcome distortions in costing multiple products which occur when a single base is used to apply overhead to products. 
C)  ABC is cheaper and less time consuming to implement than traditional costing systems. 
D)  Overhead costs are accumulated by activities and then assigned to cost objects using a different cost driver for each activity. C

Question 4

Match the business with the most likely type of costing system.
1) Oil refinery
2) Automotive brake repairer
3) Bathroom renovator
4) Commercial printer
5) Management consultant
I Job costing
II Process costing

Accepted Answer

A)  1 and I, 2 and II, 3 and I, 4 and II, 5 and I 
B)  1 and I, 2 and I, 3 and I, 4 and II, 5 and II 
C)  1 and II, 2 and I, 3 and I, 4 and I, 5 and I 
D)  1 and II, 2 and II, 3 and I, 4 and I, 5 and I 
A)  1 and I, 2 and II, 3 and I, 4 and II, 5 and I 
B)  1 and I, 2 and I, 3 and I, 4 and II, 5 and II 
C)  1 and II, 2 and I, 3 and I, 4 and I, 5 and I 
D)  1 and II, 2 and II, 3 and I, 4 and I, 5 and I

Question 5

The flow of costs through the accounting system is most accurately described as:

Accepted Answer

A)  Factory overhead applied, to work in process, to finished goods 
B)  Purchases, to finished goods, to work in process 
C)  Purchases, to factory overhead, to cost of sales 
D)  Work in process, to cost of sales 
A)  Factory overhead applied, to work in process, to finished goods 
B)  Purchases, to finished goods, to work in process 
C)  Purchases, to factory overhead, to cost of sales 
D)  Work in process, to cost of sales

Question 6

Which of the following statements concerning activity-based costing is correct?

Accepted Answer

A)  ABC is a refinement of job costing. 
B)  ABC was introduced because of globalisation. 
C)  ABC is most useful when a smaller number of similar products are produced by a firm. 
D)  Direct labour hours can be a cost driver for ABC. 
A)  ABC is a refinement of job costing. 
B)  ABC was introduced because of globalisation. 
C)  ABC is most useful when a smaller number of similar products are produced by a firm. 
D)  Direct labour hours can be a cost driver for ABC.

Question 7

Dreamtime Manufacturing uses the weighted-average method of computing equivalent units of production. For beginning work in process there were 8000 units 20% complete as to materials and conversion costs. For ending work in process there were 10000 units 35% complete as to materials and conversion costs. 14 000 units were completed during the year. Determine the equivalent units of production.

Accepted Answer

A)  14 000 
B)  17 500 
C)  20 500 
D)  24 000 
A)  14 000 
B)  17 500 
C)  20 500 
D)  24 000

Question 8

Equivalent units are:

Accepted Answer

A)  the number of whole units represented by the finished units. 
B)  the units represented by the total manufacturing costs for the period. 
C)  the units that would have been produced under optimum circumstances. 
D)  the number of whole units represented by the finished units plus the partly completed units. 
A)  the number of whole units represented by the finished units. 
B)  the units represented by the total manufacturing costs for the period. 
C)  the units that would have been produced under optimum circumstances. 
D)  the number of whole units represented by the finished units plus the partly completed units.

Question 9

When Job No. 1010 at the Saunders Manufacturing Company emerges with its final finishing touches completed, the company's:

Accepted Answer

A)  work in process is increased. 
B)  work in process is decreased. 
C)  total assets are increased. 
D)  total assets are decreased. 
A)  work in process is increased. 
B)  work in process is decreased. 
C)  total assets are increased. 
D)  total assets are decreased.

Question 10

Derbyshire Ltd distributes overhead based on direct labour dollars. The estimated manufacturing overhead for the year was $800 000 and the estimated direct labour dollars for the year were $160 000. Indicate the amount of underapplied or overapplied overhead if actual direct labour was $135 000 and actual manufacturing overhead was $658 000.

Accepted Answer

A)  $17 000 underapplied 
B)  $17 000 overapplied 
C)  $25 000 overapplied 
D)  $25 000 underapplied 
A)  $17 000 underapplied 
B)  $17 000 overapplied 
C)  $25 000 overapplied 
D)  $25 000 underapplied

Question 11

The number of full units that could have been completely produced with the effort expended are known as:

Accepted Answer

A)  conversion units. 
B)  work-in-process. 
C)  equivalent units. 
D)  completed units. 
A)  conversion units. 
B)  work-in-process. 
C)  equivalent units. 
D)  completed units.

Question 12

Which account would be adjusted for the disposal of an immaterial amount of overapplied manufacturing overhead?

Accepted Answer

A)  Cost of sales 
B)  Finished goods inventory 
C)  The overapplied overhead account 
D)  Work in process inventory 
A)  Cost of sales 
B)  Finished goods inventory 
C)  The overapplied overhead account 
D)  Work in process inventory

Question 13

Wessex Pty Ltd applies overhead to completed jobs using a predetermined rate of 75% of direct labour costs. If Job No. 34 shows $30 000 of factory overhead applied, how much was the direct labour cost of the job?

Accepted Answer

A)  $10 000 
B)  $22 500 
C)  $30 000 
D)  $40 000 
A)  $10 000 
B)  $22 500 
C)  $30 000 
D)  $40 000

Question 14

Fresco Production uses a predetermined overhead rate based upon direct labour hours. The firm has the following budgeted and actual data for the current year:
$$\begin{array} { l r } 
\text { Budgeted factory overhead cost } & \$ 12000 \
\text { Actual factory overhead cost } & \$ 13500 \
\text { Budgeted direct labour hours } & 2000 \
\text { Actual direct labour hours } & 2400
\end{array}$$
What was the amount of underapplied or overapplied overhead for the year?

Accepted Answer

A)  $1 500 overapplied 
B)  $1 500 underapplied 
C)  $900 underapplied 
D)  $900 overapplied 
A)  $1 500 overapplied 
B)  $1 500 underapplied 
C)  $900 underapplied 
D)  $900 overapplied

Question 15

Which of the following is not a section of a cost of production report?

Accepted Answer

A)  GST summary 
B)  Costs accounted for 
C)  Costs to be accounted for 
D)  Physical flow schedule 
A)  GST summary 
B)  Costs accounted for 
C)  Costs to be accounted for 
D)  Physical flow schedule

Question 16

It is true that Just-in-time (JIT) processing:

Accepted Answer

A)  runs the risk of interruptions in supply. 
B)  is only suitable for large businesses. 
C)  reflects a 'push' approach to manufacturing. 
D)  sounds good in theory but doesn't work in practice. 
A)  runs the risk of interruptions in supply. 
B)  is only suitable for large businesses. 
C)  reflects a 'push' approach to manufacturing. 
D)  sounds good in theory but doesn't work in practice.

Question 17

Johnson's Metal Works planned the following for the year ended 31 December 2019.
$$\begin{array} { l r } 
\text { Factory overhead costs } & \$ 114000 \
\text { Direct labour cost } ( \$ 6.00 \text { an hour } ) \mathrm { x } ( 12000 \mathrm { hrs } ) & \$ 72000 \
\text { Machine hours } & 24000 \
\text { Direct material cost } & \$ 66000
\end{array}$$
The predetermined overhead rate is based on direct labour hours and planned production during 2019 is 6 000 units. The estimated cost per unit produced is:

Accepted Answer

A)  $19. 
B)  $23. 
C)  $42. 
D)  $30. 
A)  $19. 
B)  $23. 
C)  $42. 
D)  $30.

Question 18

An activity-based approach to designing a costing system focuses on:

Accepted Answer

A)  direct costs. 
B)  activities. 
C)  departments. 
D)  traceable costs. 
A)  direct costs. 
B)  activities. 
C)  departments. 
D)  traceable costs.

Question 19

A job costing system tracks:

Accepted Answer

A)  the use of materials. 
B)  direct labour and the use of materials. 
C)  the conversion of the inputs into work in process. 
D)  direct labour, the use of materials and the conversion of the inputs into work-in-process. 
A)  the use of materials. 
B)  direct labour and the use of materials. 
C)  the conversion of the inputs into work in process. 
D)  direct labour, the use of materials and the conversion of the inputs into work-in-process.

Question 20

Which account is not classified as an asset?

Accepted Answer

A)  Materials 
B)  Cost of sales 
C)  Work in process 
D)  Finished goods 
A)  Materials 
B)  Cost of sales 
C)  Work in process 
D)  Finished goods

Exam 21: Cost Accounting Systems

Overhead has been underapplied when the:

The type of product costing system used by a company is determined by the:

Which of the following statements concerning activity-based costing (ABC)is not true?

Match the business with the most likely type of costing system. 1) Oil refinery 2) Automotive brake repairer 3) Bathroom renovator 4) Commercial printer 5) Management consultant I Job costing II Process costing

The flow of costs through the accounting system is most accurately described as:

Which of the following statements concerning activity-based costing is correct?

Equivalent units are:

When Job No. 1010 at the Saunders Manufacturing Company emerges with its final finishing touches completed, the company's:

The number of full units that could have been completely produced with the effort expended are known as:

Which account would be adjusted for the disposal of an immaterial amount of overapplied manufacturing overhead?

Wessex Pty Ltd applies overhead to completed jobs using a predetermined rate of 75% of direct labour costs. If Job No. 34 shows $30 000 of factory overhead applied, how much was the direct labour cost of the job?

Which of the following is not a section of a cost of production report?

It is true that Just-in-time (JIT) processing:

An activity-based approach to designing a costing system focuses on:

A job costing system tracks:

Which account is not classified as an asset?

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Cash Management and Control

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Accounting for Manufacturing

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

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