Deck 6: Estimating the Costs of Products and Inventory

Question 1

A job that shows low profitability may be the result of:

A)wasting direct materials.
B)underpricing the job.
C)inefficient direct manufacturing labour.
D)All of these answers are correct.

Answer 1

D

Question 2

Job costing:

A)allocates an equal amount of cost to each unit made during a time period.
B)records the flow of costs for each customer.
C)is commonly used when each unit of output is identical.
D)can only be used in manufacturing.

Answer 2

B

Question 3

Normandeau Company's actual manufacturing overhead is $1 400 000.Overhead is allocated on the basis of direct labour hours which were 25 000 for the period.What is the manufacturing overhead rate?

A)$47.00
B)$56.00
C)$75.00
D)None of the above is correct.

Answer 3

B

Question 4

Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs:
A.identify indirect costs
B.compute the total cost of the job
C.select cost-allocation bases
D.compute the indirect cost rate

A)cadb
B)acdb
C)bacd
D)dcab

Question 5

A job-cost sheet details the:

A)direct labour costs incurred.
B)direct materials purchased and paid for.
C)indirect labour costs incurred.
D)actual indirect overhead costs incurred.

Question 6

The basic source document for direct manufacturing labour is the:

A)materials-requisition record.
B)job-cost record.
C)labour-time record.
D)All of these answers are correct.

Question 7

Problems with accurate costing occur when:

A)incorrect job numbers are recorded on source documents.
B)a computer screen requests an employee number before that employee is able to work on information related to a specific job.
C)bar coding is used to record materials used on the job.
D)All of these answers are correct.

Question 8

In a job-costing system,what does a manufacturing firm typically allocate to a job?

A)Direct labour
B)Total costs
C)Manufacturing overhead costs
D)Direct materials

Question 9

For a given job the direct costs associated with the job are:

A)actual overhead.
B)direct manufacturing labour.
C)direct material.
D)Both direct material and direct manufacturing labour are correct.

Question 10

What is the assignment of direct costs to a cost object called?
Variant question

A)Cost assignment
B)Cost allocation
C)Cost tracing
D)Cost pooling

Question 11

Job costing may only be used by:

A)merchandising companies.
B)service companies.
C)manufacturing companies.
D)All of these may use job costing.

Question 12

________ costing is used by a business to price unique products for different jobs.

A)Actual
B)Process
C)Job
D)Traditional

Question 13

Copley Enterprises manufactures digital video equipment.Each unit requires $1475 of direct material and $1500 of direct manufacturing labour at $30 per hour.Manufacturing overhead is applied at $35 per direct manufacturing labour hour.Calculate the cost of each unit.

A)$3150
B)$4025
C)$4725
D)$2975

Question 14

In a costing system:

A)a cost object should be a product and not a department or a geographic territory.
B)cost tracing allocates indirect costs.
C)cost allocation assigns direct costs.
D)a cost-allocation base can be either financial or non-financial.

Question 15

A ________ links an indirect cost to a cost object.

A)cost assignment
B)cost-allocation base
C)cost pool
D)cost tracing

Question 16

What is job costing information used for?
Variant question

A)It is used to make pricing decisions.
B)It is used for external financial reporting.
C)It is used to develop strategies.
D)All of these answers are correct.

Question 17

Microlight Enterprises Company,a producer of microlight aircraft,would use a ________ costing system.

A)job
B)actual
C)process
D)traditional

Question 18

________ is the process of distributing indirect costs to products.

A)Cost tracing
B)Cost pooling
C)Job cost recording
D)Cost allocation

Question 19

An updated costing system should:

A)provide all information for management decision needs.
B)focus specifically on the costing needs of the CFO.
C)be tailored to fit the underlying operations rather than the current cost system.
D)be installed even if the costs outweigh the additional benefits.

Question 20

In a job-costing system,a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.

A)direct labour
B)total costs
C)manufacturing overhead costs
D)direct materials

Question 21

The budgeted indirect-cost driver rate for the Machining Department based on the number of machine-hours in that department is:

A)$5 per machine-hour
B)$10 per machine-hour
C)$20 per machine-hour
D)None of these answers are correct.

Question 22

If actual indirect-cost rates were calculated monthly rather than annually,then for the month of February with only 28 days:

A)variable indirect-cost rates would be lower.
B)monthly output would be higher.
C)total indirect-cost rates would be higher.
D)fixed indirect-cost rates would be lower.

Question 23

If indirect-cost rates are calculated monthly,distortions might occur because of:

A)property tax payments made in July and December.
B)routine monthly preventive-maintenance costs that benefit future months.
C)rental costs paid monthly.
D)Both B and C are correct.

Question 24

Answer the following questions using the information below:
Botany Bay Boatbuilders uses departmental cost driver rates to allocate manufacturing overhead costs to products.Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labour-hours in the Assembly Department.At the beginning of 2010,the following estimates were provided for the coming year:
$$\begin{array}{l}\begin{array} { l l l } & \text { Machining } & \text { Assembly } \\\text { Direct labour-hours } & 30000&60000 \\\text { Machine-hours } & 80000&20000 & \\\text { Direct labour cost } & \$ 500000 & \$ 900000 \\\text { Manufacturing overhead costs } & \$ 420000 & \$ 240000\end{array}\\\\\text { The accounting records of the company show the following data for Job \#316: }\end{array}$$

$\begin{array}{lcc}& \text { Machining } & \text { Assembly } \\ \text { Direct labour-hours } & 120 & 70 \\\text { Machine-hours } & 60 & 5\\\text { Direct material cost } & \$ 300 & \$ 200 \\\text { Direct labour cost } & \$ 100 & \$ 400 \end{array}$

-For Botany Bay Boatbuilders,what is the annual manufacturing overhead cost-allocation rate for the Machining Department?

A)$4.00
B)$4.67
C)$4.20
D)$5.25

Question 25

Answer the following questions using the information below:
Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018:
$$\begin{array} { l r } \text { Direct materials } & \$ 280000 \\\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \\\text { Ind irect labour } & \$ 20000 \\\text { Plant facility rent } & \$ 60000 \\\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \\\text { Sales commissions } & \$ 40000 \\\text { Administrative expenses } & \$ 50000\end{array}$$

-The amount of manufacturing overhead allocated to all jobs during June 2018 totals:

A)$110 000.
B)$105 000.
C)$77 000.
D)$200 000.

Question 26

Fixed costs remain constant at $200 000 per month.During high-output months variable costs are $160 000,and during low-output months variable costs are $40 000.What are the respective high and low indirect-cost rates if budgeted professional labour-hours are 8000 for high-output months and 2000 for low-output months?

A)$45.00 per hour;$120.00 per hour
B)$25.00 per hour;$20.00 per hour
C)$56.20 per hour;$120.00 per hour
D)$45.00 per hour;$45.00 per hour

Question 27

Answer the following questions using the information below:
Wagga Wagga Textiles is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the Tumut Brass Band band jacket job.
$$\begin{array} { l c c } \text { Company } & \text { Tumut Brass } & \text { Band Job } \\\text { Direct materials } & \$ 40000 & \$ 1000 \\\text { Direct labour } & \$ 10000 & \$ 200 \\\text { Manufacturing overhead costs } & & \$ 30000 \\\text { Machine-hours } & 100000 \mathrm { mh } & 900 \mathrm { mh }\end{array}$$

-What amount of manufacturing overhead costs will be allocated to this job?

A)$270
B)$720
C)$30 000
D)$450

Question 28

The difference between actual costing and normal costing is:

A)normal costing uses actual direct-cost rates.
B)actual costing uses actual quantities of cost-allocation bases.
C)actual costing uses actual quantities of direct-cost inputs.
D)normal costing uses budgeted indirect-cost rates.

Question 29

A company would use multiple cost-allocation bases:

A)because there is more than one way to allocate overhead.
B)because this is a simpler approach than using one cost-allocation base.
C)if managers believe that using multiple cost-allocation bases is the only acceptable method.
D)if managers believed the benefits exceeded the additional costs of that costing system.

Question 30

Where do managers and accountants collect most of the cost information from that goes into their systems?
Variant question

A)An information databank
B)Source documents
C)Computer programs
D)Time surveys

Question 31

Answer the following questions using the information below:
Wagga Wagga Textiles is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the Tumut Brass Band band jacket job.
$$\begin{array} { l c c } \text { Company } & \text { Tumut Brass } & \text { Band Job } \\\text { Direct materials } & \$ 40000 & \$ 1000 \\\text { Direct labour } & \$ 10000 & \$ 200 \\\text { Manufacturing overhead costs } & & \$ 30000 \\\text { Machine-hours } & 100000 \mathrm { mh } & 900 \mathrm { mh }\end{array}$$

-What is the bid price for the Tumut Brass Band job if the company uses a 40% markup of total manufacturing costs?

A)$1680
B)$2310
C)$588
D)$2058

Question 32

Answer the following questions using the information below:
Botany Bay Boatbuilders uses departmental cost driver rates to allocate manufacturing overhead costs to products.Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labour-hours in the Assembly Department.At the beginning of 2010,the following estimates were provided for the coming year:
$$\begin{array}{l}\begin{array} { l l l } & \text { Machining } & \text { Assembly } \\\text { Direct labour-hours } & 30000&60000 \\\text { Machine-hours } & 80000&20000 & \\\text { Direct labour cost } & \$ 500000 & \$ 900000 \\\text { Manufacturing overhead costs } & \$ 420000 & \$ 240000\end{array}\\\\\text { The accounting records of the company show the following data for Job \#316: }\end{array}$$

$\begin{array}{lcc}& \text { Machining } & \text { Assembly } \\ \text { Direct labour-hours } & 120 & 70 \\\text { Machine-hours } & 60 & 5\\\text { Direct material cost } & \$ 300 & \$ 200 \\\text { Direct labour cost } & \$ 100 & \$ 400 \end{array}$

-What are the total manufacturing costs of Job #316?

A)$1000
B)$880
C)$1595
D)$715

Question 33

Answer the following questions using the information below:
Wagga Wagga Textiles is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the Tumut Brass Band band jacket job.
$$\begin{array} { l c c } \text { Company } & \text { Tumut Brass } & \text { Band Job } \\\text { Direct materials } & \$ 40000 & \$ 1000 \\\text { Direct labour } & \$ 10000 & \$ 200 \\\text { Manufacturing overhead costs } & & \$ 30000 \\\text { Machine-hours } & 100000 \mathrm { mh } & 900 \mathrm { mh }\end{array}$$

-For Wagga Wagga Textiles,what is the annual manufacturing overhead cost-allocation rate?

A)$0.50
B)$33.33
C)$0.30
D)$0.80

Question 34

Answer the following questions using the information below:
Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018:
$$\begin{array} { l r } \text { Direct materials } & \$ 280000 \\\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \\\text { Ind irect labour } & \$ 20000 \\\text { Plant facility rent } & \$ 60000 \\\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \\\text { Sales commissions } & \$ 40000 \\\text { Administrative expenses } & \$ 50000\end{array}$$

-The actual amount of manufacturing overhead costs incurred in June 2018 totals:

A)$200 000.
B)$557 000.
C)$110 000.
D)$80 000.

Question 35

Answer the following questions using the information below:
Botany Bay Boatbuilders uses departmental cost driver rates to allocate manufacturing overhead costs to products.Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labour-hours in the Assembly Department.At the beginning of 2010,the following estimates were provided for the coming year:
$$\begin{array}{l}\begin{array} { l l l } & \text { Machining } & \text { Assembly } \\\text { Direct labour-hours } & 30000&60000 \\\text { Machine-hours } & 80000&20000 & \\\text { Direct labour cost } & \$ 500000 & \$ 900000 \\\text { Manufacturing overhead costs } & \$ 420000 & \$ 240000\end{array}\\\\\text { The accounting records of the company show the following data for Job \#316: }\end{array}$$

$\begin{array}{lcc}& \text { Machining } & \text { Assembly } \\ \text { Direct labour-hours } & 120 & 70 \\\text { Machine-hours } & 60 & 5\\\text { Direct material cost } & \$ 300 & \$ 200 \\\text { Direct labour cost } & \$ 100 & \$ 400 \end{array}$

-What amount of manufacturing overhead costs will be allocated to Job #316?

A)$532
B)$502
C)$595
D)$439

Question 36

An example of a NUMERATOR REASON for calculating annual indirect-cost rates includes:

A)fewer production workdays in a month.
B)payment of estimated taxes four times a year.
C)higher heating costs during the winter.
D)Both B and C are correct.

Question 37

Answer the following questions using the information below:
Wagga Wagga Textiles is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the Tumut Brass Band band jacket job.
$$\begin{array} { l c c } \text { Company } & \text { Tumut Brass } & \text { Band Job } \\\text { Direct materials } & \$ 40000 & \$ 1000 \\\text { Direct labour } & \$ 10000 & \$ 200 \\\text { Manufacturing overhead costs } & & \$ 30000 \\\text { Machine-hours } & 100000 \mathrm { mh } & 900 \mathrm { mh }\end{array}$$

-What are the total manufacturing costs of this job?

A)$1650
B)$1470
C)$1920
D)$1200

Question 38

A job-cost record uses information from:

A)a receiving report that indicates the type and quantity of each item received in an order from a supplier.
B)a labour-time card to record an employee's wage rate and hours spent on a particular job.
C)a materials requisition record to record raw material purchases from suppliers.
D)All of these answers are correct.

Question 39

A single indirect-cost rate based on direct manufacturing labour-hours for the entire plant is:
$$\begin{array} { l c c c } & \text { Machining } & { \text { Assembly } } \\\text { Direct manufacturing labour-hours } & 15000 & 75000 & \\\text { Machine-hours } & 60000 & 30000 & \\\text { Manufacturing overhead } & \$ 300000 & { \$ 600000 }\end{array}$$

A)$8 per direct labour-hour
B)$10 per direct labour-hour
C)$20 per direct labour-hour
D)None of these answers are correct.

Question 40

An example of a DENOMINATOR REASON for calculating annual indirect-cost rates includes:

A)higher heating bills in the winter.
B)higher levels of output demanded during the summer months from an ice cream factory.
C)semi-annual insurance payments in March and September.
D)All of these answers are correct.

Question 41

Which of the following statements about normal costing is TRUE?

A)Direct costs and indirect costs are traced using an actual rate.
B)Direct costs are traced using a budgeted rate,and indirect costs are allocated using an actual rate.
C)Direct costs are traced using an actual rate,and indirect costs are allocated using a budgeted rate.
D)Direct costs and indirect costs are traced using budgeted rates.

Question 42

Manufacturing overhead costs allocated to Job #432 total:

A)$30 000.
B)$36 000.
C)$24 000.
D)$12 000.

Question 43

Answer the following questions using the information below:
Hunter Valley Corporation uses a job cost system and has two production departments,A and B.Budgeted manufacturing costs for the year are:
$$\begin{array}{l}\begin{array} { l r r } & \text { Department A } & \text { Department B } \\\text { Direct materials } & \$ 700000 & \$ 100000 \\\text { Direct manufacturing labour } & \$ 200000 & \$ 800000 \\\text { Manufacturing overhead } & \$ 600000 & \$ 400000\end{array}\\\text { The actual material and labour costs charged to Job \#432 were as follows: }\\\begin{array} { c c } & \text { Total } \\\text { Direct materials: } & \$ 25000 \\\text { Direct labour: } & \\\text { Department A } & \$ 8000 \\\text { Department B } & \$ 12000 \\& \$ 20000\end{array}\end{array}$$ Hunter Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labour cost using departmental rates determined at the beginning of the year.

-For Department B,the manufacturing overhead allocation rate is:

A)50%.
B)100%.
C)300%.
D)200%.

Question 44

Manufacturing costs estimated for Job #432 total:

A)$55 000.
B)$65 000.
C)$70 000.
D)$75 000.

Question 45

Costs that are subject to short-run fluctuations for given jobs are:

A)budgeted indirect costs.
B)normal costs.
C)budgeted direct costs.
D)actual costs.

Question 46

The budgeted indirect-cost rate is calculated:

A)at the end of each quarter.
B)during the year.
C)at the end of the year.
D)at the beginning of the year.

Question 47

Answer the following questions using the information below:
Cronulla Products uses a normal cost system and had the following data available for 2018:
$$\begin{array} { l c } \text { Direct materials purchased on account } & \$ 74000 \\\text { Direct materials requisitioned } & 41000 \\\text { Direct labour cost incurred } & 65000 \\& \\\text { Factory overhead incurred } & 73000 \\\text { Cost of goods completed } & 146000 \\\text { Cost of goods sold } & 128000 \\& \\& 13000 \\\text { Be ginning direct materials inventory } & 32000 \\\text { Beginning WIP inventory } & 29000 \\\text { Beginning firished goods inventory } & \\\text { Overhead application rate, } & 125 \text { percent }\end{array}$$

-The ending balance of work-in-process inventory is:

A)$65 000.
B)$73 25.
C)$219 250.
D)$211 000.

Question 48

Annual cost rates are preferred over actual cost rates for all of the following reasons EXCEPT:

A)budgeted indirect-cost rates are known prior to the inception of a new job.
B)budgeted costs allow managers to have cost information on a timely basis.
C)budgeted-cost rates can be used to allocate direct or indirect costs
D)budgeted costs may be subject to short-run fluctuations.

Question 49

When a normal costing system is used,clients using proportionately more lawyer time than paraprofessional time will:

A)be underbilled for actual resources used.
B)be overbilled for actual resources used.
C)result in an underallocation of direct costs.
D)be billed accurately for actual resources used

Question 50

Answer the following questions using the information below:
For 20X5,Irwin's Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base.The accounting records contain the following information:
$$\begin{array} { l c c } & \text { Estimated } & \text { Actual } \\\text { Manufacturing overhead costs } & \$ 150000 & \$ 180000 \\\text { Machine-hours } & 30000 & 35000\end{array}$$

-Using normal costing,the amount of manufacturing overhead costs allocated to jobs during 20X5 is:

A)$150 000.
B)$175 000.
C)$200 000.
D)$180 000.

Question 51

________ costing is a cost management system that measures the cost of products,services and customers.

A)Process
B)Job
C)Normal
D)All of these answers are correct.

Question 52

What source document is used to keep track of direct labour for a job?

A)Material requisition
B)Balanced scorecard
C)Cost object sheet
D)Job-cost record

Question 53

Answer the following questions using the information below:
Cronulla Products uses a normal cost system and had the following data available for 2018:
$$\begin{array} { l c } \text { Direct materials purchased on account } & \$ 74000 \\\text { Direct materials requisitioned } & 41000 \\\text { Direct labour cost incurred } & 65000 \\& \\\text { Factory overhead incurred } & 73000 \\\text { Cost of goods completed } & 146000 \\\text { Cost of goods sold } & 128000 \\& \\& 13000 \\\text { Be ginning direct materials inventory } & 32000 \\\text { Beginning WIP inventory } & 29000 \\\text { Beginning firished goods inventory } & \\\text { Overhead application rate, } & 125 \text { percent }\end{array}$$

-The ending balance of direct materials inventory is:

A)$46 000.
B)$87 000.
C)$54 000.
D)$41 000.

Question 54

Answer the following questions using the information below:
Cronulla Products uses a normal cost system and had the following data available for 2018:
$$\begin{array} { l c } \text { Direct materials purchased on account } & \$ 74000 \\\text { Direct materials requisitioned } & 41000 \\\text { Direct labour cost incurred } & 65000 \\& \\\text { Factory overhead incurred } & 73000 \\\text { Cost of goods completed } & 146000 \\\text { Cost of goods sold } & 128000 \\& \\& 13000 \\\text { Be ginning direct materials inventory } & 32000 \\\text { Beginning WIP inventory } & 29000 \\\text { Beginning firished goods inventory } & \\\text { Overhead application rate, } & 125 \text { percent }\end{array}$$

-The ending balance of finished goods inventory is:

A)$146 000.
B)$29 000.
C)$47 000.
D)$18 000.

Question 55

Answer the following questions using the information below:
For 20X5,Irwin's Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base.The accounting records contain the following information:
$$\begin{array} { l c c } & \text { Estimated } & \text { Actual } \\\text { Manufacturing overhead costs } & \$ 150000 & \$ 180000 \\\text { Machine-hours } & 30000 & 35000\end{array}$$

-Using job costing,the 20X5 actual indirect-cost rate is:

A)$5.00 per machine-hour.
B)$5.14 per machine-hour.
C)$4.00 per machine-hour.
D)$6.00 per machine-hour.

Question 56

Answer the following questions using the information below:
For 20X5,Irwin's Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base.The accounting records contain the following information:
$$\begin{array} { l c c } & \text { Estimated } & \text { Actual } \\\text { Manufacturing overhead costs } & \$ 150000 & \$ 180000 \\\text { Machine-hours } & 30000 & 35000\end{array}$$

-Using job costing,the 20X5 budgeted manufacturing overhead rate is:

A)$4.00 per machine-hour.
B)$6.00 per machine-hour.
C)$5.00 per machine-hour.
D)$4.80 per machine-hour.

Question 57

What is the advantage of using normal costing instead of actual costing?
Variant question

A)Indirect costs are assigned to a job on a timely basis.
B)Normal costing provides a higher gross profit margin.
C)The job cost is more accurate under normal costing.
D)Indirect costs are assigned at the end of the year when they are known.

Question 58

Answer the following questions using the information below:
Hunter Valley Corporation uses a job cost system and has two production departments,A and B.Budgeted manufacturing costs for the year are:
$$\begin{array}{l}\begin{array} { l r r } & \text { Department A } & \text { Department B } \\\text { Direct materials } & \$ 700000 & \$ 100000 \\\text { Direct manufacturing labour } & \$ 200000 & \$ 800000 \\\text { Manufacturing overhead } & \$ 600000 & \$ 400000\end{array}\\\text { The actual material and labour costs charged to Job \#432 were as follows: }\\\begin{array} { c c } & \text { Total } \\\text { Direct materials: } & \$ 25000 \\\text { Direct labour: } & \\\text { Department A } & \$ 8000 \\\text { Department B } & \$ 12000 \\& \$ 20000\end{array}\end{array}$$ Hunter Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labour cost using departmental rates determined at the beginning of the year.

-For Department A,the manufacturing overhead allocation rate is:

A)100%.
B)33%.
C)300%.
D)66%.

Question 59

Answer the following questions using the information below:
For 20X5,Irwin's Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base.The accounting records contain the following information:
$$\begin{array} { l c c } & \text { Estimated } & \text { Actual } \\\text { Manufacturing overhead costs } & \$ 150000 & \$ 180000 \\\text { Machine-hours } & 30000 & 35000\end{array}$$

-Using actual costing,the amount of manufacturing overhead costs allocated to jobs during 20X5 is:

A)$190 000.
B)$150 000.
C)$180 000.
D)$135 000.

Question 60

During an accounting period,job costs are computed on an ongoing basis by the use of:

A)overallocated indirect-cost rates.
B)actual allocation rates.
C)underallocated indirect-cost rates.
D)budgeted indirect-cost rates.

Question 61

Indirect manufacturing costs should be allocated equally to each job.

Question 62

The reliability of the job-cost records depends on the reliability of the inputs.

Question 63

Actual costing is a method of job costing that allocates an indirect cost based on the actual indirect-cost rate times the actual quantity of the cost-allocation base.

Question 64

For external reporting purposes,it is acceptable to allocate marketing costs to individual jobs.

Question 65

In a job-costing system the cost object is an individual unit,batch,or lot of a distinct product or service.

Question 66

To smooth fluctuating levels of output,separate indirect-cost rates should be calculated for each month.

Question 67

Actual costing is a costing method that allocates ________ indirect costs.

A)estimated
B)actual
C)predetermined
D)budgeted

Question 68

A job-cost record is a source document,but individual items of the job-cost record may also have source documents.

Question 69

A materials-requisition record is an example of a source document.

Question 70

Air conditioning costs incurred during the summer months will distort indirect-cost rates that are computed monthly.

Question 71

Direct costs are allocated to the cost object using a cost-allocation method.

Question 72

Manufacturing overhead costs are allocated to individual job-cost records with the use of indirect-cost rates.

Question 73

In some variations of normal costing,organisations use budgeted rates to assign direct costs as well as indirect costs to jobs.

Question 74

Which of the following statements about actual costing and normal costing is TRUE?

A)Manufacturing costs of a job are available earlier under actual costing.
B)Manufacturing costs are available earlier under normal costing.
C)Corrective actions can be implemented sooner under normal costing.
D)Both B and C are correct.

Question 75

In job costing,only direct costs are used to determine the cost of a job.

Question 76

Gross margin percentage can be used to compare the profitability of different jobs.

Question 77

The budgeted direct-labour cost rate includes ________ in the calculation.

A)budgeted total direct-labour costs in the denominator
B)budgeted total direct-labour costs in the numerator
C)budgeted total direct-labour hours in the numerator
D)budgeted total costs in the indirect cost pool

Question 78

Overhead costs allocated each month are expected to equal actual overhead costs incurred each month.

Question 79

One reason for using longer time periods to calculate indirect-cost rates is seasonal cost fluctuations.

Question 80

When using a normal costing system,manufacturing overhead is allocated using the ________ manufacturing overhead rate and the ________ quantity of the allocation base.

A)actual;actual
B)budgeted;budgeted
C)actual;budgeted
D)budgeted;actual