Question 1

The ﬁnal step in recognizing the completion of production requires a company to:

Accepted Answer

A) debit Finished-Goods Inventory and credit Work-in-Process Inventory. 
B) debit Work-in-Process Inventory and credit Finished-Goods Inventory. 
C) add direct labor to Work-in-Process Inventory. 
D) add direct materials, direct labor, and manufacturing overhead to Work-in-Process 
E) add direct materials to Finished-Goods Inventory.

Question 2

Travers Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor.The proper journal entry to record these events would include a debit to Work in Process for:

Accepted Answer

A) $0 because Work in Process should be credited. 
B) $0 because Work in Process is not affected. 
C) $11,000. 
D) $106,000. 
E) $117,000.

Question 3

Boston, Inc.applies manufacturing overhead at the rate of $40 per machine hour.Budgeted machine hours for the current period were anticipated to be 120,000; however, a lengthy strike resulted in actual machine hours being worked of only 90,000.Budgeted and actual manufacturing overhead ﬁgures for the year were $4,800,000 and $4,180,000, respectively.On the basis of this information, the company's year-end overhead was:

Accepted Answer

A) overapplied by $580,000. 
B) underapplied by $580,000. 
C) overapplied by $1,200,000. 
D) underapplied by $1,200,000. 
E) underapplied by $900,000.

Question 4

Two-stage cost allocation uses a ﬁrst stage to assign all product costs to production departments and then a second stage to apply different cost drivers to improve eﬃciency.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true?

Accepted Answer

A) Service ﬁrms have little need for determining the cost of their services. 
B) The concept of product costing is relevant only for manufacturing ﬁrms. 
C) The cost of year-end inventory appears on the balance sheet as an expense. 
D) Service companies use cost information for planning and control purposes. 
E) Mining and petroleum companies have no inventoriable costs.

Question 6

As soon as products are completed, their product costs are transferred from Raw Materials Inventory to Finished-Goods Inventory.

Accepted Answer

A) True 
 B)False

Question 7

A custom-home builder would likely utilize:

Accepted Answer

A) job-order costing. 
B) process costing. 
C) mass customization. 
D) process budgeting. 
E) joint costing.

Question 8

A manufacturing ﬁrm produces goods in accordance with customer speciﬁcations, commencing production upon receipt of a purchase order.To accumulate the cost of each order, the company would use a:

Accepted Answer

A) job-cost record. 
B) cost allocation matrix. 
C) production log. 
D) overhead sheet. 
E) manufacturing cost record.

Question 9

Which of the following is not considered to be a service department?

Accepted Answer

A) Equipment maintenance department 
B) Material handling department 
C) Machining department 
D) Factory custodial service department 
E) Vehicle repair department

Question 10

A typical job-cost record would provide information about all of the following items related to an order except:

Accepted Answer

A) the cost of direct materials used. 
B) administrative costs. 
C) direct labor costs incurred. 
D) applied manufacturing overhead. 
E) direct labor hours worked.

Question 11

The process of assigning overhead costs to the jobs that are worked on is commonly called:

Accepted Answer

A) service department cost allocation. 
B) overhead cost distribution. 
C) overhead application. 
D) transfer costing. 
E) overhead cost apportionment.

Question 12

Dubois Decors is an interior decorator in St.Louis, Missouri.The following costs were incurred in the ﬁrm's contract to redecorate a corporate CEO's oﬃce.  The ﬁrm's budget for the year included the following estimates:  Overhead is applied to contracts using a predetermined overhead rate calculated annually.The rate is based on direct professional labor cost. What is the total cost of the ﬁrm's contract to redecorate the CEO's oﬃce?

Accepted Answer

A) $155,000 
B) $95,000 
C) $191,000 
D) $650,000 
E) $132,500

Question 13

Which of the following statements is true?

Accepted Answer

A) Product costing is not used in ﬁnancial accounting. 
B) There is only one way to assign indirect costs. 
C) All product cost numbers can be easily derived due to their objective nature. 
D) Product costing is limited to manufacturing ﬁrms. 
E) Relative proﬁtability depends upon the way we assign costs and deﬁne outputs as

Question 14

If the amount of effort and attention to products varies substantially throughout a company's various manufacturing operations, the company might consider the use of:

Accepted Answer

A) a plant-wide overhead rate. 
B) departmental overhead rates. 
C) actual overhead rates instead of predetermined overhead rates. 
D) direct labor hours to determine the overhead rate. 
E) machine hours to determine the overhead rate.

Question 15

Use the following labor budget data for Roy & Miller Accounting, LLP.  The budgeted overhead cost for the year is $1,260,000.The company has estimated that one-third of the budgeted overhead cost is incurred to support the ﬁrm's two partners, and two-thirds goes to support the staff accountants.The current audit bid for Monoco Industries requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant professional labor, $5,000 in direct material. What is the overhead rate based on a single cost driver (rounded to the nearest percentage)?

Accepted Answer

A) 71% 
B) 90% 
C) 210 % 
D) 83% 
E) 60%

Question 16

As production takes place, all manufacturing costs are added to the:

Accepted Answer

A) Work-in-Process Inventory account. 
B) Manufacturing-Overhead Inventory account. 
C) Cost-of-Goods-Sold account. 
D) Finished-Goods Inventory account. 
E) Production Labor account.

Question 17

In a public accounting ﬁrm, for example, costs are assigned to an audit engagement in much the same way they are assigned to a single batch of tables by a furniture manufacturer.

Accepted Answer

A) True 
 B)False

Question 18

Boxer Industries worked on four jobs during its ﬁrst year of operation: nos.401, 402, 403, and 404. A review of job no.403's cost record revealed direct material charges of $40,000 and total manufacturing costs of $50,000.If Boxer applies overhead at 150% of direct labor cost, the overhead applied to job no.403 must have been:

Accepted Answer

A) $0. 
B) $6,000. 
C) $4,000. 
D) $3,333. 
E) $5,000.

Question 19

Job-order costing methods are used in a variety of service industry ﬁrms and nonproﬁt organizations.

Accepted Answer

A) True 
 B)False

Question 20

The left side of the Manufacturing Overhead account is used to accumulate:

Accepted Answer

A) actual manufacturing overhead costs incurred throughout the accounting period. 
B) overhead applied to Work-in-Process Inventory. 
C) underapplied overhead. 
D) predetermined overhead. 
E) overapplied overhead.

Exam 3: Product Costing and Cost Accumulation in a Batch Production Environment

The ﬁnal step in recognizing the completion of production requires a company to:

Travers Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor.The proper journal entry to record these events would include a debit to Work in Process for:

Two-stage cost allocation uses a ﬁrst stage to assign all product costs to production departments and then a second stage to apply different cost drivers to improve eﬃciency.

Which of the following statements is true?

As soon as products are completed, their product costs are transferred from Raw Materials Inventory to Finished-Goods Inventory.

A custom-home builder would likely utilize:

A manufacturing ﬁrm produces goods in accordance with customer speciﬁcations, commencing production upon receipt of a purchase order.To accumulate the cost of each order, the company would use a:

Which of the following is not considered to be a service department?

A typical job-cost record would provide information about all of the following items related to an order except:

The process of assigning overhead costs to the jobs that are worked on is commonly called:

Which of the following statements is true?

If the amount of effort and attention to products varies substantially throughout a company's various manufacturing operations, the company might consider the use of:

As production takes place, all manufacturing costs are added to the:

In a public accounting ﬁrm, for example, costs are assigned to an audit engagement in much the same way they are assigned to a single batch of tables by a furniture manufacturer.

Job-order costing methods are used in a variety of service industry ﬁrms and nonproﬁt organizations.

The left side of the Manufacturing Overhead account is used to accumulate: