Question 1

For Case (B)above,what is the amount Transferred Out (TO)?

Accepted Answer

A)  $93,900.
B)  $101,500.
C)  $116,900.
D)  $120,700. B

Question 2

Zeppo Supply Company manufactures cleaning products.During the year,the company spent $600,000 on chemicals and $728,000 on conversion costs.Overhead is applied at a rate of 180% of direct labor costs.How much did the company spend on manufacturing overhead during the year?

Accepted Answer

A)  $260,000.
B)  $468,000.
C)  $128,000.
D)  $404,444. B

Question 3

A system that provides information about the costs of processes,products,and services used and produced by an organization is a:

Accepted Answer

A)  continuous flow process.
B)  cost management system.
C)  two-stage allocation system.
D)  operations cost. B

Question 4

The predetermined manufacturing overhead rate for the year was 140% of direct labor cost;employees were paid $17.50 per hour.If the estimated direct labor hours were 15,000,what was the estimated manufacturing overhead?

Accepted Answer

A)  $210,000.
B)  $187,500.
C)  $262,500.
D)  $367,500.

Question 5

Process costing systems do not separate and record direct material and direct labor costs for each individual unit of product.Process costing does not separate and record costs for each unit.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would be the least appropriate allocation base for allocating overhead in a highly automated (i.e. ,capital-intensive)manufacturing company?

Accepted Answer

A)  Electricity used.
B)  Machine hours.
C)  Direct labor hours.
D)  Material consumeD.Direct labor hours would be the least related allocation base to use in an automated environment between the alternatives provideD.

Question 7

Which of the following statements regarding the two-stage cost allocation process is (are)false? (A)If a company has three cost pools,then it should also have three different cost allocation bases.(B)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)  Only A is false.
B)  Only B is false.
C)  Both A and B are false.
D)  Neither A nor B is false.

Question 8

Cost pools are:

Accepted Answer

A)  costs that are accumulated before being allocated to cost objects on some common basis.
B)  costs that are relevant to decision-making but irrelevant to financial reporting.
C)  product costs that are assigned to cost objects using direct labor or machine hours.
D)  accounts in the product life cycle from research and development to customer service.

Question 9

One of the most common decisions facing managers is determining the price at which to sell one of their products or to provide their services.Accountant needs to provide the individual product costs to the various product managers so they can make decisions regarding pricing,production,promotion,and so on.

Accepted Answer

A) True 
 B)False

Question 10

Mounder processes rebate requests for a large building supply firm.Mounder processed 420,000 rebates in March.All rebates are processed the same day they are received.March costs were labor of $28,000 and overhead of $14,000.What is the cost to process 1,000 rebates?

Accepted Answer

A)  $66.67.
B)  $100.00.
C)  $10.00.
D)  $42.00.

Question 11

In general,indirect costs are allocated,while direct costs are assigned.This is a definition of allocated and assigned costs.

Accepted Answer

A) True 
 B)False

Question 12

The following information has been gathered for Roswell Machining for its fiscal year ending December 31:  What is the predetermined factory overhead rate per labor dollar?

Accepted Answer

A)  178.54%.
B)  211.44%.
C)  118.43%.
D)  198.41%.

Question 13

Regression analysis can be used to estimate the strength of the relationship between a cost and potential allocation bases for that cost.This is one possible method of estimating the strength of the relationship.

Accepted Answer

A) True 
 B)False

Question 14

"Beginning Balance (BB)plus Transfers Out (TO)equals Ending Balance (EB)plus Transfers In (TI)".BB + TI = EB + TO

Accepted Answer

A) True 
 B)False

Question 15

The predetermined manufacturing overhead rate for 2012 was $4.00 per direct labor hour;employees were paid $5.00 per hour.If the estimated direct labor cost was $75,000,what was the estimated manufacturing overhead?

Accepted Answer

A)  $15,000.
B)  $60,000.
C)  $75,000.
D)  $93,750.

Question 16

Lo-crete produces quick setting concrete mix.Production of 200,000 tons was started in April,190,000 tons were completed.Material costs were $3,152,000 for the month while conversion costs were $591,000.There was no beginning work-in-process;the ending work-in-process was 70% complete.What is the cost of the product that remains in work-in-process?

Accepted Answer

A)  $591,000.
B)  $131,005.
C)  $187,150.
D)  $133,000.

Question 17

The following direct labor information pertains to the manufacture of product Glu:  What is the standard direct labor cost per unit of product Glu? (CPA adapted)

Accepted Answer

A)  $30.
B)  $24.
C)  $15.
D)  $12.

Question 18

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.

Question 19

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

Accepted Answer

A)  $139,300.
B)  $136,260.
C)  $62,950.
D)  $56,730.

Question 20

Slurpy produces soft drinks and sodas.Production of 100,000 liters was started in February,85,000 liters were completed.Material costs were $38,220 for the month while conversion costs were $16,380.There was no beginning work-in-process;the ending work-in-process was 40% complete.What is the cost of the product that was completed and transferred to finished goods?

Accepted Answer

A)  $54,600.
B)  $51,000.
C)  $46,410.
D)  $38,220.

Exam 6: Fundamentals of Product and Service Costing

For Case (B) above,what is the amount Transferred Out (TO) ?

Zeppo Supply Company manufactures cleaning products.During the year,the company spent $600,000 on chemicals and $728,000 on conversion costs.Overhead is applied at a rate of 180% of direct labor costs.How much did the company spend on manufacturing overhead during the year?

A system that provides information about the costs of processes,products,and services used and produced by an organization is a:

The predetermined manufacturing overhead rate for the year was 140% of direct labor cost;employees were paid $17.50 per hour.If the estimated direct labor hours were 15,000,what was the estimated manufacturing overhead?

Process costing systems do not separate and record direct material and direct labor costs for each individual unit of product.Process costing does not separate and record costs for each unit.

Which of the following would be the least appropriate allocation base for allocating overhead in a highly automated (i.e. ,capital-intensive) manufacturing company?

Cost pools are:

Mounder processes rebate requests for a large building supply firm.Mounder processed 420,000 rebates in March.All rebates are processed the same day they are received.March costs were labor of $28,000 and overhead of $14,000.What is the cost to process 1,000 rebates?

In general,indirect costs are allocated,while direct costs are assigned.This is a definition of allocated and assigned costs.

The following information has been gathered for Roswell Machining for its fiscal year ending December 31: What is the predetermined factory overhead rate per labor dollar?

Regression analysis can be used to estimate the strength of the relationship between a cost and potential allocation bases for that cost.This is one possible method of estimating the strength of the relationship.

"Beginning Balance (BB)plus Transfers Out (TO)equals Ending Balance (EB)plus Transfers In (TI)".BB + TI = EB + TO

The predetermined manufacturing overhead rate for 2012 was $4.00 per direct labor hour;employees were paid $5.00 per hour.If the estimated direct labor cost was $75,000,what was the estimated manufacturing overhead?

The following direct labor information pertains to the manufacture of product Glu: What is the standard direct labor cost per unit of product Glu? (CPA adapted)

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