Question 1
Which of the following would be more likely to use job-order costing rather than process costing?
a. furniture manufacturer
b. manufacturer of bricks
c. brewery
d. flour mill
Question 2
Which of the following would be more likely to use process costing rather than job-order costing?
a. mortgage loan firm
b. manufacturer of custom yachts
c. petroleum refinery
d. CPA firm
Question 3
All of the following statements are true with respect to process costing EXCEPT
a. unit costs are determined by the processing department and added together to determine total unit costs
b. identical products are produced on a continuous basis
c. the cost of production report provides the detail for the Work-in-Process account
d. costs are accumulated by individual job
Question 4
Which of the following statements regarding job-order costing is true?
a. It accumulates cost by department.
b. It is used for a wide variety of distinct products.
c. Unit cost is calculated by dividing total plantwide manufacturing costs of the period by total number of units produced.
d. all of the above
Question 5
Which type of costing system works best with a large number of homogeneous products?
a. job-order costing
b. process costing
c. operation costing
d. weighted average costing
Question 6
The following information pertains to Job No. 15:
Job No. 15
Direct materials
$1,000
Direct labor
$2,000
Manufacturing overhead is applied at 60 percent of direct labor cost.
If 100 units were produced in Job No. 15, the unit cost of Job No. 15 would be
a. $48
b. $42
c. $30
d. $12
e. none of the above
Question 7
In a job-order cost system, the amount of overhead cost applied to a job that remains incomplete at the end of a period is part of which of the following at the end of the period?
a. raw materials inventory
b. work in process
c. finished goods inventory
d. overhead control
Question 8
In a job-order costing system, when raw materials are purchased, which of the following would increase?
a. work in process
b. raw materials inventory
c. job order costs
d. finished goods inventory
Question 9
Figure 6-1
The following information was extracted from the job-order cost sheet for Job 9574:
Materials requisitioned
$2,000
Direct labor cost
$1,650
Direct labor hours
10
Budgeted overhead for the year was $35,000, based on 500 direct labor hours. Actual overhead was $35,800 and 510 actual hours were worked.
Refer to Figure 6-1. The total cost of Job 9574 was
a. $3,650
b. $4,336
c. $4,350
d. $4,366
Question 10
Figure 6-1
The following information was extracted from the job-order cost sheet for Job 9574:
Materials requisitioned
$2,000
Direct labor cost
$1,650
Direct labor hours
10
Budgeted overhead for the year was $35,000, based on 500 direct labor hours. Actual overhead was $35,800 and 510 actual hours were worked.
Refer to Figure 6-1. If each product required a half hour of direct labor, what is the unit cost of Job 9574?
a. $8.70
b. $4.35
c. $8.73
d. $4.37
Question 11
An actual overhead rate can be calculated
a. at the beginning of the year
b. at the end of each month
c. at the beginning of each month
d. either at the beginning of the year or at the beginning of the month
Question 12
Bowlton Company uses job-order costing and applies overhead based on 75 percent of direct labor cost. If Job 5555 is applied with $30,000 of manufacturing overhead, how much direct labor was incurred?
a. $22,500
b. $40,000
c. $15,000
d. $30,000
Question 13
Figure 6-3
The following information was extracted from the accounting records of Bowater Company:
Estimated manufacturing overhead
$260,000
Estimated machine hours
7,500
Actual machine hours worked
8,000
Actual overhead costs incurred:
Indirect materials
$97,500
Indirect labor
$60,000
Utilities
$10,000
Insurance
$25,000
Rent
$70,000
Refer to Figure 6-3. If Bowater uses a predetermined overhead rate to apply overhead, manufacturing overhead applied would be (round the rate to two decimal places)
a. $277,360
b. $262,500
c. $260,000
d. $243,750
Question 14
Figure 6-3
The following information was extracted from the accounting records of Bowater Company:
Estimated manufacturing overhead
$260,000
Estimated machine hours
7,500
Actual machine hours worked
8,000
Actual overhead costs incurred:
Indirect materials
$97,500
Indirect labor
$60,000
Utilities
$10,000
Insurance
$25,000
Rent
$70,000
Refer to Figure 6-3. Bowater's amount of overapplied or underapplied overhead would be (round the rate to two decimal places)
a. $18,750 underapplied
b. $16,250 overapplied
c. $14,860 overapplied
d. $2,500 underapplied
Question 15
If an overhead variance is immaterial, what is the appropriate accounting treatment?
a. the amount is closed to cost of goods sold
b. the amount is closed to cost of goods sold and work in process
c. the amount is closed to cost of goods sold, work in process and finished goods inventory
d. the amount is closed to raw materials inventory, work in process and finished goods inventory
Question 16
The following information is provided:
Estimated manufacturing overhead
$420,000
Actual manufacturing overhead
$400,000
Estimated direct labor hours
28,000
Actual direct labor hours worked
20,000
The predetermined overhead rate for applying manufacturing overhead would be
a. $14.28
b. $15.00
c. $20.00
d. $21.00
Question 17
Figure 6-5
The following information was extracted from the accounting records of Harper Company:
Manufacturing overhead
$ 20,000
Work-in-process
60,000
Finished goods inventory
90,000
Cost of goods sold
230,000
Refer to Figure 6-5. If Harper Company's amount of manufacturing overhead is overapplied and is considered immaterial, the adjusted cost of goods sold would be
a. $230,000
b. $250,000
c. $210,000
d. $270,000
Question 18
Figure 6-5
The following information was extracted from the accounting records of Harper Company:
Manufacturing overhead
$ 20,000
Work-in-process
60,000
Finished goods inventory
90,000
Cost of goods sold
230,000
Refer to Figure 6-5. If Harper Company's overhead is underapplied and is accounted for as an adjustment to cost of goods sold, adjusted cost of goods sold would be
a. $230,000
b. $250,000
c. $210,000
d. $270,000
Question 19
The purpose of the cost of production report is
a. to account for the physical units processed in a department and the manufacturing costs associated with them
b. to provide cost information for the calculation of finished goods and work-in-process inventory
c. to provide information on the equivalent units of production
d. all of the above
Question 20
Equivalent production expresses all activity of the period in terms of
a. direct labor hours
b. partially completed units
c. fully completed units
d. units of input
Question 21
The two methods used to determine equivalent units of production are
a. weighted average and FIFO
b. weighted average and LIFO
c. FIFO and LIFO
d. FIFO and specific identification
Question 22
The following information is provided:
Units
Work in process, April 1 (20% complete)
5,000
Started in April
18,000
Materials are added at the beginning of the process.
If 17,000 units were completed during the month, ending work in process at April 30 would be
a. 6,000
b. 5,000
c. 1,000
d. 12,000
Question 23
Equivalent units of production are
a. complete units that could have been produced given the total amount of manufacturing effort expended for the period under consideration
b. the average number of units produced in a given period
c. continuously measured in a total quality environment
d. computed in both job-order and process cost systems
Question 24
When will FIFO and the weighted average methods yield the same equivalent units of production?
a. when there are more units in beginning inventory than in ending inventory
b. when product costs do not change from period to period
c. when the average cost per unit is less than $10
d. FIFO and weighted average methods will never yield the same equivalent units of production
Question 25
Which costing method ignores the fact that work was done in a prior period?
a. FIFO
b.weighted average
c. both FIFO and weighted average
d. neither FIFO or weighted average
Question 26
The Kapo Company has the following information:
17,000 units in the beginning work in process
6,000 units in the ending work in process
40,000 units started
How many units were started and completed during the period? (Assume FIFO for the production process)
a. 34,000
b. 51,000
c. 57,000
d. 63,000
Question 27
The following amounts were selected from the production report of Chandon Corporation:
Actual units in production
42,000
Equivalent units (materials)
42,000
Equivalent units (conversion)
39,000
Cost per equivalent unit (materials)
$1.10
Cost per equivalent unit (conversion)
$0.90
Chandon uses the weighted average method in preparing its production reports. Chandon's total production cost to be accounted for must have been
a. $81,300
b. $84,000
c. $89,100
d. $72,900
Question 28
Conversion costs consist of
a. direct materials and direct labor
b. direct materials and manufacturing overhead
c. direct labor and manufacturing overhead
d. direct labor and transferred-in costs
Question 29
Beginning inventory for the month contained 2,000 units that were 45 percent complete with respect to materials. During the month, 18,000 units were completed and transferred out. Ending inventory contained 2,500 units, 20 percent complete with respect to materials. The weighted average equivalent units of production for materials for the month would be
a. 18,000
b. 19,600
c. 19,400
d. 18,500
Question 30
Figure 6-18
The following information is provided:
Units
Work in process, June 1 (20% complete)
4,000
Started in June
32,000
Work in process, June 30 (30% complete)
12,000
Materials are added at the beginning of the process.
Appendix. Refer to Figure 6-18. Equivalent units of production for materials using the FIFO method would be
a. 44,000
b. 40,000
c. 32,000
d. 24,000
Question 31
Figure 6-18
The following information is provided:
Units
Work in process, June 1 (20% complete)
4,000
Started in June
32,000
Work in process, June 30 (30% complete)
12,000
Materials are added at the beginning of the process.
Appendix. Refer to Figure 6-18. Equivalent units of production for conversion costs using the FIFO method would be
a. 35,600
b. 34,800
c. 26,800
d. 24,000
Question 32
Which entry is recorded to account for direct labor cost?
a. wages expense XX
work in process XX
b. work in process XX
wages payable XX
c. wages expense XX
wages payable XX
d. direct labor costs XX
overhead control XX
Question 33
The entry to record total manufacturing overhead applied would be
a. overhead control XX
work in process XX
b. finished goods inventory XX
work in process XX
c. work in process XX
overhead control XX
d. overhead control XX
accounts payable XX
Question 34
An entry to record the sale of goods would be
a. cost of goods sold XX
finished goods inventory XX
b. finished goods inventory XX
cost of goods sold XX
c. cost of goods sold XX
work in process XX
d. work in process XX
cost of goods sold XX
Question 35
The underapplied overhead is eliminated with which of the following entries?
a. cost of goods sold XX
overhead control XX
b. overhead control XX
underapplied overhead XX
c. cost of goods sold XX
underapplied overhead XX
d. net income XX
cost of goods sold XX
