Problem 1. Place the following Process costing steps in the correct order: 1 - Calculate equivalent units 2 - Determine the total costs to account for 3 - Analyze flow of physical units 4 - Assign total manufacturing costs 5 - Compute unit costs
a. 3,5,2,1,4
b. 2,1,5,4,3
c. 2,3,5,4,1,
e. 3,1,2,5,4
d. None of the above
Problem 2. Direct materials and direct labor costs total $70,000, conversion costs total $60,000, and factory overhead costs total $100 per machine hour. If 300 machine hours were used for Job #222, what is the total manufacturing cost for Job #222?
1. $30,000
2. 60,000
3. $70,000
4. 90,000
5. $100,000
Problem 3. L & L, CPAs, employs two full-time professional CPAs and five other accountants. Budgeted direct salary costs include $150,000 for each CPA and $40,000 per other accountant. For 2001 year, indirect costs were budgeted at $200,000, but actually amounted to $225,000. Actual salaries were $155,000 for each CPA and $45,000 for each accountant. Direct and indirect costs are applied on a labor-hour basis. Total budgeted labor-hours were 5,000. If a client used 500 labor-hours, what are the budgeted direct-cost rate and the budgeted indirect cost rate, respectively?
1. $100; $45
2. $100; $40
3. $90; $40
4. $101; $40
5. 107; $45
Problem 4. If estimated annual factory overhead is $480,000, estimated annual direct labor hours are 200,000, actual March factory overhead is $41,000, and actual March direct labor hours are 17,000, then overhead is:
a. $800 overapplied
b. $200 overapplied
c. $800 underapplied
d. $200 underapplied
e. $ 1000 underapplied
Problem 5. Which of the following industries is more suitable for using a job costing system?
a. chemical plants.
b. petroleum product manufacturing
c. medical clinics.
d. cement manufacturing
e. food processing.
Problem 6. The ideal criterion for choosing an allocation base is:
a. ease of calculation.
b. a cause-and-effect relationship
c. ease of use
d. its preciseness.
e. its applicability.
Problem 7: "Investment myopia" tends to cause managers to avoid new investment because the returns may be uncertain and may not:
a. be actually realized.
b. reach minimum goals.
c. be realized for some time.
d. exceed minimum goals.
e. do all of the above.
Problem 8. On March 1, Atlanta Company had 20,000 units of WIP in Department A, which were 100% complete as to material costs and 30% complete as to conversion costs. During March, 150,000 units were started in Department A and 160,000 units were completed and transferred to Department B. WIP on March 31 was 100% complete as to material costs and 50% complete as to conversion costs. By what amount would the equivalent units for conversion costs for the month of March differ if the FIFO method were used instead of the weighted-average method?
1. 10,000
2. 8,000 decrease
3. 6,000 decrease
4. 5,000 decrease
5. 4,000 decrease
Problem 9: Given a competitive outside market for identical intermediate goods, what is the best transfer price, assuming all relevant information is readily available?
a. Average cost of production.
b. Average cost of production, plus average production department allocated profit.
c. Market price of the intermediate goods.
d. Market price of the intermediate goods, less average production department allocated profit.
Problem 10: If a firm is following the cost leadership strategy, and overhead accounts are complex, then the:
1. firm should use a process costing system.
2. firm can use either a process or job costing system.
3. traditional volume-based job costing will not provide much help.
4. only recourse is to install a hybrid costing system.
5. firm should attempt to collect only material and labor costs.
Problem 11: The concept of "management by exception" refers to management's consideration of:
1. only those items that vary materially from plans.
2. only rare and unusual events.
3. items selected at random.
4. only those items that vary materially from the operations of the previous year.
5. only those items deemed to be exceptionally important.
Any idea which one is the answer?