1.Which of the following is most likely to be a fixed cost?
A. Cost of raw materials for production
B. Power consumed in the factory
C. Salary and Allowances paid to office staff
D. Wages paid to factory workers.
2. An Accountant who is studying for his part time MBA had to give up one day salary of every week to attend the MBA classes. This is
A. a Sunk cost
B. an Opportunity cost
C. a Direct cost
D. an Indirect cost
3. During September 2016 a manufacturing company had the following operating results:
Beginning inventory of finished goods.
$50,000
Ending inventory of finished goods.
$70,000
Sales.
$350,000
Gross margin.
$75,000
What was the cost of goods manufactured for the month?
A. $295,000
B. $255,000
C. $370,000
D. $330,000
4. Sony Electronics, Inc. manufactures smart phones. The direct material cost assigned to smart phones that Sony started during the period but did not fully complete would be found in the ending balance of:
A. raw materials inventory.
B. work in process inventory.
C. finished goods inventory.
D. both raw materials inventory and work in process inventory.
5. Direct material is traced to jobs using:
A. An overhead allocation base.
B. Material requisition forms.
C. Pre-determined rates.
D. None of the above
6. Overhead is overapplied to a job if:
A. the actual overhead is greater than the amount of overhead applied.
B. the actual overhead is less than the amount of overhead applied.
C. the actual overhead rate is greater than the rate used in prior periods.
D. the Manufacturing overhead account has a debit balance at the end of the period.
7. Aser Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. For the month of October, Aser's estimated manufacturing overhead cost was $300,000 based on an estimated activity level of 100,000 direct labor-hours. Actual overhead amounted to $325,000 with actual direct labor-hours totaling 110,000 for the month. How much was the overapplied or underapplied overhead?
A. $25,000 overapplied
B. $25,000 underapplied
C. $5,000 overapplied
D. $5,000 underapplied
8. The job cost sheet:
A. summarizes all costs charged to a particular job.
B. contains only direct costs such as direct materials and direct labor.
C. is discarded after production is completed on a particular job.
D. is useful only in process costing.
9. Indirect costs:
A. are always variable costs.
B. are always fixed costs.
C. cannot be traceable to a cost unit or cost centre.
D. are not taken into account for cost of goods manufactured.
10. Cost of Goods sold is $200,000, the beginning balance in Finished goods is $50,000, the ending balance in Finished Goods is $100,000, and the ending balance in Work in process is $10,000. What is the Cost of Goods Manufactured?
A. $150,000
B. $250,000
C. $260,000
D. $240,000
11. The inventory accounts of a Manufacturing firm include:
A. Raw materials
B. Finished Goods
C. Work in Process
D. All of the above.
12. The accounting records of Bossco Company revealed the following information:
Raw Materials used - $50,000
Direct Labor- $120,000
Work in Process (beginning)- $30,000
Finished goods (beginning)- $60,000
Work in Process (end) - $70,000
Finished goods (end)- $80,000
Bossco's cost of goods manufactured is:
A. $130,000
B. $190,000
C. $150,000
D. $210,000
13. The costs in a process cost system are traced to
A. Specific jobs.
B. Specific customers.
C. Specific company administrators.
D. Specific production departments.
14. The accounting records of Diego Company revealed the following costs, among others:
Costs that would be considered in the calculation of manufacturing overhead total:
A. $149,000.
B. $171,000.
C. $186,000.
D. $442,000.
15. The first process of cost allocation is:
A. Determining the cost objective
B. Forming cost pools
C. Selecting an Allocation base
D. None of the above.
16. The most suitable cost driver for handling materials and parts:
A. Number of purchase orders
B. Number of material requisitions.
C. Number of receipts.
D. Number of setups.
17. Most companies that use an Activity-Based Costing system use:
A. No cost pools
B. One or two cost pools.
C. Two to five cost pools.
D. More than five cost pools.
18. Which of the following types of companies would most likely use process costing?
A. Aircraft manufacturers.
B. Textile manufacturers.
C. Textbook publishers.
D. Custom-machining firms.
19. ABC Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 50,000 units during the year and had 6,000 units in process at year's end, 20% complete with respect to conversion cost. Equivalent units for the year total:
A. materials, 50,000; conversion, 50,000.
B. materials, 50,000; conversion, 1,200.
C. materials, 51,200; conversion, 51,200.
D. materials, 56,000; conversion, 51,200.
20. Suppose driver cost of set up of a machine is ‘number of set ups' and for depreciation of equipment it is ‘number of machine hours' and it is estimated that cost per set up is $4,000 and depreciation per machine hour is $500. Now, suppose Model 250 took 3 set ups and machinery worked for 40 hours. What is the amount of overhead applied to Model 250:
A. $4,500
B. $12,500
C. $32,000
D. $20,000
21. The Incremental Analysis is used for one or more of the following decisions:
A. The decision to engage in additional processing of a product.
B. The decision to make or buy a product.
C. The decision to drop a product line.
D. All of the above.
22. Which of the following is often not differential cost?
A. Material cost
B. Labor cost
C. Variable overhead
D. Fixed overhead
23. A Controller of a business organization is normally not involved with:
A. Preparation of Financial Reports
B. Preparation of Budgets and Performance Reports
C. Preparation of Audit Report
D. Preparation of Taxation Reports.
24. Which of the following statements is false?
A. In job-order costing, costs are accumulated by job order.
B. In process costing, costs are accumulated by department.
C. In process costing, the cost per unit in a department is found by spreading the period's manufacturing costs over the production activity.
D. In process costing, the total cost of each unit is found by dividing the total factory costs by the number of units completed.
25. Which of the following statements about similarities between process costing and job-order costing are true?
A. Both systems are essentially a system of averaging the cost.
B. The product passes through several departments in both systems.
C. In both systems the overhead is applied using a cost driver rate.
D. Equivalent units of production is calculated in both systems.