Question 1. For which of the following businesses would a job order cost system be appropriate?
Auto repair shop
Crude oil refinery
Drug manufacturer
Root beer producer
Question 2. Which of the following statements is (are) true regarding the application of manufacturing overhead?
(A) Manufacturing overhead is only recorded on the job cost sheets when financial statements are prepared or a job is completed.
(B) Overapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.
Only A is true.
Only B is true.
Both A and B are true.
Neither A nor B is true.
Question 3. If a company multiplies its actual overhead rate by the actual activity level of its allocation base, it is using
standard costing.
normal costing.
actual costing.
ideal costing.
Question 4. Jasper Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $266,400, and budgeted machine-hours were 18,500. Actual factory overhead was $287,920, and actual machine-hours were 19,050. How much overhead would be applied to production?
$266,400
$274,320
$279,607
$287,920
Question 5. Blue Company has beginning and ending work-in-process inventories that are 45% and 10% complete, respectively. Materials are added at the beginning of the process. If first-in, first-out (FIFO) process costing is used, the total equivalent units for materials will equal the number of units
transferred out during the period.
started and completed during the period.
started into the process during the period.
started into the process plus the units in the ending inventory.
Question 6. The Mason Company has a process cost system. All materials are added when the process is first begun. At the beginning of September, there were no units of product in process. During September, 50,000 units were started; 5,000 of these were still in process at the end of September and were 3/5 finished. The equivalent number of units for the conversion costs in September were
40,000.
45,000.
48,000.
50,000.
Question 7. Jones, Inc. instituted a new process in October 2012. During October, 10,000 units were started in Department A. Of the units started, 8,000 were transferred to Department B, and 2,000 remained in work-in-process at October 31, 2012. The work-in-process at October 31, 2012, was 100% complete as to material costs and 50% complete as to conversion costs. Material costs of $27,000 and conversion costs of $36,000 were charged to Department A in October. What were the total costs transferred to Department B assuming Department A uses weighted-average process costing?
$46,900
$53,600
$56,000
$57,120
Question 8. Joan Martin, CPA provides bookkeeping and tax services to her clients. She charges a fee of $60 per hour for bookkeeping and $90 per hour for tax services. Ms. Martin estimates the following costs for the upcoming year:
Office Supplies $16,000
Computer Fees 24,000
Secretary's Salary 30,000
Rent 18,000
88,000
Operating profits declined last year and Ms. Martin has decided to use activity-based costing (ABC) procedures to evaluate her hourly fees. She gathered the following information from last year's records:
Activity Levels
Activity Cost Driver Bookkeeping Tax Services
Office Supplies Hours billed 1,200 800
Computer Fees Computer hours used 400 600
Secretary's Salary Number of clients 16 84
Rent Types of services offered 1 1
Ms. Martin wants her hourly fees for the tax services to be 160% of their activity-based costs. What is the fee per hour for tax services in the upcoming year?
$70.40
$88.00
$110.00
$118.40
Question 9. Perfume Company manufactures and distributes several different products. The company currently uses a plantwide allocation method for allocating overhead at a rate of $7 per direct labor hour. Cindy is the department manager of Department C, which produces Products J and P. Department C has $16,200 in traceable overhead. Diane is the department manager of Department D, which manufactures Product X. Department D has $11,100 in traceable overhead. The product costs (per case of 24 bottles) and other information are as follows:
J P X
Direct materials $100 $ 72 $ 48
Direct labor 42 31.50 12
Overhead 28 21 14
$170 $124.50 $ 74
Machine hours (per case) 4 2 3
Number of cases (per year) 300 500 600
If Perfume changes its allocation basis to machine hours, what is the total product cost per case for Product X?
$80.48
$79.50
$74.00
$75.17
Question 10. Long-range planning as a management function is more important
at top management levels.
at lower management levels.
at middle management levels.
at investor levels.
Question 11. The starting point in preparing a comprehensive budget for a manufacturing company limited by its ability to produce and not by its ability to sell is
a sales forecast.
an estimate of productive capacity.
an estimate of cash receipts and disbursements.
a projection of fixed asset acquisitions.
Question 12. The manufacturing overhead budget requires that costs be separated into their fixed and variable components. Another budget that has this requirement is the
direct labor.
direct materials.
cost of goods sold.
marketing and administrative expenses.