ACCT 102-19,20,22,24

ACCT 102-19,20,22,24Student: ___________________________________________________________________________1.

A job order cost accounting system would best fit the needs of a company that makes:

A.

Shoes and apparel.

B.

Paint.

C.

Cement.

D.

Custom machinery.

E.

Pencils and erasers.

2.

Dell Builders manufactures each house to customer specifications. It most likely would use:

A.

Capital process costing.

B.

A periodic inventory system.

C.

Unique costing.

D.

Job order costing.

E.

Activity-based costing.

3.

A document in a job order cost accounting system that is used to record the costs of producing a job is a(n):

A.

Job cost sheet.

B.

Job lot.

C.

Finished goods summary.

D.

Process cost system.

E.

Units-of-production sheet.

4.

The job order cost sheets used by Garza Company revealed the following:

Job No. 125 was completed during May and Jobs No. 124 and 125 were shipped to customers in May. What were the company's cost of goods sold for May and the goods in process inventory on May 31?

A.

$3,200; $ 900.

B.

$2,900; $1,200.

C.

$1,200; $2,900.

D.

$1,700; $1,200.

E.

$4,100; $ 0.

5.

The Goods in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:

A.

40%.

B.

50%.

C.

80%.

D.

200%.

E.

220%.

6.

A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a:

A.

Job cost sheet.

B.

Production order.

C.

Materials requisition.

D.

Materials purchase order.

E.

Receiving report.

7.

A source document that an employee uses to record the number of hours at work and that is used to determine the total labor cost for each pay period is a:

A.

Job cost sheet.

B.

Hours-of-production sheet.

C.

Time ticket.

D.

Job order ticket.

E.

Clock card.

8.

Penn Company uses a job order cost accounting system. In the last month, the system accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. These costs were accumulated in Factory Payroll as they were paid. Which entry should Penn make to assign the Factory Payroll?

A.

B.

C.

D.

E.

9.

A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?

A.

$ 5,000.

B.

$ 16,000.

C.

$ 25,000.

D.

$125,000.

E.

$250,000.

$20,000 x 1.25 = $25,000

10.

BVD Company uses a job order cost accounting system and last period incurred $80,000 of overhead and $100,000 of direct labor. BVD estimates that its overhead next period will be $75,000. It also expects to incur $100,000 of direct labor. If BVD bases applied overhead on direct labor cost, their overhead application rate for the next period should be:

A.

75%.

B.

80%.

C.

107%.

D.

125%.

E.

133%.

OH rate = $75,000/$100,000 = 75%

11.

The R&R Company's production costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. R&R Company's factory overhead incurred for August is:

A.

$ 2,000.

B.

$ 6,500.

C.

$ 8,500.

D.

$21,500.

E.

$36,500.

12.

If one unit of Product X used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale?

A.

$8.00.

B.

$5.50.

C.

$2.50.

D.

$1.60.

E.

$0.90.

13.

At the current year-end, Hardly Company found that its overhead was underapplied by $2,500, and this amount was not deemed to be a material amount. Based on this information, Hardly should

A.

Close the $2,500 to Cost of Goods Sold.

B.

Close the $2,500 to Finished Goods Inventory.

C.

Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year.

D.

Carry the $2,500 to the income statement as "Other Expense"

E.

Carry the $2,500 to the next period.

14.

M.A.E. charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, M.A.E. Company's Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should M.A.E. make at year-end?

A.

No entry is needed.

B.

C.

D.

E.

15.

Which of the following characteristics does not usually apply to process manufacturing systems?

A.

Each unit of product is separately identifiable.

B.

Partially completed products are transferred between processes.

C.

Different managers are responsible for different processes.

D.

The output of all processes except the final process is an input to the next process.

E.

All of these are characteristics of process manufacturing systems.

16.

A measure of the productivity of a process with respect to its use of direct materials, direct labor, or overhead, and an expression of the activity of a process as the number of units that would have been processed during a period if all effort had been applied to units that were started and finished during the period, is called:

A.

Manufacturing overhead.

B.

Units in process.

C.

A job cost sheet.

D.

Equivalent units of production.

E.

Process cost summary.

17.

Which of the following is not one of the four steps in accounting for production activity in a period?

A.

Determine over or underapplied overhead.

B.

Analyze the physical flow of units.

C.

Analyze equivalent units.

D.

Determine cost per equivalent unit.

E.

Prepare a cost reconciliation.

18.

A production department's output for the most recent month consisted of 10,000 units completed and transferred to the next stage of production and 10,000 units in ending goods in process inventory. The units in ending goods in process inventory were 50% complete with respect to both direct materials and conversion costs. There were 1,000 units in beginning goods in process inventory, and they were 70% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.

A.

10,000 units.

B.

10,300 units.

C.

15,000 units.

D.

15,300 units.

E.

10,700 units.

19.

A company uses a process cost accounting system. Its Assembly Department's beginning inventory consisted of 50,000 units, 3/4 complete with respect to direct labor and overhead. The department started and finished 127,500 units this period. The ending inventory consists of 40,000 units that are 1/4 complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $24,000 and overhead costs of $32,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:

A.

$0.14.

B.

$0.16.

C.

$0.17.

D.

$0.30.

E.

$0.37.

20.

A company's beginning work in process inventory consisted of 20,000 units that were 1/5 complete with respect to direct labor. These beginning units were completed and another 90,000 units were started during the current period. Of those started, 60,000 were finished and the remaining 30,000 were 1/3 complete at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were:

A.

60,000.

B.

74,000.

C.

76,000.

D.

90,000.

E.

96,000.

21.

A company uses a process cost accounting system. Its Sewing Department completed and transferred out 120,000 units during the current period. The ending inventory in the Sewing Department consists of 40,000 units (20% complete with respect to direct materials and 60% complete with respect to direct labor). Overhead is applied on the basis of direct labor.

Determine the equivalent units of production for the Sewing Department for direct materials, direct labor and overhead assuming the weighted average method.

A.

120,000; 120,000; 120,000

B.

120,000; 160,000; 120,000

C.

128,000; 120,000; 120,000

D.

128000; 144,000; 144,000

E.

128,000; 184,000; 160,000

22.

The following data are available for a company's manufacturing activities:

If materials are added when the production process begins and direct labor is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labor, respectively using the FIFO method of process costing?

A.

16,250; 19,250.

B.

16,250; 21,750.

C.

21,000; 19,250.

D.

19,250; 18,750.

E.

21,000; 22,250.

23.

A company that applies process costing is most frequently characterized by:

A.

Low standardization and high production volume.

B.

Custom orders and homogeneous products.

C.

Repetitive production and heterogeneous products.

D.

Repetitive production and low production volume.

E.

Homogeneous product and high production volume.

24.

A cost that remains the same in total even when volume of activity varies is a:

A.

Fixed cost.

B.

Curvilinear cost.

C.

Variable cost.

D.

Step-wise variable cost.

E.

Standard cost.

25.

A cost that changes in proportion to changes in volume of activity is a(n):

A.

Differential cost.

B.

Fixed cost.

C.

Incremental cost.

D.

Variable cost.

E.

Product cost.

26.

A cost that remains constant over a limited range of volume, but increases by a lump sum when volume increases beyond a maximum amount, is a(n):

A.

Step-wise cost.

B.

Fixed cost.

C.

Curvilinear cost.

D.

Incremental cost.

E.

Opportunity cost.

27.

Select cost information for Winfrey Enterprises is as follows:

Based on this information:

A.

Both direct materials and rent expense are variable costs.

B.

Utilities expense is a mixed cost and rent expense is a variable cost.

C.

Utilities expense is a mixed cost and rent expense is a fixed cost.

D.

Direct materials is a fixed cost and utilities expense is a mixed cost.

E.

Both direct materials and utilities expense are mixed costs.

28.

A company's normal operating range, which excludes extremely high and low volumes that are not likely to occur, is called the:

A.

Margin of safety.

B.

Contribution range.

C.

Break-even point.

D.

Relevant range.

E.

High-low point.

29.

The margin of safety is the excess of:

A.

Break-even sales over expected sales.

B.

Expected sales over variable costs.

C.

Expected sales over fixed costs.

D.

Fixed costs over expected sales.

E.

Expected sales over breakeven sales.

30.

A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. If the firm wants to earn $35,000 pretax income, how many units must be sold?

A.

6,500.

B.

6,000.

C.

500.

D.

5,000.

E.

5,500.

Units required to earn target pre-tax income of $35,000 = ($35,000 + $420,000)/$70 = 6,500 units

31.

Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales. What will pretax income equal if sales are $325,000?

A.

$ 57,500.

B.

$122,500.

C.

$130,000.

D.

$181,250.

E.

$252,500.

Pretax income = $325,000 - ((40% x $325,000) + $72,500) = $122,500

32.

Conan Company has total fixed costs of $112,000. Its product sells for $35 per unit and variable costs amount to $25 per unit. Next year Conan Company wishes to earn a pretax income that equals 10% of fixed costs. How many units must be sold to achieve this target income level?

A.

1,120.

B.

8,214.

C.

11,200.

D.

12,320.

E.

14,080.

Desired pretax income = 10% x $112,000 = $11,200Units required = ($112,000 + $11,200)/($35 - $25) = 12,320 units

The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year:

33.

If Griffith Corporation's income tax rate is 40%, compute the number of units that must be sold in order to achieve a target pretax income of $130,000.

A.

53,165.

B.

81,250.

C.

36,207.

D.

50,000.

E.

58,621.

Revenues - Variable Costs = Contribution Margin$1,000,000 - ($270,000 + $240,000 + $150,000 + $50,000) = Contribution Margin$1,000,000 - $710,000 = $290,000$290,000 / 50,000 units to be sold = $5.80 budgeted contribution margin per unitBudgeted unit sales = Total Fixed Costs + Budgeted Pretax Income / CM Per UnitBudgeted unit sales = [($100,000 + $110,000) + $130,000] / $5.80Budgeted unit sales = $340,000 / $5.80Budgeted unit sales = 58,620.689 or 58,621

34.

A statistical method for deriving an estimated line of cost behavior is the:

A.

Scatter diagram method.

B.

High-low method.

C.

Composite method.

D.

CVP charting method.

E.

Least-squares regression method.

35.

A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. What is the break-even point in dollar sales?

A.

$2,100.

B.

$6,000.

C.

$420,000.

D.

$646,154.

E.

$1,200,000.

Contribution margin ratio = ($200 - $130)/$200 = 35%Break-even point in sales dollars = $420,000/0.35 = $1,200,000

36.

Mueller Corp. manufactures compact discs that sell for $5.00. Fixed costs are $28,000 and variable costs are $3.60 per unit. Mueller can buy a newer production machine that will increase fixed costs by $8,000 per year, but will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mueller's break-even point in units?

A.

4,444 unit increase.

B.

9,850 unit decrease.

C.

5,714 unit increase.

D.

4,444 unit decrease.

E.

No effect on the break-even point in units.

Break-even point with old machine = $28,000/($5.00 - $3.60) = 20,000 unitsBreak-even point with new machine = ($28,000 + $8,000)/[$5.00 - ($3.60 -$0.40)]= 20,000 units

37.

Standard costs are:

A.

Actual costs incurred to produce a specific product or perform a service.

B.

Preset costs for delivering a product or service under normal conditions.

C.

Established by the IMA.

D.

Rarely achieved.

E.

Uniform among companies within an industry.

38.

A process of examining the differences between actual and budgeted costs and describing them in terms of the amounts that resulted from price and quantity differences is called:

A.

Cost analysis.

B.

Flexible budgeting.

C.

Variable analysis.

D.

Cost variable analysis.

E.

Cost variance analysis.

39.

A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a:

A.

Rolling budget.

B.

Production budget.

C.

Flexible budget.

D.

Merchandise purchases budget.

E.

Fixed budget.

40.

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the company produces and sells 16,000 units is:

A.

$ 2,667.

B.

$14,000.

C.

$18,667.

D.

$24,000.

E.

$35,000.

Selling price per unit = $48,000/12,000 units = $4.00 per unitVariable costs per unit = $18,000/12,000 = $1.50 per unitContribution margin per unit = $4.00 - $1.50 = $2.50 per unitExpected operating income for 16,000 units:

41.

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

A.

$12,500.

B.

$25,000.

C.

$20,000.

D.

$30,000.

E.

$35,000.

42.

Which department is often responsible for the direct materials price variance?

A.

The accounting department.

B.

The production department.

C.

The purchasing department.

D.

The finance department.

E.

The budgeting department

Kyle, Inc., has collected the following data on one of its products:

43.

The direct materials quantity variance is:

A.

$30,000 favorable.

B.

$13,750 unfavorable.

C.

$16,250 favorable.

D.

$30,000 unfavorable.

E.

$13,750 favorable.

44.

The direct materials price variance is:

A.

$13,750 unfavorable.

B.

$16,250 unfavorable.

C.

$16,250 favorable.

D.

$30,000 unfavorable.

E.

$33,000 favorable.

45.

Bartels Corp. produces woodcarvings. It takes 2 hours of direct labor to produce a carving. Bartels' standard labor cost is $12 per hour. During August, Bartels produced 10,000 carvings and used 21,040 hours of direct labor at a total cost of $250,376. What is Bartels' labor rate variance for August?

A.

$2,000 favorable.

B.

$2,104 unfavorable.

C.

$2,104 favorable.

D.

$4,160 favorable.

E.

$2,000 unfavorable.

The following information describes a company's usage of direct labor in a recent period:

46.

The direct labor quantity variance is:

A.

$28,000 unfavorable.

B.

$28,000 favorable.

C.

$45,000 unfavorable.

D.

$45,000 favorable.

E.

$17,000 unfavorable.

47.

Adams Co. uses the following standard to produce a single unit of its product:

Variable overhead (2 hrs. @ $3/hr.) $6

Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:

A.

$6,000F.

B.

$6,000U.

C.

$78,000U.

D.

$78,000F.

E.

$0.

Montaigne Corp. has the following information about its standards and production activity in November:

48.

The volume variance is:

A.

$1,295U.

B.

$1,295F.

C.

$2,400U.

D.

$2,400F.

E.

$3,695U.

49.

Price Company's flexible budget shows $10,710 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.00 per direct labor hour based on a budgeted operating level of 6,120 direct labor hours (90% of capacity). If overhead actually incurred was $11,183 during May, the controllable variance for the month was:

A.

$ 473 unfavorable.

B.

$ 473 favorable.

C.

$1,530 favorable.

D.

$1,530 unfavorable.

E.

$1,057 favorable.

50.

When recording variances in a standard cost system:

A.

Only unfavorable material variances are debited.

B.

Only unfavorable material variances are credited.

C.

Both unfavorable material and labor variances are credited.

D.

All unfavorable variances are debited.

E.

All unfavorable variances are credited.