1) The following data are from Baker Company, a manufacturer, for the month of
October:
Compute the conversion costs.
A.$167,500
B.$104,500
C.$140,500
D.$128,000
2) The Lucas Manufacturing Company has two production departments (fabrication and
assembly) and three service departments (general factory administration, factory
maintenance, and factory cafeteria). A summary of costs and other data for each
department, prior to allocation of service department costs for the year ended June 30,
appears below:
The costs of the general factory administration department, factory maintenance
department, and factory cafeteria are allocated on the basis of direct labor hours, square
footage occupied, and number of employees, respectively.
Assuming that Lucas elects to use the sequential method to distribute service
department costs (starting with the factory cafeteria), what would be the amount of
factory cafeteria costs that would be allocated to the factory maintenance department?
A.$3,314
B.$6,960
C.$5,800
D.$0
3) If a company uses a factory overhead ledger, at the end of the month, an accountant
should:
A.close the accounts in the factory overhead ledger to Work in Process
B.total the accounts in the factory overhead ledger and compare the total to the balance
in the Factory Overhead control account
C.prepare a schedule of fixed costs
D.All of the above are true
4) A company uses a two-variance analysis for overhead variances, flexible-budget and
production-volume. The production-volume variance is the difference between the
factory overhead applied at standard and:
A.Total factory overhead per the flexible budget
B.Actual factory overhead incurred
C.Total factory overhead per the master budget
D.Fixed overhead incurred
5) The wages of which of the following employees would not be included in the
product cost for a manufacturer of custom-built home cooking appliances?
A.shipping clerk
B.appliance body welder
C.factory janitor
D.shop floor supervisor
6) Consider the following information for the Cornwall Company:
What are Cornwalls variable costs at the break-even point?
A.$490,000
B.$1,176,000
C.$840,000
D.$588,000
7) Howell Company uses the average cost method of process costing. Howell had 1,000
units in beginning work-in-process which were 75% complete. Costs associated with
this inventory were $3,200. When calculating the cost per equivalent unit for the month
of June, Howells controller should:
A.Not consider the $3,200 as those costs were incurred in a prior period
B.Calculate the cost to complete the 1,000 items in beginning work-in-process
separately
C.Include the $3,200 with the current months cost to arrive at total cost for production
to date
D.Include the equivalent units to complete the beginning work-in-process inventory to
arrive at the equivalent units for the period
8) The margin of safety is the amount:
A.by which the sales price per unit exceeds the variable cost per unit
B.that the contribution margin exceeds fixed cost
C.by which the profit calculated under absorption costing exceeds the profit calculated
under variable costing
D.that sales can decrease before the company will suffer a loss
9) Norma Company had 10,000 units in work in process at January 1 that were 50
percent complete. During January, 25,000 units were completed. At January 31, 6,000
units remained in work in process that were 75 percent complete. Using the average
cost method, the equivalent units for January were:
A.31,000
B.29,500
C.35,000
D.36,000
10) The total number of units to be accounted for in the second department of a process
is:
A.the number of units in process at the beginning of the period plus the units received
from another department during the period
B.the number of units in process at the beginning of the period plus the units transferred
out to another department during the period
C.the number of units in process at the end of the period plus the units completed and
on hand
D.the number of units in process at the end of the period plus the units received from
another department during the period
11) The Davis Corporation budgeted factory overhead at $250,000 for the period for the
Assembly Department based on a budgeted volume of 100,000 direct labor hours. At
the end of the period, the factory overhead control account for the Assembly
Department had a balance of $252,000. The actual (and allowed) direct labor hours
were 104,000.
What was the over- or underapplied factory overhead for the period?
A.$10,000 underapplied
B.$10,000 overapplied
C.$8,000 underapplied
D.$8,000 overapplied
12) The business entity that purchases finished goods for resale is a:
A.Manufacturer
B.Merchandiser
C.Service business
D.For-profit service business
13) Under a backflush accounting system, the following entry is made when products
are completed:
A.Debit-Finished Goods
Credit-Work In Process
B.Debit-Cost of Goods Sold
Credit-Raw and In Process
Credit-Conversion Costs
C.Debit-Finished Goods
Credit-Raw and In Process
Credit-Conversion Costs
D.Debit-Cost of Goods Sold
14) The following information pertains to the Braun Company for March:
Using the four-variance method of factory overhead variance analysis, what is the fixed
overhead spending variance?
A.$1,200 favorable
B.$1,800 unfavorable
C.$3,000 favorable
D.$1,200 unfavorable
15) Sam Jones works at Seeker, Inc. Sams duties include identifying where materials
can be obtained most economically, placing orders and verifying invoices and
approving them for payment. Sam is a(n):
A.receiving clerk
B.accounts payable clerk
C.purchasing agent
D.production supervisor
16) A predetermined factory overhead rate is computed by dividing
A.Actual overhead cost by actual production
B.Actual overhead cost by budgeted production
C.Budgeted overhead by actual production
D.Budgeted overhead by budgeted production
17) In a period of rising prices, the use of which of the following cost flow methods
would result in the lowest tax liability?
A.FIFO
B.LIFO
C.Weighted average cost
D.Moving average cost
18) Consider the budget information for Bert and Ernie Design firm:
Bert and Ernie decide there are two cost pools, design support, which is assigned to jobs
based on the number of rooms redone, and facilities costs, which is assigned to jobs
based on the number of professional labor hours. The design support cost pool includes
design equipment depreciation and samples and books. The lease expense and utilities
are considered facilities costs.
What is the budgeted rate per cost driver for design support?
A.$17.50
B.$35.00
C.$.35
D.$.70
19) Braun Company produces two chemical compounds, Herzog and Lomax from a
joint process. Joint costs to produce 500 gallons of Herzog and 300 gallons of Lomax
were $80,000. A by-product, Horst, results from the joint process and has a market
value of $1,000. Assuming Braun accounts for the by-product as a reduction in the costs
assigned to the products, what are the joint costs assigned to Herzog?
A.$39,500
B.$49,375
C.$50,000
D.$40,000
20) In performing an activity-based costing study for distribution costs, appropriate cost
drivers for preparing orders for shipment would include all of the following except the:
A.Number of orders shipped
B.Time spent packing orders
C.Time devoted to selling each product
D.Number of items per order
21) The cost of production summary for Maha Industries follows:
What is the journal entry to record completed production and transfer to the warehouse?
A.Work in process 13,125
Finished goods 13,125
B.Finished goods 1,875
Work in process 1,875
C.Finished goods 3,000
Factory overhead 3,000
D.Finished goods 13,125
22) Busby Company needs 10,000 units of a certain part to use in its production cycle.
The following information is available:
Costs incurred by Busby to make the part:
Direct materials $15
Direct labor 12
Variale factory overhead 13
Fixed factory overhead 10
Total $50
Costs to buy the part from Thurco: $45
If Busby buys the part from Thurco instead of making it, Busby could not use the
released facilities in another manufacturing activity. However, twenty percent of the
fixed overhead would be avoided because one of the supervisors could be let go.
(a)In deciding whether to make or buy the part, what are the relevant costs that Busby
must consider.
(b) What decision should Busby make?
23) When two products are produced during a common process, what is the factor that
determines whether the products are joint products or one principal product and a
by-product?
A.Potential marketability for each product
B.Amount of work expended in the production of each product
C.Management policy
D.Relative total sales value
24) Tacy Companys Schedule of Earnings and Payroll taxes for the period ended March
28 – 31 to be paid April 5 follow:
Prepare the journal entries to:
(a)Accrue the payroll in the appropriate period
(b)Distribute the accrued payroll in the appropriate period
(c)Recognize related accrued employers payroll taxes in the appropriate period
assuming payroll taxes are spread over all jobs produced.
25) What is the normal year-end treatment of immaterial variances recognized in a cost
accounting system utilizing standards?
A.Reclassified to deferred charges until all related production is sold
B.Closed to cost of goods sold in the period in which they arose
C.Allocated among cost of goods manufactured and ending work in process inventory
D.Capitalized as a cost of ending finished goods inventory
26) Information for the month of January concerning Department A, the first stage of
Cando Corporation’s production cycle, follows:
The ending work in process is 50 percent complete. How would the total costs
accounted for be distributed using the average cost method?
A.$105,000$12,600
B.$ 67,200$14,400
C.$ 67,200$50,400
D.$105,000$14,400
27) On a cost of quality report, employee training and supplier evaluation are examples
of:
A.appraisal costs
B.external failure costs
C.internal failure costs
D.prevention costs
28) Which of the following is most likely to be accounted for as a by-product?
A.Heating oil resulting from processing crude oil at a refinery
B.Cream resulting from processing raw milk at a dairy
C.Sawdust resulting from processing lumber at a lumber mill
D.Ground beef resulting from processing beef at a meat packer
29) Michael Company had 2,000 units in work in process at January 1 that were 80
percent complete. During January, 15,000 units were completed. At January 31, 4,000
units remained in work in process that were 40 percent complete. Using the average
cost method, how many units were started during January?
A.21,000
B.18,200
C.17,000
D.19,000
30) Johns Company operates in three different industries each of which is appropriately
regarded as a reportable segment. Segment No. 1 contributed 60 percent of Johns
Company’s total sales. Sales for Segment No. 1 were $600,000 and total variable costs
were $400,000. Total common costs for all segments were $320,000. Johns allocates
common costs based on the ratio of each segment’s sales to the total sales. What should
be the contribution margin presented for Segment No. 1?
A.$(100,000)
B.$8,000
C.$20,000
D.$200,000
31) Meger Manufacturing uses the direct labor cost method for applying factory
overhead to production. The budgeted direct labor cost and factory overhead for the
previous fiscal year were $1,000,000 and $800,000, respectively.
During the year, the company started and completed Job 352A, which had direct
material and labor costs of $32,000 and $45,000, respectively. What was the cost of Job
352A?
A.$77,000
B.$81,000
C.$102,600
D.$113,000
32) The relative percentage of unit sales among the various products made by a firm is
the:
A.sales volume
B.sales margin
C.sales mix
D.sales ratio
33) For a manufacturer, the total cost of manufactured goods completed but still on
hand is:
A.Merchandise Inventory
B.Finished Goods
C.Work in Process
D.Materials