1) All of the following are examples of factory overhead costs that benefit the entire
factory would therefore be difficult to identify with a specific department except:
A.machine depreciation
B.factory security
C.the plant managers salary
D.heating costs
2) Hebert & Co. CPAs anticipates that partners will bill 2,000 professional hours,
managers will bill 7,500 professional hours and staff accountants will bill 25,000
professional hours. Billing rates are $250, $150 and $75 for partners, managers and
staff accountants, respectively. What is Hebert & Co.s budgeted revenue?
A.$5,462,500
B.$3,500,000
C.$5,175,000
D.$3,750,000
3) Scheduling different levels of production each month to maintain a relatively stable
inventory could lead to all but:
A.idle production capacity in some months
B.leasing additional warehouse space to store finished goods
C.running a second or third shift during some months
D.inefficiencies from hiring inexperienced workers to meet heavy production schedules
4) What is the objective of the economic order quantity (EOQ) model for inventory?
A.To minimize order costs or carrying costs, whichever are higher
B.To minimize order costs or carrying costs and maximize the rate of inventory
turnover
C.To minimize the total order costs and carrying costs over a period of time
D.To order sufficient quantity to economically meet the next period’s demand
5) Omega Corporation uses process costing to calculate the cost of manufacturing pool
systems. Beginning work in process included 30,000 units 60 percent complete. During
the month 170,000 units were completed, 20,000 units remain in work in process at 70
percent complete. Using the average cost method, the equivalent units are:
A.140,000
B.194,000
C.184,000
D.190,000
6) Process costing techniques should be used in assigning costs to products:
A.If the product is manufactured on the basis of each order received
B.In all manufacturing situations
C.When production is only partially completed during the accounting period
D.If the product is composed of mass-produced homogeneous units
7) Tennenholtz Companys break-even graph is depicted below. The line labeled D is:
A.The sales line
B.The contribution margin line
C.The total cost line
D.The variable cost line
8) Rhodes Corporation manufactures a product with the following standard costs:
Standards are based on normal monthly production involving 2,000 direct labor hours
(500 units of output).
The following information pertains to the month of July:
9) Budde Chemicals produces two industrial chemical compounds, X15 and Z24, from
the same process, which last year, cost $300,000. Budde produced 10,000 gallons of
X15, which sells for $40 per gallon and 40,000 gallons of Z24, which sells for $20 per
gallon. Using the relative sales method, how much of the joint cost should be allocated
to X15?
A.$100,000
B.$200,000
C.$60,000
D.$75,000
10) Information relating to direct labor for the Newstead Company follow:
The labor rate variance is:
A.$2,800 unfavorable
B.$2,700 unfavorable
C.$4,600 unfavorable
D.$1,800 unfavorable
11) Which of the following is not true regarding service department expenses?
A.Preparing a budget for a service department requires the same procedures as those
used for production departments
B.Expenses of the service departments are allocated to production departments using a
standard application rate
C.Production departments will consider allocated service department expenses in
developing their budgets
D.Variances are not computed for expenses in service departments
12) An example of a process where all of the materials would be added at the end of the
process would be:
A.A bakery where the ingredients for bread are combined and left to rise
B.The second process of a snack factory where snack chips coming from the frying
process are cooled and dried for an hour, then bagged
C.A baker where the wet ingredients for a cake are added one-at-a-time after the dry
ingredients have been thoroughly blended
D.None of the above
13) Shepherd and Ford, a CPA firm uses activity-based costing to determine the costs of
its cases. Information about costs follow:
The Harrison audit required 80 professional hours, 20 of which were partner hours, and
labor costs totaled $20,000. How much overhead was assigned to the Harrison audit?
A.$12,400
B.$14,000
C.$6,000
D.$13,600
14) Ben’s Climbing Gear, Inc. has direct material costs as follows:
What was Ben’s standard quantity of material allowed?
A.18,000
B.24,000
C.20,000
D.22,000
15) When should process costing techniques be used in assigning costs to products?
A.In situations where standard costing techniques should not be used
B.If products manufactured are substantially identical
C.When production is only partially completed during the accounting period
D.If products are manufactured on the basis of each order received
16) The purpose of standard costing is to:
A.Determine optimal production level for a given period
B.Eliminate the need for subjective decisions by management
C.Control costs and promote efficiency
D.Allocate cost with more accuracy
17) Blanche Corporation adds materials at the end of the process in the injection
department, which is the second of two stages of its production cycle. Information
concerning the materials used in the forming department in April follows:
Using the average cost method, what is the materials cost of the work in process at
March 31 (rounded to nearest dollar)?
A.$108,000
B.$126,000
C.$120,000
D.$0
18) What losses should not affect the recorded cost of inventories?
A.Normal losses
B.Abnormal losses
C.Seasonal losses
D.Standard losses
19) Producing goods evenly throughout the year despite having a seasonal sales pattern
could lead to:
A.Employee morale issues
B.High costs for recruiting and training new employees
C.The potential for inventory obsolescence
D.Relatively stable inventory levels
20) A report that compares the budgeted costs for the job to the actual costs incurred
and indicates the variances is a:
A.Budget analysis
B.Job cost sheet
C.Cost analysis
D.Cost performance report
21) The inventory method which results in the most recent costs being assigned to
inventory on hand at the end of the period is:
A.First-in, first-out
B.Last-in, first-out
C.Last-in, last-out
D.Moving average
22) The statement of costs of goods manufactured shows:
A.Office supplies used in accounting office
B.Deprecation of factory building
C.Salary of sales manager
D.Rent paid on finished goods warehouse
23) Factory overhead for the Praeger Company has been estimated as follows:
Production for the month was 90 percent of the budget, and actual factory overhead
totaled $175,000.
Calculate:
24) Queen, Ltd. has one product. Its sales price and variable cost per unit are $20 and
$15, respectively. Last year, Queen sold 25,000 units, which was 5,000 more than the
break-even point. What were Queens fixed expenses?
A.$100,000
B.$125,000
C.$300,000
D.There is not enough information to answer the question
25) Joel Williams works at Allentown Company where he assembles components for
small appliances and earns $16 per hour with time-an-a-half for overtime. During the
week ended July 25, Joel worked 43 hours as follows:
The amount of Joels wages that will be charged to Factory Overhead assuming the
overtime is due to the random scheduling of jobs is:
A.$120
B.$152
C.$40
D.$128
26) Bear Printing prints one brochure in two departments on a continuous basis and
uses the average cost method of process cost accounting. The following information
was reported for the month of April, 20–:
In addition, the cost of production summary for the Binding Department follows:
Prepare the Statement of Cost of Goods Manufactured.
27) Bradford Company has two service departments, Human Resources and Janitorial,
and two production departments, Cutting and Glazing. The following data have been
estimated for next years operations:
Requirements:
(1) Distribute the service department costs using the sequential distribution method.
Distribute the Human Resources Department first.
(2)Prepare the journal entries to distribute the costs of the service departments to the
production departments given the results of your calculations.
28) Prepare a cost of goods sold budget for the KAS Company for the upcoming year
from the following estimates:
Inventories:
Totals from other budgets:
29) The materials account of the Herbert Company reflected the following changes
during August:
Assuming that Herbert Company maintains perpetual inventory records, calculate the
cost of the ending inventory at August 31 and the cost of the units issued in August
using the moving average method.
30) Daniel LLC incurred the following cost in the month of October:
Material $55,000
Labor $46,000
Factory Overhead $23,000
There was no beginning inventory. Ending work in process was 10,000 units at 50
percent complete. 15,000 units were completed and transferred out.
Prepare a cost of production summary for the month, assuming Daniel uses the average
cost method of process costing.
31) Bear Printing prints one brochure in two departments on a continuous basis and
uses the average cost method of process cost accounting. The following information
was reported for the month of April, 20–:
In addition, the cost of production summary for the Binding Department follows:
Prepare the journal entries to record production.
32) Prepare a performance report showing both month and year-to-date data for Post
Manufacturings Machining Department for February, 201X using the following data:
