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73. L & L, CPAs, employs two full-time professional CPAs and five support employees.
Budgeted direct salary costs include $160,000 for each CPA. The support employees are
considered as indirect costs, and this cost was budgeted for $200,000 although the actual cost
was $225,000. Actual salaries were $155,000 for each CPA. Direct and indirect costs are applied
on a CPA-labor-hour basis. Total budgeted CPA-labor-hours were 5,000. If a client used 500
labor-hours, what are the budgeted direct-cost rate and the budgeted indirect-cost rate,
respectively?
74. Orange, Inc. has identified the following cost drivers for its expected overhead costs for
the year:
Overhead
Item Expected
Cost Cost
Driver Expected
Quantity
Setup costs $50,000 Number of setups 250
Ordering costs 30,000 Number of orders 1,500
Maintenance 100,000 Machine hours 2,000
Power 20,000 Kilowatt hours 4,000
Total Overhead $200,000
Total direct labor hours budgeted = 2,000 hours.
The following actual data applies to one of the products completed during the year:
Product X
Direct materials $5,000 Number of setups 5
Direct labor $3,000 Number of orders 50
Units completed 100 Machine hours 50
Direct labor hours 100 Kilowatt hours 500
If Orange, Inc. uses direct labor hours to assign overhead, the unit product cost for Product X will
be:
75. Orange, Inc. has identified the following cost drivers for its expected overhead costs for
the year:
Overhead
Item Expected
Cost Cost
Driver Expected
Quantity
Setup costs $50,000 Number of setups 250
Ordering costs 30,000 Number of orders 1,500
Maintenance 100,000 Machine hours 2,000
Power 20,000 Kilowatt hours 4,000
Total Overhead $200,000
Total direct labor hours budgeted = 2,000 hours.
The following actual data applies to one of the products completed during the year:
Product X
Direct materials $5,000 Number of setups 5
Direct labor $3,000 Number of orders 50
Units completed 100 Machine hours 50
Direct labor hours 100 Kilowatt hours 500
If Orange, Inc. uses machine hours to allocate overhead cost, the unit product cost of Product X
will be:
76. If estimated annual factory overhead is $480,000; overhead is applied using direct labor
hours; estimated annual direct labor hours are 200,000; actual March factory overhead is
$42,000; and actual March direct labor hours are 17,000; then overhead is:
77. Dye Co. uses a job cost system and predetermines a factory overhead rate based on the
amount of expected fixed costs and expected volume. At the conclusion of the fiscal year,
overapplied overhead could be explained by which of the following?
Actual Fixed Costs Actual Volume
A) Less than expected Less than expected
B) Less than expected More than expected
C) More than expected More than expected
D) More than expected Less than expected
78. At the end of a fiscal year, overapplied factory overhead should be:
79. C. M. Fly, owner of Falcon Aircraft Co., is preparing the accounting record for the year
just ended. During the year, he had projected that the company would produce 300 Falcon
Aircraft for its clients with a factory overhead cost of $150,000,000. However, business was
better than expected and the company was able to produce 400 aircraft at factory overhead cost
of $175,000,000. What is the amount per unit that Falcon Aircraft has over- or underapplied
factory overhead?
80. Operation costing uses which of the following costing systems?
Process
Costing Standard
Costing Job
Costing
A) Yes Yes No
B) Yes No Yes
C) No Yes Yes
D) Yes Yes Yes
81. The following are types of rework except:
82. Depending on the nature of rework being done on a particular unit of product, the cost
can be charged to one of three specific accounts. Which of the following is correct?
83. Scrap can be classified according to which of the following?
Specific
Job Common
to all Jobs
A) Yes No
B) No Yes
C) No No
D) Yes Yes
84. Which of the following journal entries is correct if scrap is being incurred and sold for all
jobs in common in the amount of $600?
85. With the increase in competition over the past several years and the need for additional
accuracy in product costing, traditional cost accounting systems have become less common in
product costing because:
86. Departmental overhead rates are preferred over plantwide rates when:
87. Billy Baroo Company uses a job order cost system. The following information was found
in the Work-in-Process account for the month of July.
Date Description Amount [DR. or (CR.)]
July 1 Balance $12,000
July 31 Direct labor 38,000
July 31 Direct materials 52,000
July 31 Factory overhead 30,400
July 31 Transfer to finished goods (80,000)
Billy Baroo applies overhead to production at a predetermined rate of 80% based on the direct
labor cost. Job #23, the only job still in process at the end of July, has been charged with direct
labor of $12,000. Direct material charged to Job #23 was:
88. The primary focus of job costing in service industries is on:
89. A time ticket:
90. Many firms use which one of the following terms to indicate the use of job costing in
service industries?
91. Which of the following is not a method the management accountant must address
regarding the costing system?
92. All of the following are examples of companies using job costing systems except:
93. Which of the following methods accurately represents the process below?
A customer orders twenty cases of nails, and the firm then produces the nails:
94. Which of the following companies uses process costing systems?
95. Which type of firm is most likely to require a very accurate costing system?
96. Which of the following is not a cost element on the job cost sheet?
97. The time ticket shows which amount for an employee?
98. The predetermined factory overhead rate includes:
99. Which of the following industries is often suitable for applying operation costing?
100. Job costing in service firms uses recording procedures and accounts similar to those for
manufacturing companies except for those regarding:
