1) Payroll is debited and Wages Payable is credited to:
A.Pay the payroll taxes
B.Record the payroll
C.Pay the payroll
D.Distribute the payroll
2) A summary of Jacob Companys flexible budget of manufacturing costs follows:
What would the flexible budget of manufacturing costs be at a production volume of
18,000 units?
A.$144,000
B.$172,800
C.$192,000
D.$176,000
3) The Gerald Company budgeted overhead at $480,000 for the period for Department
A based on a budgeted volume of 60,000 direct labor hours. At the end of the period,
the factory overhead control account for Department A had a debit balance of $475,000;
actual direct labor hours were 59,000 . What was the under- or over applied factory
overhead for the period?
A.$8,000 overapplied
B.$3,000 overapplied
C.$3,000 underapplied
D.$5,000 underapplied
4) The duties of the purchasing agent would include all of the following except:
A.Placing purchase orders
B.Counting and identifying materials received
C.Compiling information that identifies vendors and prices
D.Verifying invoices and approving them for payment
5) What factor related to manufacturing costs causes the difference in net earnings
computed using absorption costing and net earnings computed using variable costing?
A.Absorption costing considers all costs in the determination of net earnings, whereas
variable costing considers only direct costs
B.Absorption costing “inventories” all direct costs, but variable costing considers direct
costs to be period costs
C.Absorption costing “inventories” all fixed manufacturing costs for the period in
ending finished goods inventory, but variable costing expenses all fixed costs
D.Absorption costing allocates fixed manufacturing costs between cost of goods sold
and inventories, and variable costing considers all fixed costs to be period costs
6) It is important that a standard rate rather than actual expenses be used to charge
service department costs to producing departments so that:
A.production department managers know the amount of usage at the beginning of the
year
B.extra costs resulting from inefficient operations in service departments cannot be
passed on to the production departments
C.service department managers dont need to worry about meeting their budgets
D.extra costs resulting from inefficient operations in production departments can not be
passed on to the service departments
7) On a cost of quality report, appraisal costs:
A.include the cost of quality circles where employees meet to discuss how they can
improve processes
B.are incurred to determine the value of a damaged product
C.are incurred to identify which products do not conform to specification before they
are shipped
D.include the cost to correct defective units before they are shipped
8) For a manufacturer, the cost of all materials purchases and on hand to be used in the
manufacturing process is:
A.Merchandise Inventory
B.Finished Goods
C.Work in Process
D.Materials
9) Tennenholtz Companys break-even graph is depicted below. Which area indicates the
profitability of the companys product?
A.E
B.G
C.B
D.H
10) The preferred sequence for distributing the cost of service departments to
production departments when using the sequential distribution method is:
A.to distribute the cost of the service department with the largest total overhead cost
first
B.to always distribute the cost of the Human Resources Department first
C.to distribute the costs of the service departments to the production department having
the largest amount of overhead cost first
D.to distribute the costs of the service department that services the greatest number of
departments first
11) Expected annual usage of a particular raw material is 180,000 units, and standard
order size is 12,000 units. The invoice cost of each unit is $300, and the cost to place
one purchase order is $80. Assuming the company does not maintain safety stock, the
average inventory is:
A.10,000 units
B.7,500 units
C.15,000 units
D.6,000 units
12) The type of merchandiser who purchases goods from the producer and sells them to
shops that sell them to the consumer is a:
A.Manufacturer
B.Retailer
C.Wholesaler
D.Service business
13) The cost of production summary for Maha Industries follows:
What is the journal entry to record materials issued into production?
A.Finished goods 8,000
Materials 8,000
B.Work-in-process 8,000
Materials 8,000
C.Work-in-process 1,000
Materials 1,000
D.Materials 8,000
14) Omari Assembly, Inc., which uses backflush costing, had the following transactions
during the month of October:
(a) Purchased raw materials on account, $700,000.
(b) Requisitioned raw materials to production, $700,000.
(c) Distributed direct labor costs, $105,000.
(d) Manufacturing overhead incurred, $215,000. (Use Various Credits for the account in
the credit part of the entry.)
(e) Completed all goods.
(f) Sold goods for $1,500,000 on account.
Prepare journal entries to record the above transactions.
15) The cost of activities that are incurred to correct defective products before they are
shipped are:
A.prevention costs
B.appraisal costs
C.internal failure costs
D.external failure costs
16) Fortran Industries produces burner elements for stoves. Each element sells for $20,
and the company sells approximately 2,000,000 gears each year. Unit cost data for the
year follows:
The unit cost of gears for variable costing inventory purposes is:
A.$14.50
B.$11.00
C.$9.50
D.$7.00
17) During March, Hart Company incurred the following costs on Job 122 for the
manufacture of 200 motors:
Assume the rework costs are to be spread over all jobs that go through the production
cycle. What is the journal entry needed to record the rework costs?
A.Work in Process 550
Materials 100
Payroll 180
Factory Overhead 270
B.Materials 100
Payroll 180
Factory Overhead 270
Work in Process 550
C.Factory Overhead 550
Materials 100
Payroll 180
Factory Overhead 270
D.Spoiled Goods Inventory 550
18) The Davis Corporation uses the direct labor hour method of applying factory
overhead to production. The budgeted factory overhead last year was $300,000, and
there were 50,000 machine hours and 40,000 direct labor hours budgeted. Job 564 was
started and completed during the period. Direct materials costing $5,400 were incurred.
Thirty-six direct labor hours were worked at a cost of $500, and 50 machine hours were
incurred. What is the amount of factory overhead applied to Job 564?
A.$375
B.$270
C.$216
D.$300
19) Taking appropriate action on variances includes all of the following except:
A.Ignoring the cause of favorable variances
B.Revising the standard because it was set incorrectly
C.Improving the manufacturing process
D.Looking for new suppliers
20) Costs that change in relation to volume changes, but not in direct proportion to
those changes, are known as:
A.Variable costs
B.Semivariable costs
C.Fixed costs
D.Curvilinear costs
21) Normal losses that occur in the manufacturing process are properly classified as:
A.Extraordinary items
B.Product costs
C.Period costs
D.Deferred charges
22) Tom Jones, a management accountant, was faced with an ethical conflict at the
office. According to the Institute of Management Accountants (IMA) Statement of
Professional Practice, the first action Tom should pursue is to:
A.follow his organizations established policies on the resolution of such conflict
B.contact the local newspaper
C.contact the companys audit committee
D.consult an attorney
23) Kerry Kola Company sells Kerry Kola in two sizes: 12 ounce and 32 ounce bottles,
at a price of $1.00 and $2.25, respectively. Projected unit sale volumes by region
follow:
What is Kerry Kolas budgeted sales?
A.$1,643,750
B.$1,425,000
C.$1,362,500
D.$1,581,250
24) Consider the following costs:
I. The cost of electricity which is used to power machinery and light the plant.
II. Depreciation on the building which houses both the factory and the sales office.
Which of the following statements is true?
A.Only statement I is an example of a semivariable cost
B.Only statement II is an example of a semivariable cost
C.Both statements I and I are examples of semivariable costs
D.Neither statement I nor II is an example of a semivariable cost
25) Under a modified wage plan, an employee earns $1.50 for each finished unit and is
guaranteed $18 per hour as a minimum wage. If the daily quota is 96 units, on a
particular day when an employee completes 90 units and works 8 hours, the amount of
the make-up guarantee will be:
A.$27.00
B.$12.00
C.$9.00
D.$00
26) An example of a direct cost that can be specifically identified with a job and does
not have to be allocated to the job using an overhead rate is:
A.travel expenses
B.fringe benefits
C.utilities
D.office machine lease costs
27) Kyle, Inc., instituted a new process in October. During October, 18,000 units were
started in Department A. Of the units started, 2,000 were lost in the process, 12,000
were transferred to Department B, and 4,000 remained in work in process at October 31
. The work in process at October 31 was 100 percent complete as to material costs and
15% complete as to conversion costs. Material costs of $78,400 and conversion costs of
$52,920 were charged to Department A in October. What were the total costs transferred
to Department B and assigned to ending work in process using the average cost
method?
28) The number of workers in the departments served would most likely be the basis for
distributing the cost of which service department?
A.Human Resources
B.Tool Room
C.Building Maintenance
D.Machine Shop
29) Highlander Corporation is a manufacturer that uses the average cost method to
account for costs of production. Highlander manufactures a product that is produced in
three separate departments: molding, assembling, and finishing. The following
information was obtained for the assembling department for the month of June:
Work in process, June 1: 4,000 units composed of the following:
The following activity occurred during the month of June:
(3) Materials are added at the end of the process.
Prepare in good form a cost of production report for the assembling department for the
month of June. Show supporting computations in good form. The report should include:
a. Equivalent units of production.
b. Total manufacturing costs.
c. Cost per equivalent unit.
d. Dollar amount of ending work in process.
e. Dollar amount of inventory cost transferred out.
30) The Kennedy Company uses throttles in its assembly of lawn mowers. Information
as to balances on hand, purchases, and requisitions of throttles is given in the following
table.
If a perpetual inventory record of throttles is maintained on a moving average basis, the
165 items in inventory on June 14 will have a unit cost of (rounded to three decimal
places):
A.$3.438
B.$3.167
C.$3.386
D.$2.875
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. Actual direct labor
cost and factory overhead were $1,100,000 and $825,000, respectively.
What was Megers predetermined factory overhead rate?
A.80%
B.125%
C.75%
D.133%
32) Consider the following about Taylor Corporation:
Assuming Taylor Corporation uses flexible budgeting, what is the variance related to
direct materials?
A.$10,000 favorable
B.$50,000 unfavorable
C.$30,000 unfavorable
D.$38,000 unfavorable