CHAPTER 4 QUIZ
1. A cost-allocation base may be any of the following except a
a. cost driver.
b. cost pool.
c. way to link indirect costs to a cost object.
d. nonfinancial quantity.
2. A company that manufactures dentures for use by local dentists would use
a. process costing.
b. personal costing.
c. operations costing.
d. job costing.
3. The first step in the seven-step approach to job costing is to
a. select the cost-allocation base to use in assigning indirect costs to the job.
b. identify the direct costs of the job.
c. identify the job that is the chosen cost object.
d. identify the indirect-cost pools associated with the job.
4. Using normal costing rather than actual costing requires that the allocating of indirect
manufacturing costs to work-in-process be
a. done on a more timely basis, such as every two weeks rather than every month.
b. journalized only at year end when adjusting entries are normally made.
c. calculated by using the budgeted rate times actual quantity of allocation base.
d. calculated by using the budgeted rate times the budgeted quantity of allocation base.
5. Manufacturing Overhead Control
a. represents actual overhead costs incurred.
b. has a normal debit balance.
c. is a control account with a subsidiary ledger detailing the components of manufacturing
overhead.
d. All of the above
6. Which of the following accounts is not classified as an asset?
a. Manufacturing Overhead Control
b. Materials Control
c. Work-in-Process Control
d. Finished Goods Control
7. The costs incurred on jobs that are currently in production but are not yet complete
would appear in the
a. Materials Control account.
b. Finished Goods Control account.
c. Manufacturing Overhead Control account.
d. Work-in-Process Control account.
8. The Precision Widget Company had the following balances in their accounts at the end
of the accounting period:
Work-in-Process $ 5,000
Finished Goods 20,000
Cost of Goods Sold 200,000
If their manufacturing overhead was overallocated by $8,000 and Precision Widget adjusts
their accounts using a proration based on total ending balances, the revised ending balance
for Cost of Goods Sold would be
a. $192,880.
b. $200,00.
c. $207,120.
d. $208,000.
9. Liberty Box Company calculated an indirect-cost rate of $12.50 per labor hour for
fringe benefits for use in their normal costing system. At the end of the year, the actual cost
of fringe benefits was $980,000. The total of labor hours worked for the year was the same
amount as budgeted, 70,000 hours. If Job #640 required the use of 15 labor hours and the
company used the adjusted allocation rate approach, by what amount would the cost of Job
#640 change?
a. $560.00
b. $281.25
c. $22.50
d. $20.50
10. If each professional in a service company is paid on an annual salary basis, why might
the firm want to use a predetermined or budgeted rate for direct or professional labor?
a. A predetermined or budgeted rate is easier to justify to a client who might question a
billing rate.
b. Professional staff persons do not keep accurate records of the jobs on which they work.
c. Professional staff incurs more client costs, such as travel, lodging, and out-of-town
meals, while working on a job.
d. Year-end bonuses paid to the professional staff are difficult to trace to individual jobs.
CHAPTER 4 QUIZ SOLUTIONS
