1) What does cost accounting measure, record, and report? A. Future costs B. Manufacturing processes C. Managerial accounting decisions D. Product costs
2) When a job is completed, what happens to the cost of the job? A. It is removed from finished goods and included in cost of goods sold. B. It is removed from materials inventory and included in work in process. C. It is removed from work in process and included in finished goods. D. It is removed from work in process and included in cost of goods sold.
3) Why is factory overhead applied to products and jobs by manufacturing companies? A. Because indirect costs are easy to trace to products and jobs. B. It provides a more accurate cost of the job or products being processed. C. It allows managers more timely determination of product costs during the manufacturing process. D. Total actual overhead costs can never be accurately determined for production.
4) Which of the following would be accounted for using a job order cost system? A. The production of town homes B. The production of cans of spinach C. The production of textbooks D. The pasteurization of milk
5) Which one of the following is an important feature of a job order cost system? A. Each consists of features which distinguish it from the next. B. Each job has characteristics similar to the next. C. Each job uses similar processes to produce. D. Each must be completed before a new product order is accepted.
6) In a job order cost accounting system, the Work in Process account is A. a period cost B. a control account C. an expense D. closed at year end
7) What broad functions do the management of an organization perform? A. Planning, directing, and controlling B. Planning, manufacturing, and controlling C. Planning, directing, and selling D. Directing, manufacturing, and controlling
8) Managerial accounting A. is governed by generally accepted accounting principles B. places emphasis on special-purpose information C. pertains to the entity as a whole and is highly aggregated D. is concerned with costing products
9) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer? A. The cost of the fuel lines that run from the motor to the gas tank B. The wages earned by motor assemblers C. Depreciation on the testing equipment D. The cost of the wheels 149 days ago. Customer Reply
10) A well-designed activity-based costing system starts with A. computing the activity-based overhead rate B. analyzing the activities performed to manufacture a product C. assigning manufacturing overhead costs for each activity cost pool to products D. identifying the activity-cost pools
11) In traditional costing systems, overhead is generally applied based on A. machine hours B. units of production C. direct material dollars D. direct labor
12) Which of the following is NOT typical of traditional costing systems? A. Use of direct labor hours or direct labor cost to assign overhead B. Use of multiple cost drivers to allocate overhead C. Assumption of correlation between direct labor and incurrence of overhead cost D. Use of a single predetermined overhead rate
13) All of the following statements are correct EXCEPT that A. the objective of installing ABC in service firms is different than it is in a manufacturing firm B. the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company C. a larger proportion of overhead costs are company-wide costs in service industries D. activity-based costing has been widely adopted in service industries
14) What sometimes makes implementation of activity-based costing difficult in service industries is A. identifying activities, activity cost plus, and cost drivers B. attempting to reduce or eliminate nonvalue-added activities C. that a larger proportion of overhead costs are company-wide costs D. the labeling of activities as value-added
15) Which of the following is a value-added activity? A. Machinery repair B. Inspections C. Inventory storage D. Engineering design
16) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is: Mini A Maxi B Direct labor hours 15,000 25,000 Machine setups 600 400 Machine hours 24,000 26,000 Inspections 800 700 Overhead applied to Mini A using traditional costing using direct labor hours is A. $1,536,000 B. $1,920,000 C. $1,670,000 D. $1,200,000
17) Which of the following factors would suggest a switch to activity-based costing? A. Overhead costs constitute a significant portion of total costs. B. Product lines similar in volume and manufacturing complexity. C. Production managers use data provided by the existing system. D. The manufacturing process has been stable.