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Week 3 Quiz 2: Chapter 2 and 3 Chapter 2 TRUE-FALSE STATEMENTS 1.

Cost accounting is primarily concerned with accumulating information about product costs.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

A job order cost system is most appropriate when a large volume of uniform products are produced.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Reporting

A process cost accounting system is appropriate for similar products that are continuously mass produced.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Reporting

The perpetual inventory method cannot be used in a job order cost system.

2-2

Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Reporting

A job order cost system and a process cost system are two alternative methods for valuing inventories.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

A job order cost system identifies costs with a particular job rather than with a set time period.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

A company may use either a job order cost system or a process cost system, but not both.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

2-3

Job Order Costing

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2-4

10.

Test Bank for Managerial Accounting, Sixth Edition

Recording the acquisition of raw materials is a part of accumulating manufacturing costs.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

11.

Manufacturing costs are generally incurred in one period and recorded in a subsequent period.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

12.

The Purchases account is credited for all raw materials purchase returns and allowances.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

13.

When raw materials are received, there is no effort at this point to associate the cost of materials with specific jobs.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

14.

When raw materials are purchased, the Work in Process Inventory account is debited.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2-5

15.

Job Order Costing

Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

16.

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

17.

Job order cost sheets constitute the subsidiary ledger of the control account Work In Process Inventory.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

18.

In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

19.

Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.

Ans:, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2-6

20.

Test Bank for Managerial Accounting, Sixth Edition

Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred.

Ans:, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

21.

There should be a separate job cost sheet for each job.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

2-7

22.

Job Order Costing

Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: FSA

23.

The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

24.

Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

25.

A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk Management, AICPA PC: None, IMA: Internal Controls

26.

Finished Goods Inventory is charged for the cost of jobs completed during a period.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2-8

27.

Test Bank for Managerial Accounting, Sixth Edition

When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: FSA

28.

Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

29.

Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

30.

At the end of the year, the accountant credits the amount of the overapplied overhead to Cost of Goods Sold.

Ans:, LO: 6, Bloom: C, Difficulty: Medium, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

31.

A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

2-9

32.

Job Order Costing

The cost of raw materials purchased is credited to Raw Materials Inventory when materials are received.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

33.

Requisitions for direct materials are posted daily to the individual job cost sheets.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: None, AICPA PC: None, IMA: Business Economics

2 - 10

34.

Test Bank for Managerial Accounting, Sixth Edition

The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

35.

At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

MULTIPLE CHOICE QUESTIONS 36.

Which of the following is one of the components of cost accounting? a. b. c. d.

It involves measuring product costs. It involves the determination of company profits. It requires GAAP to be applied. It requires cost minimizing principles.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

37.

A major purpose of cost accounting is to a. b. c. d.

classify all costs as operating or nonoperating. measure, record, and report period costs. provide information to stockholders for investment decisions. measure, record, and report product costs.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

2 - 11

38.

Job Order Costing

The two basic types of cost accounting systems are a. b. c. d.

job order and job accumulation systems. job order and process cost systems. process cost and batch systems. job order and batch systems.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

39.

A process cost system would most likely be used by a company that makes a. b. c. d.

motion pictures. repairs to automobiles. breakfast cereal. college graduation announcements.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

2 - 12

40.

Test Bank for Managerial Accounting, Sixth Edition

Which of the following would be accounted for using a job order cost system? a. b. c. d.

The production of personal computers. The production of automobiles. The refining of petroleum. The construction of a new campus building.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

41.

Process costing is used when a. b. c. d.

the production process is continuous. production is aimed at filling a specific customer order. dissimilar products are involved. costs are to be assigned to specific jobs.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

42.

Process costing is not used when a. b. c. d.

similar goods are being produced. large volumes are produced. jobs have distinguishing characteristics. a series of connected manufacturing processes is necessary.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

43.

An important feature of a job order cost system is that each job a. b. c. d.

must be similar to previous jobs completed. has its own distinguishing characteristics. must be completed before a new job is accepted. consists of one unit of output.

2 - 13

Job Order Costing

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

44.

As of December 31, 2013, Stand Still Industries had $2,500 of raw materials inventory. At the beginning of 2013, there was $2,000 of materials on hand. During the year, the company purchased $325,000 of materials; however, it paid for only $312,500. How much inventory was requisitioned for use on jobs during 2013? a. b. c. d.

$312,000 $324,500 $325,500 $313,000

Ans:, LO: 2, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Resource Management, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Business Economics

45.

The flow of costs in a job order cost system a. involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done. b. cannot be measured until all jobs are complete. c. measures product costs for a set time period. d. generally follows a LIFO cost flow assumption.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

2 - 14

46.

Test Bank for Managerial Accounting, Sixth Edition

In a job order cost accounting system, the Raw Materials Inventory account is a. b. c. d.

an expense. a control account. not used. a period cost.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

47.

When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is a. Finished Goods Inventory Direct Materials Direct Labor Manufacturing Overhead b. Work In Process Inventory Direct Materials Direct Labor Manufacturing Overhead c. Raw Materials Inventory Work In Process Inventory d. Finished Goods Inventory Work In Process Inventory

Ans:, LO: 2, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

48.

The two major steps in the flow of costs are

2 - 15

Job Order Costing

a. b. c. d.

allocating and assigning. acquiring and accumulating. accumulating and assigning. accumulating and amortizing.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

49.

The Raw Materials Inventory account is a. b. c. d.

a subsidiary account. debited for invoice costs and freight costs chargeable to the purchaser. debited for purchase discounts taken. debited for purchase returns and allowances.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

50.

Records of individual items of raw materials would not be maintained a. b. c. d.

electronically. manually. on stores ledger cards. in the Raw Materials Inventory account.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: Project Management, IMA: Business Applications

2 - 16

51.

Test Bank for Managerial Accounting, Sixth Edition

Cost of raw materials is debited to Raw Materials Inventory when the a. b. c. d.

materials are ordered. materials are received. materials are put into production. bill for the materials is paid.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

52.

Which of the following is not included in factory labor costs? a. b. c. d.

Gross earnings. Net earnings. Fringe benefits. Employer payroll taxes.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

53.

All of the following would be entries in assigning accumulated costs to the Work In Process Inventory except: a. b. c. d.

the purchase of raw materials. raw materials are used. overhead is applied. factory labor is used.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

54.

Factory labor costs a. b. c. d.

are accumulated in a control account. do not include pension costs. include vacation pay. are based on workersâ&#x20AC;&#x2122; net pay.

2 - 17

Job Order Costing

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

55.

Factory Labor is a(n) a. b. c. d.

expense account. control account. subsidiary account. temporary account.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

56.

Kline Manufacturing has the following labor costs: Factory—Gross wages Factory—Net wages Employer Payroll Taxes Payable

$490,000 420,000 50,000

The entry to record the cost of factory labor and the associated payroll tax expense will include a debit to Factory Labor for a. b. c. d.

$540,000. $490,000. $470,000. $440,000.

Ans:, LO: 2, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

2 - 18

57.

Test Bank for Managerial Accounting, Sixth Edition

Factory labor costs a. b. c. d.

accumulate in advance of utilization. accumulate in a control account. include sick pay earned by factory workers. accumulate in the Factory Labor Expense account.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

58.

Which of the following is not a control account? a. b. c. d.

Manufacturing Overhead Factory Labor Accounts Receivable Raw Materials Inventory

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

59.

Manufacturing Overhead would not have a subsidiary account for a. b. c. d.

utilities. property taxes. insurance. raw materials inventory.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

60.

The entry to record the acquisition of raw materials on account is a. Work in Process Inventory Accounts Payable b. Manufacturing Overhead Raw Materials Inventory

2 - 19

Job Order Costing

Accounts Payable c. Accounts Payable Raw Materials Inventory d. Raw Materials Inventory Accounts Payable

Ans:, LO: 2, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

61.

Which one of the following best describes a job cost sheet? a. It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. b. It is used to track manufacturing overhead costs to specific jobs. c. It is used by management to understand how direct costs affect profitability. d. It is a daily form that management uses for tracking worker productivity on which employee raises are based.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

62.

Job cost sheets constitute the subsidiary ledger for the a. b. c. d.

Finished Goods Inventory account. Cost of Goods Sold account. Work In Process Inventory account. Cost of Goods Manufactured account.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

2 - 20

63.

Test Bank for Managerial Accounting, Sixth Edition

A materials requisition slip showed that direct materials requested were $63,000 and indirect materials requested were $9,000. The entry to record the transfer of materials from the storeroom is a. Work In Process Inventory.....................................................

63,000

Raw Materials Inventory...............................................

63,000

b. Direct Materials.....................................................................

63,000

Indirect Materials...................................................................

9,000

Work in Process Inventory............................................ c. Manufacturing Overhead.......................................................

72,000 72,000

Raw Materials Inventory...............................................

72,000

d. Work In Process Inventory.....................................................

63,000

Manufacturing Overhead.......................................................

9,000

Raw Materials Inventory...............................................

72,000

Ans:, LO: 3, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

64.

The job cost sheet does not show a. b. c. d.

costs chargeable to a specific job. the total costs of a completed job. the unit cost of a completed job. the cost of goods sold.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

65.

Under an effective system of internal control, the authorization for issuing materials is made

2 - 21

Job Order Costing

a. b. c. d.

orally. on a prenumbered materials requisition slip. by the accounting department. by anyone on the production line.

Ans:, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk Management, AICPA PC: None, IMA: Internal Controls

66.

A copy of the materials requisition slip would not include the: a. b. c. d.

quantity. stock number. cost per unit. name of the supplier.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Internal Controls

67.

Materials requisition slips are costed a. b. c. d.

by production supervisors. by factory personnel who work on the production line. after the goods have been sold. using any of the inventory costing methods.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2 - 22

Test Bank for Managerial Accounting, Sixth Edition

68.

Postings to control accounts in a costing system are made a. b. c. d.

monthly. daily. annually. semi-annually.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

69.

Which one of the following should be equal to the balance of the Work In Process Inventory account at the end of the period? a. b. c. d.

The total of the amounts transferred from raw materials for the current period The sum of the costs shown on the job cost sheets of unfinished jobs The total of manufacturing overhead applied to work in process for the period The total manufacturing costs for the period

Ans:, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

70.

Which of the following shows entries only to control accounts? a. Factory Labor Factory Wages Payable b. Work in Process Factory Labor Raw Materials Inventory Factory Wages Payable c. Work in Process Manufacturing Overhead Raw Materials Inventory d. Factory Labor

2 - 23

Job Order Costing

Raw Materials Inventory Accounts Payable Factory Wages Payable

Ans:, LO: 3, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

71.

A time ticket does not indicate the a. b. c. d.

employee's name. account to be charged. number of personal exemptions claimed by the employee. job number.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

72.

Which one of the following is a source document that impacts the job cost sheet? a. b. c. d.

Raw materials receiving slips. Materials purchase orders. Labor time tickets. Finished goods shipping documents.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Internal Controls

2 - 24

73.

Test Bank for Managerial Accounting, Sixth Edition

Time tickets should be approved by a. b. c. d.

the audit committee. co-workers. the employee's supervisor. the payroll department.

Ans:, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Internal Controls

74.

If the entry to assign factory labor showed only a debit to Work In Process Inventory, then all labor costs were a. b. c. d.

direct labor. indirect labor. overtime related. regular hours.

Ans:, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

75.

The principal accounting record used in assigning costs to jobs is a. b. c. d.

a job cost sheet. the cost of goods manufactured schedule. the Manufacturing Overhead control account. the stores ledger cards.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

76.

The following information is available for completed Job No. 402: Direct materials, $80,000; direct labor, $120,000; manufacturing overhead applied, $60,000; units produced, 5,000 units; units sold, 4,000 units. The cost of the finished goods on hand from this job is a. b. c. d.

$40,000. $260,000. $52,000. $208,000.

2 - 25

Job Order Costing

Ans:, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

77.

Sportly, Inc. completed Job No. B14 during 2013. The job cost sheet listed the following: Direct materials

$55,000

Direct labor

$30,000

Manufacturing overhead applied

$20,000

Units produced

3,000 units

Units sold

1,800 units

How much is the cost of the finished goods on hand from this job? a. b. c. d.

$105,000 $63,000 $42,000 $51,000

Ans:, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 26

78.

Test Bank for Managerial Accounting, Sixth Edition

Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2013 totaled $18,000 of materials, $9,000 of direct labor costs, and $6,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $15,000, and the ending balance is $9,000. During the year, the company completed 20 machines. How much is the cost per machine? a. b. c. d.

$1,350 $1,950 $1,650 $2,400

Ans:, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

79.

As of December 31, 2013, Nilsen Industries had $2,000 of raw materials inventory. At the beginning of 2013, there was $1,600 of materials on hand. During the year, the company purchased $324,000 of materials; however it paid for only $314,000. How much inventory was requisitioned for use on jobs during 2013? a. b. c. d.

$324,400 $314,400 $313,600 $323,600

Ans:, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

80.

Cost of goods manufactured equals $65,000 for 2013. Finished goods inventory is $2,000 at the beginning of the year and $5,500 at the end of the year. Beginning and ending work in process for 2013 are $4,000 and $5,000, respectively. How much is cost of goods sold for the year? a. b. c. d.

$67,500 $63,000 $61,500 $68,500

2 - 27

Job Order Costing

Ans:, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

81.

A company expected its annual overhead costs to be $1,800,000 and direct labor costs to be $1,000,000. Actual overhead was $1,740,000, and actual labor costs totaled $1,100,000. How much is the companyâ&#x20AC;&#x2122;s predetermined overhead rate to the nearest cent? a. b. c. d.

$1.74 $1.57 $1.80 $1.64

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

2 - 28

82.

Test Bank for Managerial Accounting, Sixth Edition

Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $1,025,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $1,050,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12? a. b. c. d.

$1,050 $51,250 $52,500 $1,025

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

83.

Barr Mfg. provided the following information from its accounting records for 2013: Expected production

30,000 labor hours

Actual production

28,000 labor hours

Budgeted overhead

$900,000

Actual overhead

$870,000

How much is the overhead application rate if Barr bases the rate on direct labor hours? a. b. c. d.

$32.14 per hour $30.00 per hour $29.00 per hour $31.07 per hour

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

84.

Kinney Company applies overhead on the basis of 150% of direct labor cost. Job No. 176 is charged with $100,000 of direct materials costs and $120,000 of manufacturing overhead. The total manufacturing costs for Job No. 176 is a. $220,000.

2 - 29

Job Order Costing

b. $400,000. c. $300,000. d. $270,000. Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

85.

Redman Company manufactures customized desks. The following pertains to Job No. 978: Direct materials used Direct labor hours worked Direct labor rate per hour Machine hours used Applied factory overhead rate per machine hour

$11,450 360 $15.00 300 $22.00

What is the total manufacturing cost for Job No. 978? a. b. c. d.

$21,650 $23,450 $24,950 $26,750

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 30

86.

Test Bank for Managerial Accounting, Sixth Edition

Henson Company applies overhead on the basis of 120% of direct labor cost. Job No. 190 is charged with $120,000 of direct materials costs and $180,000 of manufacturing overhead. The total manufacturing costs for Job No. 190 is a. b. c. d.

$300,000. $516,000. $324,000. $450,000.

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

87.

Norman Company manufactures customized desks. The following pertains to Job No. 953: Direct materials used

$18,800

Direct labor hours worked

600

Direct labor rate per hour

$16.00

Machine hours used

400

Applied factory overhead rate per machine hour

$30.00

What is the total manufacturing cost for Job No. 953? a. b. c. d.

$37,200 $40,400 $43,200 $46,400

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

88.

Minton Company provided the following information from its accounting records for 2013: Expected production

60,000 labor hours

Actual production

56,000 labor hours

2 - 31

Job Order Costing

Budgeted overhead

$1,500,000

Actual overhead

$1,450,000

How much is the overhead application rate if Minton Company bases it on direct labor hours? a. b. c. d.

$25.00 per hour $26.79 per hour $25.89 per hour $24.17 per hour

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

89.

The labor costs that have been identified as indirect labor should be charged to a. b. c. d.

manufacturing overhead. direct labor. the individual jobs worked on. salary expense.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Reporting

2 - 32

90.

Test Bank for Managerial Accounting, Sixth Edition

Manufacturing overhead is applied to each job a. b. c. d.

at the time when the overhead cost is incurred. by means of a predetermined overhead rate. at the end of the year when actual costs are known. only if the overhead costs can be directly traced to that job.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

91.

The predetermined overhead rate is based on the relationship between a. b. c. d.

estimated annual costs and actual activity. estimated annual costs and expected annual activity. actual monthly costs and actual annual activity. estimated monthly costs and actual monthly activity.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

92.

The predetermined overhead rate is a. b. c. d.

determined on a moving average basis throughout the year. not calculated until actual overhead costs are incurred. determined at the beginning of the year. determined at the end of the current year.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

93.

In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to a. b. c. d.

direct labor hours. indirect labor dollars. machine hours. raw materials dollars.

2 - 33

Job Order Costing

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

94.

If annual overhead costs are expected to be $800,000 and direct labor costs are expected to be $1,000,000, then if the activity base is direct labor costs: a. b. c. d.

$1.25 is the predetermined overhead rate. for every dollar of manufacturing overhead, 80 cents of direct labor will be assigned. for every dollar of direct labor, 80 cents of manufacturing overhead will be assigned. a predetermined overhead rate cannot be determined.

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

95.

Overhead application is recorded with a a. b. c. d.

credit to Work in Process Inventory. credit to Manufacturing Overhead. debit to Manufacturing Overhead. credit to job cost sheets.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2 - 34

96.

Test Bank for Managerial Accounting, Sixth Edition

Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period? a. b. c. d.

Goods available for sale. Raw materials purchased. Work in process. Direct materials used.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

97.

Simmons Inc. applies overhead to production at a predetermined rate of 90% based on direct labor cost. Job No. 250, the only job still in process at the end of August, has been charged with manufacturing overhead of $7,200. What was the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is $30,000? a. b. c. d.

$7,500. $8,000. $14,800. $30,000.

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

98.

Spencer Inc. applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job No. 130, the only job still in process at the end of August, has been charged with manufacturing overhead of $5,000. What was the amount of direct materials charged to Job 130 assuming the balance in Work in Process inventory is $20,000? a. b. c. d.

$5,000. $6,250. $8,750. $20,000.

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 35

99.

Job Order Costing

For Jacobs Company, the predetermined overhead rate is 70% of direct labor cost. During the month, $300,000 of factory labor costs are incurred of which $70,000 is indirect labor. Actual overhead incurred was $160,000. The amount of overhead debited to Work in Process Inventory should be: a. b. c. d.

$161,000 $160,000 $210,000 $230,000

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

100.

Simpson Company applies overhead on the basis of 200% of direct labor cost. Job No. 305 is charged with $150,000 of direct materials costs and $200,000 of manufacturing overhead. The total manufacturing costs for Job No. 305 is: a. b. c. d.

$350,000 $450,000 $500,000 $550,000

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 36

101.

Test Bank for Managerial Accounting, Sixth Edition

For Wilton Company, the predetermined overhead rate is 70% of direct labor cost. During the month, $360,000 of factory labor costs are incurred of which $100,000 is indirect labor. Actual overhead incurred was $180,000. The amount of overhead debited to Work in Process Inventory should be: a. b. c. d.

$182,000 $180,000 $252,000 $260,000

Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

102.

At the beginning of the year, Monroe Company estimates annual overhead costs to be $1,600,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is a. b. c. d.

$1,600,000. $1,523,809. $1,120,000. $1,680,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

103.

Cost of goods sold is obtained from a. b. c. d.

analysis of all the control accounts in the cost system. the finished goods inventory records. the work in process inventory records. the Raw Materials Inventory control account.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

2 - 37

104.

Job Order Costing

When determining costs of jobs, how does a company account for indirect materials? a. b. c. d.

It is added to work in process as used. It remains part of raw materials inventory. It is transferred out of raw materials into manufacturing overhead when used. It is transferred out of raw materials into work in process as used.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

105.

In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit to a. b. c. d.

Cost of Goods Manufactured. Finished Goods Inventory. Work in Process Inventory. Raw Materials Inventory.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2 - 38

106.

Test Bank for Managerial Accounting, Sixth Edition

During 2013, Tanner Manufacturing expected Job No. 26 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Tanner applied overhead based on direct labor cost. Actual production required an overhead cost of $280,000, $550,000 in materials used, and $210,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods? a. b. c. d.

$1,000,000 $1,040,000 $1,060,000 $1,075,000

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

107.

Debits to Work in Process Inventory are accompanied by a credit to all but which one of the following accounts? a. b. c. d.

Raw Materials Inventory Factory Labor Manufacturing Overhead Cost of Goods Sold

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

108.

Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system? a. b. c. d.

Cost of goods sold is recognized Raw materials are purchased Factory labor is incurred Manufacturing overhead is incurred

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

2 - 39

109.

Job Order Costing

Which of the following is not viewed as part of assigning manufacturing costs in a job order cost system? a. b. c. d.

Manufacturing overhead is applied Raw materials are used Manufacturing overhead is incurred Completed goods are recognized

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

110.

In determining total manufacturing costs on the cost of goods manufactured schedule, a. b. c. d.

beginning work in process inventory should have a zero balance. actual manufacturing overhead costs appear as a deduction. manufacturing overhead applied is added to direct materials and direct labor. ending work in process inventory is deducted from beginning work in process inventory.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

2 - 40

111.

Test Bank for Managerial Accounting, Sixth Edition

Gulick Company developed the following data for the current year: Beginning work in process inventory Direct materials used

$160,000 96,000

Actual overhead

192,000

Overhead applied

144,000

Cost of goods manufactured

176,000

Total manufacturing costs

480,000

Gulick Company's direct labor cost for the year is a. b. c. d.

$48,000. $240,000. $144,000. $192,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Hard, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

112.

Gulick Company developed the following data for the current year: Beginning work in process inventory Direct materials used

$160,000 96,000

Actual overhead

192,000

Overhead applied

144,000

Cost of goods manufactured

176,000

Total manufacturing costs

480,000

Gulick Company's ending work in process inventory is a. $464,000.

2 - 41

Job Order Costing

b. $320,000. c. $304,000. d. $144,000. Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

113.

Hayward Manufacturing Company developed the following data: Beginning work in process inventory

$450,000

Direct materials used

350,000

Actual overhead

550,000

Overhead applied

400,000

Cost of goods manufactured

600,000

Ending work in process

750,000

Hayward Manufacturing Company's total manufacturing costs for the period is a. b. c. d.

$950,000. $900,000. $650,000. cannot be determined from the data provided.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 42

114.

Test Bank for Managerial Accounting, Sixth Edition

Which of the following is not used in assigning manufacturing costs to work in process inventory? a. b. c. d.

Actual manufacturing overhead Time tickets Materials requisitions Predetermined overhead rate

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

115.

On the cost of goods manufactured schedule, the cost of goods manufactured agrees with the a. balance of Finished Goods Inventory at the end of the period. b. total debits to Work in Process Inventory during the period. c. amount transferred from Work in Process Inventory to Finished Goods during the period. d. debits to Cost of Goods Sold during the period.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

116.

Gannon Company had the following information at December 31: Finished goods inventory, January 1 Finished goods inventory, December 31

$ 50,000 150,000

If the cost of goods manufactured during the year amounted to $2,100,000 and annual sales were $2,750,000, the amount of gross profit for the year is a. b. c. d.

$650,000. $2,000,000. $750,000. $550,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 43

117.

Job Order Costing

Haight Company incurred direct materials costs of $1,500,000 during the year. Manufacturing overhead applied was $270,000 and is applied at the rate of 60% of direct labor costs. Haight Companyâ&#x20AC;&#x2122;s total manufacturing costs for the year was a. b. c. d.

$2,220,000. $1,932,000. $1,770,000. $2,832,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting 118.

Greer Company developed the following data for the current year: Beginning work in process inventory

$ 102,000

Direct materials used

156,000

Actual overhead

132,000

Overhead applied

138,000

Cost of goods manufactured

675,000

Total manufacturing costs

642,000

How much is Greer Company's direct labor cost for the year? a. b. c. d.

$381,000 $450,000 $348,000 $246,000

Ans:, LO: 5, Bloom: AP, Difficulty: Hard, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

119.

Greer Company developed the following data for the current year:

2 - 44

Test Bank for Managerial Accounting, Sixth Edition

Beginning work in process inventory

$ 102,000

Direct materials used

156,000

Actual overhead

132,000

Overhead applied

138,000

Cost of goods manufactured

675,000

Total manufacturing costs

642,000

How much is Greer Company's ending work in process inventory for the year? a. b. c. d.

$69,000 $363,000 $63,000 $279,000

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

120.

Chmelar Manufacturing Company developed the following data: Beginning work in process inventory

$ 80,000

Direct materials used

480,000

Actual overhead

560,000

Overhead applied

540,000

Cost of goods manufactured

1,280,000

Ending work in process

How much are total manufacturing costs for the period? a. $1,580,000 b. $1,260,000 c. $1,100,000

60,000

2 - 45

Job Order Costing

d. $1,220,000 Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

121.

Barger Company had the following information at December 31: Finished goods inventory, January 1 Finished goods inventory, December 31

$ 90,000 126,000

If the cost of goods manufactured during the year amounted to $1,995,000 and annual sales were $2,994,000, how much is the amount of gross profit for the year? a. b. c. d.

$999,000 $909,000 $1,959,000 $1,035,000

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

122.

Emley Company incurred direct materials costs of $600,000 during the year. Manufacturing overhead applied was $560,000 and is applied based on direct labor costs. The predetermined overhead rate is 70%. How much are Emley Companyâ&#x20AC;&#x2122;s total manufacturing costs for the year? a. b. c. d.

$1,552,000 $1,400,000 $1,160,000 $1,960,000

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 46

123.

Test Bank for Managerial Accounting, Sixth Edition

During 2013, Durham Manufacturing expected Job No. 51 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Durham applied overhead based on direct labor cost. Actual production required an overhead cost of $290,000, $550,000 in materials used, and $220,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods? a. b. c. d.

$1,070,000 $1,100,000 $1,000,000 $1,060,000

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

124.

During 2013, Cotte Manufacturing expected Job No. 59 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Cotte applied overhead based on direct labor cost. Actual production required an overhead cost of $290,000, $550,000 in materials used, and $220,000 in labor. All of the goods were completed. How much is the amount of overor underapplied overhead? a. b. c. d.

$10,000 underapplied $10,000 overapplied $40,000 underapplied $40,000 overapplied

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

125.

Kimble Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period: Estimated annual overhead cost

$1,600,000

Actual annual overhead cost

$1,540,000

Estimated machine hours

400,000

2 - 47

Job Order Costing

Actual machine hours a. b. c. d.

380,000

$1,520,000 applied and $20,000 overapplied $1,600,000 applied and $20,000 overapplied $1,520,000 applied and $20,000 underapplied $1,463,000 applied and neither under- nor overapplied

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

126.

Barnes Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period:

a. b. c. d.

Estimated annual overhead cost

$3,000,000

Actual annual overhead cost

$2,940,000

Estimated machine hours

300,000

Actual machine hours

290,000

$2,900,000 applied and $40,000 overapplied $3,000,000 applied and $40,000 overapplied $2,900,000 applied and $40,000 underapplied $2,940,000 applied and neither under- nor overapplied

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

127.

A company assigned overhead to work in process. At year end, what does the amount of overapplied overhead mean? a. b. c. d.

The overhead assigned to work in process is greater than the estimated overhead costs. The overhead assigned to work in process is less than the estimated overhead costs. The overhead assigned to work in process is less than the actual overhead. The overhead assigned to work in process is greater than the overhead incurred.

2 - 48

Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

128.

If the Manufacturing Overhead account has a debit balance at the end of a period, it means that a. b. c. d.

actual overhead costs were less than overhead costs applied to jobs. actual overhead costs were greater than overhead costs applied to jobs. actual overhead costs were equal to overhead costs applied to jobs. no jobs have been completed.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

129.

If the manufacturing overhead costs applied to jobs worked on were greater than the actual manufacturing costs incurred during a period, overhead is said to be a. b. c. d.

underapplied. overapplied. in error. prepaid.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

130.

At the end of the year, any balance in the Manufacturing Overhead account is generally eliminated by adjusting a. b. c. d.

Work In Process Inventory. Finished Goods Inventory. Cost of Goods Sold. Raw Materials Inventory.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

131.

If Manufacturing Overhead has a credit balance at the end of the period, then

2 - 49

Job Order Costing

a. b. c. d.

overhead has been underapplied. the overhead assigned to Work in Process Inventory is less than the overhead incurred. overhead has been overapplied. management must take corrective action.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

132.

The Manufacturing Overhead account shows debits of $30,000, $24,000, and $28,000 and one credit for $86,000. Based on this information, manufacturing overhead a. b. c. d.

has been overapplied. has been underapplied. has not been applied. shows a zero balance.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

133.

If Manufacturing Overhead has a debit balance at the end of the period, then a. b. c. d.

overhead has been underapplied. the overhead assigned to Work in Process Inventory is more than the overhead incurred. overhead has been overapplied. management must take corrective action.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

134.

If actual overhead is greater than applied manufacturing overhead, then manufacturing overhead is: a. b. c. d.

underapplied. overapplied. a loss on the income statement under "Other Expenses and Losses." considered a miscellaneous expense.

2 - 50

Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

135.

If actual overhead is less than applied manufacturing overhead, then manufacturing overhead is: a. b. c. d.

underapplied. overapplied. a loss on the income statement under "Other Expenses and Losses." considered a miscellaneous expense.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

136.

If manufacturing overhead has been underapplied during the year, the adjusting entry at the end of the year will show a a. b. c. d.

debit to Manufacturing Overhead. credit to Cost of Goods Sold. debit to Work in Process Inventory. debit to Cost of Goods Sold.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

137.

If manufacturing overhead has been overapplied during the year, the adjusting entry at the end of the year will show a a. b. c. d.

debit to Manufacturing Overhead. credit to Finished Goods Inventory debit to Cost of Goods Sold. credit to Work in Process Inventory.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

138.

The existence of under- or overapplied overhead at the end of the year:

2 - 51

Job Order Costing

a. b. c. d.

requires an adjustment to Cost of Goods Sold. indicates that an error has been made. requires a retroactive adjustment to the cost of all jobs completed. is written off as a bad estimate expense.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

139.

Conceptually, any under- or overapplied overhead at the end of the year should be allocated among all of the following except a. b. c. d.

cost of goods sold. ending work in process inventory. ending raw materials inventory. ending finished goods inventory.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

140.

If, at the end of the year, Manufacturing Overhead has been overapplied, it means that a. b. c. d.

actual overhead costs were greater than the overhead assigned to jobs. actual overhead costs were less than the overhead assigned to jobs. overhead has not been applied to jobs still in process. cost of goods will have to be increased by the amount of the overapplied overhead.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

141.

A process cost system would be used for all of the following except the a. b. c. d.

manufacture of cereal. refining of petroleum. printing of wedding invitations. production of automobiles.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Applications

2 - 52

142.

Test Bank for Managerial Accounting, Sixth Edition

In a job order cost system, it would be correct in recording the purchase of raw materials to debit a. b. c. d.

Work in Process Inventory. Work in Process and Manufacturing Overhead. Raw Materials Inventory. Finished Goods Inventory.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

143.

In a manufacturing company, the cost of factory labor consists of all of the following except a. b. c. d.

employer payroll taxes. fringe benefits incurred by the employer. net earnings of factory workers. gross earnings of factory workers.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

144.

Which of the following is not a control account? a. b. c. d.

Raw Materials Inventory Factory Labor Manufacturing Overhead All of these are control accounts.

Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

145.

When the company assigns factory labor costs to jobs, the direct labor cost is debited to a. Direct Labor. b. Factory Labor. c. Manufacturing Overhead.

2 - 53

Job Order Costing

d. Work in Process Inventory. Ans:, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

146.

Jinnah Company applies overhead on the basis of 200% of direct labor cost. Job No. 501 is charged with $180,000 of direct materials costs and $240,000 of manufacturing overhead. The total manufacturing costs for Job No. 501 is

a. $420,000. b. $660,000. c. $540,000. d. $600,000. Ans:, LO: 4, Bloom: AP, Difficulty: Medium, Min: 1, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting 147.

Companies assign manufacturing overhead to work in process on an estimated basis through the use of a(n) a. b. c. d.

actual overhead rate. estimated overhead rate. assigned overhead rate. predetermined overhead rate.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

148.

Overapplied manufacturing overhead exists when overhead assigned to work in process is a. more than overhead incurred and there is a debit balance in Manufacturing Overhead at the end of a period. b. less than overhead incurred and there is a debit balance in Manufacturing Overhead at the end of a period. c. more than overhead incurred and there is a credit balance in Manufacturing Overhead at the end of a period. d. less than overhead incurred and there is a credit balance in Manufacturing Overhead at the end of a period.

2 - 54

Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

149.

Usually, under- or overapplied overhead is considered to be an adjustment to a. b. c. d.

work in process. finished goods. finished goods and cost of goods sold. cost of goods sold.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

150.

Which of the following statements about under- or overapplied manufacturing overhead is correct?

a. After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted, Manufacturing Overhead will have a zero balance. b. When Manufacturing Overhead has a credit balance, overhead is said to be underapplied. c. At the end of the year, under- or overapplied overhead is eliminated by a closing entry. d. When annual financial statements are prepared, overapplied overhead is reported in current liabilities. Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

Chapter 3 TRUE-FALSE STATEMENTS 1.

Process cost accounting focuses on the process involved in mass-producing products that are very similar in nature.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

2 - 55

Job Order Costing

Process cost systems are used to apply costs to a specific job, such as the manufacturing of a specialized machine.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

A company that produces motion pictures would likely use a process cost system.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

In a process cost system, costs are tracked through a series of connected manufacturing processes or departments, rather than by individual jobs.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

In a process cost system, total costs are determined at the end of a month or year.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

Separate work in process accounts are maintained for each production department or manufacturing process in a process cost system.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2 - 56

Test Bank for Managerial Accounting, Sixth Edition

In a process cost system, materials, labor and overhead are only added in the first production department.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

The assignment of the three manufacturing cost elements to Work in Process in a process cost system is the same as in a job order cost system.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

Fewer materials requisitions are generally required in a process cost system than in a job order cost system.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

10.

In a process cost system, labor costs incurred may be captured on time tickets.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

11.

A primary driver of overhead costs in continuous manufacturing operations is machine time used.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

2 - 57

12.

Job Order Costing

Equivalent units of production are used to determine the cost per unit of completed products.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

13.

Equivalent units of production measure the work done during a period, expressed in fully completed units.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

14.

Equivalent units of production is the sum of units completed and transferred out plus equivalent units of beginning work in process.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

15.

The weighted-average method of computing equivalent units is the most widely used method in practice.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

16.

There are no units in process at the beginning of the period, 1,500 units in process at the end of the period that are 40% complete, and 15,000 units transferred out during the period. Based on this information, there were 14,400 equivalent units of production during the period.

2 - 58

Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 5, Bloom: AP, Difficulty: Easy, Min: 2, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

17.

The first step performed in preparing a production cost report is computing the equivalent units of production.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

18.

Equivalent units of production must be calculated before the unit production costs can be computed.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

19.

The physical units in a department are another name for the equivalent units of production.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

20.

Unit material cost is computed by taking total material costs charged to the department for the period and dividing by the physical units in the process during the period.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

21.

When equivalent units of production are different for materials and conversion costs, unit costs are computed for materials, conversion, and total manufacturing.

2 - 59

Job Order Costing

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

22.

The total manufacturing cost per unit is used in costing the units completed and transferred during the period.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

23.

A production cost report is an internal document for management that shows production quantity and cost data for a particular job.

Ans:, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

24.

Production cost reports provide a basis for evaluating the productivity of a department.

Ans:, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

25.

Companies often use a combination of a process cost and a job order cost system, called operations costing.

Ans:, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

26.

The FIFO method is easier to understand and use than the weighted-average method.

2 - 60

Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

27.

The FIFO method is conceptually superior to the weighted-average method.

Ans:, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

28.

When comparing the FIFO with the weighted-average method, the FIFO method provides current cost information.

Ans:, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

29.

There are no units in ending work in process at the end of the period under the FIFO method.

Ans:, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

30.

Companies using the weighted-average method do not complete units left over from the previous accounting periods, they start new units.

Ans:, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

31.

In continuous process manufacturing, generally once the production begins, it continues until the finished product emerges.

2 - 61

Job Order Costing

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

32.

One similarity of process cost accounting with job order cost accounting is that both determine total manufacturing costs after each job.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

33.

The flow of costs in a process costing system requires that materials be added in one department, labor added in another department and manufacturing overhead in a third department.

Ans:, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

34.

When finished goods are sold, the entry to record the cost of goods sold is a debit to Finished Goods Inventory and a credit to Cost of Goods Sold.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

35.

When there is no beginning work in process and materials are entered at the beginning of the process, equivalent units of materials are the same as the units started into production.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

36.

In order to compute the physical unit flow, a company must first compute unit production costs.

2 - 62

Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

37.

Under the FIFO method, it is assumed that the beginning work in process is completed before new work is started.

Ans:, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

MULTIPLE CHOICE QUESTIONS 38.

A process cost accounting system is most appropriate when a. a variety of different products are produced, each one requiring different types of materials, labor, and overhead. b. the focus of attention is on a particular job or order. c. similar products are mass-produced. d. individual products are custom made to the specification of customers.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

39.

A characteristic of products that are mass-produced in a continuous fashion is that a. b. c. d.

the products are identical or very similar in nature. they are grouped in batches. they are produced at the time an order is received. their costs are accumulated on job cost sheets.

Ans:, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

2 - 63

40.

Job Order Costing

A process cost system would be used for all of the following products except a. b. c. d.

chemicals. computer chips. motion pictures. soft drinks.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

2 - 64

41.

Test Bank for Managerial Accounting, Sixth Edition

In a process cost system, a. b. c. d.

a Work in Process account is maintained for each product. a materials requisition must identify the job on which the materials will be used. a Work in Process account is maintained for each process. one Work in Process account is maintained for all the processes, similar to a job order cost system.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

42.

Differences between a job order cost system and a process cost system include all of the following except the a. b. c. d.

documents used to track costs. point at which costs are totaled. unit cost computations. flow of costs.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Applications

43.

Which of these best reflects a distinguishing factor between a job order cost system and a process cost system? a. b. c. d.

The detail at which costs are calculated. The time period each covers. The number of work in process accounts. The manufacturing cost elements included.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Applications

44.

Which of the following is a true statement about process cost systems? a. b. c. d.

In process cost systems, costs are accumulated but not assigned. A process cost system has one work in process account for each process. In process cost systems, costs are summarized on job cost sheets. Unit costs are not computed in process cost systems.

2 - 65

Job Order Costing

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

45.

Which of the following is correct regarding cost systems? Job Order

Process

a. Work in process account

several

one for each process

b. Work in process account

one

c. Work in process account

one

one for each process

d. Work in process account

several

one

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

46.

In a process cost system, unit costs are determined using a a. b. c. d.

numerator of costs of each job. denominator of units produced during the period. denominator of units produced for the job. denominator of units produced for the day.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

2 - 66

47.

Test Bank for Managerial Accounting, Sixth Edition

In process cost accounting, manufacturing costs are summarized on a a. b. c. d.

job order cost sheet. process order cost sheet. production cost report. manufacturing cost sheet.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

48.

Which of the following manufacturing cost elements occurs in a process cost system? a. b. c. d.

Direct materials. Direct labor. Manufacturing overhead. All of these.

Ans:, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

49.

In a process cost system, product costs are summarized: a. b. c. d.

on job cost sheets. on production cost reports. after each unit is produced. when the products are sold.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

50.

When manufacturing overhead costs are assigned to production in a process cost system, they are debited to a. b. c. d.

the Finished Goods Inventory account. Cost of Goods Sold. a Manufacturing Overhead account. a Work in Process account.

2 - 67

Job Order Costing

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

51.

A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to: a. b. c. d.

Finished Goods Inventory. Cost of Goods Sold. Work in Processâ&#x20AC;&#x201D;Packaging Department. Manufacturing Overhead.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

52.

Which of the following would not appear as a debit in the Work in Process account of a second department in a two stage production process? a. b. c. d.

Materials used. Overhead applied. Labor assigned. Cost of products transferred out.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2 - 68

53.

Test Bank for Managerial Accounting, Sixth Edition

Materials requisitions are: a. b. c. d.

not used in process costing. generally used more frequently in process costing than job order costing. generally used less frequently in process costing than job order costing. used more frequently by latter stage production departments.

Ans:, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

54.

A primary driver of overhead costs in continuous manufacturing operations is: a. b. c. d.

direct labor dollars. direct labor hours. machine hours. machine maintenance dollars.

Ans:, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

55.

Price Company assigns overhead based on machine hours. The Milling Department logs 1,800 machine hours and Cutting Department shows 3,000 machine hours for the period. If the overhead rate is $5 per machine hour, the entry to assign overhead will show a a. b. c. d.

debit to Manufacturing Overhead for $24,000. credit to Work in Processâ&#x20AC;&#x201D;Cutting Department for $15,000. debit to Work in Process for $15,000. credit to Manufacturing Overhead for $24,000.

Ans:, LO: 4, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

56.

Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10,000 units of ending work in process at 80% completion and 28,000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the equivalent units for conversion costs for the current period?

2 - 69

Job Order Costing

a. b. c. d.

38,000. 36,000. 8,000. 26,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

57.

15,000 units in a process that are 70% complete are referred to as: a. b. c. d.

15,000 equivalent units of production. 4,500 equivalent units of production. 10,500 equivalent units of production. 4,500 equivalent units of production.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

58.

A process with no beginning work in process, completed and transferred out 95,000 units during a period and had 50,000 units in the ending work in process inventory that were 30% complete. The equivalent units of production for the period were: a. b. c. d.

95,000 equivalent units. 145,000 equivalent units. 110,000 equivalent units. 47,500 equivalent units.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 59.

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?

2 - 70

Test Bank for Managerial Accounting, Sixth Edition

a. b. c. d.

88,000 equivalent units. 72,000 equivalent units. 60,000 equivalent units. 80,000 equivalent units.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

60.

60,000 equivalent units. 72,000 equivalent units. 68,000 equivalent units. 80,000 equivalent units.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

61.

Equivalent units are calculated by a. b. c. d.

multiplying the percentage of work done by the equivalent units of output. dividing physical units by the percentage of work done. multiplying the percentage of work done by the physical units. dividing equivalent units by the percentage of work done.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

62.

Minor Company had the following department data: Physical Units

2 - 71

Job Order Costing

Work in process, July 1 Completed and transferred out Work in process, July 31

30,000 135,000 45,000

Materials are added at the beginning of the process. What is the total number of equivalent units for materials in July? a. b. c. d.

135,000. 150,000. 210,000. 180,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 72

63.

Test Bank for Managerial Accounting, Sixth Edition

Corsi Company had the following department data: Physical Units Work in process, beginning Completed and transferred out Work in process, ending

-070,000 7,000

Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period? a. b. c. d.

70,000. 7,000. 77,000. 63,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

64.

Gantner Company had the following department information about physical units and percentage of completion: Physical Units Work in process, May 1 (60%)

60,000

Completed and transferred out

150,000

Work in process, May 31 (40%)

50,000

If materials are added at the beginning of the production process, what is the total number of equivalent units for materials during May? a. b. c. d.

210,000. 200,000. 194,000. 170,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 73

65.

Job Order Costing

It is necessary to calculate equivalent units of production in a department because a. b. c. d.

a physical count of units is impossible. some units worked on in the department are not fully complete. the physical units in the department are always 100% complete. at times a department may use a job order cost system and then switch to a process cost system.

Ans:, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

66.

In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. How many units were transferred out of the process in June? a. b. c. d.

80,000 units. 70,000 units. 90,000 units. 100,000 units.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 74

67.

Test Bank for Managerial Accounting, Sixth Edition

In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for materials for June were a. b. c. d.

90,000 equivalent units. 100,000 equivalent units. 104,000 equivalent units. 80,000 equivalent units.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

68.

In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for conversion costs for June were a. b. c. d.

80,000 equivalent units. 94,000 equivalent units. 90,000 equivalent units. 100,000 equivalent units.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

69.

A process with no beginning work in process, completed and transferred out 28,000 units during a period and had 14,000 units in the ending work in process that were 50% complete. How much is equivalent units of production for the period for conversion costs? a. b. c. d.

35,000 equivalent units. 42,000 equivalent units. 49,000 equivalent units. 21,000 equivalent units.

2 - 75

Job Order Costing

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

70.

A process with 1,600 units of beginning work in process, completed and transferred out 20,000 units during a period. There were 10,000 units in the ending work in process that were 50% complete as to conversion costs. Materials are added 80% at the beginning of the process and 20% when the units are 90% complete. How much is equivalent units of production for the period for material costs? a. b. c. d.

24,000 equivalent units. 30,000 equivalent units. 22,000 equivalent units. 28,000 equivalent units.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 76

71.

Test Bank for Managerial Accounting, Sixth Edition

Hanker Company had the following department data on physical units: Work in process, beginning Completed and transferred out Work in process, ending

3,000 12,000 2,400

Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period? a. b. c. d.

12,600. 2,400. 14,400. 9,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

72.Super-Tech Industries had the following department information about physical units and percentage of completion: Physical Units Work in process, June 1 (75%)

8,000

Completed and transferred out

18,000

Work in process, June 30 (50%)

12,000

If materials are added at the beginning of the production process, what is the total number of equivalent units for materials during June? a. b. c. d.

15,000. 30,000. 32,000. 24,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 77

73.

Job Order Costing

Gloria Company had no beginning work in process. During the period, 12,000 units were completed, and there were 1,200 units of ending work in process. How many units were started into production? a. b. c. d.

13,200. 12,000. 10,800. 1,200.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

74.

Cohen Company is trying to determine the equivalent units for conversion costs with 5,000 units of ending work in process at 80% completion and 35,000 units that are 100% complete as to materials. There are no beginning units in the department. Materials are added at the beginning of the process, and conversion costs occur evenly throughout the entire production period. What is the equivalent units of production for conversion costs for the current period? a. b. c. d.

40,000. 39,000. 4,000. 34,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

2 - 78

75.

Test Bank for Managerial Accounting, Sixth Edition

If beginning work in process is 4,000 units, ending work in process is 2,000 units, and the units accounted for equals 12,000 units, what must units started into production be? a. b. c. d.

16,000. 14,000. 8,000. 10,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

76.

The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 425,000 units, completed and transferred out 400,000 units, and ending work in process 50,000 units (40% complete). Assuming materials are entered at the beginning of the process, equivalent units for materials are: a. b. c. d.

450,000. 375,000. 400,000. 475,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

77.

The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 425,000 units, completed and transferred out 400,000 units, and ending work in process 50,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are: a. b. c. d.

450,000. 405,000. 420,000. 400,000.

2 - 79

Job Order Costing

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

78.

The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 640,000 units, and ending work in process 80,000 units (40% complete). Assuming materials are entered at the beginning of the process, equivalent units for materials are: a. b. c. d.

720,000. 600,000. 640,000. 760,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

79.

The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 640,000 units, and ending work in process 80,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are: a. b. c. d.

720,000. 760,000. 672,000. 600,000.

Ans:, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 80

80.

Test Bank for Managerial Accounting, Sixth Edition

Crawford Company has the following equivalent units for July: materials 20,000 and conversion costs 18,000. Production cost data are:

Work in process, July 1 Costs added in July

Materials

Conversion

$ 3,200

$ 1,500

25,200

21,000

The unit production costs for July are: Materials

Conversion Costs

$1.26

$1.25

1.42

1.17

1.26

1.17

1.42

1.25

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

81.

In Moyer Company, the Cutting Department had beginning work in process of 6,000 units, transferred out 16,000 units, and had an ending work in process of 3,000 units. How many units were started by Moyer during the month? a. b. c. d.

10,000. 13,000. 16,000. 19,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 81

82.

Job Order Costing

In the Shaping Department of Rollins Company the unit materials cost is $5.00 and the unit conversions cost is $3.00. The department transferred out 20,000 units and had 2,500 units in ending work in process 20% complete. If all materials are added at the beginning of the process, the total cost to be assigned to the ending work in process is a. b. c. d.

4,000. 12,500. 14,000. 20,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

83.

Holton Company has the following equivalent units for July: materials 20,000 and conversion 18,000. Production cost data are:

Work in process, July 1 Costs added in July

Materials

Conversion

$ 4,800

$ 2,250

37,800

31,500

The unit production costs for July are:

Materials

Conversion Costs

$1.89

$1.88

2.13

1.75

1.89

1.75

2.13

1.88

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

2 - 82

84.

Test Bank for Managerial Accounting, Sixth Edition

In Kapler Company, the Cutting Department had beginning work in process of 8,000 units, transferred out 20,000 units, and had an ending work in process of 4,000 units. How many units were started by Kapler during the month? a. b. c. d.

12,000. 16,000. 20,000. 24,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

85.

In the Shaping Department of Jenkins Company the unit materials cost is $2.50 and the unit conversion cost is $1.50. The department transferred out 8,000 units and had 2,000 units in ending work in process 20% complete. If all materials are added at the beginning of the process, the total cost to be assigned to the ending work in process is a. b. c. d.

$1,600. $5,000. $5,600. $8,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

86.

Cinder Company had the following department information for the month: Total materials costs

$ 80,000

Equivalent units of materials Total conversion costs

10,000 $120,000

Equivalent units of conversion costs How much is the total manufacturing cost per unit? a. $14.00. b. $6.66.

20,000

2 - 83

Job Order Costing

c. $6.00. d. $8.00. Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

87.

Materials costs of $500,000 and conversion costs of $535,500 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September? a. b. c. d.

$460,000. $977,500. $1,035,500. $1,063,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 84

88.

Test Bank for Managerial Accounting, Sixth Edition

What was the total amount of manufacturing costs assigned to the 8,000 units in the ending work in process? a. b. c. d.

$40,000. $18,000. $34,000. $58,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

89.

Charley Companyâ&#x20AC;&#x2122;s Assembly Department has materials cost at $3 per unit and conversion cost at $6 per unit. There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs and 100% complete as to materials. How much are total costs to be assigned to inventory? a. b. c. d.

$84,000. $144,000. $126,000. $180,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

90.

Byrd Company decided to analyze certain costs for June of the current year. Units started into production equaled 14,000 and ending work in process equaled 2,000 units. With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $35,000?

2 - 85

Job Order Costing

a. b. c. d.

$2.19. $8.75. $2.80. $1.40.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

91.

Long Company has recently tried to improve its analysis for its manufacturing process. Units started into production equaled 6,000 and ending work in process equaled 400 units. Long had no beginning work in process inventory. Conversion costs are applied equally throughout production, and materials are applied at the beginning of the process. How much is the materials cost per unit if ending work in process was 25% complete and total materials costs equaled $24,000? a. b. c. d.

$4.00. $4.21. $15.00. $3.75.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 86

92.

Test Bank for Managerial Accounting, Sixth Edition

Conversion cost per unit equals $7.00. Total materials costs are $60,000. Equivalent units are 20,000. How much is the total manufacturing cost per unit? a. b. c. d.

$10.00. $7.00. $4.00. $3.00.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

93.

Physical units are 40,000. Total conversion costs are $237,000. There are 1,000 units in ending inventory which are 50% complete as to conversion costs. How much are conversion costs per unit? a. b. c. d.

$6.00. $5.92. $11.86. $5.78.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

94.

Madison Industries has equivalent units of 4,000 for materials and for conversion costs. Total manufacturing costs are $160,000. Total materials costs are $120,000. How much is the conversion cost per unit? a. b. c. d.

$4.00. $10.00. $40.00. $8.00.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 87

95.

Job Order Costing

Equivalent units for materials total 30,000. There were 24,000 units completed and transferred out. Equivalent units for conversion costs equal 27,000. How much are the physical units for conversion costs if ending work in process is 50% complete? a. b. c. d.

27,000. 30,000. 6,000. 24,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

96.

If equivalent units are 12,000 for conversion costs and units transferred out equals 8,000, what stage of completion should the ending work in process be for the 16,000 units remaining? a. b. c. d.

75%. 25%. 10%. 20%.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 88

97.

Test Bank for Managerial Accounting, Sixth Edition

In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete. These units had $40,000 of materials costs and $30,000 of conversion costs. Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process. During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30. During April, manufacturing costs charged to the department were: Materials $920,000; Conversion costs $1,020,000.

The cost assigned to the units transferred to finished goods during April was a. b. c. d.

$1,800,000. $1,810,000. $1,880,000. $1,790,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

98.

The cost assigned to the units in the ending work in process inventory on April 30 was a. b. c. d.

$240,000. $210,000. $160,000. $290,000.

2 - 89

Job Order Costing

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

99.

Zibba Company enters materials at the beginning of the process. In January, there was no beginning work in process, but there were 200 units in the ending work in process inventory. The number of units completed equals the number of a. b. c. d.

units started. units started less 200. units started plus 200. equivalent units.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

100.

If there are no units in process at the beginning of the period, then a. b. c. d.

the company must be using a job order cost system. only one computation of equivalent units of production will be necessary. the units started into production will equal the number of units transferred out. the units to be accounted for will equal the units transferred out and the units in process at the end of the period.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

2 - 90

101.

Test Bank for Managerial Accounting, Sixth Edition

Which of the following is not a necessary step in preparing a production cost report? a. b. c. d.

Compute the equivalent units of production. Compute the physical unit flow. Prepare the job order cost sheet. Prepare a cost reconciliation schedule.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

102.

Honrad Company's Assembly Department has materials cost at $4 per unit and conversion cost at $8 per unit. There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs. How much are total costs to be assigned to inventory? a. b. c. d.

$112,000. $192,000. $168,800. $240,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

103.

In a process cost system, units to be accounted for in a department are equal to the a. b. c. d.

number of units started or transferred into the department. number of units transferred out of the department. units in the beginning inventory plus the units started or transferred into the department. ending inventory plus the units started or transferred into the department.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

104.

The total units accounted for equals units in a. b. c. d.

beginning work in process â&#x20AC;&#x201C; units transferred out. beginning work in process + ending work in process. ending work in process + units transferred out. ending work in process â&#x20AC;&#x201C; units started into production.

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Job Order Costing

Ans:, LO: 6, Bloom: AP, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

105.

The Slicing Department production process shows: Units Beginning Work in Process

10,000

Ending Work in Process

50,000

Total units to be accounted for

160,000

How many units were started into production in Department 1? a. b. c. d.

170,000. 110,000. 160,000. 150,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 92

106.

Test Bank for Managerial Accounting, Sixth Edition

Department 1 of a two department production process shows: Units Beginning Work in Process

10,000

Ending Work in Process

50,000

Total units to be accounted for

160,000

How many units were transferred out to Department 2? a. b. c. d.

50,000. 110,000. 160,000. 150,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

107.

The Assembly Department shows the following information: Units Beginning Work in Process

20,000

Ending Work in Process

50,000

Units Transferred Out

31,000

How many total units are to be accounted for by the Assembly Department? a. b. c. d.

81,000. 50,000. 70,000. 61,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 93

108.

Job Order Costing

The last department in a production process shows the following information at the end of the period: Units Beginning Work in Process

25,000

Started into Production

200,000

Ending Work in Process

50,000

How many units have been transferred out to finished goods during the period? a. b. c. d.

200,000. 225,000. 250,000. 175,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

109.

A process began the month with 3,000 units in the beginning work in process inventory and ended the month with 2,000 units in the ending work in process. If 15,000 units were completed and transferred out of the process during the month, how many units were started into production during the month? a. b. c. d.

14,000. 16,000. 15,000. 13,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 94

110.

Test Bank for Managerial Accounting, Sixth Edition

If 120,000 units are started into production there was no beginning work in process, and 40,000 units are in process at the end of the period, how many units were completed and transferred out? a. b. c. d.

120,000. 40,000. 80,000. 160,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

111.

Total units to be accounted for less units in beginning work in process equals a. b. c. d.

total units accounted for. units transferred out. units started into production. equivalent units.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

112.

If 120,000 units are transferred out of a department, there was no beginning work in process, and there are 20,000 units still in process at the end of a period, the number of units that were started into production during the period is a. b. c. d.

140,000. 120,000. 100,000. 20,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

113.

A department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work in

2 - 95

Job Order Costing

process; 40,000 units were completed and transferred out; and there were 20,000 units in the ending work in process that were 40% complete. During July, $96,000 materials costs and $84,000 conversion costs were charged to the department. The unit production costs for materials and conversion costs for July was Materials

Conversion Costs

$1.60

$1.40

$1.60

$1.75

$2.00

$1.40

$2.40

$2.13

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

114.

Conversion cost per unit equals $6. Total materials cost equal $80,000. Equivalent units for materials are 10,000. How much is the total manufacturing cost per unit? a. b. c. d.

$14. $6. $12. $8.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 96

115.

Test Bank for Managerial Accounting, Sixth Edition

The following department data are available: Total materials costs Equivalent units of materials Total conversion costs Equivalent units of conversion costs

$240,000 60,000 $135,000 30,000

What is the total manufacturing cost per unit? a. $4.00. b. $4.50. c. $8.50. d. $6.25.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

116.

Byers Company had the following department information for the month: Total materials costs Equivalent units of materials Total conversion costs Equivalent units of conversion costs

$48,000 5,000 $80,000 10,000

What is the total manufacturing cost per unit? a. b. c. d.

$8.53. $8.00. $9.60. $17.60.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 97

117.

Job Order Costing

Physical units accounted for are 160,000. Total conversion costs are $276,500. There are 4,000 units in ending inventory which are 50% complete as to conversion costs. How much is the conversion cost per unit? a. b. c. d.

$1.75. $1.73. $1.71. $1.69.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

118.

A department had the following information for the month: Total materials costs

$210,000

Conversion cost per unit

$3.00

Total manufacturing cost per unit

$5.00

What are the equivalent units of production for materials? a. b. c. d.

105,000. 70,000. 42,000. Cannot be determined

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 98

119.

Test Bank for Managerial Accounting, Sixth Edition

Maisley Company decided to analyze certain costs for June of the current year. Units started into production equaled 28,000 and ending work in process equaled 4,000. With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $105,000? a. b. c. d.

$3.30. $3.75. $4.20. $2.10.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

120.

Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September? a. b. c. d.

$1,500,000. $2,000,000. $1,606,500. $1,365,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

121.

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Job Order Costing

September, and there were 5,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in process? a. b. c. d.

$455,000. $500,000. $320,000. $200,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

122.

Mayer Company has recently tried to improve its analysis for its manufacturing process. Units started into production equaled 18,000 and ending work in process equaled 1,200 units. Mayer had no beginning work in process inventory. Conversion costs are applied equally throughout production, and materials are applied at the beginning of the process. How much is the materials cost per unit if ending work in process was 25% complete and total materials costs equaled $90,000? a. b. c. d.

$5.00. $5.27. $20.00. $4.69.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 123.

Madison Industries has equivalent units of 8,000 for materials and for conversion costs. Total manufacturing costs are $160,000. Total materials costs are $120,000. How much is the conversion cost per unit? a. b. c. d.

$15. $5. $20. $4.

2 - 100 Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

124.

In a process cost system, a production cost report is prepared a. b. c. d.

only for the first processing department. for all departments in the aggregate. for each processing department. only for the last processing department.

Ans:, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

125.

A production cost report a. b. c. d.

is prepared for each product. is prepared from a job cost sheet. will show quantity and cost data for a production department. will not identify a specific department if more than one department is involved in the production process.

Ans:, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

126.

In the production cost report, the total a. b. c. d.

physical units accounted for equals the costs accounted for. physical units accounted for equals the units to be accounted for. costs charged equals the units to be accounted for. costs accounted for equals the costs of the units started into production.

Ans:, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

127. The Cutting Departmentâ&#x20AC;&#x2122;s output during the period consists of 18,000 units completed and transferred out, and 4,000 units in ending work in process that were 25% complete as to

2 - 101

Job Order Costing

materials and conversion costs. Beginning inventory was 2,000 units that were 25% complete as to materials and conversion costs. Under the FIFO method, what are the equivalent units of production for materials? a. b. c. d.

20,300 18,500 21,300 20,000

Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

2 - 102 Test Bank for Managerial Accounting, Sixth Edition a

128. The Wrapping Departmentâ&#x20AC;&#x2122;s output during the period consists of 17,000 units completed and transferred out, and 900 units in ending work in process that were 75% complete as to materials and conversion costs. Beginning inventory was 1,200 units that were 30% complete as to materials and conversion costs. Under the FIFO method, what are the equivalent units of production for materials?

a. 18,035 b. 18,515 c. 17,675 d. 17,315 Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management a

129. Chicotti Company has 6,000 units in beginning work in process, 30% complete as to conversion costs, 60,000 units transferred out to finished goods, and 2,000 units in ending work in process 20% complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. How much are equivalent units for conversion costs if the FIFO method is used?

a. 60,400 b. 64,600 c. 56,000 d. 58,600 Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management a

130. Chicotti Company has 6,000 units in beginning work in process, 30% complete as to conversion costs, 60,000 units transferred out to finished goods, and 2,000 units in ending work in process 20% complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. How much are equivalent units for materials if the FIFO method is used?

a. 60,400 b. 62,000 c. 56,000 d. 68,000 Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

131. Schiller Company has unit costs of $3 for materials and $9 for conversion costs. There are 5,600 units in ending work in process which are 25% complete as to conversion costs, and

2 - 103

Job Order Costing

fully complete as to materials cost. How much is the total cost assigned to the ending work in process inventory if the FIFO method is used? a. 29,400 b. 67,200 c. 16,800 d. 12,600 Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

132. Solis Company uses the FIFO method to compute equivalent units. It has 4,000 units in beginning work in process, 20% complete as to conversion costs and 50% complete as to materials costs, 55,000 units started, and 6,000 units in ending work in process, 30% complete as to conversion costs, and 80% complete as to materials cost. How much are the equivalent units for materials under the FIFO method? a. b. c. d.

55,800 55,000 57,800 59,000

Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management a

133. Special Company had the following department information about physical units and percentage of completion: Physical Units Work in process, May 1 (60%)

36,000

Completed and transferred out

65,000

Work in process, May 31 (50%)

30,000

Materials are added at the beginning of the production process. Conversion costs are added equally throughout production. What is the total number of equivalent units during May for conversion costs if the FIFO method is used? a. 131,000

2 - 104 Test Bank for Managerial Accounting, Sixth Edition

b. 80,000 c. 58,400 d. 109,400 Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

134. Hanker Company had the following department data on physical units: Work in process, beginning Completed and transferred out Work in process, ending

2,500 14,000 2,000

Materials are added at the beginning of the process. What is the total number of equivalent units for materials if the FIFO method is used? a. b. c. d.

14,500 13,500 16,000 11,500

Ans:, LO: 8, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

135.

A process cost system would be used by all of the following except a(n) a. b. c. d.

chemical company. advertising company. oil company. computer chip company.

Ans:, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

2 - 105

136.

Job Order Costing

Which of the following is considered a difference between a job order cost and a process cost system? a. b. c. d.

The manufacturing cost elements. Documents used to track costs. The accumulation of the costs of materials, labor, and overhead. The flow of costs.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

137.

The basic similarities between job order cost and process cost systems include all of the following except the a. b. c. d.

manufacturing cost elements. flow of costs. point at which costs are totaled. accumulation of the costs of materials, labor, and overhead.

Ans:, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management 138

Equivalent units of production are a measure of a. b. c. d.

units completed and transferred out. units transferred out. units in ending work in process. the work done in a period expressed in fully completed units.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

139.

Total physical units to be accounted for are equal to the units a. b. c. d.

started (or transferred) into production. started (or transferred) into production plus the units in beginning work in process. started (or transferred) into production less the units in beginning work in process. completed and transferred out.

2 - 106 Test Bank for Managerial Accounting, Sixth Edition

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

140.

In computing equivalent units, ___________ is not part of the equivalent units of production formula. a. b. c. d.

units transferred out beginning work in process ending work in process None of these is correct.

Ans:, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

141.

In Saint-Simon, Inc., the Assembly Department started 30,000 units and completed 35,000 units. If beginning work in process was 15,000 units, how many units are in ending work in process? a. b. c. d.

0. 5,000. 10,000. 20,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

142.

The total units to be accounted for is computed by adding a. b. c. d.

beginning units in process to units transferred out. ending units in process to units started into production. beginning units in process to units started into production. ending units in process to total units accounted for.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

2 - 107

143.

Job Order Costing

In the Camria Company, materials are entered at the beginning of the process. If there is no beginning work in process, but there is an ending work in process inventory, the number of equivalent units as to materials costs will be a. b. c. d.

the same as the units started. the same as the units completed. less than the units started. less than the units completed.

Ans:, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

144.

For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12. If there are 10,000 units in ending work in process 75% complete as to conversion costs, the costs to be assigned to the inventory are a. b. c. d.

$200,000. $170,000. $150,000. $180,000.

Ans:, LO: 6, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

145.

The total costs accounted for in a production cost report equal the a. b. c. d.

cost of units completed and transferred out only. cost of units started into production. cost of units completed and transferred out plus the cost of ending work in process. cost of beginning work in process plus the cost of units completed and transferred out.

Ans:, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

146.

In a production cost report, which one of the following sections is not shown under Costs? a. Unit costs.

2 - 108 Test Bank for Managerial Accounting, Sixth Edition

b. Costs to be accounted for. c. Costs during the period. d. Units accounted for. Ans:, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

2 - 109

Job Order Costing