1. Which of the following best describes standard costing?
A. The allocation of overhead by multiplying a market-based rate by standard activity.
B. The allocation of overhead by multiplying a predetermined rate by standard activity.
C. The allocation of overhead by multiplying a predetermined rate by actual activity.
D. The allocation of overhead by multiplying a market-based rate by actual activity.
2. Which of the following would be an appropriate cost-allocation base for allocating the cost of the company cafeteria?
A. Salaries of personnel purchasing meals
B. Number of meals served
C. Number of hours of use
D. Square footage occupied by departments
3. The Fremont Company uses the weighted-average method in its process costing system. The company recorded 29,500 equivalent units for conversion costs for November in a particular department. There were 6,000 units in the ending work-in-process inventory on November 30, 75% complete with respect to conversion costs. The November 1 work-in-process inventory consisted of 8,000 units, 50% complete with respect to conversion costs. A total of 25,000 units were completed and transfe
ed out of the department during the month. The number of units started during November in the department was
A. 27,000 units.
B. 21,000 units.
C. 23,000 units.
D. 24,500 units.
4. The Barker Company uses the weighted-average method in its process costing system. The company recorded 54,800 equivalent units for conversion costs for December in a particular department. There were 9,000 units in the ending work-in-process inventory on December 31, 80% complete with respect to conversion costs. The December 1 work-in-process inventory consisted of 12,000 units, 40% complete with respect to conversion costs. A total of 38,000 units were completed and transfe
ed out of the department during the month. What was the number of units started during December in the department?
A. 59,000
B. 35,000
C. 26,000
D. 31,000
5. A management purpose for allocating joint costs of a processing center to the various products produced is to
A. report co
ect standard product costs for comparative analysis.
B. record accurate cost of sales by product line.
C. establish inventory values for unsold units.
D. compute total processing cost variances by product.
6. A _______ serves as the basis for posting to the direct labor section of the job cost sheet.
A. purchase orde
B. time card
C. cost report
D. materials requisition
7. The Work-in-Process inventory account of a manufacturing firm shows a balance of $24,000 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $3,500 and $5,450 for materials, and charges of $2,800 and $3,120 for direct labor. From this information, what predetermined overhead rates, as a percentage of direct labor costs, does the company appear to be using?
A. 148%
B. 137%
C. 154%
D. 125%
8. Barter Company's cost management and product costing procedures follow activity-based costing (ABC) principles. Activities have been identified and classified as being either value-added or nonvalue-added for each product. Which of the following activities, used in Barter's production process, is nonvalue-added?
A. Raw materials storage activity
B. Design engineering activity
C. Drill press activity
D. Heat treatment activity
9. Which of the following best describes normal costing?
A. The allocation of overhead by multiplying a predetermined overhead rate by actual activity.
B. The allocation of overhead by multiplying a predetermined overhead regression rate by standard activity.
C. The allocation of overhead by multiplying a predetermined overhead rate by budgeted activity.
D. The allocation of overhead by multiplying a predetermined overhead rate by standard activity.
10. The basic difference between a first-stage cost allocation and a second-stage cost allocation is that
A. the first stage prohibits firms from aligning the allocation of costs with the use of resources.
B. cost pools aren't used in first-stage cost allocations.
C. when used in an ABC system, the first stage assigns costs to activities.
D. predetermined overhead rates are used in first-stage cost allocations but not in second-stage cost allocations.
11. Which of the following is a characteristic of job costing?
A. Identical units are produced on an ongoing basis.
B. Each job is indistinguishable from other jobs.
C. Job cost data can't be used for setting prices and bids.
D. It's possible to compare actual costs with estimated costs.
12. Piebald Company has two service departments and two producing departments. The number of employees in each department is as follows:
The department costs of the Personnel Department are allocated on a basis of the number of employees. If these costs are budgeted at $55,421 during a given period, what would be the amount of cost allocated to Department B under the direct method?
A. $26,702.84
B. $50,355.68
C. $47,652.91
D. $52,426.49
13. Service department costs are
A. reported as selling and administrative expenses on the income statement.
B. eventually applied by the user departments to the units produced.
C. seldom found in manufacturing organizations.
D. generally treated as period costs rather than product costs.
14. Allocation of factory service department costs to the production departments is necessary to
A. measure use of plant capacity.
B. control costs.
C. make sure that machines are operating efficiently.
D. calculate cost per unit for purposes of external financial reporting.
15. Activity analysis is one of the first stages in implementing an activity-based costing system. Which of the following steps in activity analysis is usually performed first?
A. Continuously improve the efficiency of all value-added activities and develop plans to eliminate or reduce nonvalue-added ones.
B. Identify the process objectives that are defined by what the customer wants or expects from the process.
C. Classify all activities as value-added or nonvalue-added.
D. Chart, from start to finish, the activities used to complete the product or service.
16. Knight Corporation applies overhead via the use of normal costing on the basis of machine-hours. Budgeted factory overhead was $508,000 and budgeted machine-hours were 25,400. Actual factory overhead was $544,640 and actual machine-hours were 23,525. How much overhead would be applied to production?
A. $455,859
B. $470,500
C. $495,825
D. $477,800
17. A two-stage system first allocates costs to
A. products or services and then allocates costs to departments or activities.
B. a product line and then allocates costs to the department.
C. the cost driver and then allocates costs to the cost hierarchy.
D. departments or activities and then allocates costs to products or services.
18. Which of the following best describes conformance to specifications?
A. The level of compliance costs involved in providing a good or service.
B. The degree to which a good or service adheres to specifications.
C. The degree to which a good or service meets customer quality demands.
D. The level of customer service costs involved in providing a good or service.
19. When a department or product line is dropped, the common fixed costs which had been allocated to that department:
A. are allocated to the remaining departments or product lines.
B. become sunk costs.
C. are eliminated.
D. become variable costs.
20. The following events took place at a manufacturing company for the cu
ent year:
· Purchased $154,000 in direct materials
· Incu
ed the following labor costs: (a) direct, $87,000 and (b) indirect, $32,500
· Other manufacturing overhead was $143,000, excluding indirect labo
· Transfe
ed 70% of the materials to the manufacturing assembly line
· Completed 75% of the Work-in-Process during the yea
· Sold 68% of the completed goods
· There were no beginning inventories
What is the value of the ending Work-in-Process Inventory?
A. $92,575
B. $48,700
C. $107,800
D. $87,000