ACCT 2302 Quiz #2

Question 1

Which of the following items is not characteristic of a process cost system?

a. Once production begins, it continues until the finished product emerges.
b. The products produced are heterogeneous in nature.
c. The focus is on continually producing homogenous products.
d. When the finished product emerges, all units have precisely the same amount of materials, labor, and overhead.

Answer 1

b. The products produced are heterogeneous in nature.

Question 2

In making journal entires to assign raw material costs, a company using process costing:

a. Debits finished goods inventory
b. Often debits two or more work in process accounts
c. Generally credits two or more work in process accounts.
d. Credits finished goods inventory

Answer 2

b. Often debits two or more work in process accounts

Question 3

Activity based costing:

a. is the inital phasae of converting to a just-in-time operating environment.
b. can be used only in a job order costing system
c. is a two stage overhead cost allocation system that identifies activity cost pools and cost drivers
d. Uses direct labor as its primary cost driver

Answer 3

c. is a two stage overhead cost allocation system that identifies activity cost pools and cost drivers

Question 4

Rebel Sound Inc. produced 30,000 audio devices last month. Rebel started the month with
$10,000 worth of inventory in Finished Goods. The company incurred $15,000 of various
utility and rent charges on their factory, paid $50,000 for raw materials to use in production,
and paid employees $60,000 in wages. During the month, inventory costing $120,000 was
completed and transferred to the Finished Goods Inventory. At the end of the month, Rebel
had $5,000 of Inventory in Finished Goods, $6,000 in Materials Inventory, and $24,000 still
in Work in Process.

What was Rebel’s Cost of Goods Sold for the month?

A) $125,000
B) $120,000
C) $130,000
D) $5,000

Answer 4

A) $125,000

Question 5

Lowman Painting Company has the following production data for March:
Beginning work in process, 2,000 units
Units started during the month, 20,000
Ending work in process, 10,000 units (80% converted)

Materials are added only at the beginning of the process.

Compute equivalent units of production for conversion costs. 
A) $20,000 
B) $22,000 
C) $10,000 
D) $8,000

Answer 5

A) $20,000

10,000 + 2,000 (10,000 * .80)