Exam 1 ch3 multiple choice

Question 1

46. Which are the two types of cost accounting systems?
    a. A process cost system and a production cost system
    b. A job cost system and a process cost system
    c. A job order cost system and a manufacturing cost system
    d. A query cost system and a manufacturing cost system

Answer 1

b

Question 2

48. Which one of the costs below is not considered part of direct labour costs?
    a. Employer payroll taxes on factory workers
    b. Gross earnings of the general manager of the plant
    c. Gross earnings of factory workers
    d. Fringe benefits

Answer 2

b

Question 3

60. When computing the predetermined manufacturing overhead rate, which amount below is most likely used in the numerator?
    a. Direct labour hours
    b. Estimated manufacturing overhead costs
    c. Actual manufacturing overhead costs
    d. Applied manufacturing overhead costs

Answer 3

b

Question 4

62. Halitosis Company completed job 45 at a cost of $43,765 and later sold it for $90,000 cash. Which one of the following is one effect of selling the job?
    a. Debit Finished Goods Inventory $90,000
    b. Credit Finished Goods Inventory $43,765
    c. Credit Finished Goods Inventory $90,000

Answer 4

b

Question 5

63. Where would you expect to find overhead applied in the monthly financial statements?
    a. An operating expense
    b. Assigned to a product account
    c. A deduction of raw materials inventory
    d. A liability

Answer 5

b

Question 6

64. What is unique about the flow of costs in a job order cost system?
    a. Each job is costed separately in a Work in Process subsidiary ledger.
    b. It involves accumulating material, labour, and manufacturing overhead costs as they are incurred in order to determine the job cost.
    c. Job costs cannot be measured until all overhead costs are determined.
    d. There are no costs remaining in Work in Process at year end.

Answer 6

a

Question 7

67. What are the two major steps in the flow of costs for a job cost system?
    a. Accumulating and assigning
    b. Allocating and assigning
    c. Acquiring and accumulating
    d. Accumulating and allocating

Answer 7

a

Question 8

68. Which of the following statements regarding the Raw Materials Inventory account is correct?
    a. Freight costs related to acquiring materials are credited.
    b. Purchase returns and allowances are debited.
    c. The invoice cost of purchasing materials is debited.
    d. Any purchase discounts taken are debited.

Answer 8

c

Question 9

69. In what manner does a company most likely maintain its records of individual items of raw materials?
    a. In the stores ledger cards
    b. In the work in process inventory control account
    c. In the raw materials inventory account in the general ledger
    d. In each of the separate job cost records

Answer 9

a

Question 10

71. What is another name for the stores ledger cards?
    a. The job cost records
    b. Purchase requisitions
    c. The Work in Process control account
    d. Raw Materials inventory records

Answer 10

b

Question 11

72. A company completed all postings for its job costs for the year. Which of the following should have the same totals at year end?
    a. The cost of materials purchased and the total of the Raw Materials Inventory control account
    b. The total of the amount in the Work in Process subsidiary ledger and the Work in Process Inventory control account total
    c. The total of the accounts in the Work in Process subsidiary ledger and the Raw Materials Inventory control account total
    d. The cost of materials charged to Work in Process Inventory and the total of the accounts in the Work in Process subsidiary ledger

Answer 11

d

Question 12

73. Factory labour costs
    a. omit holiday pay.
    b. are equal to the total amounts of the pay cheques the employees receive.
    c. are debited to work in process when incurred.
    d. include benefits for employees.

Answer 12

b

Question 13

75. Marion Manufacturing has the following labour costs:

    Factory—Gross wages	$282,000
    Factory—Net wages	236,000
    Employer Payroll Taxes Payable	46,000

    How much should Marion debit to Factory Labour to record these amounts?

a. $518,000
b. $328,000
c. $282,000
d. $564,000

Answer 13

b

Question 14

76. Which statement is true with regard to factory labour costs?
    a. It represents the net amount paid to factory workers for work on jobs.
    b. It is added to the Factory Labour account and later assigned to work in process or manufacturing overhead.
    c. These costs are accrued before incurred.
    d. Amounts incurred during a particular year that have not been allocated to jobs are carried over to the next year.

Answer 14

b

Question 15

77. Which one of the following is a control account?
    a. Utilities Expense
    b. Factory Wages Payable
    c. Manufacturing Overhead
    d. Cost of Goods Sold

Answer 15

c

Question 16

78. Which one of the following would most likely be a subsidiary account for Manufacturing Overhead?
    a. Insurance
    b. Raw materials inventory
    c. Work in process
    d. Finished goods

Answer 16

a

Question 17

80. To which control account do job cost sheets represent the subsidiary ledger?
    a. Cost of Goods Sold
    b. Cost of Goods Manufactured
    c. Work in Process Inventory
    d. Finished Goods Inventory

Answer 17

c

Question 18

86. How often are postings to subsidiary accounts in a costing system made?
    a. At the end of every accounting period
    b. Monthly
    c. Daily
    d. Weekly

Answer 18

c

Question 19

87. Which of the following pairs are control accounts?
    a. Work in Process and Manufacturing Overhead
    b. Raw Materials Inventory and Wages Payable
    c. Factory Labour and Wages Payable
    d. Work in Process and Job Revenue

Answer 19

c

Question 20

89. Who is authorized to approve time tickets?
    a. The payroll clerk
    b. The Vice President of Time Tickets
    c. Whichever employee to whom the time ticket belongs
    d. The production supervisor

Answer 20

a

Question 21

94. Which of the following statements is correct?
    a. Both actual costing and normal costing systems trace direct costs to a cost object by using actual cost data.
    b. An actual costing system is timelier than a normal costing system.
    c. An actual costing system is less accurate than a normal costing system.
    d. Both actual costing and normal costing systems will result in the same total cost of production per unit at all points in the production process.

Answer 21

a

Question 22

96. At what point in time is the predetermined overhead rate calculated?
    a. At the end of the year in which the job is in production
    b. At the time each job is completed
    c. At the beginning of the year
    d. Once actual overhead costs are incurred

Answer 22

c

Question 23

103. At the end of each month, a company must total up the costs shown on the job cost sheets. What amount should this equal?
     a. The total of the work in process inventory account in the general ledger
     b. The total of the Job Cost expense account in the general ledger
     c. The cost of all job costs incurred during the year
     d. The total cost of manufacturing overhead applied during the year

Answer 23

a

Question 24

109. Chmelar Manufacturing Company developed the following data:

	Beginning work in process inventory 	$  60,000
	Direct materials used	  360,000
	Actual overhead	420,000
	Overhead applied	405,000
	Cost of goods manufactured	960,000
	Ending work in process	45,000

How much are total manufacturing costs for the period?

a. $1,185,000
b. $945,000
c. $825,000
d. $915,000

Answer 24

b

Question 25

110. Which one of the following is used in assigning manufacturing costs to work in process inventory?
     a. Materials purchased invoices
     b. Finished goods inventory costs
     c. Actual manufacturing overhead
     d. Estimated manufacturing overhead

Answer 25

d

Question 26

111. Which one of the following is the same amount as cost of goods manufactured on the cost of goods manufactured schedule?
     a. The amount transferred from Work in Process Inventory to Finished Goods during the period
     b. The total of direct material, direct labour, and manufacturing overhead which are added to Work in Process during the year
     c. The amount transferred out of Finished Goods Inventory during the year
     d. The total added to the Work in Process Inventory during the year

Answer 26

a

Question 27

116. Several debits are made to Work in Process Inventory during the year. Which one of the following is not a common account that would be credited to accompany one of the debits?
     a. Manufacturing Overhead
     b. Factory Labour
     c. Raw Materials Inventory
     d. Finished Goods Inventory

Answer 27

d

Question 28

117. Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system?
     a. Factory labour is incurred
     b. Manufacturing overhead is incurred
     c. Cost of goods sold is recognized
     d. Raw materials are purchased

Answer 28

c

Question 29

118. Which one of the following is a procedure as part of assigning manufacturing costs in a job order cost system?
     a. Adding manufacturing overhead costs to Work in Process as they are incurred
     b. Transferring the costs of completed goods out of Finished Goods
     c. Adding actual manufacturing overhead costs to jobs
     d. Adding direct materials costs to Work in Process as the materials are used

Answer 29

d

Question 30

120. Which one of the following is part of ‘total manufacturing costs’?
     a. Estimated overhead costs
     b. Actual overhead costs
     c. Incurred overhead costs
     d. Applied overhead costs

Answer 30

d

Question 31

122. Which one of the following is an example of an activity associated with job order cost flow?
     a. Having a supervisor responsible for specific inventory functions within the manufacturing process
     b. Using a job cost accountant to verify accounting records
     c. Assigning costs to cost of goods sold
     d. Using inventory item descriptions to track inventory costs

Answer 31

a

Question 32

136. Which one of the following describes an activity base?
     a. A denominator used by management based on estimated useful lives of the company’s plant assets
     b. A measure which is estimated by management based on prior year’s operations
     c. A measure that has a correlation with assigning overhead
     d. A guess by management on a fair method of applying overhead

Answer 32

c

Question 33

151. A company incurred more manufacturing overhead than the amount it applied to its jobs during the year. What entry must be made at the end of the year to allocate the remaining overhead if not material in amount?
     a. Debit Cost of Goods Sold and credit Manufacturing Overhead
     b. Credit Work in Process Inventory and debit Cost of Goods Sold
     c. Debit Manufacturing Overhead and credit Work in Process Inventory
     d. Debit Work in Process Inventory and credit Manufacturing Overhead

Answer 33

a

Question 34

153. Crowl, Inc. determined that $200,000 of manufacturing overhead was over-applied at the end of the year. If the amount is material, to which accounts should this amount be allocated at the end of the year?
     a. Raw materials inventory, work in process inventory, and cost of goods sold
     b. Finished goods inventory, work in process inventory, and cost of goods sold
     c. Cost of goods sold only
     d. Work in process inventory only

Answer 34

b

Question 35

154. In order to adjust for the over/under-applied manufacturing overhead, Abe Company increased its balance in the Cost of Goods Sold account only. This implies that:
     a. The company incurred more overhead costs than the overhead assigned to jobs, and the amount was not material.
     b. The company incurred less overhead costs than the overhead assigned to jobs, and the amount was material.
     c. The company incurred more overhead costs than the overhead assigned to the jobs, and the amount was material.
     d. The company incurred less overhead costs than the overhead assigned to jobs, and the amount was not material.

Answer 35

a

Question 36

168. When overhead is under-applied at the end of a year?
     a. Finished goods inventory is overstated
     b. Finished goods inventory is understated
     c. Work in process inventory is overstated
     d. Work in process inventory is understated

Answer 36

c