Exam 2 Flashcards
Process costing is most appropriate when manufacturing large batches of homogenous products. (T or F)
True
Which cost accumulation procedure is most applicable in continuous mass- production manufacturing environments?
process
The numerator in the formula for equivalent units includes all beginning inventory costs when using the FIFO costing assumption. (T or F)
False
Equivalent units of production are equal to the
number of whole units that could have been completed if all work of the period had been used to produce whole units.
In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is to
debit Finished Goods Inventory, credit Work in Process Inventory #2.
The FIFO costing method assumes that units in beginning inventory are the first units transferred. (T or F)
True
A producer of ________________ would not use a process costing system.
stained glass windows
In a FIFO process costing system, which of the following are assumed to be completed first in the current period?
units started last period
The primary difference between the FIFO and weighted average methods of process costing is
in the treatment of beginning Work in Process Inventory.
The weighted average method combines beginning inventory and current production to compute cost per unit of production. (T or F)
True
Specifications for materials are compiled on a bill of materials. (T or F)
True
The formula for price/rate variance is (AP - SP) x SQ. (T or F)
False
An operations flow document shows all processes necessary to manufacture one unit of a product. (T or F)
True
When computing variances from standard costs, the difference between actual and standard price multiplied by actual quantity used yields a
price variance
The material price variance (computed at point of purchase) is
the difference between the actual cost of material purchased and the standard cost of material purchased
A bill of material does not include
price of component inputs
A standard cost card is prepared after manufacturing standards have been developed for direct materials, direct labor, and factory overhead. (T or F)
True
The standard cost card contains quantities and costs for
direct material, direct labor, and overhead.
At the end of a period, a significant material quantity variance should be
allocated among Work in Process, Finished Goods, and Cost of Goods Sold.
If actual direct labor hours (DLHs) are less than standard direct labor hours allowed and overhead is applied on a DLH basis, a(n)
favorable variable overhead efficiency variance exists.
A budget aids in
communication, motivation, and coordination
Tactical planning usually involves which level of management?
middle and top
Strategic planning is focused on short-term goals of less than five years. (T or F)
False
The first stage in the budgeting process is the preparation of a sales budget. (T or F)
True
Which of the following is not an “operating” budget? (sales, production, purchases, and capital budgets)
capital budget
Chronologically, in what order are the sales, purchases, and production budgets prepared?
sales, production, purchases
Most tactical plans are single use plans. (T or F)
True
The financial budget is prepared before the operating budget. (T or F)
False
The amount of raw materials that must be purchased can be computed by the following formula: Ending inventory + Materials required - Beginning inventory. (T or F)
True
An example of a recurring short-term plan is
a unit sales forecast.
