Exam 2

Question 1

Process costing is most appropriate when manufacturing large batches of homogenous products. (T or F)

Answer 1

True

Question 2

Which cost accumulation procedure is most applicable in continuous mass- production manufacturing environments?

Answer 2

process

Question 3

The numerator in the formula for equivalent units includes all beginning inventory costs when using the FIFO costing assumption. (T or F)

Answer 3

False

Question 4

Equivalent units of production are equal to the

Answer 4

number of whole units that could have been completed if all work of the period had been used to produce whole units.

Question 5

In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is to

Answer 5

debit Finished Goods Inventory, credit Work in Process Inventory #2.

Question 6

The FIFO costing method assumes that units in beginning inventory are the first units transferred. (T or F)

Answer 6

True

Question 7

A producer of ________________ would not use a process costing system.

Answer 7

stained glass windows

Question 8

In a FIFO process costing system, which of the following are assumed to be completed first in the current period?

Answer 8

units started last period

Question 9

The primary difference between the FIFO and weighted average methods of process costing is

Answer 9

in the treatment of beginning Work in Process Inventory.

Question 10

The weighted average method combines beginning inventory and current production to compute cost per unit of production. (T or F)

Answer 10

True

Question 11

Specifications for materials are compiled on a bill of materials. (T or F)

Answer 11

True

Question 12

The formula for price/rate variance is (AP - SP) x SQ. (T or F)

Answer 12

False

Question 13

An operations flow document shows all processes necessary to manufacture one unit of a product. (T or F)

Answer 13

True

Question 14

When computing variances from standard costs, the difference between actual and standard price multiplied by actual quantity used yields a

Answer 14

price variance

Question 15

The material price variance (computed at point of purchase) is

Answer 15

the difference between the actual cost of material purchased and the standard cost of material purchased

Question 16

A bill of material does not include

Answer 16

price of component inputs

Question 17

A standard cost card is prepared after manufacturing standards have been developed for direct materials, direct labor, and factory overhead. (T or F)

Answer 17

True

Question 18

The standard cost card contains quantities and costs for

Answer 18

direct material, direct labor, and overhead.

Question 19

At the end of a period, a significant material quantity variance should be

Answer 19

allocated among Work in Process, Finished Goods, and Cost of Goods Sold.

Question 20

If actual direct labor hours (DLHs) are less than standard direct labor hours allowed and overhead is applied on a DLH basis, a(n)

Answer 20

favorable variable overhead efficiency variance exists.

Question 21

A budget aids in

Answer 21

communication, motivation, and coordination

Question 22

Tactical planning usually involves which level of management?

Answer 22

middle and top

Question 23

Strategic planning is focused on short-term goals of less than five years. (T or F)

Answer 23

False

Question 24

The first stage in the budgeting process is the preparation of a sales budget. (T or F)

Answer 24

True

Question 25

Which of the following is not an “operating” budget? (sales, production, purchases, and capital budgets)

Answer 25

capital budget

Question 26

Chronologically, in what order are the sales, purchases, and production budgets prepared?

Answer 26

sales, production, purchases

Question 27

Most tactical plans are single use plans. (T or F)

Answer 27

True

Question 28

The financial budget is prepared before the operating budget. (T or F)

Answer 28

False

Question 29

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)

Answer 29

True

Question 30

An example of a recurring short-term plan is

Answer 30

a unit sales forecast.