Exam 2 Flashcards
1
Q
Which of the following items would not be classified as direct material for an automobile manufacturer?
A
Screws
2
Q
Which of the following items would not be classified as direct material for Dole food company?
A
Stainless steel pots
3
Q
Which of the following would be classified as direct material for a furniture manufacture?
A
Wood
4
Q
Which of the following expenses are reported on the income statement as expenses when they are incurred?
A
Period costs
5
Q
Which of the following types of cost is not related to inventory?
A
Period costs
6
Q
Direct materials are sometimes referred to as
A
Raw materials
7
Q
Direct labor costs include all of the following except
A
Supervisors who oversee the production process
8
Q
Which of the following is not an indirect material?
A
Office supplies by Human Resources
9
Q
The three components of product cost include
A
Direct material, direct labor, overhead
10
Q
Which of the following is not classified as a variable product cost?
A
Sales commissions
11
Q
When direct materials are used which of the following accounts increase?
A
Work in process inventory
12
Q
When indirect materials are used which of the following accounts increases?
A
Finished goods inventory
13
Q
Which of the following is not included in the schedule of cost of goods manufactured?
A
Direct materials in inventory
14
Q
Which of the following is an example of direct labor for Dole food company?
A
Fruit picker
15
Q
Which of the following is an example of direct labor for Toyota motor company?
A
Assembly line worker
16
Q
Direct labor is considered a
A
Variable cost
17
Q
Which of the following is not classified as a direct labor cost?
A
Wages of the store manager at Starbucks
18
Q
Which of the following is not a common application base for calculating the predetermined overhead rate?
A
Administrative costs
19
Q
At the beginning of the year, managers at king industries estimated $420,000 in manufacturing overhead, 20,000 direct labor hours, and 50,000 machine hours. Actual manufacturing costs at the end of the year were $425,000 in manufacturing overhead, 22,000 direct labor hours and 47,000 machine hours. If overhead is applied based on direct labor hours, what is the predetermined overhead rate for the coming year?
A
$21.00 per direct labor hour
20
Q
At the beginning of the year, managers at king industries estimated $400,000 in manufacturing overhead. 20,000 direct labor hours and 50,000 machine hours. Actual manufacturing costs at the end of the year were $425,000 in manufacturing overhead, 22,000 direct labor hours and 47,000 machine hours. If overhead is applied based on direct labor hours, how much overhead was applied during the year?
A
$440,000
21
Q
Jensen Fly fishing shop applies overhead at a rate of five dollars per direct labor hour. At the end of the month, the company had accumulated 7000 direct labor hours and incurred $38,000 in manufacturing overhead. Manufacturing overhead was
A
$3,000 underapplied
22
Q
The predetermined overhead rate is calculated as
A
Budgeted total manufacturing overhead divided by budgeted activity level of application base
23
Q
During an accounting period, any factoring overhead is applied to work in process using
A
A predetermined overhead rate
24
Q
Any cost that a company incurs to acquire Rall materials and convert them to finish goods ready for sale is referred to as
A
Manufacturing costs
25
Gough’s manufacturing had under applied overhead totaling $5000 during the period. To dispose of this under applied overhead Gough should
Increase the cost of goods sold by $5,000
26
When a company purchased materials for use in the production process, the cost of those materials as recorded in which of the following accounts?
Raw materials inventory
27
Work in process inventory increases when
Raw materials are used
28
Work in process inventory decreases when
Products are finished
29
When products are completed which of the following accounts is increased?
Finished goods inventory
30
When products are completed, which of the following accounts is decreased?
Work in process inventory
31
If the beginning balance in Rome materials inventory is $5000 the ending balance is $3500, and $60,000 was the amount transferred to work in process inventory, what is the amount of materials purchased during the period?
$58,500
32
If the beginning balance in Rome materials inventory is $5000, the ending balance is $3500, and $60,000 was purchased, what is the amount of materials transferred to work in process inventory during the period?
$61,500
33
If the ending balance and roll materials inventory is $3500, $60,000 was purchased, and $61,500 was transferred to work in process inventory during the period, what was the amount in beginning inventory?
$5,000
34
Spikes Sports Manufacturing Company uses a job order costing system to account for its production of specialty golf accessories. On May 31 the company reported the following balances in its inventory accounts: $45,000 in Rome materials, $25,000 in work in process, and $15,000 in finished goods. On May 31, the total of all open job order cost sheet would be
$25,000
35
Direct material standard specify both
Quantity and price
36
Julie Finn is preparing the materials purchases budget for the second quarter. The production manager has provided the following production budget information: January 60,000 units, February 50, 5000 units, March 50,000 units. Each unit requires 5 gallons of direct materials, and Julie wants to maintain an ending inventory equal to 15% of the next months production needs. how many gallons will Julie budget to purchase in February?
271,250
37
Stacey Pierce is preparing a direct labor budget. Her sales budget shows total sales units of 15,000 in sales dollars of $45,000. The direct materials purchases but it shows materials to be purchased of 25,000 units and budgeted purchases cost of $18,750. The production budget indicate a total of 25,000 units to be produced. Standard direct labor hours per unit is $.50 and the standard average wage rate is $10. What is the budget a direct labor cost?
$125,000
38
James worm in is preparing a direct labor budget. His sales budget shows total sales Units of 15,000 in sales dollars of $18,750. They direct materials purchases budget shows materials we purchase of 15,000 units and budgeted purchases cost of $3750. The production budget indicates a total of 12,000 units to be produced. Standard direct labor hours per unit is .30 and the standard average wage rate is $80. What is the budgeted direct labor cost?
$28,800
39
Myers Company is preparing the role materials ending inventory budget. Which of the following items will Myers not need to complete the budget?
Actual production
40
To determine the cash payments for direct materials during a period, companies prepare a
Cash payment for materials budget.
41
The standard cost of direct material is there
Standard price of direct material x standard quantity of direct material inputs
42
The difference in standard price and standard cost of direct material is that
Standard price is the amount paid to obtain one unit of material from a vendor; standard cost is the amount to produce one unit of product
43
The calculation for the standard direct labor cost is
Standard wage rate per direct labor hour X standard quantity of direct labor hours.
44
The time needed to produce one unit of product is referred to as
The direct labor quantity standard
45
Assume ABC Corporation expect to incur a total of $1,025,000 in overhead costs and $820,000 in direct labor costs. Actual overhead cost incurred totaled $1,050,000 an actual direct labor cost totaled $800,100. ABC’s predetermined overhead rate is nearest
125% of direct labor cost
46
Budgetary slack is also referred to as
Budgetary padding
47
Which the following is not a consequence of budgetary slack?
Those who implemented the budget may engage in undesirable behavior because they did have input into setting the budget.
48
Sarah speed requested $120,000 in her budget to cover salary expenses. However Sarah realistically expect to spend $110,000 on salaries. This is an example of
Budgetary slack
49
The predetermined Overhead rate is calculated by
Dividing the budgeted total manufacturing overhead by the budgeted activity level
50
A collection of smaller by chance that leads to pro forma financial statements is referred to as the
Master budget
51
The master budget process usually begins with the
Sales budget
52
Which of the following items would most likely differ on the cash budget and the budgeted income statement?
Bad debt expense
53
Which of the following items were most likely differ on the cash budget and the budgeted income statement
Depreciation expense
54
Which of the following is not a component of the cash budget
Reconciliation of beginning and ending cash
55
To determine the cash payments for direct materials during a period, companies prepare a
Cash payment for materials budget.
56
Which of the following does not appear in the other cash disbursements section of the cash budget
Depreciation on factory equipment
57
A company is preparing it’s cash budget for the first quarter of the year. It has $1000 in cash at the beginning of the period. Cash sales for the quarter our budgeted at $30,000. Selling and administrative expenses are budgeted at $8000, which includes $2000 depreciation. Cash expenses are paid in the month incurred. Cash payment for inventory purchases are budgeted at $25,000. Desired cash balance on March 31 is $5000. How much financing will the company need during the quarter?
$5,000
58
The company is preparing it’s cash by give her the first quarter of the year. It has $1000 in cash at the beginning of the period. Cash sales for the quarter our budgeted at $180,000. Selling administrative expenses are budgeted at $58,000, which includes 12,000 depreciation. Cash expenses are paid in the month incurred. Cash payment for inventory purchases are budgeted at $135,000. That is Ira cash balance on March 31 is $10,000. How much financing with the company need during the quarter?
$3,000
59
Johnson equipment: The controller has determined that the company collects credit sale as follows: 60% in the month of sale, 35% in the first month after sale, and 5% in the second month after sale. How much cash will be collected from customers in March?
$376,500
60
London Manufacturing Company: The controller has determined that the company collects credit sales as follows: 60% in the month of sale, 30% in the first month after sale, 5% in the second month after sale, and 5% is expected to be uncollectible. How much cash should be collected from customers in March?
$373,500
61
If the actual cost of direct materials is $10 per unit what was the unit cost of the direct material is $11,
The direct materials price variance will be favorable
62
Backyard creations purchase 7000 feet of copper tubing at a price of $2.70 per foot and used 7200 feet during the period. The standard price of the copper tubing was $2.50 per foot. What is backyard creations in direct materials price variance for the period?
$1,400 unfavorable
63
Backyard creations purchased 7200 feet of copper tubing at a price of $2.60 per foot and used 7500 feet during the period. The standard price of the copper tubing was $2.70 per foot. What is backyard creations direct materials price variance for the period?
$720 favorable
64
If a company uses more direct labor hours than the standard allowed, the result is
A reduction in operating income
65
The sales volume variance is the difference between
The static budget and the flexible budget
66
The direct materials quantity variance is calculated using which of the three amounts?
Actually quantity used, standard quantity allowed for actual production, standard price paid
67
The algebraic equation for the direct materials quantity variance is
Direct materials quantity variance = SP x (AQused - SQ)
68
Why is the direct materials price variance basement quality of materials purchased, but that direct materials quantity variance on the quantity of material to use?
Managers need to isolate variances and take corrective action as soon as possible
69
Which of the following is not used in the calculation of the direct labor rate?
Standard hours worked
70
The algebraic equation for the direct labor rate variance is
Direct labor rate variance = AQ x (AP-SP)
71
The direct materials price variance is calculated using which the three amount?
Actual quantity purchased, actual price paid, standard price paid
72
The algebraic equation for the direct materials price variance is
AQpurch x (AP-SP)
73
The standard number of direct labor hours used in calculating the direct labor efficiency variance is based on
The actual number of finished units produced
74
The variable overhead spending variance is calculated as
Actual cost x (actual quantity x standard price)
75
The variance that captures the effect of efficient use of the activity based on the coast of variable overhead is the
Variable overhead efficiency variance
76
The variable overhead efficiency variance is calculated as
Standard price x (actual quantity x standard quantity )
77
With activity-based costing, the goal is to
Develop a product cost that capture the amount of each resource consumed by the activities performed to produce a specific product.
78
Which the following is not a step in implementing an activity-based costing system?
Calculating predetermined overhead rates
79
Calculating the activity rate is similar to the calculation of the
Predetermined overhead rate
80
Assume that the activity cost is $93,000, predetermined total overhead is $120,000, actual overhead is $98,000, and the company has three product lines, the activity rate is
$31,000 per product line
81
The firm produces and sells two products, standard and deluxe. The following information relates to set up cost of $180,000. Activity-based costing with allocate which of the following amounts of set up cost to each unit?
$50 standard $63 deluxe
82
Which of the following might be a reason the allocating overhead under an activity based approach might have less manufacturing overhead allocated to the products?
The general overhead cost pool is not allocated to products under activity-based costing
83
In an activity-based costing system, which of the following is not a category in which activities are classified?
Factory level
84
Activities that support the products or services a company provides is classified as a
Product level activity
85
Activities that are required to provide productive capacity of the keep the business in operation are
Organization level activities
86
Which of the following is not a product or service related activity
Customer level
87
Which of the following is a product or service related activity?
Batch level
88
Which of the following would be considered a batch level activity?
Machine set up
89
Product level activities are also referred to as
Product sustaining activities
90
Which of the following would be considered a batch level activity?
Quality tests
91
Assume that activity cost total is $180,000. The company produced an average of 40 units per batch and the number of batches produce is 9000. Calculate the activity rate
$20 per batch
92
ANW manufacturing uses an activity-based costing system for it’s cutting department. The activity cost total is $148,000. The number of cats is the cost driver. We couldn’t department processed a total of 9000 batches with an average cuts per batch of six and the total cuts of 46,250. What is the activity rate for the cutting department?
$3.20 per cut
93
Which of the following is formula for calculating the activity rate in an activity-based costing system?
Activity cost pool resources divided by activity driver
94
In implementing an activity-based costing system, after all the activities have been identified and the appropriate level of detail selected, activities are combined into activity cost pools based on their
Cost drivers
95
Which of the following would be most appropriate cost driver for the purchasing department?
Number of orders places
96
Organizational level activity:
Activities required to provide productive capacity and to keep the business in operation.
97
Customer level activity:
Activities are performed for specific customers.
98
Cost that has Been in carried in the past is referred to as
A sunk cost
99
Which of the following would not be relevant cost in a special order of expensive clocks
Direct labor
100
In making the decision about whether to accept a special order for pianos, which of the following costs should be considered?
Relevant costs to produce the pianos
| Relevant costs to sell the pianos
101
If a special order is being considered when the product sells for $10 and relevant costs are $6 to produce a unit and $2 to sell the unit, which of the following decisions is the most likely to be chosen?
Accept the order if the sales price is $8 or more
102
The costs that should be included in an outsourcing decision are the:
Relevant costs.
103
The costs that should be included in an outsourcing decision are the:
Relevant costs
104
Given The following data, what is the total relevant cost of internal production of 2000 products?
$40,000
105
If the unit cost of direct materials for $20, direct labor is $12, variable overhead is two dollars, avoidable fixed cost or $6000, unavoidable fixed cost or $5000 and sunk costs are $9000, what is the total relevant cost for three of your products?
$16,200
106
Given the following data what is the total relevant cost of internal production of 50 units?
$1,800
107
Costs such as rent and the production manager salary or examples of which type of costs?
Non differential costs
108
Which of the following would not be relevant cost on a special order of expensive clocks?
Fixed overhead
109
Which of the following costs would not be relevant in deciding whether to except a special order?
Both a and b
Direct material
Variable overhead
110
In making the decision about whether to except a special order for pianos, which of the following car should be considered?
Relevant costs to produce the pianos
Relevant costs to sell the pianos
Both a and b
111
If a special order results in a positive contribution margin of eight dollars from the contribution margin for regular orders is $15, which of the following decisions is most likely to be chosen?
Accept the order
112
Have a special order is being considered when the product sells for $10 and the relevant costs are six dollars to produce a unit and two dollars to sell the unit, which the following decisions is the most likely to be chosen?
Accept the order if the sales price is $8 or more
113
Which of the following is not relive it in the decision to except a special order?
Depreciation on factory equipment
114
Cough that has it been on. In the past is referred to as
A sunk cost
115
Sunk costs are classified as
Irrelevant
116
Depreciation on a factory machine is an example of which of the following types of cost?
Sunk cost
117
When a company is outsourcing a process, resources are freed up so they can be put to another use. The alternative use is considered to be
An opportunity cost
118
When choosing between alternatives, the contribution margin of the next best alternative is called
Opportunity cost
119
The cost that should be included in an outsourcing decisions are the
Relevant costs
120
If the unit cost of direct materials of $20, direct labor is $12, variable overhead is two dollars, avoidable fixed costs are $6000, unavoidable fixed costs are $5000 and some costs are $9000, what is the total relevant cost for three at your products?
$16,200
121
Given the following data, what is the total relevant cost of internal production of 50 units?
$1,800
122
Given the following data, what is the total relevant cost of internal production of 2000 products?
$40,000
