gyu MCQs for midterm

Question 1

If a company’s revenue is $530,000, profit before taxes is $98,000, and product costs are $390,000, then

a. the company’s gross margin totals $140,000.
b. the company’s period costs total $140,000.
c. the company’s period costs cannot be determined.
d. the company’s contribution margin totals $140,000.
e. None of the above.

Answer 1

a. the company’s gross margin totals $140,000.

Question 2

Which is an incorrect statement of a job-costing system?

a. Orders are customized.
b. Orders are for large quantities.
c. Average costing per unit is sufficient in a job shop environment.
d. Costs are assigned to each job or each batch

Answer 2

c. Average costing per unit is sufficient in a job shop environment.

Question 3

Which of the following are addressed by the standards of ethical professional practice of the Institute of Management Accountants?

a. competence, confidentiality, integrity
b. strategic cost management, confidentiality, integrity
c. competence, strategic cost management, integrity
d. competence, confidentiality, strategic cost management

Answer 3

a. competence, confidentiality, integrity

Question 4

Engaging in or supporting an activity that would discredit the profession would relate to which part of the IMA Code of Conduct?

a. competence
b. independence
c. integrity
d. credibility

Answer 4

c. integrity

Question 5

Disclosing all information, unfavourable as well as favourable, that could influence an intended user’s understanding of reports would relate to what section of the IMA Code of Conduct?

a. competence
b. independence
c. integrity
d. Credibility

Answer 5

d. Credibility

Question 6

Which of the following are expensed in the period in which they are incurred?

a. direct materials
b. product costs
c. non-inventoriable costs
d. inventoriable costs

Answer 6

c. non-inventoriable costs

Question 7

What is a disadvantage of actual costing?

a. Actual cost systems cannot provide accurate unit cost information on a timely basis.
b. Actual cost systems produce unit costs that do not change from period to period.
c. Estimates must be used when calculating the actual overhead rate.
d. Problems are created by the calculation of direct labour.

Answer 7

a. Actual cost systems cannot provide accurate unit cost information on a timely basis.

Question 8

Normal costing uses which cost in work in process?

a. applied direct materials
b. actual overhead
c. applied overhead
d. budgeted overhead

Answer 8

c. applied overhead

Question 9

What is the term for the whole units that could have been produced in a period given the amount of manufacturing inputs used?

a. FIFO units
b. transferred-in units
c. weighted average units
d. equivalent units of output

Answer 9

d. equivalent units of output

Question 10

What do equivalent units express all activity of the period in terms of?

a. direct labour hours
b. partially completed units
c. fully completed units
d. units of input

Answer 10

c. fully completed units

Question 11

Which of the following determines whether the costs assigned to units transferred out and to units in ending work in process are equal to the costs in beginning work in process plus the manufacturing costs incurred in the current period?

a. equivalent unit of output
b. cost reconciliation
c. batch production process
d. transferred-in costs

Answer 11

b. cost reconciliation

Question 12

What happens when conversion costs are uniform?

a. Materials, labour, and overhead are applied at different rates throughout the process.
b. Materials, labour, and overhead are added throughout the process at the same rate.
c. Labour and overhead are added at the same rate but different materials are added at a different point.
d. Materials and labour are added at the same rate but overhead is applied uniformly.

Answer 12

c. Labour and overhead are added at the same rate but different materials are added at a different point.

Question 13

17. When computing equivalent units of production, what is the method that combines partially completed units in beginning inventory with current-period production?
    a. the FIFO method
    b. the LIFO method
    c. the weighted average method
    d. the specific identification method

Answer 13

c. the weighted average method

Question 14

What does unit-level product costing assign?

a. It assigns direct materials and direct labour to products and assigns overhead to departmental pools, which are assigned to products using predetermined overhead rates based on unit-level drivers.
b. It assigns direct materials, direct labour, and overhead to departmental cost pools, which are assigned to products using predetermined overhead rates based on unit-level drivers.
c. It assigns direct materials and direct labour directly to products and assigns overhead to departmental pools, which are assigned to products using predetermined overhead rates based on non-unit-level drivers.
d. It assigns direct materials, direct labour, and overhead to departmental cost pools, which are assigned to products using predetermined overhead rates based on non-unit-level drivers.

Answer 14

a. It assigns direct materials and direct labour to products and assigns overhead to departmental pools, which are assigned to products using predetermined overhead rates based on unit-level drivers.

Question 15

Which of the following is a unit-based activity driver?

a. number of setups
b. number of direct labour hours
c. number of inspections
d. number of material moves

Answer 15

b. number of direct labour hours

Question 16

Assume the following: Actual overhead costs equalled estimated overhead. Actual direct labour hours exceeded estimated direct labour hours used to calculate the predetermined overhead rate. If overhead is applied using the predetermined overhead rate, what will be the impact on the overhead?

a. overapplied
b. underapplied
c. $0
d. None of the above

Answer 16

a. overapplied

Question 17

The major reporting standard for management accounting is

a. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management.
b. the Sarbanes-Oxley Act of 2002.
c. relevance to decisions.
d. generally accepted accounting principles.

Answer 17

c. relevance to decisions.

Question 18

Which beginning and ending inventories appear on a cost of goods manufactured schedule?

a. Raw materials only
b. Raw materials and work in process only
c. Raw materials, work in process, and finished goods
d. Work in process only

Answer 18

b. Raw materials and work in process only

Question 19

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 19

a. Each job is costed separately in a Work in Process subsidiary ledger.

Question 20

Which of the following statements is true?

a. Both job order cost and process cost systems track direct materials and direct labour, but only job order cost systems track manufacturing overhead.
b. Both job order cost and process cost systems track direct materials and direct labour, but only process cost systems track manufacturing overhead.
c. Both job order cost and process cost systems track direct materials, direct labour and manufacturing overhead.
d. Only manufacturing overhead costs are tracked in both job order cost and process cost systems.

Answer 20

c. Both job order cost and process cost systems track direct materials, direct labour and manufacturing overhead.

Question 21

Each of the following is a limitation of activity-based costing except that

a. it can be expensive to use.
b. it is more complex than traditional costing.
c. more cost pools are used.
d. some arbitrary allocations continue.

Answer 21

c. more cost pools are used.

Question 22

A non-value-added activity in a service enterprise is

a. taking appointments.
b. traveling.
c. advertising.
d. all of these.

Answer 22

d. all of these.

Question 23

Managerial accounting:

a) is governed by generally accepted accounting principles.
b) emphasizes special-purpose information.
c) pertains to the entity as a whole and is highly aggregated.
d) is limited to cost data.

Answer 23

b) emphasizes special-purpose information

Question 24

Outside of the relevant range, which of the following outcomes is unlikely?

a) It may be difficult for management to change all fixed costs.
b) Achieving cost efficiency may be difficult.
c) Total fixed costs will not change.
d) At a 0% activity level all fixed costs will cease.

Answer 24

c) Total fixed costs will not change.

Question 25

Which is a true statement about predetermined overhead rates? a) A job costing system that uses predetermined overhead rates to apply overhead is called a normal costing system. b) Firms use predetermined overhead rates because actual overhead costs and activity volumes frequently do not fluctuate. c) Predetermined overhead rate equals expected overhead costs for the period times the expected activity level. d) All of the above.

Answer 25

a) A job costing system that uses predetermined overhead rates to apply overhead is called a normal costing system.

Question 26

Bayview Manufacturing has $16,000 of under-applied overhead in Manufacturing Overhead at December 31 and the following account balances at year end: Work in Process Inventory $ 10,000 Finished Goods Inventory 20,000 Cost of Goods Sold 70,000 Total costs $100,000 The portion of under-applied overhead that should be applied to Cost of Goods Sold is: a) $16,000. b) $11,200. c) $1,120. d) ($11,200) e) None of the above

Answer 26

b) $11,200.

Question 27

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 27

b) The total of the amount in the Work in Process subsidiary ledger and the Work in Process Inventory control account total

Question 28

Manufacturing costs always follow the physical flow of goods. The costs of completed units from the mixing department are treated as input material costs in the baking department. Such a sequential process requires the use of an additional cost component called? a) Prime costs b) Transferred in costs c) Cost of goods sold d) Factory costs

Answer 28

b) Transferred in costs

Question 29

Which of the following is NOT one of the four steps involved in calculating unit costs under activity-based costing? a) Assign manufacturing overhead costs for each cost pool to products, using the overhead rates. b) Identify the cost driver that has a minor correlation to the costs accumulated in the activity cost pool c) Identify and classify the major activities involved in the manufacture of specific products, and allocate manufacturing overhead costs to the appropriate cost pools d) Calculate the overhead rate per cost driver

Answer 29

b) Identify the cost driver that has a minor correlation to the costs accumulated in the activity cost pool