Test #1

Question 1

For a manufacturing company, the cost of the insurance on its delivery vehicles is best described as a:

Answer 1

C.period cost.

Question 2

Conversion cost consists of which of the following?

Answer 2

D.Direct labor and manufacturing overhead cost.

Question 3

Which of the following costs is an example of a period rather than a product cost?

Answer 3

B.Wages of salespersons.

Question 4

Manufacturing overhead consists of:

Answer 4

C.all manufacturing costs, except direct materials and direct labor.

Question 5

Variable cost:

Answer 5

B.remains constant on a per unit basis as the number of units produced increases.

Question 6

Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behavior patterns remain unchanged the:

Answer 6

D.total cost per unit will decrease.

Question 7

Within the relevant range, variable cost per unit will:

Answer 7

B.remain constant.

Question 8

An aerospace Company uses a job-order costing system. The direct materials for Job #21 were purchased in June and put into production in July. The job was not completed by the end of July. At the end of July, in what account would the direct material cost assigned to Job #21 be located?

Answer 8

B.Work in process inventory

Question 9

Smith Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. Last year, the company’s estimated manufacturing overhead was $1,000,000 and its estimated level of activity was 50,000 direct labor-hours. The company’s direct labor wage rate is $15 per hour. Actual manufacturing overhead amounted to $1,100,000, with actual direct labor cost of $780,000. For the year, manufacturing overhead was:

Answer 9

B.underapplied by $60,000

Question 10

A manufacturing company has provided the following data for the month of October. The balance in the Work in Process inventory account was $20,000 at the beginning of the month and $22,000 at the end of the month. During the month, the company incurred direct materials cost of $56,000 and direct labor cost of $49,000. The actual manufacturing overhead cost incurred was $60,000. The manufacturing overhead cost applied to Work in Process was $53,000. The cost of goods manufactured for October was:

Answer 10

B.$156,000

Question 11

Kapka Inc. has provided the following data for the month of May. The balance in the Finished Goods inventory account at the beginning of the month was $59,000 and at the end of the month was $65,000. The cost of goods manufactured for the month was $242,000. The actual manufacturing overhead cost incurred was $74,000 and the manufacturing overhead cost applied to Work in Process was $70,000. The adjusted cost of goods sold that would appear on the income statement for May is:

Answer 11

B.$240,000

Question 12

A corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $77,250 and 2,500 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $79,000 and actual direct labor-hours were 2,400.
The actual overhead rate for the year was closest to:

Answer 12

B.$32.92

Question 13

A corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $78,250 and 2,700 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $79,500 and actual direct labor-hours were 2,825. The applied manufacturing overhead for the year was closest to:

Answer 13

D.$81,868

Question 14

A corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $82,250 and 2,700 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $81,000 and actual direct labor-hours were 2,750. The applied manufacturing overhead for the year was closest to:The overhead for the year was:

Answer 14

C.$2,773 overapplied

Question 15

1. Definition of a period cost

Answer 15

Cost that is directly taken to the income statement as expenses in the period in which they are incurred or accrued.

Question 16

3. What is included in conversation cost:

Answer 16

labor cost plus manufacturing overhead cost.

Question 17

4. What types of expenses are included in product cost:

Answer 17

All cost that are involved in acquiring or making a product. In the case of manufacturing goods, these cost consist of direct materials, direct labor, and manufacturing overhead.

Question 18

6. What is in the relevant range:

Answer 18

Fixed Cost, Variable Cost

Question 19

7. What is the relevant range?

Answer 19

The range of activity in within which assumptions about variable and fixed cost are valid.

Question 20

8. What sunk cost are:

Answer 20

not relevant to a decision, A cost that has already been incurred and that cannot be changed by any decision now or in the future.

Question 21

9. What opportunity cost:

Answer 21

Means done deal, the potential benefit that is given up with one alternative is selected over another.

Question 22

Job order costing:

Answer 22

Direct labor, Direct materials, Overhead= Money

Question 23

11. Pre determined over head rate

Answer 23

Estimated total cost driver/ allocation base

Question 24

How do I apply overhead:

Answer 24

Times it by the actual labor hours.

Question 25

Over applied overhead is

Answer 25

Better to do than under but is still bad. You reduce cost of goods sold.

Question 26

Under applied overhead is

Answer 26

Worst of the two options

Question 27

15. Two ways of getting rid of over or under applied overhea

Answer 27

Can allocate it to your ending jobs based on the ration of the individual total cost. Or direct right off to Cost of Goods Sold.

Question 28

16. What is the difference between Cost of goods manufactured, What are the goods available for sale and cost of goods sold:

Answer 28

a. Cost of goods manufactured: Everything you have manufactured
b. Goods available for sale: Stuff that is done
c. Cost of Goods Sold: Need to figure out how to work all of these from homework.