Corinne Exam 2 MCQ

1. A company sells specialty advertising items that are designed and produced to meet each customerʹs specific needs. Prominently displaying the customerʹs company name, these items are used by the customer to give to its clients as a form of promotion. The most appropriate cost accumulation system for the company to use is:

a. Actual costing.

b. Job-order costing.

c. Life-cycle costing

d. Process costing.

b. Job-order costing.

1. Which of the following would cause overhead to be overapplied?

a. Actual overhead is greater than overhead applied.

b. Actual overhead is less than overhead applied.

c. Actual overhead was equal to the budgeted amount but fewer items were manufactured.

d. The number of units produced was the budgeted amount but a larger amount of overhead was actually incurred.

b. Actual overhead is less than overhead applied

A promotional department for a retailer uses job order costing. At the beginning of the period, Job No. 154 had a work‐in‐process (WIP) inventory balance of $5,000. During the current period, Job No. 154 required $4,000 in direct materials and $6,000 in direct labor. The department has an overhead cost pool of $80,000 for all jobs. (The pool uses labor‐hours as a cost‐allocation base.) All jobs in the department consumed 10,000 labor‐hours. If Job No. 154 used 1,000 labor‐hours and sold for $34,000, what is its gross profit margin?

a. $16,000

b. $11,000

c. $19,000

d. $23,000

B. 11,000

4. John Sheng, cost accountant at Starlet Company, is developing departmental factory overhead application rates for the company's tooling and fabricating departments. The budgeted overhead for each department and the data for one job are shown below. Using the departmental overhead application rates, total overhead applied to Job No. 231 in the tooling and fabricating departments will be

A. 225

b. 303

c. 537

d. 671

B. 303

5. A firm uses direct labor hours as its plant‐wide cost driver for overhead. Managers estimate total overhead during the year to be $108,000 and direct labor hours to be 15,000. Assume that during the current period, 1,500 direct labor hours were recorded and actual overhead for the period was $9,350. Which of the following statements is true? a. Overhead is overapplied by $1,450. b. Overhead is underapplied by $9,350. c. Overhead is underapplied by $1,450. d. Overhead is overapplied by $9,350.

a. Overhead is overapplied by $1,450.

6. What is the amount of factory overhead applied during the year at Wagner Corp. which applies overhead based on machine hours, with budgeted overhead at $250,000 and estimated machine hours at 100,000?

a. $250,000.

7. What is the cost of goods sold for a manufacturing company with a beginning WIP of $5,000, ending WIP of $15,000, total manufacturing costs of $110,000, $20,000 in beginning finished goods inventory and $30,000 in ending finished goods inventory?

b. $90,000.

8. What adjustment should Black and Company make to the factory overhead control account at the end of the month for an order of 10,000 concrete statues at a price of $2.79 each, given their overhead allocation?

b. credit of $3,700.

9. In a vintage car restoration company, rework done on paint primer due to impurities in air is classified how?

a. These are abnormal defective units for a specific job, so the expense is charged to a loss from abnormal rework account.

10. Which statement is true regarding job order costing?

d. Actual, normal, or standard costing can be used with job order costing.

11. For a firm using FIFO method and given costs, what is the total cost assigned to the units completed when using 2,000 equivalent units for DM and 1,980 for CC?

b. $430,600.

12. What cost accumulation system does Smile Labs use to develop dental implants?

d. Process costing.

13. In analyzing job costing and process costing at Wilcrest Corporation, which statements are correct?

a. I and III only are correct.

14. Which alternative correctly classifies costing systems with examples?

a. Job costing system: wallpaper manufacturer; process costing system: oil refinery.

15. When weaving is complete in a wig company, what should be the treatment of weaving department costs?

c. Be transferred to the cutting and styling department's WIP inventory account.

16. Which alternative correctly classifies the business application to the appropriate costing system for a paint manufacturer and print shop?

d. Job costing system: print shop; process costing system: beverage manufacturer.

17. Using departmental overhead application rates, what is the total overhead applied to Job No. 231 in Wilcrest Corporation?

b. $303.

18. What is the appropriate cost accumulation system for a company that sells specialty advertising items designed to meet specific customer needs?

b. Job-order costing.

19. Which costing system is best suited for skyscrapers, magazines, and advertising campaigns?

b. Job order costing for I, IV, and V; process costing for II and III.

20. What is the gross profit margin for Job No. 154 in the promotional department with given costs?

b. $11,000.

21. Which of the following is not an advantage of using activity-based cost drivers?

b. Implementation is relatively inexpensive compared with other methods.

22. What steps does a traditional cost system take to implement activity-based costing?

b. Both I and II.

23. Which description best fits activity-based costing?

c. Assumes activities are responsible for consuming overhead and products consume activities.

24. Which statement is not true about activity-based costing (ABC)?

a. Activity-based costing systems cannot be used in the service industry.

25. When a company considers implementing activity-based costing, what insights would it likely gain?

c. Would normally gain added insights into causes of cost.

26. The use of activity-based costing normally results in what regarding low-volume products?

a. Substantially greater unit costs for low-volume products than is reported by traditional product costing.

27. Which type of company is most appropriate for using a traditional costing system?

b. Mass producer of pens.

28. A company with high fixed costs and a variety of products should adopt which costing system?

d. Activity-based costing.

29. Which of the following is not likely used as a cost allocation base in activity-based costing?

c. Number of vendors supplying the materials used to manufacture the product.

30. How can activity-based costing (ABC) be applied by a service company?

d. Analyzing technical support and service calls to customers.