ACC 220 TopHat (Exam 2)

Which of the following companies would most likely use job-order costing, according to the slide?

a. Kellogg's

B. Scott Paper

C. Custom Home Builder

C. Custom Home Builder

Which of the following statements accurately represents a difference between Job-Order Costing and Process Costing systems?

a. Job-Order Costing accumulates costs by department, while Process Costing accumulates costs by individual jobs.

b. In Job-Order Costing, unit costs are computed by job on the job cost sheet, whereas in Process Costing, unit costs are computed by department.

c. Job-Order Costing is used when a single product is produced for long periods of time and all units of product are identical.

d. Process Costing involves many different jobs worked on during each period, with each job having unique production requirements.

b. In Job-Order Costing, unit costs are computed by job on the job cost sheet, whereas in Process Costing, unit costs are computed by department.

Which statement accurately describes the flow of materials, labor, and overhead costs in a manufacturing process?

a. Materials, labor, and overhead costs are only added at the initial stages of the manufacturing overhead process.

b. Materials, labor, and overhead costs are added at the final stage before finished goods.

c. Materials, labor, and overhead costs can be added in any processing department.

d. Materials costs are transferred to finished goods while labor and overhead costs remain in the work in process.

c. Materials, labor, and overhead costs can be added in any processing department.

What method combines costs and outputs from the current and prior periods to calculate departmental unit costs in process costing?

a. First-In, First-Out (FIFO)

b. Last-In, First-Out (LIFO)

c. Weighted Average

d. Special Identification

c. Weighted Average

True or False:

In Process Costing, a separate work-in-process account is maintained for each processing department.

True

True or False:

When computing the cost per equivalent unit, it is necessary to consider the percentage completion of the units in the beginning inventory under the weighted-average method

False - we use the percentage completion in the ending inventory.

What is the primary purpose of CVP analysis?

a. To determine the best marketing strategy for products

b. To estimate how profits are impacted by certain factors

c. To calculate the optimal number of employees for production

d. To identify the best geographical location for sales

b. To estimate how profits are impacted by certain factors

If the contribution margin is not sufficient to cover fixed expenses

a. total profits equal total expenses

b. a loss occurs

c. variable expenses equal contribution margin

b. a loss occurs

True or False:

Contribution Margin - Fixed Expenses = Net Operating Income

True

True or False:

Company incurs a loss if sales are below break-even

True - a company incurs a loss if sales are below break-even even

True or False:

One minus the contribution margin ratio equals the variable expense ratio

True