BA 213Z In-Class Quizzes Answer Key Set 1
Page 1: In-Class Quiz 1.1
Product Cost Classifications
All of the following would be classified as product costs except:
a. Manufacturing equipment depreciation
b. Insurance on the factory building
c. Direct materials costs
d. Sales commissions
Included Costs in Product Costs
Which costs are included in product costs?
a. Prime costs, conversion costs, and selling costs
b. Direct materials, direct labor, and administrative costs
c. Direct materials, direct labor, and manufacturing overhead
d. Direct materials, direct labor, and period costs
Inventory Accounts
For a manufacturing company, product costs flow through which three inventory accounts on the balance sheet?
a. Period costs, manufacturing costs, administrative costs
b. Direct materials, direct labor, manufacturing overhead
c. Raw materials, work in process, and finished goods
d. (None of the above)
Manufacturing Overhead
Manufacturing overhead includes all manufacturing costs except?
a. Direct materials and direct labor
b. Indirect materials and indirect labor
c. Selling and administrative costs
d. People, places, and things
Page 2: In-Class Quiz 1.2
Objective of Managerial Accounting
Which of the following is the primary objective of managerial accounting?
a. Providing summarized results of operations
b. Providing information that managers need to make operational decisions
c. Providing information to comply with laws and regulations of government bodies
d. Providing historical data to investors and creditors
Variable Costs Example
Which of the following costs would be variable with respect to the number of lattes sold at Starbucks in a day?
a. Rent for the store
b. Property taxes on the store
c. Cost of the coffee beans
d. Manager’s salary
Product Costs Treatment
Product costs:
a. are expensed as they are incurred.
b. are expensed when the inventory is sold and delivered to the customer.
c. remain in inventory forever.
d. (None of the above.)
Relevance of Costs in Decision Making
Suppose you are trying to decide whether to drive or take the train to Portland to attend a concert. You pay an annual parking fee to OSU to park your car. Is the cost of parking at OSU relevant to your decision?
a. Yes, the OSU parking cost is relevant.
b. No, the OSU parking cost is not relevant.
Page 3: In-Class Quiz 2.1
Manufacturing Overhead Application
The Atlas Company estimates that it will incur $300,000 of total manufacturing overhead cost at an estimated activity level of 15,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 250 direct labor-hours?
a. $2,000
b. $4,000
c. $6,000
d. $5,000
Normal Cost System
A normal cost system applies overhead to jobs ________.
a. by multiplying a predetermined overhead rate by the estimated amount of the allocation base incurred by the job
b. by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job
c. using the actual amount of overhead caused by each job
d. using the normal amount of overhead caused by each job
Classification of Product Costs
All of the following are product costs except ________.
a. manufacturing overhead costs
b. raw materials
c. sales commissions
d. direct labor
Selling and Administrative Costs Treatment
When companies incur selling and administrative costs, those costs ________.
a. should be treated as product costs
b. do not flow through the three inventory accounts
c. should flow through the Manufacturing Overhead account
d. should flow through the Work in Process account
Page 4: In-Class Quiz 2.2
Cost Formula Meanings
In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter “a” refers to the estimated ________.
a. total manufacturing overhead cost
b. total fixed manufacturing overhead cost
c. variable manufacturing overhead cost per unit of the allocation base
d. total amount of the allocation base
Predetermined Overhead Rate Calculation
The management of The Monkey Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?
a. $6.00 per machine hour.
b. $8.00 per machine hour.
c. $10.00 per machine hour.
d. $12.50 per machine hour.
Manufacturing Overhead Application Example
The Monkey Company estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?
a. $2,000
b. $4,000
c. $6,000
d. $10,000
Normal Cost System Application
A normal cost system applies overhead to jobs ________.
a. by multiplying a predetermined overhead rate by the estimated amount of the allocation base incurred by the job
b. by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job
c. using the actual amount of overhead caused by each job
d. using the normal amount of overhead caused by each job
Page 5: In-Class Quiz 3.1
Inventory/Cost Journal Entries
To recognize the transfer of raw materials to work in process, you would debit:
a. Raw materials
b. Work in process
c. Finished goods
d. Cost of goods sold
To recognize the transfer of inventory from work in process to finished goods, you would credit:
a. Raw materials
b. Work in process
c. Finished goods
d. Cost of goods sold
To recognize the sale of inventory to a customer, you would credit:
a. Raw materials
b. Work in process
c. Finished goods
d. Cost of goods sold
To recognize the sale of inventory to a customer, you would debit:
a. Raw materials
b. Work in process
c. Finished goods
d. Cost of goods sold