QUESTION 1

A system that provides information about the costs of processes, products, and services used and produced by an organization is a:

a. Continuous flow process.

b. Cost management system.

c. Two-stage allocation system.

d. Operations cost.

QUESTION 2

When a manufacturing company has a highly automated manufacturing plant producing many different products, what is probably the most appropriate basis of applying overhead costs to work-in-process?

a. Direct labor hours.

b. Direct labor dollars.

c. Machine hours.

d. Cost of materials used.

QUESTION 3

Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves?

a. Machine-hours.

b. Power consumption.

c. Direct labor-hours.

d. Machine setups.

QUESTION 4

For which of the following businesses would a job order cost system be appropriate?

a. Auto repair shop.

b. Crude oil refinery.

c. Drug manufacturer.

d. Root beer producer.

QUESTION 5

The journal entry to record the completion of a job in a job order cost system is:

A.

Work-In-Process Inventory

xxx

Materials Inventory

xxx

B.

Materials Inventory

xxx

Purchases

xxx

C.

Cost of goods sold.

xxx

Finished Goods Inventory

xxx

D.

Finished Goods Inventory

xxx

Work-In-Process Inventory

xxx

a. Option A.

b. Option B.

c. Option C.

d. Option D.

QUESTION 6

Which of the following accounts is debited when direct labor is recorded?

a. Work-in-Process.

b. Salaries and wages expense.

c. Salaries and wages payable.

d. Manufacturing overhead.

QUESTION 7

The balance in the Work-in-Process account equals:

a. The balance in the Finished Goods inventory account.

b. The balance in the Cost of Goods Sold account.

c. The balances on the job costs sheets of uncompleted jobs.

d. The balance in the Manufacturing Overhead account.

QUESTION 8

A company should use process costing, rather than job order costing, if:

a. Production is only partially completed during the accounting period.

b. The product is manufactured in batches only as orders are received.

c. The product is composed of mass-produced homogeneous units.

d. The product goes through several steps of production.

QUESTION 9

In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted)

a. Finished goods inventory control.

b. Factory overhead control.

c. Cost of goods sold.

d. Work-in-process inventory control.

QUESTION 10

An equivalent unit of conversion costs is equal to the amount of conversion costs required to:

a. Start a unit.

b. Start and complete a unit.

c. Transfer a unit in.

d. Transfer a unit out.

QUESTION 11

In a process costing system, manufacturing overhead applied is usually recorded as a debit to:

a. Finished goods.

b. Work-in-process.

c. Manufacturing overhead.

d. Cost of goods sold.

QUESTION 12

When a department or product line is dropped, the common fixed costs which had been allocated to that department:

a. Are eliminated.

b. Become variable costs.

c. Are allocated to the remaining departments or product lines.

d. Become sunk costs.

QUESTION 13

Activity-based costing (ABC) is a costing technique that uses a two stage allocation process. Which of the following statements best describes these two stages?

a. The costs are assigned to activities, and then to the products, based on their use of the activities.

b. The costs are assigned to departments, and then to the products, based on their use of activity resources.

c. Service department costs are allocated to the production departments, and then to the products based upon their use of the activities.

d. Indirect costs are assigned to activities, and then to the products based upon the direct cost resources used by the activities.

QUESTION 14

The electricity used for production machinery would be classified as a:

a. Volume-related activity.

b. Batch-related activity.

c. Product-related activity.

d. Facility-related activity.

QUESTION 15

Which of the following activities is most likely to be classified as value-added for a manufacturing company?

a. Storing.

b. Ordering.

c. Inspecting.

d. Assembling.

QUESTION 16

Which of the following items would not be used as the cost driver for a volume-level cost in an activity-based cost management (ABM) system?

a. Direct labor hours.

b. Machine hours.

c. Units produced.

d. Square footage.

QUESTION 17

Crafter Lumber Supply noticed a recent decline in the amount of purchases from a key customer. Worried that other customers might also reduce their purchases, Crafter's management decided to evaluate the cost of its delivery service. Which of the following cost drivers is more appropriate for general administrative costs of the Delivery Department?

a. Number of different items ordered.

b. Value of each order.

c. Total number of items in each order.

d. Number of deliveries made.

QUESTION 18

Allocation of factory service department costs to the production departments is necessary to:

a. Measure use of plant capacity.

b. Make sure that machines are operating effciently.

c. Calculate cost per unit for purposes of external financial reporting.

d. Control costs.

QUESTION 19

Which of the following would be an appropriate cost-allocation base for allocating the cost of the company cafeteria?

a. Square footage occupied by departments.

b. Numbers of hours of use.

c. Number of meals served.

d. Salaries of personnel purchasing meals.

QUESTION 20

Which of the following departments is not a service department in a typical manufacturing company?

a. Assembly.

b. Accounting.

c. Human resources.

d. Information processing.