BU330 Accounting for Managers Set-2

Question-1
The cost of downtime caused by quality problems with the raw materials would be classified as what type of cost?

A. Prevention cost
B. Appraisal cost
C. External failure cost
D. Internal failure cost

Question-2
Which of the following is a result of cost distortion?

A. Over costing of all products
B. Under costing of all products
C. Accurate costing of all products
D. Over costing of some products and under costing of other products

Question-3
Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?

A. Internal failure costs
B. Backflush costing
C. Just-in-time
D. External failure costs
Question-4
Which of the following is a lean strategy?

A. Group like machines together.
B. Produce in smaller batches than a traditional system.
C. Maintain a higher level of inventory than a traditional system.
D. Lengthen setup times relative to a traditional system.

Question-5
The entry to record the purchase of raw materials on account using a job costing system would include a:


Question-6
Kramer Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each coffee table consists of 20 separate parts totaling $240 in direct materials, and each requires 5 hours of machine time to produce. Additional information follows.
Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $2.00 per part
Machining Machine hours $2.75 per machine hour
Assembling Number of parts $1.00 per part
Packaging Number of finished units $3.00 per finished unit

What is the cost of machining per coffee table?

A. $15
B. $21
C. $13.75
D. $55

Question-7
The predetermined indirect cost allocation rate is computed as:


Question-8
Watson's Computer Company uses ABC to account for its manufacturing process.
Activities Indirect activity budget Allocation base (cost driver)
Materials handling $52,000 Based on number of parts
Machine setup 30,000 Based on number of setups
Assembling 9,750 Based on number of parts
Packaging 15,300 Based on number of finished units

Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for materials handling will be:

A. $4.
B. $6.80.
C. $23.11.
D. $7.01.

Question-9
In job costing, the journal entry to record the use of direct materials on jobs is to debit work-in-process inventory and credit:


Question-10
Venus Crates manufactures custom crates for a variety of uses. The following data have been recorded for Job 551, which was recently completed. Direct materials used cost $7,200. There were 82 machine hours used on this job. The predetermined overhead rate is $30 per machine hour used. There were 175 direct labor hours worked on this job at a direct labor wage rate of $24 per hour. What is the total manufacturing cost of Job 551?


Question-11
A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is:


Question-12
If jobs have been under costed due to under allocation of manufacturing overhead, then cost of goods sold (COGS) is too low and which of the following corrections must be made?


Question-13
The first step in developing an ABC system is:


Question-14
Service firms develop a predetermined rate for some costs. This rate is called the:

Question-15
Here are selected data for Sunny Sky Corporation.

Beginning raw materials inventory $37,000 Beginning work-in-process inventory $62,200
Beginning finished goods inventory 58,300 Cost of materials purchased 151,000
Cost of direct materials requisitioned 91,300 Direct labor incurred 135,000
Actual manufacturing overhead 160,000 Cost of goods manufactured 287,000
Cost of goods sold 265,000 Manufacturing overhead rate (% of direct labor) 125%

What is the ending work-in-process inventory balance?


Question-16
Showboat Corporation had actual manufacturing overhead costs for the most recent year of $29,500. Manufacturing overhead is allocated using a predetermined manufacturing overhead rate of $1.50 per direct labor hour. Direct labor cost is $19 per hour. At the end of the year, Cabaret Corporation found it had over allocated manufacturing overhead by $1,250. How much manufacturing overhead was allocated in total during the year?


Question-17
Which term listed below describes costs incurred when the company fails to detect poor quality goods or services before delivery to the customer?


Question-18
Which of these documents informs the storeroom to send specific materials to the factory floor?


Question-19
The benefits of using the ABC costing system are higher if the company:


Question-20
A(n) ________ is an estimated manufacturing overhead rate computed before the year begins.


Question-21
The representation for fixed cost per unit of activity is:


Question-22
When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?


Question-23
Which of the following is unique to a process costing system?


Question-24
When absorption costing is used and management bonuses are related to operating income, managers are more likely to:


Question-25
The Jones Corporation uses a process system. During the current period, 2,500 units were started and 1,100 units were completed and transferred out. Ending units were 60% complete for materials and 45% complete for conversion costs. Direct materials costs added were $35,405 and conversion costs added were $32,870. There was no beginning WIP inventory and conversion costs are added evenly throughout the process. At the end of the period, what are the total equivalent units for conversion costs?

A. 1,940
B. 1,400
C. 1,100
D. 1,730

Question-26
The use of either absorption or variable costing will make little difference in companies:


Question-27
Total fixed costs for Purple Figs Company are $52,000. Total costs, both fixed and variable, are $160,000 if 80,000 units are produced. The fixed cost per unit at 80,000 units would be:


Question-28
The contribution margin is equal to:

A. sales minus cost of goods sold.
B. sales minus operating expenses.
C. sales minus fixed expenses.
D. sales minus variable expenses.

Question-29
A company manufactures mirrors. Last month's costs were as follows.
Direct materials $90,000
Direct labor 144,000
Manufacturing overhead 158,000

What were the conversion costs for the month?

A. $302,000
B. $392,000
C. $234,000
D. $90,000

Question-30
Which of the following does NOT appear on an income statement prepared using variable costing?


Question-31
In process costing, ________ is/are found by taking the number of partially completed physical units and multiplying it by the percentage of the process completed.


Question-32
Sugartown Corporation has total sales revenues of $930,000. If its total fixed costs are $182,000 and its total variable costs are $267,000, then the total contribution margin is:


Question-33
At Hodgson Corporation, direct materials are added at the beginning of the process, and conversion costs are uniformly applied. Other details include the following.
Beginning WIP direct materials $32,000
Beginning WIP conversion costs $20,250
Costs of materials added $384,100
Costs of conversion added $271,125
WIP beginning (50% for conversion) 19,200 units
Units started 119,500 units
Units completed and transferred out 115,700 units
WIP ending (60% for conversion) 23,000 units

What are the total equivalent units for conversion costs?

A. 127,200
B. 125,300
C. 129,500
D. 138,700

Question-34
Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.

A. discretionary
B. committed
C. standard
D. past

Question-35
When predicting costs at other volumes using a cost equation derived from either the high-low method or regression analysis, managers should consider:

A. outliers.
B. general inflation.
C. seasonality.
D. All of the above

Question-36
The first step of the 5-step process costing procedure is.


Question-37
The following information is provided by Adametz Company.
WIP inventory, January 1 0 units
Units started 7,500
Units completed and transferred out 3,300
WIP inventory, December 31 4,200
Direct materials $15,500
Direct labor $18,400
Manufacturing overhead $9,000


The units in ending WIP inventory were 90% complete for materials and 50% complete for conversion costs. At the end of the year, what are the equivalent units for conversion costs?

A. 3,750
B. 3,300
C. 5,400
D. 2,100
Question-38
Fun Stuff Manufacturing produces Frisbees using a three-step process that includes molding, coloring, and finishing. Which of the following accounts is debited for conversion costs?


Question-39
Fun Stuff Manufacturing produces ping pong balls using a three-step sequential process that includes molding, coloring, and finishing. When the balls and associated costs are transferred from the coloring process to the finishing process, which account is credited?


Question-40
On a traditional income statement, sales revenue less cost of goods sold equals:

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