Test bank for principles of cost accounting 16th edition

All manufacturing costs, except indirect materials and indirect labor.. All manufacturing costs, except direct materials and direct labor.. The sum of direct labor costs and all factory

Test Bank for Principles of Cost Accounting 16th Edition

The wages of which of the following employees would not be included in the product cost for a manufacturer of custom-built home cooking

The Shiplett Company’s payroll summary showed the following in November: What is the amount that would be included in factory overhead in November? Supervisors’ salaries $40,000 Legal department salaries 10,000 Maintenance workers’ wages 30,000 Machine operators’ wages 70,000 Assembly workers’ wages 50,000 Sales department salaries 20,000

1 $240,000

2 $190,000

3 $70,000

4 $30,000

Factory overhead includes:

1 Indirect labor but not indirect materials

2 Indirect materials but not indirect labor

3 All manufacturing costs, except indirect materials and indirect labor

4 All manufacturing costs, except direct materials and direct labor

A typical factory overhead cost is:

1 Freight out

2 Stationery and printing

3 Depreciation on machinery and equipment

4 Postage

Factory overhead would include:

1 Wages of office clerk

2 Sales manager’s salary.

3 Supervisor’s salary

4 Tax accountant’s salary

The term "prime cost" refers to:

1 The sum of direct labor costs and all factory overhead costs

2 The sum of direct material costs and direct labor costs

3 All costs associated with manufacturing other than direct labor costs and direct material costs

4 Manufacturing costs incurred to produce units of output

The following data are from Burton Corporation, a manufacturer, for the

month of September: Compute the prime costs Direct materials used

$135,000 Supervisors’ salaries 6,000 Machine operators’ wages 200,000 Sales office rent and utilities 22,000 Machine depreciation 35,000 Secretary to the Chief Executive Officer salary 3,000 Factory insurance 15,000

1 $344,000

2 $135,000

3 $335,000

4 $256,000

The term "conversion costs" refers to:

1 The sum of direct labor costs and all factory overhead costs

2 The sum of direct material costs and direct labor costs

3 All costs associated with manufacturing other than direct labor costs

4 Direct labor costs incurred to produce units of output

The following data are from Baker Company, a manufacturer, for the month of October: Compute the conversion costs Machine operators’ wages $100,000 Supervisors’ salaries 3,000 Factory insurance 7,500 Secretary to the Chief Executive Officer salary 1,500 Machine depreciation 17,500 Sales office rent and utilities 11,000 Direct materials used 67,500

1 $167,500

2 $104,500

3 $140,500

4 $128,000

Payroll is debited and Wages Payable is credited to:

1 Pay the payroll taxes

2 Record the payroll

3 Pay the payroll

4 Distribute the payroll

Which of the following is not a cost that is accumulated in Work in

The entry to record depreciation of the production equipment would be:

1 Debit - Depreciation Expense - Equipment Credit - Accumulated Depreciation

- Equipment

2 Debit - Depreciation Expense - Equipment Credit - Factory Overhead

3 Debit - Factory Overhead Credit - Accumulated Depreciation - Equipment

4 Debit - Work-in-Process Credit - Accumulated Depreciation - Equipment

At a certain level of operations, per unit costs and selling price are as follows: manufacturing costs, $50; selling and administrative expenses, $10; selling price, $80 Given this information, the mark-on percentage to manufacturing cost used to determine selling price must have been:

Mountain Company produced 20,000 blankets in June to be sold during the holiday season The manufacturing costs were: Management has decided that the mark-on percentage necessary to cover the product’s share of selling and administrative expenses and to earn a satisfactory profit is 30% The selling price per blanket should be: Direct materials $125,000 Direct labor 55,000 Factory overhead 60,000

1 $12.00

2 $15.60

3 $23.60

4 $31.20

The statement of costs of goods manufactured shows:

1 Office supplies used in accounting office

2 Deprecation of factory building

3 Salary of sales manager

4 Rent paid on finished goods warehouse

Selected data concerning the past fiscal year's operations (000's omitted) of the Stanley Manufacturing Company are presented below: Assuming Stanley does not use indirect materials, the cost of materials purchased during the year amounted to: INVENTORIES Beginning Ending Materials $ 90 $ 85 Work

in process 50 65 Finished goods 100 90 Other data: Direct materials used

$365 Total manufacturing costs charged to production during the year

(includes direct materials, direct labor, and factory overhead) 680 Cost of goods available for sale 765 Selling and general expenses 250

1 $455

2 $450

3 $365

13 Finished goods 20 18 Other data: Direct materials used $ 73 Total

manufacturing costs charged to production during the year (includes direct materials, direct labor, and factory overhead) 136 Cost of goods available for sale 153 Selling and general expenses 50

1 $135

2 $146

3 $153

4 $155

Which of the following production operations would be most likely to employ

a job order system of cost accounting?

1 Candy manufacturing

2 Crude oil refining

3 Printing business cards

4 Flour milling

A law firm wanting to track the costs of serving different clients may use a:

1 process cost system

2 job order cost system

3 cost control system

4 standard cost system

When should process costing techniques be used in assigning costs to products?

1 In situations where standard costing techniques should not be used

2 If products manufactured are substantially identical

3 When production is only partially completed during the accounting period

4 If products are manufactured on the basis of each order received

An industry that would most likely use process costing procedures is:

1 Beverage

2 Home Construction

3 Printing

4 Shipbuilding

A standard cost system is one:

1 that provides a separate record of cost for each special-order product

2 that uses predetermined costs to furnish a measurement that helps

management make decisions regarding the efficiency of operations

3 that accumulates costs for each department or process in the factory

4 where costs are accumulated on a job cost sheet

In job order costing, the basic document for accumulating the cost of each job

1 Debit-Payroll Credit-Wages Payable

2 Debit-Work in Process Debit-Factory Overhead Debit-Selling and

Administrative Expense Credit-Payroll

3 Debit-Work in Process Debit-Finished Goods Debit-Cost of Goods Sold Payroll

Credit-4 Debit-Work in Process Debit-Factory Overhead Debit-Selling and

Administrative Expense Credit-Wages Payable

Under a job order system of cost accounting, the dollar amount of the entry

to transfer inventory from Work in Process to Finished Goods is the sum of the costs charged to all jobs:

1 In process during the period

2 Completed and sold during the period

3 Completed during the period

4 Started in process during the period

Under a job order system of cost accounting, Cost of Goods Sold is debited and Finished Goods is credited for a:

1 Transfer of materials to the factory

2 Shipment of completed goods to the customer

3 Transfer of completed production to the finished goods storeroom

4 Purchase of goods on account

The Institute of Management Accountants (IMA) Statement of Professional Practice includes all of the following standards except:

1 Confidentiality

2 Commitment

3 Integrity

4 Competence

According to the Institute of Management Accountants (IMA) Statement of Ethical Professional Practice, performing professional duties in accordance with relevant laws, regulations and technical standards is a component of which standard?

1 Communicate information fairly and objectively

2 Keep information confidential

3 Mitigate actual conflicts of interest

4 Maintain an appropriate level of professional competence

Tom Jones, a management accountant, was faced with an ethical conflict at the office According to the Institute of Management Accountants’ (IMA)

Statement of Professional Practice, the first action Tom should pursue is to:

1 follow his organization’s established policies on the resolution of such conflict

2 contact the local newspaper

3 contact the company’s audit committee

4 consult an attorney

The business entity that converts purchased raw materials into finished

goods by using labor, technology, and facilities is a:

1 Manufacturer

2 Merchandiser

3 Service business

4 Not-for-profit service agency

The business entity that purchases finished goods for resale is a:

The type of merchandiser who purchases goods from the producer and sells them to shops that sell them to the consumer is a:

1 Manufacturer

2 Retailer

3 Wholesaler

4 Service business

Examples of service businesses include:

1 Airlines, architects, and hair stylists

2 Department stores, poster shops, and wholesalers

3 Aircraft producers, home builders, and machine tool makers

4 None of these are correct

ISO 9000 is a set of international standards for:

1 determining the selling price of a product

3 Determining the amount of advertising needed to promote the product.

4 Determining the amount of profit that each product earns

The process of establishing objectives or goals for the firm and determining the means by which they will be met is:

1 periodically measuring and comparing company results

2 assigning responsibility for costs to employees responsible for those costs

3 constantly monitoring employees to ensure they do exactly as they are told

4 taking necessary corrective action when variances warrant doing so

Dan Louis is the supervisor of the Assembly Department of Wiggerman Corporation He has control over and is responsible for manufacturing costs traced to the department The Assembly Department is an example of

Which of the following items of cost would be least likely to appear on a performance report based on responsibility accounting for the supervisor of

an assembly line in a large manufacturing situation?

1 Direct labor

2 Indirect materials

3 Selling expenses

4 Repairs and maintenance

Which of the following items of cost would be least likely to appear on a performance report based on responsibility accounting for the supervisor of

an assembly line in a large manufacturing situation?

1 Direct labor

2 Supervisor's salary

3 Materials

4 Repairs and maintenance

Responsibility accounting would most likely hold a manager of a

manufacturing unit responsible for:

1 cost of raw materials

2 quantity of raw materials used

3 the number of units ordered

4 amount of taxes incurred

Which of the following statements best describes a characteristic of a

performance report prepared for use by a production line department

3 The report should include information on all costs chargeable to the

department, regardless of their origin or control

4 It is more important that the report be precise than timely

A budget:

1 is a monthly financial statement issued to a company’s lenders

2 is management’s operating plan expressed in units and dollars

3 documents the production department’s schedule

4 is the basis for the annual sales forecast

Joshua Company prepares monthly performance reports for each department The budgeted amounts of wages for the Finishing Department for the month

of August and for the eight-month period ended August 31 were $12,000 and

$100,000, respectively Actual wages paid through July were $91,500, and wages for the month of August were $11,800 The month and year-todate variances, respectively, for wages on the August performance report would be:

1 $200 F; $8,500 F

2 $200 F; $3,300 U

3 $200 U; $3,300 U

4 $200 U; $8,500 F

The January performance report for cab no 52 of Teri’s Taxi Service was as follows: (A) Possible reason(s) for the variance in the driver’s wages could be: Expense Budgeted Actual Variance Driver’s wages $2,000 $1,800 $200 F Gasoline 300 270 30 F Maintenance 200 400 200 U Insurance 100 110 10 U Total $2,600 $2,580 $ 20 F

1 A new driver was assigned to cab no 52 on January 5, replacing one who retired after 30 years of service

2 The cab was in the shop for repairs for a few days

3 Business was slow so cab no 52 was idled for two days

4 All of the above are possible reasons

As a result of recent accounting scandals involving companies such as Enron and World Com, the Sarbanes-Oxley Act of 2002 was written to protect

shareholders of public companies by improving

1 management accounting

2 corporate governance

3 professional competence

4 the corporate legal process

Which of the following is not a key element of the Sarbanes Oxley Act to improve corporate governance?

1 The establishment of the Public Company Accounting Oversight Board

2 Requiring a company’s annual report to contain an internal control report thatincludes management’s opinion on the effectiveness of internal control

3 Severe criminal penalties for retaliation against “whistleblowers”

4 Requiring that the company’s performance reports are prepared in

accordance with generally accepted accounting principles

Cost accounting differs from financial accounting in that financial

accounting:

1 Is mostly concerned with external financial reporting

2 Is mostly concerned with individual departments of the company

3 Provides the additional information required for special reports to

management

4 Puts more emphasis on future operations

Taylor Logan is an accountant with the Tanner Corporation Taylor’s duties include preparing reports that focus on both historical and estimated data needed to conduct ongoing operations and do long-range planning Taylor is a(n)

1 certified financial planner

Umberg Merchandise Company’s cost of goods sold last month was

$1,350,000 the Merchandise Inventory at the beginning of the month was

$250,000 and there was $325,000 of Merchandise Inventory at the end of the month Umberg’s merchandise purchases were:

1 $165,000

2 $175,000

3 $185,000

4 $225,000

The balance in Post Industries’ Finished Goods account at December 30 was

$425,000 Its December cost of goods manufactured was $1,350,000, its total manufacturing costs were $1,500,000 and its cost of goods sold in December was $1,455,000 What was the balance in Post’s Finished Goods at December 1?

1 $380,000

2 $320,000

3 $470,000

4 $530,000

Inventory accounts for a manufacturer include all of the following except:

1 periodic inventory system

2 inventory control account

3 perpetual inventory system

4 inventory cost method

Witt Company, like most manufacturers, maintains a continuous record of purchases, materials issued into production and balances of all goods in stock, so that inventory valuation data is available at any time This is an example of a(n)

1 perpetual inventory system

2 inventory control account

3 periodic inventory system

4 inventory cost method