ACCT 241 241 Practice Exam 1

ACCT 241 241 Practice Exam 1 | Assignment Help | American University 

Practice Exam 1

1.

Which of the following statements concerning direct and indirect costs is NOT true?

Multiple Choice

Whether a particular cost is classified as direct or indirect does not depend on the cost object.

A direct cost is one that can be easily traced to the particular cost object.

The factory manager’s salary would be classified as an indirect cost of producing one unit of product.

A particular cost may be direct or indirect, depending on the cost object.

2.

Rotonga Manufacturing Company leases a vehicle to deliver its finished products to customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle?

Multiple Choice

Direct Cost - Yes; Fixed Cost - Yes

Direct Cost - Yes; Fixed Cost - No

Direct Cost - No; Fixed Cost - Yes

Direct Cost - No; Fixed Cost - No

3.

As the level of activity increases, how will a mixed cost in total and per unit behave?

Multiple Choice

Choice A

Choice B

Choice C

Choice D

Choice E

4.

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

Multiple Choice

Using a plant wide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.

Using a plant wide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs.

It is often overly simplistic and incorrect to assume that direct labor-hours is a company’s only manufacturing overhead cost driver.

The labor theory of value ensures that using a plant wide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.

5.

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year:

Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

Multiple Choic

$2.50 per direct labor-hour

$2.79 per direct labor-hour

$3.00 per direct labor-hour

$4.00 per direct labor-hour

6.

Tancredi Corporation has two manufacturing departments--Machining and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

During the most recent month, the company started and completed two jobs--Job E and Job J. There were no beginning inventories. Data concerning those two jobs follow:

Assume that the company uses a plant wide predetermined manufacturing overhead rate based on machine-hours. If both jobs are sold during the month, the company's cost of goods sold for the month would be closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

$61,450

$41,150

$110,808

$102,600

7.

If manufacturing overhead is under applied, then:

Multiple Choice

actual manufacturing overhead cost is less than estimated manufacturing overhead cost.

the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred.

the predetermined overhead rate is too high.

the Manufacturing Overhead account will have a credit balance at the end of the year.

8.

Brendal Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year:

Results of operations:

How much is the total manufacturing cost added to Work in Process during the year?

Multiple Choice

• $1,215,000
• $1,803,000
• $1,498,500
• $2,023,500

9.

Tusa Corporation is a manufacturer that uses job-order costing. The company closes out any over applied or under applied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year:

Results of operations:

The adjusted Cost of Goods Sold for the year is:

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Multiple Choice

• $1,518,000
• $1,506,500
• $1,642,000
• $1,529,500

10.

In process costing, a separate work in process account is kept for each:

Multiple Choice

individual order.

equivalent unit.

processing department.

cost category (i.e., materials, conversion cost).

11.

Assume there was no beginning work in process inventory and the ending work in process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be:

Multiple Choice

the same as the units completed.

less than the units completed.

the same as the units started during the period.

less than the units started during the period.

12.

Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of:

Multiple Choice

units in ending work in process and the units started.

units in beginning work in process and the units started.

units in ending work in process and the units started and completed.

units in beginning work in process and the units started and completed.

13.

Eccles Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:

Costs:

Distribution of resource consumption:

How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?

Multiple Choice

$233,633

$246,300

$354,150

$78,700

14.

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:

Multiple Choice

under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.

under activity-based costing the sum of all product costs does not equal the total costs of the company.

activity-based costing has not been approved by the United Nation’s International Accounting Board.

activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours.

15.

Which of the following would be an acceptable measure of activity for a material handling activity cost pool?

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Multiple Choice

Option A

Option B

Option C

Option D

16.

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:

Required:

1. With respect to cost classifications for preparing financial statements:

a. What is the total product cost?

b. What is the total period cost? 

2. With respect to cost classifications for assigning costs to cost objects:

a. What is total direct manufacturing cost? 

b. What is the total indirect manufacturing cost? 

3. With respect to cost classifications for manufacturers:

a. What is the total manufacturing cost? 

b. What is the total nonmanufacturing cost? 

c. What is the total conversion cost and prime cost? 

4. With respect to cost classifications for predicting cost behavior:

a. What is the total variable manufacturing cost? 

b. What is the total fixed cost for the company as a whole? 

c. What is the variable cost per unit produced and sold? 

5. With respect to cost classifications for decision making:

a. If Dozier had produced 1,001 units instead of 1,000 units, how much incremental manufacturing cost would it have incurred to make the additional unit?

17.

Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $13.00 per hour. During the year, the company started and completed only two jobs—Job Alpha, which used 64,200 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below:

Required:

1. Calculate the plant wide predetermined overhead rate.

2. Complete the job cost sheet for Job Alpha 

18.

The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year.

The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: 

For example, of the $45,000 ending balance in work in process, $21,600 was overhead that had been applied during the year.

Required:

1. Identify reasons for entries (a) through (d).

2. Assume that the under applied or over applied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry.

3. Assume that the under applied or over applied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.

19.

Helix Corporation uses the weighted-average method in its process costing system. It produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow:

Required:

1. Calculate the first production department's equivalent units of production for materials and conversion for May.

2. Compute the first production department's cost per equivalent unit for materials and conversion for May.

3. Compute the first production department's cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the first production department's cost of the units transferred to the next production department for materials, conversion, and in total for May.

20.

Ellix Company manufactures two models of ultra-high fidelity speakers—the X200 model and the X99 model. Data regarding the two products follow:

Additional information about the company follows:

a. Model X200 requires $36 in direct materials per unit, and model X99 requires $28.

b. The direct labor workers are paid $40 per hour.

c. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products.

d. Model X200 is more complex to manufacture than model X99 and requires the use of special equipment.

e. Because of the special work required in (d) above, the company is considering the use of activity-based absorption costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows:

Required:

1. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products.

a. Compute the plant wide predetermined overhead rate.

b. Compute the unit product cost of each model.

2. Assume that the company decides to use activity-based absorption costing to apply overhead cost to products.

a. Compute the activity rate for each activity cost pool and determine the amount of overhead cost that would be applied to each model using the activity-based approach.

b. Compute the unit product cost of each model.