Deck 13: Job-Costing

Question 1

A company has the following information for the month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 37,500 \\\text { Sales }(\$ 97.50 \text { p er unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable s elling and administrative } & \$ 4,500 \\\text { Fixed selling and adminis trative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$

$\begin{array}{lll}\text { Inventories: } & \text { Beginning } & \text { Ending } \\\text { Raw materials } & 0 & \$ 10500 \\\text { WIP } & 0 & \text { none } \\\text { Finished goods } & 0 & 1,200 \text { units }\end{array}$ Raw materials purchased during the current period are:

A) $27,000
B) $48,000
C) $37,500
D) None of these answers is correct.

Answer 1

$48,000

Question 2

The production- volume variance is the difference between:

A) budgeted fixed overhead and actual fixed overhead
B) expected fixed overhead and actual fixed overhead
C) expected fixed overhead and budgeted fixed overhead
D) applied fixed overhead and budgeted fixed overhead

Answer 2

D

Question 3

A company has the following information for the current month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 37,500 \\\text { Sales }(\$ 97.50 \text { p er unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable s elling and administrative } & \$ 4,500 \\\text { Fixed selling and adminis trative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$

$\begin{array}{lll}\text { Inventories: } & \text { Beginning } & \text { Ending } \\\text { Raw materials } & 0 & \$ 10500 \\\text { WIP } & 0 & \text { none } \\\text { Finished goods } & 0 & 1,200 \text { units }\end{array}$ The ending inventory under variable costing is:

A) $126,000
B) $144,000
C) $63,000
D) $72,000

Answer 3

$63,000

Question 4

A company has the following information for its first month of operations: $\begin{array}{ll}\text { Raw material s used } & \$ 25,000 \\\text { Sales ( } \$ 65 \text { per unit) } & \$ 78,000 \\\text { Direct labor } & \$ 42,000 \\\text { Variable factory overhead } & \$ 17,000 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable s elling and administrative } & \$ 3,000 \\\text { Fixed selling and adminis trative } & \$ 5,000 \\\text { Gross profit } & \$ 30,000 \\\text { Contribution margin } & \text { unknown }\end{array}$ The company sold half of the units it produced. of factory overhead is included in the ending inventory under absorption costing.

A) $- 0-
B) $6,000
C) $8,400
D) $12,000

Question 5

is least likely to be a cost driver as a basis for applying overhead costs.

A) Production setups
B) Machine hours
C) Indirect labor hours
D) Direct- labor cost

Question 6

A company has the following information for the current month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 37,500 \\\text { Sales }(\$ 97.50 \text { p er unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable s elling and administrative } & \$ 4,500 \\\text { Fixed selling and adminis trative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$

$\begin{array}{lll}\text { Inventories: } & \text { Beginning } & \text { Ending } \\\text { Raw materials } & 0 & \$ 10500 \\\text { WIP } & 0 & \text { none } \\\text { Finished goods } & 0 & 1,200 \text { units }\end{array}$ The cost of goods sold under variable costing is:

A) $144,000
B) $63,000
C) $72,000
D) $126,000

Question 7

If a department identifies more than one cost driver for overhead costs, the department ideally should:

A) select a single cost driver
B) allocate 80% of the costs with 20% of the drivers
C) create as many cost pools as there are cost drivers
D) put 80% of the cost into one pool and 20% into second pool

Question 8

Fighting Irish Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array}{ll}\text { Sales }(\$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable s elling and administrative } & \$ 20,000 \\\text { expenses } &\\\text { Fixed selling and adminis trative expenses }&\$10,000\\\text { Ending inventories: Direct materials }&-0-\\\text { WIP } & -0- \\\text { Finished goods } & \mathbf{4 0 0} \text { units }\end{array}$ were produced.

A) 400 units
B) 1,600 units
C) 1,575 units
D) 2,000 units

Question 9

Roosevelt Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array}{ll}\text { Sales }(\$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable s elling and administrative } & \$ 20,000 \\\text { expenses } &\\\text { Fixed selling and adminis trative expenses }&\$10,000\\\text { Ending inventories: Direct materials }&-0-\\\text { WIP } & -0- \\\text { Finished goods } & \mathbf{4 0 0} \text { units }\end{array}$ The operating income (loss) under absorption costing is:

A) ($70,000)
B) ($6,000)
C) $10,000
D) $0

Question 10

The two key items in determining the budgeted factory- overhead rate are budgeted total overhead and:

A) actual factory- overhead costs
B) budgeted total volume of the cost driver
C) estimated factory- overhead costs
D) actual volume of the cost driver

Question 11

Huskies Company had the following information: $\begin{array}{ll}\text { Budgeted factory overhead } & \$ 85,000 \\\text { Actual factory overhead } & \$ 105,000 \\\text { Budgeted: Direct- labor costs } & \$ 100,000 \\\text { Actual: Direct-labor costs } & \$ 105,000\end{array}$ The budgeted factory- overhead rate using direct- labor costs as the cost driver is:

A) $1.05
B) $.85
C) $.81
D) $1.00

Question 12

is(are) another term for variable costing.

A) Full costing
B) Absorption costing
C) Direct costing
D) Traditional costing

Question 13

A company has the following information for its first month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 25,000 \\\text { Sales ( } \$ 65 \text { per unit) } & \$ 78,000 \\\text { Direct labor } & \$ 42,000 \\\text { Variable factoryoverhead } & \$ 17,000 \\\text { Fixed } &\\factory\\overhead&\text { unknown }unknown\\Variable\\sellingand\\administrative&\$3,000\\\text { Fixed sellingand administrative } & \$ 5,000 \\\text { Grossprofit } & \$ 30,000 \\\text { Contributiormargin } & \text { unknown }\\\text { Ending inventories: }\\\text { Raw materials } & \$ 7,000 \\\text { WIP } & \text { none } \\\text { Finished goods } & 1,200 \text { units }\end{array}$ were sold during the period.

A) 1,200 units
B) 2,400 units
C) 0 units
D) 3.600 units

Question 14

A company has the following information for its first month of operations: $\begin{array}{lr}\text { Raw materials used } & \$ 25,000 \\\text { Sales ( } \$ 65 \text { per unit) } & \$ 78,000 \\\text { Direct labor } & \$ 42,000 \\\text { Variable factory overhead } & \$ 17,000 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable selling and }\\\text { administrative } & \$ 3,000 \\\text { Fixed selling and administrative } & \$ 5,000 \\\text { Gross profit } & \$ 30,000 \\\text { Contribution margin } & \text { unknown }\\\text { Ending inventories: }\\\text { Raw materials } & \$ 7,000 \\\text { WIP } & \text { none } \\\text { Finished goods } & 1,200 \text { units }\end{array}$ is the inventory cost per unit using variable costing.

A) $36.25
B) $35.00
C) $37.92
D) $65.00

Question 15

Cyclone Company had the following information: $$\begin{array} { l l } \text { Budgeted factory overhead } & \$ 85,000 \\\text { Actual factory overhead } & \$ 105,000 \\\text { Budgeted: Direct- labor costs } & \$ 100,000 \\\text { Actual: Direct- labor costs } & \$ 105,000\end{array}$$ The journal entry to apply overhead to a job incurring $15,000 of direct- labor cost includes a:

A) credit to factory Overhead Control for $15,000
B) debit to Factory Overhead Control for $12,750
C) credit to WIP Inventory for $15,000
D) debit to WIP Inventory for $12,750

Question 16

Hoosier Company incurred actual overhead costs of $305,000 for the year. A budgeted factory- overhead rate of 150% of direct- labor cost was determined at the beginning of the year. Budgeted factory overhead was $300,000, and budgeted direct- labor cost was $200,000. Actual direct- labor cost was $205,000 for the year. The disposition of the factory overhead variance for the year (assuming an immaterial amount) was a:

A) credit to Cost of Goods Sold for $5,000
B) debit to Cost of Goods Sold for $2,500
C) debit to Cost of Goods Sold for $5,000
D) credit to Cost of Goods Sold for $2,500

Question 17

Cardinals Company reported the following information about the production and sales of its only product during its first month of operations: $\begin{array}{ll}\text { Sales }(\$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct material s used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and admini strative } & \$ 20,000\\\text { expenses }\\\text { Fixed selling and administrative expenses }&\$10,000\\\text { Ending inventories: Direct materials }&-0-\\\text { WIP } & -0- \\\text { Finished goods } & 400 \text { units }\end{array}$ The cost of producing one unit of product using variable costing is:

A) $160
B) $225
C) $170
D) $200

Question 18

A company that produces more than its planned volume for a year will:

A) not have an overhead variance
B) underapply overhead
C) overapply overhead
D) None of these answers is correct.

Question 19

When actual volume is less than expected volume, the production- volume variance is:

A) unfavorable
B) favorable
C) overapplied
D) None of these answers is correct.

Question 20

Cowboys Company had the following information: $\begin{array}{ll}\text { Budget ed factory overhead } & \$ 80,000 \\\text { Actual f actory overhead } & \$ 82,000 \\\text { Budgeted: M achine hours } & 40,000 \\\text { Actual: M achine hours } & 39,500\end{array}$ The budgeted factory- overhead rate using machine hours as the cost driver is:

A) $2.875
B) $2.000
C) $2.025
D) $2.050

Question 21

is the most important contributor to the variances between actual and applied overhead.

A) The difference between actual and budgeted volume of cost driver activity
B) Inefficient use of overhead items
C) Poor forecasting
D) Calendar variations, number of workdays in a month

Question 22

The most widely used approach to disposing of overhead variances is:

A) to capitalize it as a cost of finished goods inventory
B) proration
C) to allocate it between cost of goods sold and finished goods inventory
D) immediate write- off

Question 23

The fixed- overhead rate is determined by dividing the budgeted fixed manufacturing overhead by:

A) budgeted variable manufacturing overhead
B) expected volume of the cost driver
C) the number of units sold
D) actual volume of production

Question 24

is (are) used for external reporting.

A) Direct costing
B) Absorption costing and variable costing
C) Variable costing
D) Absorption costing

Question 25

is (are) computed for variable overhead.

A) Production- volume variance
B) Production- volume variance and flexible- budget variance
C) Flexible- volume variance
D) None of these answers is correct.

Question 26

A company has the following information for its first month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 37,500 \\\text { Sales }(\$ 97.50 \text { per unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable selling and administrative } & \$ 4,500 \\\text { Fixed selling and adminis trative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$ The company sold half of the units it produced. _ is the cost of goods sold under absorption costing.

A) $63,000
B) $45,000
C) $117,000
D) $72,000

Question 27

A company has the following information for its first month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 25,000 \\\text { Sales (\$65 per unit) } & \$ 78,000 \\\text { Directlabor } &\$ 42,000\\\text { Variable factory overhead }&\$17,000\\\text { Fixed factory overheadunknown Variable sellingand }\\\text { administrative }&\$3,000\\\text { Fixed sellingand administrative }&\$5,000\\\text { Gross profit }&\$30,000\\\text { Contributionmargin }&\text { unknown }\\\end{array}$

Ending inventories:
Raw materials $\$ 7,000$
WIP none
Finishedgoods $\quad$$\quad$ 1,200 units The cost of goods sold under variable costing is:

A) $96,000
B) $84,000
C) $42,000
D) $48,000

Question 28

Bruins Company had the following information: $$\begin{array} { l l } \text { Budgeted factory overhead } & \$ 75,000 \\\text { Actual factory overhead } & \$ 80,000 \\\text { Budgeted: Direct-1abor hours } & 20,000 \\\text { Actual: Direct-labor hours } & 21,000\end{array}$$ The budgeted factory- overhead rate using direct- labor hours as the cost driver is:

A) $3.75
B) $3.81
C) $3.57
D) $4.00

Question 29

Clemson Company had the following data available: Direct materials purchased on account $\quad\quad\$ 74,000$
Direct materi als requi sition ed $\quad\quad\$ 41,000$
Payment for direct materi als $\quad\quad\$ 65,000$ Direct materials inventory increased by:

A) $74,000
B) $33,000
C) $9,000
D) $41,000

Question 30

A company has the following information for its first month of operations: $\begin{array}{ll}\text { R aw materials used } & \$ 25,000 \\\text { S ales }(\$ 65 \text { per unit) } & \$ 78,000 \\\text { Direct lab or } & \$ 42,000 \\\text { V ariable factory overhead } & \$ 17,000 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable selling and administrative } & \$ 3,000 \\\text { Fixed selling and administrative } & \$ 5,000 \\\text { Gross profit } & \$ 30,000 \\\text { Contribution margin } & \text { unknown }\end{array}$ The company sold half of the units it produced. _ is the cost of goods sold under absorption costing.

A) $30,000
B) $42,000
C) $48,000
D) $78,000

Question 31

Buckeyes Company incurred actual overhead costs of $80,000 for the year. A budgeted factory- overhead rate of 210% of direct- labor cost was determined at the beginning of the year. Budgeted factory overhead was $78,750, and budgeted direct- labor cost was $37,500. Actual direct- labor cost was $40,000 for the year. The disposition of the variance, assuming a material amount, would include a:

A) credit to Cost of Goods Sold for $1,250
B) credit to Factory Department Overhead Control for $1,250
C) debit to Factory Department Overhead Control for $4,000
D) debit to Cost of Goods Sold for $4,000

Question 32

Hoover Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l r } \text { Sales ( } \$ 225 \text { per unit) } & \$ 315,000 \\\text { Direct materials used } & \$ 160,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 60,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative expenses } & \$ 20,000 \\\text { Fixed selling and administrative expenses } & \$ 30,000 \\\text { Endinginventories: } & \\\quad \text { Direct materials } & - 0 - \\\text { WIP } & - 0 - \\\text { Finished goods } & 600 \text { units }\end{array}$$ The cost of producing one unit of product using absorption costing is:

A) $200.00
B) $225.00
C) $130.00
D) $160.00

Question 33

The budgeted factory- overhead rate is computed as:

A) budgeted total overhead / actual cost driver activity
B) actual factory overhead / actual production in units
C) budgeted total overhead / budgeted cost driver
D) actual factory overhead / actual cost driver activity

Question 34

Buffaloes Company had the following information: $\begin{array}{ll}\text { Budgeted factory overhead } & \$ 78,000 \\\text { Actual factory overhead } & \$ 75,000 \\\text { Budgeted: Production setups } & 12,000 \\\text { Actual: Production setup s } & 11,500\end{array}$ The journal entry to apply overhead to a job requiring 4,800 setups includes a:

A) debit to Factory Overhead Control for $31,296
B) debit to WIP Inventory for $31,296
C) credit to Factory Overhead Control for $31,200
D) credit to Cost of Goods Sold for $31,200

Question 35

When the variable costing method is used, fixed factory overhead appears on the income statement as a:

A) fixed expense
B) component of cost of goods sold and as a production volume variance
C) component of cost of goods sold
D) production volume variance

Question 36

The primary difference between variable and absorption costing is the accounting for:

A) variable manufacturing overhead
B) fixed manufacturing overhead
C) beginning inventory costs
D) selling and administrative costs

Question 37

Truman Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l r } \text { Sales ( } \$ 225 \text { per unit) } & \$ 315,000 \\\text { Direct materials used } & \$ 160,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 60,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative expenses } & \$ 20,000 \\\text { Fixed selling and administrative expenses } & \$ 30,000 \\\text { Endinginventories: } & \\\quad \text { Direct materials } & - 0 - \\\text { WIP } & - 0 - \\\text { Finished goods } & 600 \text { units }\end{array}$$ The ending inventory under absorption costing is:

A) $96,000
B) $120,000
C) $78,000
D) $135,000

Question 38

A company has the following information for the current month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 37,500 \\\text { Sales }(\$ 97.50 \text { per unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable selling and administrative } & \$ 4,500 \\\text { Fixed selling and adminis trative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$

$\begin{array}{lll}\text { Inventories: } & \text { Beginning } & \text { Ending } \\\text { Raw materials } & 0 & \$ 10,500 \\\text { WIP } & 0 & \text { none } \\\text { Finished goods } & 0 & 1,200 \text { units }\end{array}$ The total contribution margin under variable costing is:

A) $10,500
B) $31,500
C) $49,500
D) $54,000

Question 39

A company has the following information for its first month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 25,000 \\\text { Sales (\$65 per unit) } & \$ 78,000 \\\text { Directlabor } &\$ 42,000\\\text { Variable factory overhead }&\$17,000\\\text { Fixed factory overheadunknown Variable sellingand }\\\text { administrative }&\$3,000\\\text { Fixed sellingand administrative }&\$5,000\\\text { Gross profit }&\$30,000\\\text { Contributionmargin }&\text { unknown }\\\end{array}$

Ending inventories:
Raw materials $\$ 7,000$
WIP none
Finishedgoods $\quad$$\quad$ 1,200 units were produced during the period.

A) 2,400 units
B) 0 units
C) 3.600 units
D) 1,200 units

Question 40

The difference between applied and budgeted fixed overhead is the:

A) feedback variance
B) production- volume variance
C) price variance
D) quality variance

Question 41

Hawkeyes Company had the following information: $\begin{array}{lr}\text { Budgeted variable factory overhead }&\$66,000\\\text { Budgeted fixed factory overhead }&\$46,500\\\\\text { Actual variable factory overhead }&\$67,500\\\text { Actual fixed factory overhead }&\$52,500\\\\\text { Budgeted cost driver activity levels: }\\\text { Direct- labor hours } & 30,000 \\\text { Direct- labor costs } & \$ 150,000 \\\text { Machine hours } & 60,000 \\\text { Productionsetups } & 15,000\\\\\text { Actual cost driver activity levels: }\\\text { Direct- labor hours } & 31,500 \\\text { Direct-labor costs } & \$ 165,600 \\\text { Machine hours } & 56,190 \\\text { Productionsetups } & 14,280\end{array}$ The budgeted factory- overhead rate using production setups as the cost driver is:

A) $7.88
B) $8.40
C) $8.00
D) $7.50

Question 42

is not an inventoriable cost under variable costing.

A) Variable selling and administrative expenses
B) Variable manufacturing overhead
C) Direct materials
D) All of these answers are correct.

Question 43

The following information was gathered for Nittany Lions Company: $\begin{array}{ll}\text { Budgeted direct-labor hours } & 34,000 \\\text { Actual direct-lab or hours } & 32,400 \\\text { Budgeted f actory overhead } & \$ 144,500 \\\text { Actual factory ov erhead } & \$ 149,980\end{array}$ Assume the cost driver is direct- labor hours. The budgeted factory- overhead rate is:

A) $4.25
B) $4.84
C) $4.63
D) $4.45

Question 44

In the immediate write- off approach, overapplied overhead is regarded as:

A) a reduction to the cost of inventory
B) a decrease in current income
C) a decrease in cost of goods sold
D) an addition to the cost of inventory

Question 45

Wilson Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l l } \text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative } & \$ 20,000 \\\text { expenses } & \\\text { Fixed s elling and administrative expenses } & \$ 10,000 \\\text { Endinginventories: Direct materials } & - 0 - \\\text { WIP } & - 0 -\\\text { Finished goods }&400 \text { units }\end{array}$$ The gross profit under absorption costing is:

A) $40,000
B) $0
C) $104,000
D) $84,000

Question 46

To apply the budgeted overhead to a job, the budgeted overhead rate is multiplied by the:

A) actual factory- overhead costs
B) actual cost- driver data
C) estimated factory- overhead costs
D) actual production in units

Question 47

The following information was gathered for Gophers Company: $\begin{array}{ll}\text { Budgeted direct-labor hours } & 8,000 \\\text { Actual dir ect-lab or hours } & 8,100 \\\text { Bud geted factory overhead } & \$ 224,000 \\\text { Actual factory overhead } & \$ 224,970\end{array}$ Assume the cost driver is direct- labor hours. The amount of over/underapplied overhead is:

A) $1,830 underapplied
B) $970 underapplied
C) $1,830 overapplied
D) $970 overapplied

Question 48

is (are) computed for fixed overhead.

A) Flexible- volume variance
B) Production- volume variance and flexible- budget variance
C) Production- volume variance
D) None of these answers is correct.

Question 49

Longhorns Company had the following information: $\begin{array}{lr}\text { Budgeted variable factory overhead }&\$66,000\\\text { Budgeted fixed factory overhead }&\$46,500\\\\\text { Actual variable factory overhead }&\$67,500\\\text { Actual fixed factory overhead }&\$52,500\\\\\text { Budgeted cost driver activity levels: }\\\text { Direct- labor hours } & 30,000 \\\text { Direct- labor costs } & \$ 150,000 \\\text { Machine hours } & 60,000 \\\text { Productionsetups } & 15,000\\\\\text { Actual cost driver activity levels: }\\\text { Direct- labor hours } & 31,500 \\\text { Direct-labor costs } & \$ 165,600 \\\text { Machine hours } & 56,190 \\\text { Productionsetups } & 14,280\end{array}$ The budgeted factory- overhead rate using direct- labor hours as the cost driver is:

A) $3.81
B) $4.00
C) $3.57
D) $3.75

Question 50

An absorption- costing income statement separates cost into the major categories of:

A) inventoriable and noninventoriable
B) product and period
C) manufacturing and nonmanufacturing
D) All of these answers are correct.

Question 51

assigns both fixed and variable manufacturing costs to the product.

A) Fixed costing
B) Variable costing
C) Direct costing
D) Absorption costing

Question 52

Fixed factory overhead appears on the absorption- costing income statement:

A) as part of cost of goods sold and as a production volume variance
B) as a fixed expense
C) as a production volume variance
D) as part of cost of goods sold

Question 53

Applied fixed cost is computed using:

A) actual volume
B) budgeted volume
C) expected volume
D) estimated volume

Question 54

The cost driver chosen for applying factory overhead costs should be the cost driver that:

A) incurs the least administration cost
B) causes most of the overhead costs
C) confers a competitive advantage
D) is easiest to understand

Question 55

Browns Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l l } \text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative } & \$ 20,000 \\\text { expenses } & \\\text { Fixed s elling and administrative expenses } & \$ 10,000 \\\text { Endinginventories: Direct materials } & - 0 - \\\text { WIP } & - 0 -\\\text { Finished goods }&400 \text { units }\end{array}$$ The ending inventory under variable costing is:

A) $80,000
B) $64,000
C) $68,000
D) $90,000

Question 56

Jayhawks Company had the following information: $\begin{array}{ll}\text { Budgeted factory overhead } & \$ 80,000 \\\text { Actual factory overhead } & \$ 82,000 \\\text { Budgeted: Machine hours } & 40,000 \\\text { Actual: Machinehours } & 39,500\end{array}$ The overhead applied for a company that uses 10,000 machine hours is:

A) $20,000
B) $20,250
C) $28,750
D) $20,500

Question 57

The entry to record the application of overhead includes a:

A) debit to Factory Department Overhead Control
B) debit to WIP Inventory
C) credit to Accumulated Depreciation
D) credit to Cost of Goods Sold

Question 58

Variable costing regards fixed manufacturing overhead as:

A) an unexpired cost
B) a charge against sales
C) a product cost
D) an inventoriable cost

Question 59

The most common treatment of an end- of- year immaterial overhead variance is to:

A) allocate the variance among inventories and cost of goods sold
B) ignore it
C) close the variance to cost of goods sold in the current period
D) capitalize the variance as a cost of finished goods inventory

Question 60

In the immediate write- off approach, underapplied overhead is regarded as:

A) a decrease in cost of goods sold
B) a decrease in the cost of inventory
C) a reduction in current income
D) an addition to the cost of inventory

Question 61

Lincoln Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l l } \text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative } & \$ 20,000 \\\text { expenses } & \\\text { Fixed s elling and administrative expenses } & \$ 10,000 \\\text { Endinginventories: Direct materials } & - 0 - \\\text { WIP } & - 0 -\\\text { Finished goods }&400 \text { units }\end{array}$$ The operating income (loss) under variable costing is:

A) 41,000
B) $(70,000)
C) $(6,000)
D) $10,000

Question 62

The following information was gathered for Spartans Company: $\begin{array}{ll}\text { Budgeted direct-labor hours } & 34,000 \\\text { Actual direct- lab or hours } & 32,400 \\\text { Budgeted factory overhead } & \$ 144,500 \\\text { Actual factory overhead } & \$ 149,980\end{array}$ Assume the cost driver is direct- labor hours. The amount of factory overhead applied is:

A) $144,500
B) $149,980
C) $142,922
D) $137,700

Question 63

In absorption costing, costs are separated into the major categories of:

A) manufacturing and fixed
B) variable and nonmanufacturing
C) fixed and variable
D) manufacturing and nonmanufacturing

Question 64

is not an alternative term for absorption costing.

A) Functional approach
B) Full costing
C) Traditional approach
D) Direct costing

Question 65

A normal costing system uses the following:

A) actual direct material, actual direct labor, and applied overhead
B) actual direct material, applied direct labor, and actual overhead
C) applied direct material, applied direct labor, and actual overhead
D) actual direct material, actual direct labor, and actual overhead

Question 66

Absorption costing assigns _ to the product.

A) all variable costs
B) all fixed and variable costs
C) variable and fixed manufacturing costs
D) variable manufacturing costs

Question 67

Ducks Company had the following information: $$\begin{array} { l l } \text { Budgeted factory overhead } & \$ 75,000 \\\text { Actual factory overhead } & \$ 80,000 \\\text { Budgeted: Direct-1abor hours } & 20,000 \\\text { Actual: Direct-1abor hours } & 21,000\end{array}$$ The amount of overhead applied to a company that uses 2,000 direct- labor hours is:

A) $7,600
B) $7,140
C) $8,000
D) $7,500

Question 68

Choosing direct- labor cost rather than direct- labor hours as a cost driver for overhead implies that:

A) lower paid employees use proportionally less support cost
B) direct- labor cost data is easier to obtain
C) direct- labor hour data is easier to obtain
D) higher paid employees use proportionally more support cost

Question 69

Red Raiders Company had the following information: $\begin{array}{lr}\text { Budgeted variable factory overhead }&\$66,000\\\text { Budgeted fixed factory overhead }&\$46,500\\\\\text { Actual variable factory overhead }&\$67,500\\\text { Actual fixed factory overhead }&\$52,500\\\\\text { Budgeted cost driver activity levels: }\\\text { Direct- labor hours } & 30,000 \\\text { Direct- labor costs } & \$ 150,000 \\\text { Machine hours } & 60,000 \\\text { Productionsetups } & 15,000\\\\\text { Actual cost driver activity levels: }\\\text { Direct- labor hours } & 31,500 \\\text { Direct-labor costs } & \$ 165,600 \\\text { Machine hours } & 56,190 \\\text { Productionsetups } & 14,280\end{array}$ The budgeted factory- overhead rate using machine hours as the cost driver is:

A) $2.000
B) $2.003
C) $1.875
D) $2.135

Question 70

is (are) expensed as a period cost under variable costing.

A) Fixed manufacturing overhead
B) Direct labor
C) Direct materials
D) Variable manufacturing overhead

Question 71

A company has the following information for the current month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 37,500 \\\text { Sales ( } \$ 97.50 \text { per unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown } \\\text { Variable selling and administrative } & \$ 4,500 \\\text { Fixed selling and adminis trative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$

$\begin{array}{lll}\text { Inventories: } & \text { Beginning } & \text { Ending } \\\text { Raw materials } & 0 & \$ 10,500 \\\text { WIP } & 0 & \text { none } \\\text { Finished goods } & 0 & 1,200 \text { units }\end{array}$ were produced during the period.

A) 2,400 units
B) 1,200 units
C) 0 units
D) 3.600 units

Question 72

Cleveland Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l l } \text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative } & \$ 20,000 \\\text { expenses } & \\\text { Fixed s elling and administrative expenses } & \$ 10,000 \\\text { Endinginventories: Direct materials } & - 0 - \\\text { WIP } & - 0 -\\\text { Finished goods }&400 \text { units }\end{array}$$ The cost of goods sold under absorption costing is:

A) $320,000
B) $256,000
C) $272,000
D) $360,000

Question 73

In absorption costing, the fixed factory overhead is included:

A) entirely in the cost of goods sold
B) entirely in ending inventory
C) as part of cost of goods sold and as a production- volume variance
D) entirely as a production- volume variance

Question 74

Jackson Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l l } \text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \\\text { Direct materials used } & \$ 176,000 \\\text { Direct labor } & \$ 100,000 \\\text { Variable factory overhead } & \$ 44,000 \\\text { Fixed factory overhead } & \$ 80,000 \\\text { Variable selling and administrative } & \$ 20,000 \\\text { expenses } & \\\text { Fixed s elling and administrative expenses } & \$ 10,000 \\\text { Endinginventories: Direct materials } & - 0 - \\\text { WIP } & - 0 -\\\text { Finished goods }&400 \text { units }\end{array}$$ The cost of goods sold under variable costing is:

A) $272,000
B) $320,000
C) $360,000
D) $256,000

Question 75

The excess of actual overhead over the overhead applied to products is called:

A) overapplied overhead
B) overestimated overhead
C) prorated overhead
D) underapplied overhead

Question 76

The following information was gathered for Badgers Company: $\begin{array}{ll}\text { Budgeted dir ect-labor hours } & 31,000 \\\text { Actual dir ect- lab or hours } & 32,400 \\\text { Budgeted factory overhead } & \$ 147,250 \\\text { Actual factory overhead } & \$ 149,980\end{array}$ Assume the cost driver is direct- labor hours. The amount of over/underapplied overhead is:

A) $3,920 overapplied
B) $2,730 overapplied
C) $6,450 underapplied
D) $2,730 underapplied

Question 77

There is no difference between variable- costing and absorption- costing income if there is:

A) no ending inventory
B) no change in inventory level
C) no beginning inventory
D) no variable overhead cost

Question 78

A company has the following information for the current month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 37,500 \\\text { Sales ( } \$ 97.50 \text { per unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown } \\\text { Variable selling and administrative } & \$ 4,500 \\\text { Fixed selling and adminis trative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$

$\begin{array}{lll}\text { Inventories: } & \text { Beginning } & \text { Ending } \\\text { Raw materials } & 0 & \$ 10,500 \\\text { WIP } & 0 & \text { none } \\\text { Finished goods } & 0 & 1,200 \text { units }\end{array}$ is the inventory cost per unit using variable costing.

A) $97.50
B) $56.88
C) $52.50
D) $54.38

Question 79

If the overhead control account has a credit balance at the end of the period, then:

A) overhead is underapplied and the difference should be credited to the proper accounts
B) overhead is overapplied and the difference should be credited to the proper accounts
C) overhead is overapplied and the difference should be debited to the proper accounts
D) overhead is underapplied and the difference should be debited to the proper accounts

Question 80

The fixed overhead rate is computed as:

A) budgeted fixed manufacturing overhead / actual volume of production
B) actual fixed manufacturing overhead / actual volume of production
C) actual fixed manufacturing overhead / expected volume of production
D) budgeted fixed manufacturing overhead / expected volume of production