Deck 3: Product Costing and Cost Accumulation in a Batch Production Environment

Question 1

Electricity costs that were incurred by a company's production processes should be debited to Utilities Expense.

Answer 1

False

Question 2

The term "normal costing" refers to the use of job-costing systems.

Answer 2

False

Question 3

A predetermined overhead rate is calculated by dividing actual overhead cost by the actual amount of a cost driver used in the process.

Answer 3

False

Question 4

Two-stage cost allocation uses a first stage to assign all product costs to production departments and then a second stage to apply different cost drivers to improve efficiency.

Question 5

Which of the following statements is true?

A) Service firms have little need for determining the cost of their services.
B) The concept of product costing is relevant only for manufacturing firms.
C) The cost of year-end inventory appears on the balance sheet as an expense.
D) Service companies use cost information for planning and control purposes.
E) Mining and petroleum companies have no inventoriable costs.

Question 6

In traditional product-costing systems, the measure of productive activity is usually some volume-based cost driver, like direct-labor hours.

Question 7

The two-stage cost allocation actually has three types of allocation involved.

Question 8

A production order for a job authorizes the release of material to production.

Question 9

Product or service cost is a very objective number that anyone could agree on.

Question 10

The final step in recognizing the completion of production requires a company to debit Finished-Goods Inventory and credit Work-in-Process Inventory.

Question 11

Manufacturing overhead is a pool of indirect production costs that must somehow be attached to each unit manufactured.

Question 12

Actual costing avoids the profitability of cyclicality.

Question 13

As soon as products are completed, their product costs are transferred from Raw Materials Inventory to Finished-Goods Inventory.

Question 14

In a public accounting firm, for example, costs are assigned to an audit engagement in much the same way they are assigned to a single batch of tables by a furniture manufacturer.

Question 15

Product costs provide crucial data for a variety of managerial purposes.

Question 16

Under- or overapplied manufacturing overhead at year-end is most commonly charged or credited to Work-in-Process Inventory.

Question 17

If a company sells goods that cost $80,000 for $92,000, the firm will:

A) reduce Finished-Goods Inventory by $80,000.
B) reduce Finished-Goods Inventory by $92,000.
C) report sales revenue on the balance sheet of $92,000.
D) reduce Cost of Goods Sold by $80,000.
E) follow more than one of the other procedures.

Question 18

Job-order costing methods are used in a variety of service industry firms and nonprofit organizations.

Question 19

As production takes place, all manufacturing costs are added to the:

A) Work-in-Process Inventory account.
B) Manufacturing-Overhead Inventory account.
C) Cost-of-Goods-Sold account.
D) Finished-Goods Inventory account.
E) Production Labor account.

Question 20

Which of the following statements is true?

A) Product costing is not used in financial accounting.
B) There is only one way to assign indirect costs.
C) All product cost numbers can be easily derived due to their objective nature.
D) Product costing is limited to manufacturing firms.
E) Relative profitability depends upon the way we assign costs and define outputs as successful or unsuccessful.

Question 21

Which of the following manufacturers would most likely use job-order costing?

A) Chemical manufacturers.
B) Microchip processors.
C) Custom-furniture manufacturers.
D) Gasoline refiners.
E) Fertilizer manufacturers.

Question 22

Osgood Company, which applies overhead at the rate of 190% of direct material cost, began work on job no. 101 during June. The job was completed in July and sold during August, having accumulated direct material and labor charges of $27,000 and $15,000, respectively. On the basis of this information, the total overhead applied to job no. 101 amounted to:

A) $0.
B) $28,500.
C) $51,300.
D) $70,500.
E) $79,800.

Question 23

Which of the following statements about material requisitions is false?

A) Material requisitions are often computerized.
B) Material requisitions are a common example of source documents.
C) Material requisitions contain information that is useful to the cost accounting department.
D) Material requisitions authorize the transfer of materials from the production floor to the raw materials warehouse.
E) Material requisitions are routinely linked to a bill of materials that lists all of the materials needed to complete a job.

Question 24

Gonzales Company has developed an integrated system that coordinates the flow of all goods, services, and information into and out of the organization, working with raw material vendors as well as customers to improve service and reduce costs. The firm is said to be using:

A) participative management.
B) top-down management.
C) strategic cost management.
D) supply chain management.
E) management by objectives (MBO).

Question 25

When using normal costing, the total production cost of a job is composed of:

A) direct material and direct labor, only.
B) direct material, direct labor, manufacturing overhead, and outlays for selling costs.
C) direct material, direct labor, manufacturing overhead, and outlays for both selling and administrative costs.
D) direct material, direct labor, and applied manufacturing overhead.
E) direct material, direct labor, and actual manufacturing overhead.

Question 26

Norwood Corporation uses a predetermined overhead rate of $20 per machine hour. In deriving this figure, the company's accountant used:

A) a denominator of budgeted machine hours for the current accounting period.
B) a denominator of actual machine hours for the current accounting period.
C) a denominator of actual machine hours for the previous accounting period.
D) a numerator of budgeted machine hours for the current accounting period.
E) a numerator of actual machine hours for the current accounting period.

Question 27

Metalica Company applies overhead based on machine hours. At the beginning of 20x1, the company estimated that manufacturing overhead would be $500,000, and machine hours would total 20,000. By 20x1 year-end, actual overhead totaled $525,000, and actual machine hours were 25,000. On the basis of this information, the 20x1 predetermined overhead rate was:

A) $0.04 per machine hour.
B) $0.05 per machine hour.
C) $20 per machine hour.
D) $21 per machine hour.
E) $25 per machine hour.

Question 28

A custom-home builder would likely utilize:

A) job-order costing.
B) process costing.
C) mass customization.
D) process budgeting.
E) joint costing.

Question 29

A manufacturing firm produces goods in accordance with customer specifications, commencing production upon receipt of a purchase order. To accumulate the cost of each order, the company would use a:

A) job-cost record.
B) cost allocation matrix.
C) production log.
D) overhead sheet.
E) manufacturing cost record.

Question 30

A typical job-cost record would provide information about all of the following items related to an order except:

A) the cost of direct materials used.
B) administrative costs.
C) direct labor costs incurred.
D) applied manufacturing overhead.
E) direct labor hours worked.

Question 31

Manufacturing overhead:

A) includes direct materials, indirect materials, indirect labor, and factory depreciation.
B) is easily traced to jobs.
C) includes all selling costs.
D) should not be assigned to individual jobs because it bears no obvious relationship to them.
E) is a pool of indirect production costs that must somehow be attached to each unit manufactured.

Question 32

The process of assigning overhead costs to the jobs that are worked on is commonly called:

A) service department cost allocation.
B) overhead cost distribution.
C) overhead application.
D) transfer costing.
E) overhead cost apportionment.

Question 33

Which of the following statements regarding work in process is not correct?

A) Work in process is partially completed inventory.
B) Work in process consists of direct labor, direct material, and manufacturing overhead.
C) Work-in-Process Inventory is debited to record direct material used and direct labor incurred.
D) Work-in-Process Inventory appears on the year-end balance sheet.
E) Work-in-Process Inventory is credited when goods are sold.

Question 34

Which of the following types of companies would most likely use process costing?

A) Aircraft manufacturers.
B) Textile manufacturers.
C) Textbook publishers.
D) Custom-machining firms.
E) Shipbuilders.

Question 35

The assignment of direct labor cost to individual jobs is based on:

A) an estimate of the total time spent on the job.
B) actual total payroll cost divided equally among all jobs in process.
C) estimated total payroll cost divided equally among all jobs in process.
D) the actual time spent on each job multiplied by the wage rate.
E) the estimated time spent on each job multiplied by the wage rate.

Question 36

The final step in recognizing the completion of production requires a company to:

A) debit Finished-Goods Inventory and credit Work-in-Process Inventory.
B) debit Work-in-Process Inventory and credit Finished-Goods Inventory.
C) add direct labor to Work-in-Process Inventory.
D) add direct materials, direct labor, and manufacturing overhead to Work-in-Process Inventory.
E) add direct materials to Finished-Goods Inventory.

Question 37

Which of the following statements about manufacturing cost flows is false?

A) Direct materials, direct labor, and manufacturing overhead are entered in the Work-in-Process Inventory account.
B) The Finished-Goods Inventory account will contain entries that reflect the cost of goods sold during the period.
C) The cost of units sold during the period will typically appear on the income statement.
D) When a company sells goods that cost $54,000 for $60,000, the firm will enter $6,000 in an account entitled Profit on Sale.
E) Units are normally transferred from Work-in-Process Inventory to Finished-Goods Inventory.

Question 38

Which of the following is the correct method to calculate a predetermined overhead rate?

A) Budgeted total manufacturing cost/budgeted amount of cost driver.
B) Budgeted overhead cost / budgeted amount of cost driver.
C) Budgeted amount of cost driver / budgeted overhead cost.
D) Actual overhead cost /budgeted amount of cost driver.
E) Actual overhead cost / actual amount of cost driver.

Question 39

Morgan Manufacturing recently sold goods that cost $35,000 for $45,000 cash. The journal entries to record this transaction would include:

A) a credit to Work-in-Process Inventory for $35,000.
B) a debit to Sales Revenue for $45,000.
C) a credit to Profit on Sale for $10,000.
D) a debit to Finished-Goods Inventory for $35,000.
E) a credit to Sales Revenue for $45,000.

Question 40

Blakely charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of machine hours. The following data pertain to the current year:
Budgeted manufacturing overhead: $480,000
Actual manufacturing overhead: $440,000
Budgeted machine hours: 20,000
Actual machine hours: 16,000
Overhead applied to production totaled:

A) $352,000.
B) $384,000.
C) $550,000.
D) $600,000.
E) some other amount.

Question 41

Which of the following statements about materials is false?

A) Acquisitions of materials are normally charged to the Purchases account.
B) The use of direct materials gives rise to a debit to Work-in-Process Inventory.
C) The use of indirect materials gives rise to a debit to Manufacturing Overhead.
D) The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory.
E) Direct materials are accounted for in a different manner than indirect materials.

Question 42

Farrina Manufacturing uses a predetermined overhead application rate of $8 per direct labor hour. A review of the company's accounting records for the year just ended discovered the following:
Underapplied manufacturing overhead: $7,200
Actual manufacturing overhead: $392,000
Budgeted labor hours: 50,000
Simone's actual labor hours worked totaled:

A) 48,100.
B) 49,100.
C) 49,900.
D) 50,900.
E) cannot be determined based on the information presented.

Question 43

The journal entry needed to record $5,000 of advertising for Oxner Manufacturing would include:

A) a debit to Advertising Expense.
B) a credit to Advertising Expense.
C) a debit to Manufacturing Overhead.
D) a credit to Manufacturing Overhead.
E) a debit to Projects-in-Process.

Question 44

Boxer Industries worked on four jobs during its first year of operation: nos. 401, 402, 403, and 404. A review of job no. 403's cost record revealed direct material charges of $40,000 and total manufacturing costs of $50,000. If Boxer applies overhead at 150% of direct labor cost, the overhead applied to job no. 403 must have been:

A) $0.
B) $6,000.
C) $4,000.
D) $3,333.
E) $5,000.

Question 45

Boston, Inc. applies manufacturing overhead at the rate of $40 per machine hour. Budgeted machine hours for the current period were anticipated to be 120,000; however, a lengthy strike resulted in actual machine hours being worked of only 90,000. Budgeted and actual manufacturing overhead figures for the year were $4,800,000 and $4,180,000, respectively. On the basis of this information, the company's year-end overhead was:

A) overapplied by $580,000.
B) underapplied by $580,000.
C) overapplied by $1,200,000.
D) underapplied by $1,200,000.
E) underapplied by $900,000.

Question 46

Terrence Industries charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of labor hours. The following data pertain to the current year:

Which of the following choices is the correct status of manufacturing overhead at year-end?

A) Overapplied by $10,000.
B) Underapplied by $10,000.
C) Overapplied by $35,000.
D) Underapplied by $35,000.
E) Overapplied by $45,000.

Question 47

The left side of the Manufacturing Overhead account is used to accumulate:

A) actual manufacturing overhead costs incurred throughout the accounting period.
B) overhead applied to Work-in-Process Inventory.
C) underapplied overhead.
D) predetermined overhead.
E) overapplied overhead.

Question 48

Travers Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor. The proper journal entry to record these events would include a debit to Work in Process for:

A) $0 because Work in Process should be credited.
B) $0 because Work in Process is not affected.
C) $11,000.
D) $106,000.
E) $117,000.

Question 49

A computer manufacturer recently shipped several laptops to a customer (cost: $25,000) and billed the customer $30,000. Which of the following options correctly expresses the accounts that are debited and credited to record this transaction?

A) Debits: Accounts Receivable, Finished-Goods Inventory; credits: Sales Revenue, Cost of Goods Sold.
B) Debits: Accounts Receivable, Cost of Goods Sold; credits: Sales Revenue, Finished-Goods Inventory.
C) Debits: Sales Revenue, Cost of Goods Sold; credits: Accounts Receivable, Finished-Goods Inventory.
D) Debits: Sales Revenue, Finished-Goods Inventory; credits: Accounts Receivable, Cost of Goods Sold.
E) Debits: Accounts Receivable; credits: Finished-Goods Inventory, Profit on Sale.

Question 50

Rogers Manufacturing's overhead at year-end was underapplied by $5,800, a small amount given the firm's size. The year-end journal entry to record this amount would include:

A) a debit to Cost of Goods Sold.
B) a debit to Manufacturing Overhead.
C) a debit to Work-in-Process Inventory.
D) a credit to Cost of Goods Sold.
E) a credit to Work-in-Process Inventory.

Question 51

Electricity costs that were incurred by a company's production processes should be debited to:

A) Utilities Expense.
B) Accounts Payable.
C) Cash.
D) Manufacturing Overhead.
E) Work-in-Process Inventory.

Question 52

The estimates used to calculate the predetermined overhead rate will virtually always:

A) prove to be correct.
B) result in a year-end balance of zero in the Manufacturing Overhead account.
C) result in overapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amount.
D) result in underapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amount.
E) result in either underapplied or overapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amount.

Question 53

A review of a company's Work-in-Process Inventory account found a debit for materials of $67,000. If all procedures were performed in the correct manner, this means that the firm:

A) also recorded a credit to Raw-Material Inventory.
B) also recorded a credit to Manufacturing Supplies Inventory.
C) was accounting for the usage of direct materials.
D) was accounting for the usage of indirect materials.
E) also recorded a credit to Raw-Material Inventory and was accounting for the usage of direct materials.

Question 54

Hsu Company incurred $90,000 of depreciation for the year. Eighty percent relates to the firm's production facilities, and 20% relates to sales and administrative offices. If all items are handled in the proper manner, a review of the company's accounting records should reveal a:

A) debit to Depreciation Expense for $90,000.
B) debit to Manufacturing Overhead for $90,000.
C) debit to Manufacturing Overhead for $72,000.
D) debit to Work-in-Process Inventory for $18,000.
E) credit to Cash for $90,000.

Question 55

Mountain Man Corporation debited Cost of Goods Sold and credited Manufacturing Overhead at year-end. On the basis of this information, one can conclude that:

A) budgeted overhead exceeded actual overhead.
B) budgeted overhead exceeded applied overhead.
C) budgeted overhead was less than applied overhead.
D) actual overhead exceeded applied overhead.
E) actual overhead was less than applied overhead.

Question 56

Templeton Corporation recently used $75,000 of direct materials and $9,000 of indirect materials in production activities. The journal entries reflecting these transactions would include:

A) a debit to Manufacturing Overhead for $9,000.
B) a debit to Manufacturing Overhead for $84,000.
C) a debit to Raw-Material Inventory for $75,000.
D) a debit to Work-in-Process Inventory for $84,000.
E) a credit to Manufacturing Overhead for $9,000.

Question 57

An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead at a company that uses normal costing. The accountant was:

A) applying a predetermined overhead amount to production.
B) recognizing receipt of the factory utilities bill.
C) recording a year-end adjustment for an insignificant amount of underapplied overhead.
D) recognizing actual overhead incurred during the period.
E) recognizing the completion of production.

Question 58

Throughout the accounting period, the credit side of the Manufacturing Overhead account is used to accumulate:

A) actual manufacturing overhead costs.
B) overhead applied to Work-in-Process Inventory.
C) overapplied overhead.
D) underapplied overhead.
E) predetermined overhead.

Question 59

Flores Company, which uses labor hours to apply overhead to manufacturing, may have increased amounts of underapplied overhead at month-end if:

A) suppliers of direct materials have an across-the-board price increase.
B) an accountant failed to record the period's charges for plant maintenance and security.
C) employees are hit hard with a widespread outbreak of the flu.
D) direct laborers are granted a wage increase.
E) outlays for advertising expenditures are increased.

Question 60

Armour, Inc., an advertising agency, applies overhead to jobs on the basis of direct professional labor hours. Overhead was estimated to be $150,000, direct professional labor hours were estimated to be 15,000, and direct professional labor cost was projected to be $225,000. During the year, Armour incurred actual overhead costs of $146,000, actual direct professional labor hours of 14,500, and actual direct labor cost of $222,000. By year-end, the firm's overhead was:

A) $1,000 underapplied.
B) $1,000 overapplied.
C) $4,000 underapplied.
D) $4,000 overapplied.
E) $5,000 underapplied.

Question 61

Under- or overapplied manufacturing overhead at year-end is most commonly:

A) charged or credited to Work-in-Process Inventory.
B) charged or credited to Cost of Goods Sold.
C) charged or credited to a special loss account.
D) prorated among Work-in-Process Inventory, Finished-Goods Inventory, and Cost of Goods Sold.
E) ignored because there is no effect on the Cash account.

Question 62

Use the following labor budget data for Roy & Miller Accounting, LLP to answer the following Questions
The budgeted overhead cost for the year is $1,260,000. The company has estimated that one-third of the budgeted over¬head cost is incurred to support the firm’s two partners, and two-thirds goes to support the staff accountants. The current audit bid for Monoco Industries requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant professional labor, $5,000 in direct material,

-What is the overhead rate for partners, if separate rates are used for partners and staff accountants?

A) 90%
B) 75%
C) 60%
D) 225%
E) 50%

Question 63

In the two-stage cost allocation process, costs are assigned:

A) from jobs, to service departments, to production departments.
B) from service departments, to jobs, to production departments.
C) from service departments, to production departments, to jobs.
D) from production departments, to jobs, to service departments.
E) from the balance sheet (when goods are produced), to the income statement (when goods are sold).

Question 64

When underapplied or overapplied manufacturing overhead is prorated, amounts can be assigned to which of the following accounts?

A) Raw-Material Inventory, Manufacturing Overhead, and Direct Labor.
B) Cost of Goods Sold, Work-in-Process Inventory, and Finished-Goods Inventory.
C) Work-in-Process Inventory, Raw-Material Inventory, and Cost of Goods Sold.
D) Raw-Material Inventory, Finished-Goods Inventory, and Cost of Goods Sold.
E) Raw-Material Inventory, Work-in-Process Inventory, and Finished-Goods Inventory.

Question 65

Use the following labor budget data for Roy & Miller Accounting, LLP to answer the following Questions
The budgeted overhead cost for the year is $1,260,000. The company has estimated that one-third of the budgeted over¬head cost is incurred to support the firm’s two partners, and two-thirds goes to support the staff accountants. The current audit bid for Monoco Industries requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant professional labor, $5,000 in direct material,

-If overhead is applied on the Monoco engagement based on a single-cost driver basis, what is the total cost of the engagement?

A) $101,000
B) $96,200
C) $43,200
D) $48,000
E) $85,000

Question 66

The term "normal costing" refers to the use of:

A) job-costing systems.
B) computerized accounting systems.
C) targeted overhead rates.
D) predetermined overhead rates.
E) actual overhead rates.

Question 67

Which of the following is not considered to be a service department?

A) equipment maintenance department
B) material handling department
C) machining department
D) factory custodial service department
E) Vehicle repair department

Question 68

The primary difference between normalized and actual costing methods lies in the determination of a job's:

A) direct material costs.
B) direct labor costs.
C) manufacturing overhead costs.
D) selling costs.
E) administrative costs.

Question 69

Use the following labor budget data for Roy & Miller Accounting, LLP to answer the following Questions
The budgeted overhead cost for the year is $1,260,000. The company has estimated that one-third of the budgeted over¬head cost is incurred to support the firm’s two partners, and two-thirds goes to support the staff accountants. The current audit bid for Monoco Industries requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant professional labor, $5,000 in direct material,

-If overhead is applied on the Monoco engagement based on two separate cost drivers, what is the cost of the engagement?

A) $101,000
B) $83,000
C) $43,500
D) $96,500
E) $89,000

Question 70

If the amount of effort and attention to products varies substantially throughout a company's various manufacturing operations, the company might consider the use of:

A) a plantwide overhead rate.
B) departmental overhead rates.
C) actual overhead rates instead of predetermined overhead rates.
D) direct labor hours to determine the overhead rate.
E) machine hours to determine the overhead rate.

Question 71

Use the following labor budget data for Roy & Miller Accounting, LLP to answer the following Questions
The budgeted overhead cost for the year is $1,260,000. The company has estimated that one-third of the budgeted over¬head cost is incurred to support the firm’s two partners, and two-thirds goes to support the staff accountants. The current audit bid for Monoco Industries requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant professional labor, $5,000 in direct material,

-What is the overhead rate based on a single cost driver (rounded to the nearest percentage?

A) 71%
B) 90%
C) 210 %
D) 83%
E) 60%

Question 72

When selecting a volume-based cost driver, the goal is to:

A) choose an input that varies in a pattern that is most similar to the pattern with which overhead costs vary.
B) choose a period where a cost driver is at a low level so that overhead costs will be at a low level.
C) choose labor hours for a computer-integrated manufacturing processes.
D) eliminate complexity by using a plantwide overhead rate for all of a firm's products.
E) None of these are goals when selecting a volume-based cost driver.

Question 73

Which of the following statements about the use of direct labor as a cost driver is false?

A) Direct labor is the most commonly used cost driver when calculating a predetermined overhead rate.
B) Direct labor is gaining importance in many manufacturing applications with respect to being a significant cost driver.
C) Direct labor is an inappropriate cost driver to use if a company is highly automated.
D) If direct labor is a good cost driver, increases in direct labor are matched with increases in manufacturing overhead.
E) Companies can use either direct labor cost or direct labor hours as a cost driver.

Question 74

Which of the following is not a drawback of actual costing?

A) Costs are subject to cyclicality.
B) Costs avoid the estimation associated with predetermined overhead rates.
C) Costs may not be evenly spread throughout the year due to large payments for overhead costs.
D) Actual overhead costs may only be available after a production period has passed.
E) All of these are drawbacks of actual costing.

Question 75

Use the following labor budget data for Roy & Miller Accounting, LLP to answer the following Questions
The budgeted overhead cost for the year is $1,260,000. The company has estimated that one-third of the budgeted over¬head cost is incurred to support the firm’s two partners, and two-thirds goes to support the staff accountants. The current audit bid for Monoco Industries requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant professional labor, $5,000 in direct material,

-What is the total budgeted compensation for both partners and staff accountants?

A) $1,000,000
B) $600,000
C) $1,160,000
D) $1,400,000
E) None of these answers is correct.

Question 76

Which of the following entities would not likely be a user of job-costing systems?

A) Custom-furniture manufacturers.
B) Repair shops.
C) Hospitals.
D) Accounting firms.
E) None of these, because all are likely users.

Question 77

Use the following labor budget data for Roy & Miller Accounting, LLP to answer the following Questions
The budgeted overhead cost for the year is $1,260,000. The company has estimated that one-third of the budgeted over¬head cost is incurred to support the firm’s two partners, and two-thirds goes to support the staff accountants. The current audit bid for Monoco Industries requires $18,000 in direct partner professional labor, $30,000 in direct staff accountant professional labor, $5,000 in direct material,

-What is the overhead rate for staff accountants, if separate rates are used for partners and staff accountants?

A) 50%
B) 75%
C) 66.7%
D) 100%
E) 150%

Question 78

Throughput time includes the time required for all of these except:

A) material handling.
B) production processing.
C) product inspection.
D) packaging.
E) the time a salesman spends with a customer.

Question 79

At the Bayshore Advertising Agency, partner and staff compensation cost is a key driver of agency overhead. In light of this fact, which of the following is the correct expression to determine the amount of overhead applied to a particular client job?

A) (Budgeted overhead /budgeted compensation) *budgeted compensation cost on the job.
B) (Budgeted overhead / budgeted compensation) * actual compensation cost on the job.
C) (Budgeted compensation /budgeted overhead) * budgeted compensation cost on the job.
D) (Budgeted compensation/budgeted overhead) * actual compensation cost on the job.
E) None of these, because service providers do not apply overhead to jobs.

Question 80

Which of the following would not likely be used by service providers to accumulate job costs?

A) Projects.
B) Contracts.
C) Clients.
D) Processes.
E) All of these, because service providers cannot use job-costing systems.