Deck 9: Cost Accounting Systems

Question 1

Which of these is not a source document for job costing?

A)Materials requisition record
B)Labour hours/time sheets record
C)Invoice for factory expense
D)The marketing manager's expense sheet

Answer 1

D

Question 2

Predetermined overhead rates are necessary for how many of the following reasons?
.Actual overheads are not incurred evenly over the period
.Product costs need to be calculated promptly for decision- making
.Overhead cannot be traced directly to products because of its indirect nature

A)0
B)1
C)2
D)3

Answer 2

3

Question 3

Magenta Ltd uses a job order costing system and applies factory overhead,based on direct labour hours,at a rate of $2 per direct labour hour.The data relating to production for last period is:

Answer 3

A

Question 4

The Pike Supply Company distributes overhead based on direct labour dollars.The estimated manufacturing overhead for the year was $484,000 and the estimated direct labour dollars for the year were $110,000.Indicate the amount of underapplied or overapplied overhead if actual direct labour was $118,000 and actual manufacturing overhead was $497,400:

A)$21,800 underapplied
B)$21,800 overapplied
C)$15,000 overapplied
D)$15,000 underapplied

Question 5

G Repair Services uses job order costing.At the end of the month the following information was available: $$\begin{array} { l l l l } & \text { Job X-1 } & \text { Job X-2 } & \text { Job X-3 } \\\text { Direct materials } & \$ 50 & \$ 60 & \$ 30 \\\text { Direct labour } & \$ 20 & \$ 30 & \$ 10\end{array}$$ Actual overhead costs are $100.Overhead is applied on the basis of 200% of direct labour costs.Jobs X-1 and X-2 have been completed and sold.Job X-3 is not yet complete.At month-end the work in process inventory balance is:

A)$320
B)$260
C)$60
D)$40

Question 6

Which of these is not a section of a cost of production report?

A)Physical flow schedule
B)Costs to be accounted for
C)Costs accounted for
D)GST summary

Question 7

Port Manufacturing uses the weighted-average method of computing equivalent units of production.For beginning work in process there were 9000 units 30% complete as to materials and conversion costs.For ending work in process there were 5000 units 60% complete as to materials and conversion costs.13 000 units were completed during the year.Determine the equivalent units of production.

A)16 000
B)19 300
C)20 000
D)22 300

Question 8

Equivalent units are:

A)The number of whole units represented by the finished units plus the partly completed units
B)The number of whole units represented by the finished units
C)The units represented by the total manufacturing costs for the period
D)The units that would have been produced under optimum circumstances

Question 9

Smith Co started 40 000 units into production during the current period and completed 28 000.The other 12 000 units were 30% complete as to conversion costs at the end of the period.Total costs were $60 000 for material and $36 000 for conversion costs.
Material is added at the beginning of the production process.Unit raw material and conversion costs for the period were:

Question 10

In 2011,Brunswick Plumbing Supplies planned the following:
Factory overhead costs $180,000
Direct labour costs 15,000 hours at $8.00 per hour) $120,000
Machine Hours 48,000
Direct material costs $108,000
The predetermined overhead rate is based on direct labour hours and planned production during 2011 is 12,000 units.The estimated cost per unit produced is:

A)$24.00
B)$44.00
C)$34.00
D)$26.00

Question 11

$\begin{array}{l}\begin{array} { l c } \text { Beginning balance Job No } 58 \quad \mid & \$ 18,800 \\\text { Direct Materials issued to job in the current period } & \$ 30,600 \\\text { Direct Labour charged to job in the current period } & \$ 24,500 \\\text { Manufacturing overhead applied in the current period } & \$ 40,100 \\\text { Total number of units produced by Job 58 } & 30,000\end{array}\\\text { What is the unit cost for Job } 58 ?\end{array}$

A)$3.85
B)$3.80
C)$4.00
D)$3.91

Question 12

Manufacturing costs assigned to inventory should appear on the income statement in the period in which:

A)The goods are completed
B)Cash is collected for the goods sold
C)The sale of goods is recorded
D)The purchase order to manufacture the goods is received

Question 13

The statement concerning the job cost order that is incorrect is:

A)It provides an itemised list of all costs charged to a particular job
B)Orders for incomplete jobs serve as a subsidiary ledger for the work in process account
C)It traces all costs to jobs
D)The control number assigned to each job is recorded on the job order

Question 14

Black Cat Limited supplies the following information.Manufacturing overhead is applied on the basis of direct labour hours.
$\begin{array}{l}\text { on the basis of direct labour hours. }\\\begin{array} { l r } \text { Estimated manufacturing overhead costs } & \$ 2,295,000 \\\text { Estimated direct labour hours } & 340,000 \\\text { Actual direct labour hours } & 348,000 \\\text { Actual manufacturing overhead costs } & \$ 2,357,000\end{array}\end{array}$
Compute the amount of overapplied or underapplied overhead.

A)$8,800 underapplied
B)$8,000 overapplied
C)$8,000 underapplied
D)$8 800 overapplied

Question 15

Which most accurately describes the flow of costs through the accounting system?

A)Purchases,to Finished Goods,to Work in Process
B)Work in Process,to Cost of sales
C)Factory overhead applied,to Work in Process,to Finished Goods
D)Purchases,to Factory overhead,to Cost of sales

Question 16

For 2011 The Iron Works planned the following:

Question 17

Petlyn Pty Ltd applies overhead to completed jobs using a predetermined rate of 60% of direct labour costs.If Job No 22 shows $9,000 of factory overhead applied,how much was the direct labour cost of the job?

A)$5,400
B)$12,000
C)$15,000
D)$14,400

Question 18

The Work in Process account of Village Manufacturing shows a balance of $42 000 at the end of an accounting period.The job cost orders of the two uncompleted jobs show charges of $15 000 and $7000 for materials used and charges of $10 000 and $5000 for direct labour used.From this information it appears that the company is using a predetermined overhead rate as a percentage of direct labour costs,of:

A)13.5%
B)50.0%
C)33.3%
D)300%

Question 19

Small Budget Production uses a predetermined overhead rate based upon direct labour hours.The firm has the following budgeted and actual data for the current year:

Question 20

Which best describes the set of costs that are debited directly to work in process inventory?

A)Actual direct materials,actual direct labour,actual overhead
B)Actual indirect materials,actual direct labour,applied overhead
C)Actual indirect materials,actual indirect labour,actual overhead
D)Actual direct materials,actual direct labour,applied overhead

Question 21

When a job is completed,the costs recorded on its job cost order are totalled and the amount debited/credite d__________ to finished goods inventory.

Question 22

The correct statement concerning cost accounting for service type businesses is:

A)Cost information is needed for different reasons in a service business than in a manufacturing business
B)The cost object is normally activities
C)Actual costs rather than budgeted costs are used to determine overhead application rates
D)To determine the rate at which direct labour costs are applied to a particular job a labour cost per hour is developed for each employee.

Question 23

The two types of cost accounting systems are j______ costing and p________ costing.

Question 24

The combined cost of direct labour and factory overhead incurred in converting raw materials into finished goods is known as c________________ cost.

Question 25

In an 'ideal' just-in-time processing plant,the inventories held are:

A)Direct materials
B)Work in process
C)Finished goods
D)Supplies of packaging

Question 26

It is incorrect concerning Activity-Based Costing [ABC] that:

A)Production processes are broken down into activities
B)Cost drivers are used to assign costs between activities
C)The use of cost drivers allows management to apply overhead more accurately to products with different production requirements
D)It is now used by firms much more commonly than traditional costing

Question 27

Which of these inputs are debited to a work -in-process account with a process costing system?

A)Direct materials and direct labour
B)Direct labour and factory overhead applied
C)Direct materials,direct labour and factory overhead applied
D)Direct materials and factory overhead applied

Question 28

Equivalent units of production measures:

A)The number of partial jobs completed in the period
B)The production level which could have been achieved under optimum circumstances
C)The number of full units that could have been completely produced with the effort expended
D)The number of jobs started but not completed in the period

Question 29

Which of these differs between job order and process costing?

A)Basic purpose
B)Focal point for cost accumulation
C)Tracing of direct costs and allocation of indirect costs
D)Cost flows

Question 30

The correct statement concerning process costing is:

A)The type of production is heterogeneous
B)The flow of products is separated by jobs
C)The control document is a cost of production report
D)Record keeping is more detailed than for job costing

Question 31

Something that is not a feature of just-in-time processing is:

A)Strict quality control
B)A steady,reliable supply of raw materials and labour
C)A variable demand from customers
D)Efficiency in the production process

Question 32

The flow of goods in a firm that uses process costing is,work in process at the start 5000 units ½ complete,units started 54,000,units finished 50,000,work in process end of period 9000 units 1/3 complete.Raw materials are issued at the end of the production process.Using the weighted average method,the equivalent units as to conversion cost for the period are:

A)53,000 units
B)50,000 units
C)54,000 units
D)57,000 units

Question 33

Direct materials are issued to work in process upon receipt of a properly prepared and authorised m___________ r______________.

Question 34

The applied factory overhead is debited/credited ____________________ to the factory overhead account.

Question 35

The statement concerning Activity-based costing ABC)that is not true is:

A)It has been introduced to overcome distortions in costing multiple products which occur when a single base is used to apply overhead to products
B)ABC is cheaper and less time consuming to implement than traditional costing systems
C)Overhead costs are accumulated by activities and then assigned to cost objects using a different cost driver for each activity.
D)ABC can be applied in service businesses as well as in manufacturing businesses

Question 36

It is true that Just-in-time JIT)processing:

A)Is most suitable for small businesses
B)Reflects a 'push' approach to manufacturing
C)Runs the risk of interruptions in supply
D)Applies to inputs of materials rather than outputs of products

Question 37

Factory overhead is charged to jobs by means of a predetermined o______________ rate.

Question 38

The statement concerning cost drivers that is incorrect is:

A)As direct labour shrinks as a proportion of manufacturing costs it becomes a more accurate factor by which to apply overhead to products
B)A cost driver is a measure of the activity that causes overhead costs
C)In modern day manufacturing there has been a decline in labour costs and an increase in factory overheads as a percentage of product costs
D)Inaccurate application of overhead to products can lead to wrong conclusions about which products are profitable

Question 39

The control document used in job order costing is the j_____ c_______ order.

Question 40

The method of calculating equivalent units where the costs assigned to the beginning inventory of work-in-process are combined with the current periods costs of production and the degree of completion of the beginning units is ignored is the:

A)first-in-first-out method
B)last-in-last-out method
C)last-in-first-out method
D)weighted average method

Question 41

P___________ costing is used by firms with continuous production flows which are usually found in industries which mass produce.

Question 42

A________-________ costing is a system in which overhead costs are accumulated by activities and the cost pools for each activity are assigned to the cost object by means of individual cost drivers.

Question 43

E____________ u___________ are a measure of how many whole units of production are represented by the units finished,plus the units partially finished,in a process costing operation.

Question 44

The usual treatment for under-applied overhead at year-end is to add it to ___________ __ ________ sold.