1. Venus Crates manufactures custom crates for a variety of uses. The following data have been recorded for Job 551, which was recently completed. Direct materials used cost $7,200. There were 82 machine hours used on this job. The predetermined overhead rate is $30 per machine hour used. There were 175 direct labor hours worked on this job at a direct labor wage rate of $24 per hour. What is the total manufacturing cost of Job 551?

A. $13,860

B. $4,200

C. $2,460

D. $7,457

Answer: $13,860

2. Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?

A. Internal failure costs

B. Backflush costing

C. Just-in-time

D. External failure costs

Answer: Just-in-time

3. If jobs have been under costed due to under allocation of manufacturing overhead, then cost of goods sold (COGS) is too low and which of the following corrections must be made?

A. Decrease COGS for the amount of the under allocation

B. Increase COGS for double the amount of the under allocation

C. Decrease COGS for double the amount of the under allocation

D. Increase COGS for the amount of the under allocation

Answer:

4. A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is:

A. appraisal costs.

B. value engineering.

C. activity-based costing.

D. prevention costs.

Answer:activity-based costing.

5. Which of these documents informs the storeroom to send specific materials to the factory floor?

A. Receiving report

B. Bill of materials

C. Purchase order

D. Materials requisition

Answer: Materials requisition

6. In job costing, the journal entry to record the use of direct materials on jobs is to debit work-in-process inventory and credit:

A. raw materials inventory.

B. finished goods inventory.

C. manufacturing overhead.

D. wages payable.

Answer: raw materials inventory.

7. Here are selected data for Sunny Sky Corporation.

Beginning raw materials inventory $37,000 Beginning work-in-process inventory $62,200

Beginning finished goods inventory 58,300 Cost of materials purchased 151,000

Cost of direct materials requisitioned 91,300 Direct labor incurred 135,000

Actual manufacturing overhead 160,000 Cost of goods manufactured 287,000

Cost of goods sold 265,000 Manufacturing overhead rate (% of direct labor) 125%

What is the ending work-in-process inventory balance?

A. $161,500

B. $170,250

C. $211,200

D. $229,950

Answer:$229,950

8. Service firms develop a predetermined rate for some costs. This rate is called the:

A. labor rate.

B. direct cost rate.

C. indirect cost allocation rate.

D. hourly cost rate.

Answer: direct cost rate.

9. Watson’s Computer Company uses ABC to account for its manufacturing process.

Activities Indirect activity budget Allocation base (cost driver)

Materials handling $52,000 Based on number of parts

Machine setup 30,000 Based on number of setups

Assembling 9,750 Based on number of parts

Packaging 15,300 Based on number of finished units

Watson’s Computer Company expects to produce 2,250 computers. Watson’s Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for materials handling will be:

A. $4.

B. $6.80.

C. $23.11.

D. $7.01.

Answer: $4

10. Showboat Corporation had actual manufacturing overhead costs for the most recent year of $29,500. Manufacturing overhead is allocated using a predetermined manufacturing overhead rate of $1.50 per direct labor hour. Direct labor cost is $19 per hour. At the end of the year, Cabaret Corporation found it had over allocated manufacturing overhead by $1,250. How much manufacturing overhead was allocated in total during the year?

A. $28,250

B. $29,500

C. $30,750

D. $1,250

Answer: $29,500

11. The predetermined indirect cost allocation rate is computed as:

A. total estimated indirect costs / total estimated amount of the allocation base.

B. total amount of the allocation base / total estimated indirect costs.

C. total estimated indirect costs + total estimated amount of the allocation base.

D. total amount of the allocation base – total estimated indirect costs.

Answer: total estimated indirect costs / total estimated amount of the allocation base

12. Which of the following is a lean strategy?

A. Group like machines together.

B. Produce in smaller batches than a traditional system.

C. Maintain a higher level of inventory than a traditional system.

D. Lengthen setup times relative to a traditional system.

Answer:Produce in smaller batches than a traditional system.

13. The first step in developing an ABC system is:

A. calculate an activity cost allocation rate for each activity.

B. allocate the costs to the cost object using the activity cost allocation rates.

C. select an allocation base for each activity.

D. identify the primary activities and estimate a total cost pool for each.

Answer:identify the primary activities and estimate a total cost pool for each.

14. Kramer Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each coffee table consists of 20 separate parts totaling $240 in direct materials, and each requires 5 hours of machine time to produce. Additional information follows.

Activity Allocation Base Cost Allocation Rate

Materials handling Number of parts $2.00 per part

Machining Machine hours $2.75 per machine hour

Assembling Number of parts $1.00 per part

Packaging Number of finished units $3.00 per finished unit

What is the cost of machining per coffee table?

A. $15

B. $21

C. $13.75

D. $55

Answer: $21

15. The benefits of using the ABC costing system are higher if the company:

A. has high indirect costs.

B. produces many different products that use differing amounts of resources.

C. has high indirect costs and produces many different products that use differing amounts of resources.

D. produces only one product.

Answer:has high indirect costs.

16. The entry to record the purchase of raw materials on account using a job costing system would include a:

A. credit to work-in-process inventory.

B. debit to accounts payable.

C. debit to work-in-process inventory.

D. debit to raw materials inventory.

Answer:  debit to materials inventory.

17. Which of the following is a result of cost distortion?

A. Over costing of all products

B. Under costing of all products

C. Accurate costing of all products

D. Over costing of some products and under costing of other products

Answer: Over costing of some products and under costing of other products

18. The cost of downtime caused by quality problems with the raw materials would be classified as what type of cost?

A. Prevention cost

B. Appraisal cost

C. External failure cost

D. Internal failure cost

Answer: . Internal failure cost

19. A(n) ________ is an estimated manufacturing overhead rate computed before the year begins.

A. cost allocation

B. cost driver

C. predetermined manufacturing overhead rate

D. actual manufacturing overhead rate

Answer: predetermined manufacturing overhead rate

20. Which term listed below describes costs incurred when the company fails to detect poor quality goods or services before delivery to the customer?

A. Internal failure costs

B. Value-added activity

C. External failure costs

D. Just-in-time production

Answer: External failure costs

Devolution describes a process through which a Congress gives up some of its?

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