Cost Accounting QE

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1 McCoy Company has the following information available for October when 3,500 units were produced (round answers to the nearest dollar).

Standards: Material 3.5 pounds per unit @ $4.50 per poundLabor 5.0 hours per unit @ $10.25 per hour Actual: Material purchased 12,300 pounds @ $4.25Material used 11,750 pounds17,300 direct labor hours @ $10.20 per hour

What is the labor rate variance?a. $875 F b. $865 F c. $865 U d. $875 U

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2 Western Co. has total budgeted fixed costs of $72,000. Actual production of 5,500 units resulted in a $6,000 unfavorable volume variance. What normal capacity was used to determine the fixed overhead rate? a. 5,000 b. 5,500 c. 6,000 d. Cannot be determined without further information.

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3 The term "relevant range" as used in cost accounting means the range over whicha. costs may fluctuate. b. cost relationships are valid. c. production may vary. d. relevant costs are incurred.

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4 Which of the following is not a valid method for determining product cost?a. arbitrary assignment b. direct measurement c. systematic allocation d. cost-benefit measurement

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5 Denver Enterprises recently used 14,000 labor hours to produce 7,500 completed units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The company's actual payroll cost amounted to $158,200. If the standard labor cost per hour is $11, Denver's labor efficiency variance is: A. $11,000U. B. $11,000F. C. $11,300U. D. $11,300F. E. none of the above.

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6 The following July information is for Marley Company:

Standards: Material 3.0 feet per unit @ $4.20 per footLabor 2.5 hours per unit @ $7.50 per hour Actual: Production 2,750 units produced during the monthMaterial 8,700 feet used; 9,000 feet purchased @ $4.50 per footLabor 7,000 direct labor hours @ $7.90 per hour

(Round all answers to the nearest dollar.)What is the material price variance (calculated at point of purchase)?a. $2,700 U b. $2,700 F c. $2,610 F d. $2,610 U

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7 Benchmarking allows a company toa. identify its strengths and weaknesses. b. imitate those ideas that are readily transferable.c. improve on methods in use by others. d. all of the above.

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8 Which of the following journal entries definitely contains an error? A. Raw-Material Inventory 200,000 Direct-Material Price Variance 5,000 Accounts Payable 205,000B. Raw-Material Inventory 38,000 Direct-Material Price Variance 2,000 Accounts Payable 36,000C. Raw-Material Inventory 156,000 Direct-Material Price Variance 8,000 Work-in-Process Inventory 148,000D. Work-in-Process Inventory 67,000

Direct-Material Quantity Variance 3,000 Raw-Material Inventory 70,000 E. Work-in-Process Inventory 79,000 Direct-Material Quantity Variance 4,000 Raw-Material Inventory 75,000

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9 At the end of the last fiscal year, Roberts Company had the following account balances:

Overapplied overhead $ 6,000Cost of Goods Sold $980,000Work in Process Inventory $ 38,000Finished Goods Inventory $ 82,000

If the most common treatment of assigning overapplied overhead were used, the final balance in Cost of Goods Sold is:a. $974,000. b. $974,660. c. $985,340. d. $986,000.

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10 Value reflects the ability of a product toa. provide the best quality at any price.b. have all possible product and service characteristics.c. meet the majority of a customer's needs at the lowest possible price.d. have the longest technical or service life and the best warranty.

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11 Injection Molding, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.

Data for Department A for February 2010 are: Work in process, beginning inventory,40% converted 200 units Units started during February 600 units Work in process, ending inventory: 100 units 30% complete as to conversion costs 100% complete as to materials

What were the equivalent units of direct materials and conversion costs, respectively, at the end of February? Assume Injection Molding, Inc., uses the weighted-average process costing method. a. 800, 730 b. 800, 800 c. 800, 700 d. 600, 500

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12 Forrest Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when Forrest made 4,500 units:

Standard: DLH per unit 2.50Variable overhead per DLH $1.75Fixed overhead per DLH $3.10Budgeted variable overhead $21,875Budgeted fixed overhead $38,750 Actual: Direct labor hours 10,000Variable overhead $26,250Fixed overhead $38,000

Using the one-variance approach, what is the total overhead variance?a. $6,062.50 U b. $3,625.00 U c. $9,687.50 U d. $6,562.50 U

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13 Which of the following is not a step in benchmarking procedures?a. analyze the "positive gap"b. engage in continuous improvementc. analyze the "negative gap"d. identify "best-in-class" companies

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14 The following March information is available for Scott Manufacturing Company when it produced 2,100 units:

Standard: Material 2 pounds per unit @ $5.80 per poundLabor 3 direct labor hours per unit @ $10.00 per hour Actual: Material 4,250 pounds purchased and used @ $5.65 per poundLabor 6,300 direct labor hours at $9.75 per hour

What is the material quantity variance?a. $275 F b. $290 F c. $290 U d. $275 U

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15 A criticism of variable costing for managerial accounting purposes is that it a. is not acceptable for product line segmented reporting. b. does not reflect cost-volume-profit relationships. c. overstates inventories. d. might encourage managers to emphasize the short term at the expense of the long term.

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16 The addition or removal of product or service characteristics to satisfy additional needs, especially price, reflect the ________ of a product or service.a. Value b. Grade c. Quality d. Durability

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17 An all-inclusive definition of quality views it as the ability of products/services toa. only meet internal design specifications.b. meet the customer's stated or implied needs.c. be produced using all value-added production activities.d. be produced with no rework costs.

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18 Broadly speaking, cost accounting can be defined as a(n)a. external reporting system that is based on activity-based costs.b. system used for providing the government and creditors with information about a company's internal operations.c. internal reporting system that provides product costing and other information used by managers in performing their functions.d. internal reporting system needed by manufacturers to be in compliance with Cost Accounting Standards Board pronouncements.

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19 Alpha Co. uses a job order costing system. At the beginning of January, the company had two jobs in process with the following costs:

Direct Material Direct Labor OverheadJob #456 $3,400 $510 $255Job #461 1,100 289 ?

Alpha pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

What is the overhead application rate per direct labor hour?a. $ 0.50 b. $ 2.00 c. $ 4.25 d. $30.00

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20 Kerry Company makes small metal containers. The company began December with 250 containers in process that were 30 percent complete as to material and 40 percent complete as to conversion costs. During the month, 5,000 containers were started. At month end, 1,700 containers were still in process (45 percent complete as to material and 80 percent complete as to conversion costs). Using the weighted average method, what are the equivalent units for conversion costs?a. 3,450 b. 4,560 c. 4,610 d. 4,910

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21 Gamma Corporation has total budgeted fixed costs of $150,000. Actual production was 8,000 units; normal capacity is 7,500 units. What was the volume variance? a. $10,000 favorable b. $15,000 favorable c. $15,000 unfavorable d. $10,000 unfavorable

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22 Courtney purchased and consumed 50,000 gallons of direct material that was used in the production of 11,000 finished units of product. According to engineering specifications, each finished unit had a manufacturing standard of five gallons. If a review of Courtney's accounting records at the end of the period disclosed a material price variance of $5,000U and a material quantity variance of $3,000F, determine the actual price paid for a gallon of direct material. A. $0.50. B. $0.60. C. $0.70. D. An amount other than those shown above. E. Not enough information to judge.

__ 23 Oxygen Company uses a standard cost system. Overhead cost information for October is as follows:

_Total actual overhead incurred $12,600Fixed overhead budgeted $3,300Total standard overhead rate per MH $4Variable overhead rate per MH $3Standard MHs allowed for actual production 3,500

What is the total overhead variance?a. $1,200 F b. $1,200 U c. $1,400 F d. $1,400 U

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24 Quest Co. is a print shop that produces jobs to customer specifications. During January 20X6, Job #3051 was worked on and the following information is available:

Direct material used $2,500Direct labor hours worked 15Machine time used 6Direct labor rate per hour $7Overhead application rate per hour of machine time $18

What was the total cost of Job #3051 for January?a. $2,713 b. $2,770 c. $2,812 d. $3,052

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25 Jackson Company uses a job order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13.

Raw material used $120,000Direct labor per hour $8.50Overhead applied based on direct labor cost 120%

Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000. Other actual overhead costs totaled $36,000.

What is the prime cost of Job #6?a. $42,250 b. $57,250 c. $73,250 d. $82,750

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26 The Holiday Company makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows:

The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are: How many units were transferred to Decorating during the month?a. 600 b. 4,900 c. 5,950 d. 7,000

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27 Cajun Company. uses a job order costing system. During April 2010, the following costs appeared in the Work in Process Inventory account:

Beginning balance $ 24,000Direct material used 7 0,000Direct labor incurred 60,000Applied overhead 48,000Cost of goods manufactured 185,000

Cajun Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of April which contained $5,600 of overhead. What amount of direct material was included in this job?a. $4,400 b. $4,480 c. $6,920 d. $8,000

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28 The following information pertains to Beta Company for September 2010.

Direct Material Direct Labor OverheadJob #323 $3,200 $4,500 ?Job #325 ? 5,000 ?Job #401 5,670 ? $5,550

Beta Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323 and #325 is identical.

What amount of overhead is applied to Job #323?a. $4,800 b. $5,550 c. $6,300 d. $7,500

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29 Rainbow Company uses a standard cost system for its production process. Rainbow Company applies overhead based on direct labor hours. The following information is available for July:

Standard: Direct labor hours per unit 2.20Variable overhead per hour $2.50Fixed overhead per hour (based on 11,990 DLHs) $3.00 Actual: Units produced 4,400Direct labor hours 8,800Variable overhead $29,950Fixed overhead $42,300

Using the four-variance approach, what is the variable overhead spending variance?a. $7,950 U b. $25 F c. $7,975 U d. $10,590 U

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30 Julia Company makes fabric-covered hatboxes. The company began September with 500 boxes in process that were 100 percent complete as to cardboard, 80 percent complete as to cloth, and 60 percent complete as to conversion costs. During the month, 3,300 boxes were started. On September 30, 350 boxes were in process (100 percent complete as to cardboard, 70 percent complete as to cloth, and 55 percent complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?a. 3,295 b. 3,395 c. 3,450 d. 3,595

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31 ABC had the same activity in 2010 as in 2009 except that production was higher in 2010 than in 2009. ABC will show a. higher income in 2010 than in 2009. b. the same income in both years. c. the same income in both years under variable costing. d. the same income in both years under absorption costing.

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32 Lafayette Savings and Loan had the following activities, traceable costs, andphysical flow of driver units:

Traceable Physical flow of Activities Costs Driver Units

Open new accounts $50,000 1,000 accounts Process deposits 36,000 400,000 deposits Process withdrawals 15,000 200,000 withdrawals Process loan applications 27,000 900 applications

What is the cost per driver unit for new account activity?a. $0.09 c. $30.00b. $0.075 d. $50.00

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33 ABC had $400,000 budgeted fixed overhead costs and based its standard on normal activity of 40,000 units. Actual fixed overhead costs were $430,000, actual production was 36,000 units, and sales were 30,000 units. The volume variance was a. $30,000. b. $40,000. c. $70,000. d. $77,777.

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34 Which of the following defines variable cost behavior?

Total cost reaction Cost per unit reactionto increase in activity to increase in activity

a. remains constant remains constantb. remains constant increasesc. increases increasesd. increases remains constant

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35 Long Company transferred 5,500 units to Finished Goods Inventory during September. On September 1, the company had 300 units on hand (40 percent complete as to both material and conversion costs). On June 30, the company had 800 units (10 percent complete as to material and 20 percent complete as to conversion costs). The number of units started and completed during September was:a. 5,200. b. 5,380. c. 5,500. d. 6,300.

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36 Maxwell Company adds material at the start of production. The following production information is available for June:

Beginning Work in Process Inventory (45% complete as to conversion) 10,000 unitsStarted this period 120,000 unitsEnding Work in Process Inventory (80% complete as to conversion) 8,200 units

How many units must be accounted for?a. 118,200 b. 128,200 c. 130,000 d. 138,200

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37 Tiger Company has a job order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of $12,000 and overhead of $7,200. Job #64 has direct material of $2,000 and direct labor of $9,000.What amount of direct labor cost has been charged to Job #63?a. $ 6,000 b. $ 7,200 c. $ 8,640 d. $14,400

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38 The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing.

Data for the Assembly Department for June 2010 are: Work in process, beginning inventory 250 units Direct materials (100% complete) Conversion costs (50% complete)

Units started during June 800 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete)

What are the equivalent units for direct materials and conversion costs, respectively, for June? a. 1,200.5 units; 1,160.64 units b. 1,050 units; 1,012.5 units c. 1,050 units; 1,050 units d. 962 units; 990 units

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39 Cherub Co.Beginning inventory (30% complete as to Material B and 60% complete for conversion) 700 unitsStarted this cycle 2,000 unitsEnding inventory (50% complete as to Material B and 80% complete for conversion) 500 units

Beginning inventory costs: Material A $14,270 Material B 5,950 Conversion 5,640

Current Period costs: Material A $40,000 Material B 70,000 Conversion 98,100 Material A is added at the start of production, while Material B is added uniformly throughout the process.Assuming a weighted average method of process costing, compute the average cost per EUP for conversion.a. $39.90 b. $45.00 c. $43.03 d. $47.59

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40 _____________ is a philosophy of increasing a firm's performance by involving all workers.a. Open-book management b. Data mining c. Diversity d.Strategic alliance