Principles of Accounting II Exam 1 -2010 Version1-16.Decentralization refers to:A.reporting for the company as a whole.B.focusing reporting on parts of the company.C.the delegation of decision-making authority throughout an organization.D.differences in organizations.

2-21.Dorra Corporation manufactures lawnmowers in five work stations. Dorra's weekly demand is 5,000 mowers but Dorra can only produce 4,200. According to the theory of constraints, to increase production output Dorra would benefit the most by concentrating improvement efforts on the:A.first work station.B.last work station.C.largest work station.D.fastest work station.E.slowest work station.3-23.One of the steps in the lean thinking model is to organize work arrangements around the flow of the business process. This is often accomplished by:A.automating the business process.B.implementing an enterprise system.C.instituting a six sigma program.D.creating a manufacturing cell.4-18.Managerial accounting:A.has its primary emphasis on the future.B.is required by regulatory bodies such as the SEC.C.focuses on the organization as a whole, rather than on the organization's segments.D.Responses a, b, and c are all correct.5-20.Which of the following IS a characteristic of financial accounting?A.not mandatoryB.must follow GAAPC.emphasis on relevance of data, rather than precisionD.both A and C above6-21.The corporate controller's salary would be considered a(n):A.manufacturing cost.B.product cost.C.administrative cost.D.selling expense.

7-22.The costs of direct materials are classified as:

A.Choice AB.Choice BC.Choice CD.Choice D

8-24.The three basic elements of manufacturing cost are direct materials, direct labor, and:A.cost of goods manufactured.B.cost of goods sold.C.work in process.D.manufacturing overhead.

9-26.Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice?

A.Choice AB.Choice BC.Choice CD.Choice D

10-27.The cost of fire insurance for a manufacturing plant is generally considered to be a:A.product cost.B.period cost.C.variable cost.D.all of these.

11-29.Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?A.Product costB.Manufacturing overheadC.Period costD.Administrative cost

12-30.Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?A.Product costB.Manufacturing overheadC.Direct laborD.Period cost

13-33.Which two terms below describe the wages paid to security guards that monitor a factory 24 hours a day?A.variable cost and direct costB.fixed cost and direct costC.variable cost and indirect costD.fixed cost and indirect cost

14-34.Within the relevant range, the difference between variable costs and fixed costs is:A.variable costs per unit fluctuate and fixed costs per unit remain constant.B.variable costs per unit are constant and fixed costs per unit fluctuate.C.both total variable costs and total fixed costs are constant.D.both total variable costs and total fixed costs fluctuate.

15-36.A lawnmower manufacturer computed a cost per unit of $53 by adding together last month's direct labor, direct materials, and manufacturing overhead and dividing that total by the 10,000 units produced last month. (There were no beginning or ending inventories.) If 9,000 units are going to be manufactured this month, we would expect that the:A.cost per unit will remain the same.B.cost per unit will decrease.C.direction of change in unit costs cannot be determined.D.cost per unit will increase.

16-40.The following costs were incurred in August:

Conversion costs during the month totaled:A.$127,000B.$51,000C.$52,000D.$75,000

17-43.In August direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000 and the direct materials cost was $34,000, the direct labor cost was:A.$36,000B.$22,667C.$51,000D.$81,000

18-45.Green Company's costs for the month of August were as follows: direct materials, $27,000; direct labor, $34,000; selling, $14,000; administrative, $12,000; and manufacturing overhead, $44,000. The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000. What was the cost of goods manufactured for the month?A.$105,000B.$132,000C.$138,000D.$112,00019-46.Consider the following costs incurred in a recent period:

What was the total amount of the period costs listed above for the period?A.$78,000B.$71,000C.$46,000D.$37,000

20-47.The Lyons Company's cost of goods manufactured was $120,000 when its sales were $360,000 and its gross margin was $220,000. If the ending inventory of finished goods was $30,000, the beginning inventory of finished goods must have been:A.$20,000B.$50,000C.$110,000D.$150,000

21-48.Last month a manufacturing company had the following operating results:

What was the cost of goods manufactured for the month?A.$350,000B.$385,000C.$377,000D.$323,000

22-54.Using the following data for August, calculate the cost of goods manufactured:

The cost of goods manufactured was:A.$106,000B.$92,000C.$95,000D.$89,000

23-17.Which of the following companies would be most likely to use a job-order costing system rather than a process costing system?A.fast food restaurantB.shipbuildingC.crude oil refiningD.candy making

24-18.Computing unit product costs involves averaging in:

A.Choice AB.Choice BC.Choice CD.Choice D

25-19.For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?A.a steel factory that processes iron ore into steel barsB.a factory that processes sugar and other ingredients into black licoriceC.a costume maker that makes specialty costumes for figure skatersD.all of these

26-20.In job-order costing, all of the following statements are correct with respect to labor time and cost except:A.time tickets are kept by employees showing the amount of work on specific jobs.B.the job cost sheet for a job will contain all direct labor charges to that particular job.C.labor cost that can be traced to a job only with a great deal of effort is treated as part of manufacturing overhead.D.a machine operator performing routine annual maintenance work on a piece of equipment would charge the maintenance time to a specific job.

27-23.In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include:A.a credit to the Manufacturing Overhead account.B.a credit to the Work in Process inventory account.C.a debit to Cost of Goods Sold.D.a debit to the Manufacturing Overhead account.

28-24.Ivory Company uses a job-order costing system. What year-end journal entry could Ivory make to dispose of (close out) $4,150 of overapplied manufacturing overhead cost?A.B.C.D.29-25.In a job-order costing system, the use of indirect materials would usually be recorded as a debit to:A.Raw Materials.B.Work in Process.C.Manufacturing Overhead.D.Finished Goods.

30-26.In a job-order costing system, direct labor costs usually are recorded initially with a debit to:A.Manufacturing Overhead.B.Finished Goods inventory.C.Direct Labor Expense.D.Work in Process.

31-34.The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $400 and $200 for direct materials, and charges of $300 and $500 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:A.80%B.125%C.300%D.240%

32-35.Job 607 was recently completed. The following data have been recorded on its job cost sheet:

The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 607 would be:A.$4,107B.$6,319C.$3,432D.$4,863

33-36.The following data have been recorded for recently completed Job 501 on its job cost sheet. Direct materials cost was $3,067. A total of 30 direct labor-hours and 104 machine-hours were worked on the job. The direct labor wage rate is $12 per labor-hour. The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $11 per machine-hour. The total cost for the job on its job cost sheet would be:A.$4,571B.$3,757C.$3,090D.$3,427

34-38.Harrell Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year the company estimated its total manufacturing overhead cost at $400,000 and its direct labor-hours at 100,000 hours. The actual overhead cost incurred during the year was $350,000 and the actual direct labor-hours incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year would be:A.$10,000 underappliedB.$10,000 overappliedC.$50,000 underappliedD.$50,000 overapplied

35-41.Brabo Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 15,700 hours. At the end of the year, actual direct labor-hours for the year were 16,700 hours, the actual manufacturing overhead for the year was $352,960, and manufacturing overhead for the year was overapplied by $27,800. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:A.$327,124B.$357,960C.$380,760D.$347,960

36-43.Dagnon Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $299,130. At the end of the year, actual direct labor-hours for the year were 17,400 hours, manufacturing overhead for the year was overapplied by $13,850, and the actual manufacturing overhead was $294,130. The predetermined overhead rate for the year must have been closest to:A.$17.70B.$17.19C.$18.22D.$16.90

37-44.The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the company made the following estimates:

What predetermined overhead rates would be used in Dept A and Dept B, respectively?A.50% and $8.00B.50% and $5.00C.$15 and 110%D.200% and $5.00

38-45.Simplex Company has the following estimated costs for next year:

Simplex estimates that 10,000 direct labor and 16,000 machine-hours will be worked during the year. If overhead is applied on the basis of machine-hours, the overhead rate per hour will be:A.$8.56B.$7.63C.$6.94D.$3.50

39-63.Beaver Company used a predetermined overhead rate last year of $2 per direct labor-hour, based on an estimate of 25,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were:

The underapplied or overapplied overhead last year was:A.$1,000 underappliedB.$1,000 overappliedC.$3,000 overappliedD.$2,000 underapplied

40-7.Process costing would be appropriate for each of the following except:A.custom furniture manufacturing.B.oil refining.C.grain milling.D.newsprint production.

41-9.Assume there is no beginning work in process inventory and the ending work in process inventory is 100% complete with respect to materials costs. The number of equivalent units with respect to materials costs under the weighted-average method is:A.the same as the number of units put into production.B.less than the number of units put into production.C.the same as the number of units completed.D.less than the number of units completed.

42-11.The Assembly Department started the month with 59,000 units in its beginning work in process inventory. An additional 274,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 21,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month?A.333,000B.236,000C.354,000D.312,000

43-12.Lucas Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows:

What was the materials cost of work in process at October 31?A.$3,060B.$5,520C.$6,000D.$6,120

44-13.Dewey Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 15,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19,200. An additional 86,000 units were started into production during the month. There were 13,000 units in the ending work in process inventory of the Welding Department that were 60% complete with respect to conversion costs. A total of $575,360 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs is closest to:A.$5.812B.$6.206C.$6.400D.$6.690

45-14.Luft Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below:

According to the company's records, the conversion cost in beginning work in process inventory was $79,893 at the beginning of June. Additional conversion costs of $343,830 were incurred in the department during the month.What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)A.$8.070B.$7.891C.$5.928D.$4.584

46-15.Unizat Corporation uses the weighted-average method in its process costing system. The following information pertains to one of the company's processing departments for a recent month:

All materials are added at the beginning of the process. The cost per equivalent unit for materials is closest to:A.$0.86B.$0.90C.$1.10D.$1.18

47-17.Park Company uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $40,484 and a total of $213,890 in conversion costs were incurred in the department during January.The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:A.$4.823B.$4.186C.$4.650D.$4.590

48-21.Jam Company uses the weighted-average method in its process costing system. Operating data for the Painting Department for the month of April appear below:

What were the equivalent units for conversion costs in the Painting Department for April?A.78,680B.77,500C.72,300D.81,28049-28.Raulot Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

The Molding Department's cost per equivalent unit for conversion cost for January was $1.72.How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January?A.$5,332.00B.$2,528.40C.$3,199.20D.$2,132.80

Sumter Company uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month:

50-32.How many units were started into production during the month?A.68,000 unitsB.84,000 unitsC.72,000 unitsD.56,000 units