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1. A system of accounting for production operations that uses a periodic inventory system is called a:
A. Manufacturing accounting system.
B. Production accounting system.
C. General accounting system.
D. Cost accounting system.
E. Finished goods accounting system.
2. A job cost sheet shows information about each of the following items except:
A. The direct labor costs assigned to the job.
B. The name of the customer.
C. The costs incurred by the marketing department in selling the job.
D. The overhead costs assigned to the job.
E. The direct materials costs assigned to the job.
3. Canoe Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. Canoe Company’s production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied, $6,000. The overhead application rate was:
A. 5.0%.
B. 12.0%.
C. 20.0%.
D. 500.0%.
E. 16.7%.
4. If it is a material amount, overapplied or underapplied overhead should be disposed of by allocating it to:
A. Cost of goods sold and finished goods.
B. Finished goods and goods in process.
C. Goods in process, finished goods, and cost of goods sold.
D. Goods in process, if immaterial.
E. Raw materials, goods in process, and finished goods.
5. A process cost summary is a managerial accounting report that describes:
A. The costs charged to a department.
B. The equivalent units of production by the department.
C. How the costs were assigned to the output.
D. Physical transfers for a department.
E. All of the above.
6. Direct material costs are recorded:
A. Indirectly to Goods in Process account.
B. Indirectly to a Finished Goods account.
C. Directly to a Goods in Process account.
D. Directly to a Finished Goods account.
E. Directly to a Cost of Goods Sold account.
7. In a process costing system, when manufacturing overhead costs are applied to the cost of production, they are debited to:
A. the Finished Goods Inventory account.
B. the Cost of Goods Sold account.
C. the Goods in Process Inventory account.
D. the Manufacturing Overhead account.
E. the Raw Materials Inventory account
8. An expense that does not require allocation between departments is a(n):
A. Common expense.
B. Indirect expense.
C. Direct expense.
D. Administrative expense.
E. All of the above.
9. A single cost incurred in producing or purchasing two or more essentially different products is a(n):
A. Product cost.
B. Incremental cost.
C. Differential cost.
D. Joint cost.
E. Fixed cost.
10. A system of assigning costs to departments and products on the basis of a variety of activities instead of only one allocation base is called:
A. A responsibility accounting system.
B. A cost center accounting system.
C. Controllable costing.
D. Activity-based costing.
E. Performance costing.
Problem # 1()
The following calendar year information about the Tahoma Corporation is available on December 31:
The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead.
Problem # 2 ()
A company uses a process cost accounting system. The following information is available regarding direct labor for the current year:
(a) Calculate the equivalent units of production for direct labor for the year.
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).
A retail store has three departments, A, B, and C, each of which has four full-time employees. The store does general advertising that benefits all departments. Advertising expense totaled $90,000 for the current year, and departmental sales were:
1. A department that incurs costs without directly generating revenues is a:
A. Service center.
B. Production center.
C. Profit center.
D. Cost center.
E. Performance center.
2. Costs that the manager has the power to determine or at least strongly influence are called:
A. Uncontrollable costs.
B. Controllable costs.
C. Joint costs.
D. Direct costs.
E. Indirect costs.
3. The most useful evaluation of a manager’s cost performance is based on:
A. Controllable costs.
B. Contribution percentages.
C. Departmental contributions to overhead.
D. Fixed expenses.
E. Direct costs.
4. In a firm that manufactures clothing, the department that is responsible for actually assembling the garments could best be described as a:
A. Service department.
B. Operating or production department.
C. Cost center.
D. Department in which all of the costs incurred are direct expenses.
E. Department in which all of the costs incurred are indirect expenses.
Problem ()
Texas Toys, a retail store, has four sales departments supported by three service departments. Cost and operational data for each department follow:
Determine the service department expenses to be allocated to Sales Department 1 for:
How much advertising expense should be allocated to each department?