Twenty One MCQs

1. Responsibility accounting performance reports:
Answer
a. Become more detailed at higher levels of management.
b. Become less detailed at higher levels of management.
c. Are equally detailed at all levels of management.
d. Are useful in any format.
e. Are irrelevant.

2. Mach Co. operates three production departments as profit centers. The following information is available for its most recent year. Which department has the greatest departmental contribution to overhead and what is the amount contributed?
Dept sales cost of good sold direct expense indirect expense
1 1,000,000 700,000 100,000 80,000
2 400,000 150,000 40,000 100,000
3 700,000 300,000 150,000 20,000
a.aa Dept. 3; $400,000.
b.ab Dept. 1; $1,000,000.
c.cc Dept. 2; $100,000.
d.dd Dept. 3; $250,000.
e.ee Dept. 2; $150,000.

3. The Dina Corp. has applied overhead to jobs during the period as follows:
job finish and sold: $46,000
job started and in process: $54000
job finish and unsold: 100,000
The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account, and this amount is not material. The entry to dispose of this remaining factory overhead balance is:
a. Debit Cost of Goods Sold $5,600; credit Factory Overhead $5,600.
b. Debit Factory Overhead $5,600; credit Cost of Goods Sold $5,600.
c. Debit Factory Overhead $5,600; credit Goods in Process Inventory $5,600.
d. Debit Goods in Process Inventory $5,600; credit Factory Overhead $5,600.
e. No entry is needed.

4. Baker Corporation has two operating departments, Machining and Assembly, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries……………………$ 30,000 Number of Employees
Depreciation…………….. 20,000 Cost of Goods Sold
Advertising………………. 40,000 Net Sales
Item Machining Assembly Total
Number of Employees…. 1,000 1,500 2,500
Net Sales………………… $ 325,000 $ 475,000 $ 800,000
Cost of Goods Sold…….. $ 75,000 $ 125,000 $ 200,000
The amount of the total office expenses that should be allocated to Assembly for the current period is:
Answer
$ 35,750.
$ 45,000.
$ 54,250.
$ 90,000.
$600,000.

5. The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:
Answer
a. Adjusted overhead.
b. Estimated overhead.
c. Predetermined overhead.
d. Underapplied overhead.
e. Overapplied overhead.

6. If maintenance costs are allocated to the other departments based on floor space occupied by each, the amount of maintenance cost allocated to the Cutting Department is:
maintenance: Direct cost = $18000, Square feet = 500, # of employees = 2
Cutting: Direct Cost =$30000 Square Feet =1000 , # of employees = 3
Assembly: Direct Cost = $70000 , Square Feet = 2000 , # of employees = 16
Packaging: Direct Cost =$45000 , Square Feet = 3000 , # of employees = 4
a. $ 2,769.
b. $ 3,000.
c. $ 3,724.
d. $ 6,000.
e. $18,000.

7. A sawmill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows:
How much of the $70,000 joint cost should be allocated to No. 2 Common?
A. $ 0.
B. $17,500.
C. $23,333.
D. $35,000.
E. $70,000.

8. A system of performance measures, including nonfinancial measures, used to assess company and division manager performance is:
Answer
a. Hurdle rate.
b. Return on investment.
c. Balanced scorecard.
d. Residual income.
e. Investment turnover.

9. Responsibility accounting performance reports:
Answer
a. Become more detailed at higher levels of management.
b. Become less detailed at higher levels of management.
c. Are equally detailed at all levels of management.
d. Are useful in any format.
e. Are irrelevant.

10. The amount by which a department’s revenues exceed its direct expenses is:
Answer
a. Net sales.
b. Gross profit.
c. Departmental profit.
d. Contribution margin.
e. Departmental contribution to overhead.

11. A job order production system would be appropriate for a company that produces which one of the following items?
Answer
a. A landscaping design for a new hospital.
b. Seedlings for sale in a nursery.
c. Sacks of yard fertilizer.
d. Packets of flower seeds.
e. Small gardening tools, including rakes, shovels, and hoes.

12. A company’s overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.
Goods in process inventory Finished goods inventory
Beg. Bal 100,800 Beg. Bal. 118,200
D.M ? 324,800 301,000
D.L?
O.H? F.G?
End bal. 131,040 End. Bal. 142,000
Factory Overhead:
93,240 90720
a. $106,400.
b. $113,120.
c. $30,240.
d. $211,680.
e. $324,800.

13. 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:
Answer
a. A responsibility accounting system.
b. A cost center accounting system.
c. Controllable costing.
d. Activity-based costing.
e. Performance costing