charter oak acc102 midterm exam

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1. Manufacturing overhead is considered an
indirect cost, since overhead costs generally cannot be traced conveniently
and directly to specific units of product.

Answer

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Question 2

2 out of 2 points

2. Supervisor salaries, equipment repairs, depreciation
of machinery and indirect materials are all examples of manufacturing
overhead.

Answer

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Question 3

2 out of 2 points

3. Direct labor and overhead costs that are
required to convert raw materials into finished goods are considered to be
conversion costs.

Answer

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Question 4

0 out of 2 points

4. A real estate company incurs $500,000 in
direct labor, direct material and overhead costs on October 30th. At the end
of the year they have not sold any houses yet so these costs should be
reported on their income statement.

Answer

Selected Answer:

True

Correct Answer:

False

Response Feedback:

The costs should be reported on their balance
sheet as inventory because they are not related to any revenue earned
during the year.

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Question 5

2 out of 2 points

5. The payment of a factories electricity bill
would be a debit to Manufacturing Overhead.

Answer

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Question 6

2 out of 2 points

6. A credit balance in the manufacturing overhead
account at month end indicates that the actual overhead costs were less than
the amount applied to jobs.

Answer

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Question 7

2 out of 2 points

7. Job order costing is appropriate for
businesses that produce mass quantities of identical units using the same
amount of direct labor, direct materials and overhead.

Answer

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Question 8

0 out of 2 points

8. A companies Work in Process account in a job
order costing system will be debited for Direct Material, Direct Labor and
actual overhead.

Answer

Response Feedback:

WIP is debited for DM, DL and applied overhead
(not actual)

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Question 9

2 out of 2 points

9. An overhead application rate is a device used
to assign overhead costs to units of product in proportion to some
“activity base” that can be traced directly to the manufactured
products.

Answer

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Question 10

2 out of 2 points

10. In activity-based costing, only one cost
driver should be used in applying overhead.

Answer

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Question 11

2 out of 2 points

11. Process costing provides information on a
total and per-unit bases as well as the per-unit cost of performing each step
in the production process.

Answer

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Question 12

2 out of 2 points

12. Completing 3,000 units which were each 75%
complete at the beginning of the period represents 2,250 equivalent full
units of work during the current period.

Answer

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Question 13

0 out of 2 points

13. An equivalent unit measures the percentage of
a completed unit’s cost that is present in a partially finished unit.

Answer

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Question 14

2 out of 2 points

14. Direct materials and overhead may be referred
to as conversion costs.

Answer

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Question 15

2 out of 2 points

15. If beginning inventory was 6,000 units,
29,000 were started and completed and 5,000 units were in ending inventory,
28,000 units were completed and transfered out.

Answer

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Question 16

2 out of 2 points

16. Target cost equals target price plus profit
margin.

Answer

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Question 17

0 out of 2 points

17. If a customer is willing to pay $400 for a
new stereo system Radio Shack and Radio Shack requires a 30% return on sales
for all of its products then the target cost of the stereo would be $280.

Answer

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Question 18

0 out of 2 points

18. The achievement of the target cost occurs at
the first 2 stages of of the target costing process

Answer

=

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Question 19

2 out of 2 points

19. Cycle time is the length of time required for
a product to pass completely though inspection.

Answer

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Question 20

2 out of 2 points

20. Rather than aiming to produce inventory,
Just-in-Time costing attempts to pull production according to customer
demand.

Answer

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Question 21

2 out of 2 points

21. Costs which increase in total amount in
direct proportion to an increase in output are called variable costs.

Answer

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Question 22

2 out of 2 points

22. The contribution margin is the difference
between total revenue and fixed costs.

Answer

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Question 23

2 out of 2 points

23. Margin of safety is the dollar amount by
which actual sales volume exceeds the break-even sales volume.

Answer

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Question 24

2 out of 2 points

24. Operating Income is found by multiplying
Margin of Safety by the Contribution Margin Ratio

Answer

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Question 25

0 out of 2 points

25. The volume of output which causes fixed costs
to be equal in amount to total revenue is called the break-even point.

Answer

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Question 26

4 out of 4 points

26. Manufacturing costs do not include:

A) Direct labor applicable to production within
the period.

B) Selling expenses related to goods manufactured
during the period.

C) Direct materials used during the period.

D) Manufacturing overhead charged to work in
process during the period.

Answer

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Question 27

4 out of 4 points

27. Direct labor costs in a paint factory would
include wages of employees who:

A) Supervise heavy equipment operators.

B) Operate paint-mixing machines.

C) Develop highly secret formulas for new
products.

D) Paint the interior of the factory every two
years.

Answer

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Question 28

0 out of 4 points

28. Which of the following costs wouldnotbe considered part of the
manufacturing overhead of a furniture manufacturer?

A) The cost of compliance with federal factory
safety regulations.

B) Depreciation expense on factory equipment.

C) The cost of grease used to lubricate factory
equipment.

D) The cost of wood used in furniture
construction.

Answer

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Question 29

0 out of 4 points

29. Which of the following should not be
classified as a manufacturing cost?

A) Indirect factory labor costs, such as salaries
of plant security guards.

B) Direct materials used in the production
process.

C) Utility bills related to factory operations.

D) Commissions paid to salespeople.

Answer

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Question 30

0 out of 4 points

30. In a manufacturing company, the cost of goods
sold is equal to:

A) The beginning inventory of finished goods,
plus net purchases, less the ending inventory of finished goods.

B) The sum of the manufacturing costs charged
(debited) to the Work in Process Inventory account during the period.

C) The costs of direct materials, direct labor,
and manufacturing overhead incurred in manufacturing the goods sold during
the period.

D) The beginning inventory of work in process,
plus total manufacturing costs for the period, less the ending inventory of
work in process.

Answer

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Question 31

4 out of 4 points

31. A job order cost system would be appropriate
in the manufacture of:

A) Paints.

B) Custom-made furniture.

C) Breakfast cereal.

D) Standard-grade plywood.

Answer

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Question 32

0 out of 4 points

32. Manufacturing overhead is:

A) A direct cost that can traced to a specific
job.

B) An indirect cost that can be traced to a
specific job.

C) A direct cost that cannot be traced to a
specific job.

D) An indirect cost that cannot be traced to a
specific job.

Answer

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Question 33

4 out of 4 points

33. Benefits of activity-based costing include
all of the following except:

A) More accurate measures of product costs.

B) More accurate evaluations of product
profitability.

C) A better understanding of what “drives”
manufacturing overhead costs.

D) More subjective product pricing decisions.

Answer

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Question 34

4 out of 4 points

34. The cost of salaries paid to employees who
work in a factory maintaining the heating system is considered:

A) Direct labor

B) Indirect materials

C) Factory overhead

D) General and administrative costs

Answer

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Question 35

4 out of 4 points

35. Process cost systems

A) Are good when companies produce homogeneous
units

B) May have work-in-process accounts for each
department.

C) Use equivalent units of production

D) All of the above.

Answer

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Question 36

4 out of 4 points

36. Per-unit costs:

A) Are relevant only when a company is engaged in
manufacturing activities.

B) Are determined in job order cost systems but
cannot be computed when a process cost system is in use.

C) Are relevant in manufacturing, merchandising,
and service industries, regardless of the type of cost accounting system in
use.

D) Are determined by relating manufacturing costs
to the number of units sold.

Answer

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Question 37

4 out of 4 points

37. Department X of a manufacturing company works
on only one product, and all costs are incurred uniformly as the product goes
along the assembly line. The 6,000 units in process on December 1 were 60%
completed. An additional 60,000 units were placed in production during
December. At December 31, the 10,000 units in process were 80% completed. The
equivalent full units of production during December amounted to:

A) 60,400.

B) 61,600.

C) 79,600.

D) 76,000.

Answer

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Question 38

4 out of 4 points

38. The computation of equivalent full units is generally not
necessary when:

A) Beginning work in process inventories are
significantly larger than ending work in process inventories.

B) Beginning and ending work in process
inventories differ only slightly.

C) The number of units in ending work in process
exceeds the number of units completed and transferred to finished goods
during the period.

D) Per-unit costs become distorted as a result of
not computing equivalent full units of production.

Answer

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Question 39

4 out of 4 points

Use the following to answer questions 39-40:

Winter Brothers manufactures a single product
using a process involving (1) mixing ingredients and (2) a subsequent
packaging operation. Winter uses a process cost system to account for the
flow of costs through its production process.

39. Refer to the information above. In the production
process described, the Work in Process Inventory: Packaging Department is
debited for:

A) Costs transferred from the Work in Process
Inventory: Mixing Department only.

B) The cost of materials, direct labor, and
overhead applicable to the packaging operation only.

C) Costs transferred from the Work in Process
Inventory: Mixing Department, as well as materials, direct labor, and
overhead applicable to the packaging operation.

D) Costs transferred to the Finished Goods
Inventory.

Answer

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Question 40

4 out of 4 points

Use the following to answer questions 39-40:

Winter Brothers manufactures a single product
using a process involving (1) mixing ingredients and (2) a subsequent
packaging operation. Winter uses a process cost system to account for the
flow of costs through its production process.

40. Refer to the information above. In Winter’s
operation, the Finished Goods Inventory account is debited for:

A) The cost of units transferred directly from
the Mixing Department.

B) The cost of units transferred directly from
the Packaging Department.

C) The cost of units transferred directly from
both the Mixing Department and the Packaging Department.

D) The cost of the units sold.

Answer

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Question 41

4 out of 4 points

41. The primary objective of activity-based
management is:

A) To develop more accurate product costs.

B) To reduce and eliminate non-value added
activities.

C) To increase product quality.

D) To identify instances of internal failure.

Answer

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Question 42

4 out of 4 points

42. Quality costs include

A) Costs to prevent poor quality from occurring.

B) Costs of appraising and inspecting the
product.

C) Costs to correct problems before the customer
receives the goods.

D) All of the above.

Answer

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Question 43

4 out of 4 points

43. Just-in-time manufacturing systems are also
known as:

A) Supply push systems.

B) Supply pull systems.

C) Demand push systems.

D) Demand pull systems.

Answer

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Question 44

4 out of 4 points

44. Four categories of costs associated with
product quality are:

A) External failure, internal failure,
prevention, and carrying.

B) External failure, internal failure,
prevention, and appraisal.

C) External failure, internal failure, training,
and appraisal.

D) Warranty, product liability, prevention, and
training.

Answer

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Question 45

4 out of 4 points

45. External failure costs include

A) Inspections of materials.

B) Training.

C) Rework.

D) Warranty costs.

Answer

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Question 46

4 out of 4 points

Use the following to answer questions 46-50:

Noble Corporation manufactures a single product.
The selling price is $60 per unit, and variable costs amount to $48 per unit.
The fixed costs are $12,000 per month.

46. Refer to the above information. What is the
contribution margin ratio of Noble’s product?

A) 65%.

B) 80%.

C) 72%.

D) 20%.

Answer

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Question 47

4 out of 4 points

Use the following to answer questions 46-50:

Noble Corporation manufactures a single product.
The selling price is $60 per unit, and variable costs amount to $48 per unit.
The fixed costs are $12,000 per month.

47. Refer to the above information. What is the
monthly sales volume in dollars necessary to break even?

A) $60,000.

B) $16,667.

C) $18,462.

D) $15,000.

Answer

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Question 48

4 out of 4 points

Use the following to answer questions 46-50:

Noble Corporation manufactures a single product.
The selling price is $60 per unit, and variable costs amount to $48 per unit.
The fixed costs are $12,000 per month.

48. Refer to the above information. How many
units must be sold each month to earn a monthly operating income of $5,000?

A) 283.

B) 1,417.

C) 85,000.

D) 354.

Answer

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Question 49

4 out of 4 points

Use the following to answer questions 46-50:

Noble Corporation manufactures a single product.
The selling price is $60 per unit, and variable costs amount to $48 per unit.
The fixed costs are $12,000 per month.

49. Refer to the above information. What will be
the monthly margin of safety (in dollars) if 1,500 units are sold each month?

A) $60,000.

B) $30,000.

C) $ 9,000.

D) $12,000.

Answer

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Question 50

4 out of 4 points

Use the following to answer questions 46-50:

Noble Corporation manufactures a single product.
The selling price is $60 per unit, and variable costs amount to $48 per unit.
The fixed costs are $12,000 per month.

50. Refer to the above information. What will be
Noble’s monthly operating income if 1,500 units are sold each month?

A) $78,000.

B) $30,000.

C) $18,000.

D) $ 6,000.

Answer

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