CH 3

1.Expenses that require a series of payments over a long period of time such as long-term debt and lease rentals are frequently known as: *
A. programmed fixed expenses
B. avoidable expenses
C. variable expenses
D. committed fixed expenses
E. normal capacity expenses

2. A mathematical technique used to fit a straight line to a set of plotted points is: *
A. selection of the cost unit becomes simplified
B. predetermined amounts are ignored
C. an analysis of cost variances is facilitated
D. historical costs are recorded as they are incurred
E. reports are delayed until operations have been performed

3. One advantage of using multiple regression analysis is that: *

A. computations are simplified
B. only two data points need be considered
C. a two dimensional graph may be used to show cost relationships
D. costs may be grouped into one independent variable
E. the effects of several variables on costs may be analyzed

4. Hoyden Co. developed the following equation to predict certain components of its budget for the coming period:Costs = $50,000 + ($5 x direct labor hours)The
$5 would approximate: *
A. total cost
B. direct labor rate per hour
C. fixed cost per direct labor hour
D. the coefficient of determination
E. variable costs per direct labor hour

5. When cost relationships are linear, total variable manufacturing costs will vary in proportion to changes in: *
A. machine hours
B. direct labor hours
C. total material cost
D. total overhead cost
E. volume of production

6.The term "relevant range" as used in cost accounting means the range over which: *
A. relevant costs are incurred
B. cost relationships are valid
C. costs may fluctuate
D. sales volume fluctuates
E. production may vary

7. Within a relevant range, the amount of fixed cost per unit: *

A. differs at each production level on a per unit basis
B. remains constant in total
C. decreases as production increases on a per unit basis
D. increases as production decreases on a per unit basis
E. all of the above

8.The following relationships pertain to a year's budgeted activity for Buckeye Company: *

A. $100,000
B. $25,000
C. $54,000
D. $75,000
E. none of the above

9.Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs
and volume measures: *

A. $12.50
B. $0.80
C. $0.08
D. $1.25
E. none of the above
10.A company allocates its variable factory overhead based on direct labor hours. During the past three months, the actual direct labor hours and the total factory
overhead allocated were as follows: *

A. $.125
B. $12.50
C. $.08
D. $8
E. none of the above

11. The technique that can be used to determine the variable and fixed portions of a company's costs is: *
A. scattergraph method
B. poisson analysis
C. linear programming
D. game theory
E. queuing theory

12. The number of variables used in simple regression analysis is: *

A. two
B. three
C. more than three
D. three or less
E. one

13. Multiple regression analysis: *

A. is not a sampling technique
B. involves the use of independent variables only
C. assumes that the independent variables are not correlated
D. establishes a cause and effect relationship
E. all of the above

14. For a simple regression-analysis model that is used to allocate factory overhead, an internal auditor finds that the intersection of the line of best fit for the
overhead allocation on the y-axis is $50,000. The slope of the trend line is .20. The independent variable, factory wages, amounts to $900,000 for the month. What
is the estimated amount of factory overhead to be allocated for the month? *
A. $910,000
B. $950,000
C. $ 50,000
D. $180,000
E. $230,000 =50.000+0,2X900.000

15. As a result of analyzing the relationship of total factory overhead to changes in machine hours, the following relationship was found: y bar = $1,000 + $2x bar.
This equation was probably found by using the mathematical techniques called: *
A. simple regression analysis
B. dynamic programming
C. linear programming
D. multiple regression analysis
E. none of the above

16. As a result of analyzing the relationship of total factory overhead to changes in machine hours, the following relationship was found:y bar = $1,000 + $2 x bar.
The "y" bar in the equation is an estimate of: *
A. total factory overhead
B. total fixed costs
C. total machine costs
D. total variable costs
E. none of the above

17. As a result of analyzing the relationship of total factory overhead to changes in machine hours, the following relationship was found: y bar = $1,000 + $2 x bar.
The $2 in the equation is an estimate of: *
A. fixed costs per machine hour
B. total fixed costs
C. variable costs per machine hour
D. total variable costs
E. none of the above

18. As a result of analyzing the relationship of total factory overhead to changes in machine hours, the following relationship was found:y bar = $1,000 + $2 x bar.
The use of such a relationship of total factory overhead to changes in machine hours is said to be valid only within the relevant range, which means: *
A. within the range of reasonableness as judged by the department supervisor
B. within the budget allowance for overhead
C. within a reasonable dollar amount for machine costs
D. within the range of observations of the analysis
E. none of the above

19. The quantitative method that will separate a semivariable cost into its fixed and variable components with the highest degree of precision is: *
A. simplex method
B. least squares method
C. scattergraph method
D. account analysis
E. high low method

20. Multiple regression analysis involves the use of: *

A. Dependent variables :1, Independent Variables : none
B. Dependent variables : 1>, Independent Variables : 1
C. Dependent variables: 1>, Independent Variables : 1>
D. Dependent variables: 1, Independent Variables : 1
…………..1 1>

CH 4
1.The tie in between general accounts and cost accounts is often discussed with accounting procedures. An example of a general account is: *
D. Finished Goods
C. Factory Overhead Control
A. Materials
B. Work in Process
E. Accumulated Depreciation

2. One feature of a standard cost system is that: *

D. historical costs are recorded as they are incurred
E. reports are delayed until operations have been performed
A. selection of the cost unit becomes simplified
C. an analysis of cost variances is facilitated
B. predetermined amounts are ignored

3. An industry that would most likely use job order costing procedures is: *
A. road building
B. fertilizer manufacturing
C. flour milling
D. petroleum refining
E. textile manufacturing

4. An industry that would most likely use process costing procedures is: *
A. musical instrument manufacturing
B. construction
C. aircraft
D. chemicals
E. office equipment

5.Supplies needed for use in the factory are issued on the basis of: *
A. materials requisitions
B. time tickets
C. factory overhead analysis sheets
D. clock cards
E. purchase invoices

6. Finished Goods is debited and Work in Process is credited for a: *

A. transfer of materials to the factory
B. return of unused materials from the factory
C. purchase of goods on account
D. transfer of completed production
E. transfer of completed goods out of the factory

7. The best cost accumulation procedure to use when many batches, each differing as to product specifications, are produced is: *
A. absorption
B. job order
C. process
D. actual
E. standard

8. Job order costs are most useful for: *

A. determining the cost of a specific project
B. determining the labor cost involved in production
C. determining inventory valuation using fifo
D. estimating overhead costs
E. controlling indirect costs of future production

9. Under a job order cost system, the dollar amount of the entry to transfer the inventory from Finished Goods to Cost of Goods Sold is the sum of the costs
charged to all jobs: *
A. completed during the period
B. started in process during the period
C. in process during the period
D. completed and sold during the period
E. sold during the period

10. The industry most likely to use job order costing in accounting for costs is: *
A. accounting firms
B. textile manufacturer
C. paint manufacturer
D. oil refinery
E. none of the above

11. Job order cost accounting systems and process accounting systems differ in the way: *
A. costs are traced to cost objects
B. orders are taken and in the number of units in the orders
C. product profitability is determined and compared with planned costs
D. manufacturing processes can be accomplished and in the number of production runs that may be performed in a year
E. none of the above

12. In a job order cost system, the distribution of direct labor costs usually are recorded as an increase in: *
A. Cost of Goods Sold
B. Factory Overhead Control
C. Finished Goods
D. Work in Process
E. none of the above

13. Process costing techniques should be used in assigning costs to products: *

A. if the product is manufactured on the basis of each order received
B. when production is only partially completed during the accounting period
C. if the product is composed of mass produced homogeneous units
D. whenever standard costing techniques should not be used
E. none of the above
14. A characteristic of a process costing system is: *
A. partially processed inventory is restated in terms of completed units
B. costs are accumulated by order
C. it is used by a company manufacturing custom machinery
D. standard costs are not applicable
E. none of the above

15. The industry most likely to use process costing in accounting for costs is: *
A. road builder
B. electrical contractor
C. airlines
D. automobile repair shop
E. none of the above

16. In the computation of manufacturing cost per equivalent unit, the weighted average method of process costing considers: *
A. current costs only
B. current costs plus cost of beginning work in process inventory
C. current costs plus cost of ending work in process inventory
D. current costs less cost of beginning work in process inventory
E. none of the above

17. The element of manufacturing cost that supports time tickets is: *
A. materials
B. labor
C. factory overhead
D. all of the above
E. none of the above

18. The element of manufacturing cost that supports depreciation schedules is: *
A. materials
B. labor
C. factory overhead
D. all of the above
E. none of the above
19. Work in Process is debited and Materials is credited for: *
A. indirect materials requisitioned to production
B. the completion of work in process
C. the sale of completed product
D. direct materials requisitioned to production
E. materials returned to the storeroom

20. Factory Overhead Control is debited and Work in Process is credited for: *
A. indirect materials requisitioned to production
B. the completion of work in process
C. the sale of completed product
D. direct materials requisitioned to production
E. none of the above

CH5

1. Under job order cost accumulation, the factory overhead control account controls: *
A. factory overhead analysis sheets
B. all general ledger subsidiary accounts
C. job order cost sheets
D. cost reports by processes
E. materials inventories

2. Supplies needed for use in the factory are issued on the basis of: *
A. job cost sheets
B. materials requisitions
C. time tickets
D. factory overhead analysis sheets
E. clock cards

3. Finished Goods is debited and Work in Process is credited for a: *

A. transfer of completed goods out of the factory
B. transfer of completed production to the finished goods storeroom
C. purchase of goods on account
D. transfer of materials to the factory
E. return of unused materials from the factory

4. In job order costing, when materials that were previously issued to the factory for cleaning supplies are returned to the storekeeper, the journal entry should be

made to: *
A. Debit : Materials, Credit : Factory Overhead
B. Debit :Materials, Credit :Work in Process
C. Debit : Purchases Returns, Credit : Work in Process
D. Debit : Work in Process, Credit : Work in Process
E. Debit : Factory Overhead, Credit : Work in Process

5. Under a job order cost system, the dollar amount of the entry to transfer the inventory from Work in Process to Finished Goods is the sum of the costs charged

to all jobs: *
A. completed during the period
B. started in process during the period
C. in process during the period
D. completed and sold during the period
E. none of the above

6. When a manufacturing company has a highly automated plant producing many different products, probably the most appropriate basis of applying factory

overhead costs to Work in Process is: *

A. units processed
B. machine hours
C. direct labor hours
D. direct labor dollars
E. none of the above

7. Cherokee Company applies factory overhead on the basis of direct labor hours. Budget and actual data for direct labor and overhead for the year are as

follows: *

A. overapplied by $20,000
B. overapplied by $40,000
C. underapplied by $20,000
D. underapplied by $40,000
E. neither underapplied nor overapplied
SUPPORTING CALCULATION:

$720,000
= $1.20 _ 650,000
600,000

= $780,000 (applied)  $760,000 (actual) = $20,000 (overapplied)

8. At the end of the year, Paola Company had the following account balances after applied factory overhead had been closed to Factory Overhead Control: *

A. carry it as a deferred credit on the balance sheet

B. report it as miscellaneous operating revenue on the income statement
C. credit it to Cost of Goods Sold
D. prorate it between Work in Process and Finished Goods
E. prorate it among Work in Process, Finished Goods, and Cost of Goods Sold

9. Overapplied factory overhead would result if: *

A. the plant were operated at less than normal capacity
B. factory overhead costs incurred were less than costs charged to production
C. factory overhead costs incurred were unreasonably large in relation to units produced
D. factory overhead costs incurred were greater than costs charged to production
E. a firm incurred a significant amount of overhead

10. The Waitkins Company estimated Department A's overhead at $255,000 for the period based on an estimated volume of 100,000 direct labor hours. At the end

of the period, the factory overhead control account for Department A had a balance of $265,500; actual direct labor hours were 105,000. What was the over- or

under-applied overhead for the period? *

A. $2,250
B. $(2,250)
C. $15,000
D. $(15,000)
E. $(5,000)
$255,000
= $2.55 _ 105,000 = $267,750 (applied)  $265,500 (actual)
100,000

= $2,250 (overapplied)

11. Howell Corporation has a job order cost system. The following debits (credits) appeared in Work in Process for the month of July: *

A. $6,750
B. $2,250
C. $2,500
D. $4,250
E. $9,000
SUPPORTING CALCULATION:

Job 1040 = $12,000 + $40,000 + $30,000 + $27,000 - $100,000 = $9,000

$2,250
Direct materials = $9,000   $2,250 = $4,250
.9

12. Valentino Corporation makes aluminum fasteners. Among Valentino's 19, manufacturing costs were: *
A. $50,000
B. $100,000
C. $110,000
D. $130,000
E. none of the above

13. Rudolpho Corporation makes aluminum fasteners. Among Rudolpho's 19, manufacturing costs were: *

A. $23,000
B. $400,000
C. $405,000
D. $418,000
E. $423,000

14. Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing Company are presented below. *

A. $360
B. $316
C. $336
D. $411
E. none of the above
SUPPORTING CALCULATION: $326 + $85 - $75 = $336

15. Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing Company are presented below. *

B. $135
C. $225
A. $216
D. $360
E. none of the above
SUPPORTING CALCULATION: $686 = $326 + x + .6x
x = $225

16. Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing Company are presented below. *
B. $716
C. $636
E. none of the above
D. $766
A. $736
SUPPORTING CALCULATION: $80 + $686 - $30 = $736

17. Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing Company are presented below. *

C. $801
A. $716
E. none of the above
B. $691
D. $736

18. J. D. Doonesbury Company manufactures tools to customer specifications. The following data pertain to Job 1501 for April: *

A. $9,600
D. $5,400
B. $10,300
E. $8,800
C. $11,100

19. In service businesses using job order costing, the most commonly used base for applying overhead to jobs is: *
A. machine hours
B. direct materials consumed
C. direct labor cost
D. meals, travel, and entertainment
E. none of the above

20. In service businesses using job order costing, the hourly rate used to charge costs to a job usually includes:
A. both labor and overhead cost
B. labor cost only
C. overhead cost only
D. labor, overhead, and miscellaneous costs
E. none of the above

CH6
1. An equivalent unit of material or conversion cost is equal to:*
E. 50% of the material or conversion cost of a unit of finished goods inventory, assuming a linear production pattern
B. the amount of material or conversion cost necessary to complete one unit of production
C. a unit of work in process inventory
D. the amount of material or conversion cost necessary to start a unit of production into work in process
A. the prime cost

2. An item that does not appear on a cost of production report is: *

C. finished goods ending inventory
E. unit costs added by the department
D. materials used in the department
B. cumulative costs through the end of departmental production
A. work in process beginning inventory

3. Goode Manufacturing has three producing departments in its factory. The ending inventory in the Milling Department consisted of 3,000 units. These units were

60% complete with respect to labor and factory overhead. Materials are applied at the end of the milling process. Unit costs for the complete process in the Milling

Department are: materials, $1; labor, $2; and factory overhead, $3. The appropriate unit cost for each unit in the ending inventory is: *
A. $2
B. $5
C. $3 SUPPORTING CALCULATION: 60% ($2 + $3) = $3
D. $6
E. $4

4. When added materials in subsequent departments result in an increase of the units produced, the unit transferred-in costs will: *
A. be reclassified as new materials
B. be increased to provide for the additional units
C. be accounted for under the fifo costing method
D. be decreased as they are spread over more units
E. remain unchanged

5.Gyro Products transferred 10,000 units to one department. An additional 3,000 units of materials were added in the department. At the end of the month, 7,000

units were transferred to the next department. There was no beginning inventory. The costs for units transferred in would be effectively allocated over: *
A. 17,000 units
B. 3,000 units
C. 10,000 units
D. 7,000 units
E. 13,000 units
SUPPORTING CALCULATION: 7,000 units transferred out + 6,000 units in ending inventory = 13,000 units

6. A characteristic of a process costing system is that: *

A. costs are accumulated by order
B. it is used by a company manufacturing custom machinery
C. standard costs are not applicable
D. it requires a lot more detailed accounting than does a job order system
E. work in process inventory is restated in terms of completed units

7. Transferred-in costs as used in a process cost accounting system are: *

A. supervisory salaries that are transferred from an overhead cost center to a production cost center
B. ending work in process inventory of a previous process that will be used in a succeeding process
C. labor that is transferred from another department within the same plant instead of hiring temporary workers from the outside
D. costs of the product of a previous internal process that is subsequently used in a succeeding internal process
E. none of the above

8. In a process costing system, how is the unit cost affected in a production cost report when materials are added in a department subsequent to the first department

and the added materials result in additional units? *

A. The first department's unit cost is increased, but it does not necessitate an adjustment of the transferred-in unit cost.
B. The first department's unit cost is decreased, but it does not necessitate an adjustment of the transferred-in unit cost.
C. The first department's unit cost is not affected.
D. The first department's unit cost is increased, which necessitates an adjustment of the transferred-in unit cost.
E. The first department's unit cost is decreased, which necessitates an adjustment of the transferred-in unit cost.

9. Assuming that there was no beginning work in process inventory and the ending work in process inventory is 50% complete as to conversion costs, the number

of equivalent units as to conversion costs would be: *

A. less than the units completed
B. more than the units completed
C. the same as the units placed in process
D. the same as the units completed
E. less than the units placed in process

10.An error was made in the computation of the percentage of completion of the current year's ending work in process inventory. The error resulted in assigning a

lower percentage of completion to each component of the inventory than actually was the case. What is the effect of this error upon:(1) the computation of

equivalent units in total, (2) the computation of costs per equivalent unit, (3) costs assigned to cost of goods completed for the period *
A. understate overstate overstate
B. understate understate overstate
C. overstate understate understate
D. overstate overstate understate
E. none of the above

11. Read, Inc. instituted a new process in October. During October, 10,000 units were started in Department A. Of the units started, 7,000 were transferred to

Department B, and 3,000 remained in work in process at October 31. The work in process at October 31 was 100% complete as to material costs and 50%

complete as to conversion costs. Materials costs of $27,000 and conversion costs of $39,950 were charged to Department A in October. What were the total costs

transferred to Department B? *
A. $46,900
B. $53,600
C. $51,800
D. $57,120
E. none of the above
SUPPORTING CALCULATION:

Materials unit cost = $27,000  (7,000 + 3,000) = $2.70

Conversion unit cost = $39,950  [7,000 + 50%(3,000)] = $4.70
Costs transferred = 7,000($2.70 + $4.70) = $51,800

12. In accounting for beginning inventory costs, the method that allows the addition of beginning inventory costs with costs incurred during the period is referred

to as: *
A. first-in, first-out
B. addition
C. last-in, first-out
D. average
E. first-in, last-out

13. Chicago Processing Co. uses the average costing method and reported a beginning inventory of 5,000 units that were 20% complete with respect to materials in

one department. During the month, 11,000 units were started; 8,000 units were finished; ending inventory amounted to 8,000 units that were 60% complete with

respect to materials. Total materials cost during the period for work in process should be spread over: *
A. 7,200 units
B. 16,000 units
C. 11,200 units
D. 13,200 units
E. 12,800 units
SUPPORTING CALCULATION: 8,000 + .60(8,000) = 12,800 units

14. In determining the cost of goods transferred in from a previous department under the average cost method: *
A. a simple average of unit costs is used
B. beginning inventory costs are separated from costs transferred in during the period
C. a first-in, first-out approach is used
D. equivalent production in ending inventory is separated from other transferred-in costs
E. a weighted average of unit costs is used

15.The average and fifo process costing methods differ in that the average method: *
A. can be used under any cost flow assumption
B. is much more difficult to apply than the fifo method
C. requires that ending work in process inventory be stated in terms of equivalent units of production
D. considers the ending work in process inventory only partially complete
E. does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production

CH6_2

1. The first step in applying the average cost method is to: *

B. divide the current period's production costs by the equivalent units
A. add the beginning work in process costs to the current period's production costs
E. B and C
C. subtract the beginning work in process costs from the current period's production costs
D. A and B

2. Beginning work in process was 60% complete as to conversion costs, and ending work in process was 45% complete as to conversion costs. The dollar amount

of the conversion cost included in ending work in process (using the average cost method) is determined by multiplying the average unit conversion costs by what

percentage of the total units in ending work in process? *

A. 60%
B. 55%
D. 522%
C. 45%
E. 100%
3. Dover Corporation's production cycle starts in the Mixing Department. The following information is available for April: *

A. materials : 255,000 conversion : 255,000

B. materials : 270,000 conversion : 280,000
C. materials : 280,000 conversion : 270,000
D. materials : 305,000 conversion : 275,000
E. materials : 240,000 conversion : 250,000
SUPPORTING CALCULATION:

Materials = 40,000 + 240,000 = 280,000

Conversion = (280,000 - 25,000) + .6(25,000) = 270,000

4. Information concerning Department A of Neeley Company for June is as follows: *

A. $0.825
B. $0.833
C. $0.85
D. $0.97
E. $1.01
SUPPORTING CALCULATION: ($12,800 + $69,700)  (85,000 + 14,000) = $.833

5. Kennedy Company adds materials in the beginning of the process in the Forming Department, which is the first of two stages of its production cycle.

Information concerning the materials used in the Forming Department in October is as follows: *

A. $3,000
B. $6,120
C. $3,060
D. $5,520
E. $6,000
SUPPORTING CALCULATION:

($3,000 + $25,560)  (44,000 + 12,000) = $.51

$.51 x 12,000 = $6,120

6.Roger Company manufactures Product X in a two-stage production cycle in Departments A and B. Materials are added at the beginning of the process in

Department B. Roger uses the average costing method. Conversion costs for Department B were 50% complete as to the 6,000 units in beginning work in process

and 75% complete as to the 8,000 units in ending work in process. A total of 12,000 units were completed and transferred out of Department B during February.

An analysis of the costs relating to work in process and production activity in Department B for February follows: *
A. $2.82
B. $2.85
C. $2.05
D. $2.75
E. $2.78
SUPPORTING CALCULATION:

Transferred-in costs = $41,000  20,000 = $2.05

Materials cost = $8,000  20,000 = .40
Conversion cost = $6,000  18,000 = .33
$2.78

7.Simpson Co. adds materials at the beginning of the process in Department M. The following information pertains to Department M's work in process during

April: *

A. 26,000
B. 25,000
C. 24,000
D. 21,800
E. none of the above

8.During March, Quig Company's Department Y equivalent unit product costs, computed under the average cost method, were as follows: *

A. $36,000
B. $28,800
C. $27,200
D. $24,800
E. none of the above

9.If a company reports two different unit costs for goods transferred to the next department, it is reasonable to assume that: *
A. the department accounts for lost units at the end of the process
B. a fifo costing method is used
C. lost unit costs are computed separately
D. an average costing method is used
E. errors must have occurred in recording costs

10.In order to compute equivalent units of production using the fifo method of process costing, work for the period must be broken down to units: *
A. started and completed during the period
B. completed during the period and units in ending inventory
C. completed from beginning inventory, started and completed during the month, and units in ending inventory
D. started during the period and units transferred out during the period
E. processed during the period and units completed during the period

11.The first-in, first-out method of process costing will produce the same cost of goods manufactured amount as the average cost method when: *
A. there is no beginning inventory
B. there is no ending inventory
C. beginning and ending inventories are each 50% complete
D. beginning inventories are 100% complete as to materials
E. goods produced are homogeneous

12.The fifo method of process costing differs from the average cost method of process costing in that fifo: *
A. allocates costs based on whole units, but the average cost method uses equivalent units
B. considers the stage of completion of beginning work in process in computing equivalent units of production, but the average cost method does not
C. does not consider the stage of completion of beginning work in process in computing equivalent units of production, but the average cost method does
D. is applicable only to those companies using the fifo inventory pricing method, but the average cost method may be used with any inventory pricing method
E. none of the above

13.Connor Company computed the flow of physical units completed for Department M for the month of March as follows: *

A. 60,600
B. 55,200
C. 57,000
D. 54,600
E. 63,600

14.The Hilo Company computed the physical flow of units for Department A for the month of April as follows: *
A. Materials : 48,000 Conversion Cost : 48,000
B. Materials : 40,000 Conversion Costs : 47,600
C. Materials : 36,800 Conversion Costs:38,000
D. Materials : 38,000 Conversion Costs : 36,800
E. Materials : 48,000 Conversion Costs : 44,800

15.Department A is the first stage of Mann Company's production cycle. The following information is available for conversion costs for the month of April: *

A. 336,000
B. 360,000
C. 328,000
D. 320,000
E. 324,000