$70,000 RM ($50,000 DM and $5,000 indirect

materials used in production)

$45,000 total labor incurred
$20,000 other factory overhead
$40,000 direct labor costs from WIP $30,000

what is the total amount accumulated in factory

overhead control account?

$325,000 wages at base direct-labor rates

$25,000 shift differentials
$10,000 overtime premiums

pays 15% for late-shift differential $325,000

pays 50% premium for overtime

what amount of direct labor should Regan charge to

work-in-process?

#54 on page 94 for answers and diagram

#66 on page 47 answer and chart

90,000 DM incurred
8,000 indirect materials incurred
125,000 MOH incurred
113,000 MOH applied $310,000 = 90,000 + 113,000 +
107,000 DL costs 107,000
pick had neither beg. or end. WIP. what was the
cost of jobs completed in january?
according to statement of management
accounting number 1C, IMA statement of
ethical professional practice, a member
has a responsibility to recognize competence
professional limitations. under which
standard of ethical conduct would this
responsibility be included?

accounting for factory overhead yes or no

costs involves averaging in

job-order costing yes

process costing yes

an accounting system that

collects financial and operating
data on the basis of the activity-based costing
underlying nature and extent of
the cost drivers is

All costs related to the

manufacturing function in a product costs
company are

application rates for factory

overhead best reflect anticipated
fluctuations in sales over a cycle normal capacity
of years when they are
computed under the concept of
applies factory OH based on direct labor hours:

$500,000 estimated OH cost

$200,000 estimated labor hours
$515,000 actual OH cost over applied by $10,000
$210,000 actual labor hours

based on this info, what is factory OH?

assuming all manufacturing costs for

finished goods are known, which of the
following statements explains why the the manufacturing cost per unit
accountant's unit cost used in inventory reflected in financial statements
valuation for the annual financial includes fixed costs
statements would differ from the
economist's marginal unit cost?

assuming no beginning WIP inv.,

and that the end. WIP inv. is 50%
less than the units placed in
complete as to conversion costs,
process
the number of equivalent units as
to conversion costs would be

assuming no beg. WIP inv., and

that the end. WIP inv. is 100%
the same as the units placed in
complete as to materials costs,
progress
the number of equivalent units as
to materials costs is

assuming two overhead accounts

are used, what is the entry to cost of goods sold XX
close them and to charge factory OH applied XX
underapplied overhead to costs factory OH control XX
of goods sold?
Beg WIP: $12,000
End WIP: $10,000
COGM: $97,000
DM Used: $20,000
$30,000
factory overhead is assigned at 150% of
direct labor. what was the august direct
labor?

$900,000
the childers company manufactures
widgets. during the fiscal year just ended, OH= 200%*DL
DL+OH= 1,800,000
the company incurred prime costs of $1.5
million and conversion costs of $1.8 DL+2DL= 1,800,000
DL= 600,000
million. overhead is applied at the rate of
200% dl cost. how much of the above DM+DL =1,500,000
DM+600,000= 1,500,000
costs represent dm cost? DM= 900,000

companies characterized by the

production of basically homogenous
products will most likely use which of
the following methods for the purpose
process costing
of averaging costs and providing
management with unit-cost data?

companies characterized by the

production of heterogeneous products
will most likely use which of the
following methods for the purpose of
job-order costing
averaging costs and providing
management with the unit cost data?

a company experienced a machinery breakdown the overtime hours times the

on one of its production lines. as a consequence
of the breakdown, manufacturing fell behind
overtime premium would be
schedule, and a decision was made to schedule charged to manufacturing
overtime to return manufacturing to schedule.
overhead, and the overtime hours
which one of the following methods is the
proper way to account for the overtime paid to times the straight-time wages
the direct laborers? would be treated as direct labor
a company services office equipment. some
customers bring their equipment to the
company's service shop; other customers
prefer to have the company's service a job-order costing system
personnel come to their offices to repair
their equipment. the most accurate costing
method for the company is

a company will produce 20,000 units of product A at a unit

variable cost of $7 and a unit selling price of $13. Fixed costs
are $40,000. However the company will still have 40% idle
capacity. The company can use this idle capacity to produce
6,000 units of product B, which it can sell for $7 per unit. the
incremental variable cost of producing a unit of B is $6. present
differential cost analysis
fixed costs that will be allocated to B amount to $10,000.

to decide whether to produce B, the company should use

the completion of goods is

yes or no
recorded as a decrease in WIP
control when using
yes
job-order costing
yes
process costing

completion of job #21, total costs FG 4,900

of 4,900 results what JE? WIP 4,900

are primarily subject to the

influence of a given manager of a
controllable costs
given responsibility center for a
given time span
 controllers are ordinarily not
investor relations
concerned with

could be used when the

conversion cost pricing customer furnishes the material
used in manufacturing a product

conversion costs do not include direct materials

a corporation manufactures two

brands of barbed wire fencing for
sale to wholesalers and large
process system
ranchers. which of the following
would be best type of costing
system for such a company to use?

cost and managerial accounting

systems are goods in the economic
sense and their benefits must exceed
their costs. when managerial accounting
educating users
systems change, the cost that is
frequently ignored is the cost of
costs that increase as the volume
of activity decreases within the average costs per unit
relevant range are

cox company found that the differences in

product costs resulting from the application
of predetermined overhead rates rather than
overhead was composed chiefly
actual overhead rates were immaterial even
though actual production was substantially of variable costs
less than planned production. the most likely
explanation is that

the debits in work-in-process are

BWIP, dl, dm, and factory OH. the
account should be credited for
EWIP (debit)
production that is completed and
sent to finished goods inventory.
the balance is

the denominator of the overhead

application rate can be based on
one of several production
expected capacity
capacities. which would result in
the lowest expected over or
undersupplied overhead?

depreciation based on the

number of units produced is variable
classified as what type of cost?
 depreciation based on the
straight-line method is classified fixed
as what type of cost?

the difference between the sales

the contribution margin
price and total variable costs is

unit variable costs are fixed over

the difference between variable
the relevant range, and unit fixed
costs and fixed costs is
costs are variable

A direct labor overtime premium

should be charged to a specific customer's requirement for early
job when the overtime is caused completion of the job
by the

direct materials 100,000

direct labor 90,000
factory overhead 4,000
$190,000
what amount off costs should be traced
to specific products in the production
process?
dm and dl: 700,000
other variable costs: 100,000
depr. of factory building
and manu. equipment: 80,000
other fixed manu. OH: 18,000 $898,000

what amount should be considered product cost

for external reporting purposes?

effective cost capacity matches the firm's resources with

management market opportunities

an equivalent unit of direct the amount of direct materials or

materials or conversion cost is conversion cost necessary to
equal to complete one unit of production

equivalent units of production

provide a means of assigning
are used in process accounting
cost to partially completed units
to

an error was made in the computation of the percentage of

completion of the current year's ending WIP inv. the error
resulted in assigning a lower percentage of completion to each
component of the inventory than actually was the case. 1. understate
consequently, the following were misstated:
1. computation of total equivalent units 2. overstate
2. computation of costs per equivalent unit
3. costs assigned to cost of goods completed for the period 3. overstate
what were the effects of the error? (overstate or understate)
 direct materials and conversion
EUP analysis is usually applied to
costs

a production supervision's salary

a fixed cost that would be
when the cost object is the
considered a direct cost is
production department

the fixed portion of the

semivariable cost of electricity for
a manufacturing plant is a (yes/no) yes
yes
conversion cost
product cost

for product costing purposes,

the cost of production overtime
caused by equipment failure that
indirect cost
represents idle time plus the
overtime premium should be
classified as

for short-run profit maximization,

greater contribution margin per
jago should manufacture the
hour of manufacturing capacity
product with the
 subsidiary ledgers for the work-
How does a job-order cost
in-process and finished goods
accounting system differ from a
inventories are necessary in job-
process cost accounting system?
order costing

WIP 5,000
if 5,000 dl and 1,250 idl incurred
OH control 1,250
JE
accrued payable 6,250

WIP 200
if 200 of dm and 125 of supplies
OH control 125
were issued to WIP, what is JE?
stores control 325

if an IMA member has a problem

in identifying unethical behavior
discuss the problem with his/her
or resolving an ethical conflict,
immediate supervisor
the first action he/she should
normally take is to

if COGS is 105,000 and FG inv.

decreased by 9,000 during the
$96,000
year, what was the year-end
COGM?
if OH costs incurred 29,000 and
25,000 costs applied to product,
what is the closing entry?
the IMA statement of ethical
professional practice includes a
competence standard which
requires an IMA member to
the IMA Statement of ethical
professional practice includes an
integrity standard, which requires
an IMA member to
the IMA statement of ethical
professional practice requires an IMA
member to follow the established
policies of the organization when faced
with an ethical conflict. if these policies
do not resolve the conflict, the member
should
in a capital-intensive industry,
which is most likely to be an
appropriate basis for applying
overhead
COGS 4,000
OH applied 25,000
OH control 29,000
develop his/her professional
proficiency on a continual basis
identify and make known anything
that may hinder his/her judgment
or prevent satisfactory
completion of any duties
contact the next higher
managerial level if initial
presentation to the immediate
superior does not resolve the
conflict
machine hours
in accordance with statement on
management accounting number 1C, IMA
statement of ethical professional
practice, a member who fails to perform competence
professional duties in accordance with
relevant standards is acting contrary to
which one fo the following standards?

in a given process costing system, the EUP are yes or no

computed using the weighted-average method.
with respect to conversion costs, the percentage
of completion for the current period only is
included in the calculation of the

Beg. WIP no
End. WIP yes

in a job-order cost system, direct

labor costs usually are recorded work-in-process control
initially as an increase in

in a job-order cost system, the

application of factory overhead
work-in-process control
is usually reflected in the general
ledger as an increase in

in a job-order cost system, the

use of direct materials previously
work-in-process control
purchased usually is recorded as
an increase in
in a labor-intensive industry in which
more overhead (service, support, more
expensive equipment, etc) is incurred by
the more highly skilled and paid direct labor cost
employees, what denominator measure
is most likely to be appropriate for
applying overhead?

in a manufacturing environment,
job-order cost accounting
systems and process cost
accounting systems differ in the
way
costs are assigned to production
runs and the number of units for
which costs are averaged

in a process costing system, how is the

unit cost affected in a production cost
report when direct materials are added
in a department subsequent to the first
department and the added materials
result in additional units?
the first department's unit cost is
decreased, which necessitates an
adjustment of the transferred-in
unit cost

in a process costing system, the

application of factory overhead
WIP inventory control
usually is recorded as an increase
in

in a production cost report using

direct materials added at a point
process costing, transferred-in
during the process
costs are similar to
in a retailing enterprise, the income
statement includes cost of goods sold.
cost of goods sold is, in effect,
purchases adjusted for changes in cost of goods manufactured
inventory. in a manufacturing company,
the purchases account is replaced by
which account?

in a traditional job-order costing,

the issuance of supplies to a factory overhead control
production department increases

in a traditional manufacturing
operation, direct costs normally wood in a furniture factory
include

the FIFO method is better than

the weighted-average method for
in comparing the FIFO and
judging the performance in a
weighted average methods for
period independently from
calculating equivalent units
performance in preceding
periods

in considering whether or not to accept

the certificate, the controller should
refer to which section of statement of
management accounting number 1C,
integrity
ima statement of ethical professional
practice?
 the difference in total costs that
incremental cost is results from selecting one choice
instead of another

in developing a predetermined factory

overhead application rate for use in a numerator: estimated factor
traditional process costing system, overhead
which of the following could be used in: denominator: estimated machine
numerator hours
denominator

indirect materials are a (yes or

no)
yes
yes
conversion cost
no
manufacturing cost
prime cost

in job-cost system, manu OH is

yes or no
an indirect cost of jobs
yes
a necessary element of
yes
production

in job-order costing, payroll

taxes paid by the employer for
direct labor
factory employees are usually
accounted for as
 in job-order costing, the basic
document to accumulate the job-cost sheet
cost of each order is the

in process 2, material G is added when a yes or no

batch is 60% complete. ending WIP units,
which are 50% complete, would be included
in the computation of equivalent units for

converion costs yes

material g no

integrity as an ethical
requirement for all IMA
avoidance of conflict of interest
members. one aspect of integrity
requires

internal auditors must often distinguish

between product costs and period costs.
product costs are properly assigned to
inventory when incurred. period costs are
always expensed in the same period in
property taxes on a factory
which they are incurred. which of the
following items is a product cost for a
manufacturing company?

in the computation of
manufacturing cost per
equivalent unit, the weighted-
average method of process
costing considers
current costs plus cost of
beginning work-in-process
inventory
 are regarded as assets before the
inventorial costs
products are sold

WIP
JE to accrue monthly payroll and OH control
payroll taxes? accrued payroll
employer payroll tax payable

accrued payroll
JE to record payment of weekly cash
payroll employees income tax payable
employees FICA tax payable

JE to record payroll and accrue est.

vacation costs for month of january: WIP 180,000
OH control 75,000
total vaca costs 360,000 est. liab. for vacation pay 30,000
DL costs monthly 180,000 accrued payroll 225,000
IDL costs 45,000

a job-order cost system uses a predetermined greater than/less than expected

factory overhead rate based on expected
volume and expected fixed cost. at the end of
the year, undersupplied overhead might be
explained by which of the following situations?

actual volume less than expected

actual fixed costs greater than expected
job-order cost system, work in process:

April:
1 Balance 24,000
30 DM 80,000

$8,500
30 DL 60,000
30 OH 54,000
30 to FG (200,000)

POHR 90% based on DL cost

job #100, only job still in process charged with OH of $4,500. the
amount of DM charged to job #100 was

of two or more products

joint costs are those costs produced from a common
process

just-in-time manufacturing goods should be "pulled"

practices are based in part on through the production process,
the belief that not "pushed"

Kew Co. had 3,000 units in work-in-process at April 1 11,000

that were 60% complete as to
conversion cost. During April, 10,000 units were
completed. At April 30, the 4,000 units in BWIP + Units started = units
work-in-process were 40% complete as to
conversion cost. Direct materials are added at the
completed + EWIP
beginning of the process. How many units were 3,000 + units started = 10,000 +
started during April?
4,000

is sometimes used as a basis for

life-cycle costing cost planning and product
pricing
the likely reason for the stability fixed cost component of the full
of total revenues is the cost

look at 28-33 on page 36-37 for answers and diagram

look at 41-44 on page 40-41 for answers and numbers

look at #41 on page 89 numbers and answer

look at #43-47 on page 90-91 for answers and numbers

look at #48-52 on page 92-93 for answers and diagram

look at #56 and 57 on page 44 for answers and diagrams

look at #58-60 on page 96 for answers and numbers

look at #62-63 on page 97 for answers and diagram

look at #65-66, #67-68 on page

for answers and diagram
98-99
look at #69-72, #73-74 on page
for answer and diagram
100-101

look at #76 for answer and numbers

look at #86-88 on page 106-107 for answers and numbers

look up #24 on page 118 for answers and chart

look up #35-38, 39-40, 41-43 on

for answers and diagrams
page 122,123,124
 look up #45,46-49 on page
for answers and numbers
125,126-127,128-129

look up #54-55, 56-58 on page

for answers and numbers
130-131

look up #59,60-64,65-72 on page

for answers and diagrams
132,132-133,134-136

luna co's year end MOH costs:

500,000 DM and DL
70,000 Depr. on Manu. equipment
40,000 Depr. on factory building
$625,000
15,000 janitor wages [500,000+70,000+40,000+15,000]
how much of these costs should be inventories for
external reporting purposes?

management should implement a

the benefits of the system exceed
different and/or more expensive
the cost
accounting system only when
 managerial accounting differs
primarily concerned with external
from financial accounting in that
financial reporting
financial accounting is?

a manufacturing firm planned to

manufacture and sell 100,000 units of
product during the year at a variable cost
per unit of $4.00 and fixed cost per unit
$2.00. the firm fell short of its goal and only
$5,000 favorable
manufactured 80,000 units at a total incurred
cost of $515,000. the firm's manufacturing
cost variance was

many companies recognize three major

categories of costs of manufacturing a the cost of small tools used in
product. these are direct materials,
direct labor, and overhead. which of the
mounting tires on each
following is an overhead cost in the automobile
production of an automobile?

many firms use two overhead

accounts: factory overhead
control and factory overhead
neither
applied. during the period, which
account receives numbers debits
and credits?

a new advertising agency serves a wide

range of clients including manufacturers,
restaurants, service businesses, department
stores, and other retail establishments. the job-order costing
accounting system the advertising agency
has most likely adopted for its record
keeping in accumulating costs is
a non manufacturing organization either job-order or process
may use costing

one approach to calculating EUP

yes, begin with total work that
is to begin with the total work
has been done (units transferred
that could be done, the units in
out and the completed EUP in
Beg WIP and those transferred in.
end WIP)
is there another approach?

one of the purposes of standard simplify costing procedures and

costs is to expedite cost reports

the only costs and expenses

commissions, cost of sales, and
controllable at the product-line
salaries
level for this retail company are

on november 1, yankee company had 20,000 units of WIP in

4,000 decrease
department #1 which were 100% complete as to material cost
and 20% complete as to conversion costs. during november,
160,000 units started department #1 and 170,000 completed and 174,000 [170,000+(10,000*40%)]:
transferred to department #2. WIP on nov. 30 was 100% weighted-average
complete as to material costs and 40% complete as to
conversion costs. by what amount would the equivalent nits for
conversion costs for the month of november differ if the FIFO 170,000 [16,000+(20,00080%)+150,000+
method were used instead of weighted-average method?
(10,00040%)]: FIFO method
operation costing is appropriate produced in batches or
for products that are production runs

operation costing is a product a blend of job-order and process

costing system best described as costing

the same as a process costing

system except that materials
an operation costing system is
costs are assigned on the basis of
batched of production

are always expensed in the same

period costs
period in which they are incurred

the perpetual inventory method maintains a continuous record of

differs from the period in that the transactions affecting the
former inventory balances
 does not consider idle time
practical capacity as a plant
caused by inadequate sales
capacity concept
demand

the primary reason for adopting

total quality management is to greater customer satisfaction
achieve

a process costing system is used for a department that began

operations in year 1. approximately the same number of physical units,
at the same degree of completion, were in work-in-process at the end
of both january and february in the current year. monthly conversion
costs are assigned to ending work-in-process and units completed.
compared with the FIFO method, would the weighted-average same
greater number
method use the same or a greater number of equivalent units to
calculate the monthly cost assignments?

equivalent units for weighted-average compared with FIFO:

January
February

the professional certification

program most suited for one
interested in a career in
CMA
management accounting leads to
which of the following
designations?

Purchased direct materials are

added in the second department
of a three-department process.
increase total unit cost
This addition does not increase
the number of units produced in
the second department and will
Purchased direct materials are
added in the second department
always change the direct labor
of a three-department process.
cost percentage in the end WIP
This addition increases the
inventory
number of units produced in the
second department and will

purchases 450,000
beg. inv. 170,000
end. inv. 210,000
freight-in 50,000 $460,000
freight-out 75,000

how much is the COGS for the year?

the relevance of a particular cost

potential effect on the decision
to a decision is determined by

the salary of the line supervisor in

the assembly division of an
conversion costs
automobile company should be
included in

sales 300,000
purchases 140,000
inventories:
january 1 70,000
dec. 31 100,000 $190,000
sales commissions 10,000

the gross margin was

 separate equivalent units
calculations are often not made direct labor costs
for

theoretically, cash discounts

deducted from inventory,
permitted on purchased raw
whether taken or not
materials should be

there are several alternative

denominator measures for
sales value of product produced
applying overhead. which is not
commonly used?

three commonly employed systems for product

costing are job-order costing, operation costing, and
process costing. match the type of production auto repair
environment with the costing method used.
clothing manufacturing
job-order costing oil refining
operation costing
process costing

the treasury function is usually

financial reporting
not concerned with
 a true process costing could
make use of each of the individual lots
following except

two basic costing systems for assigning

costs to products or services are job costing
and process costing. these two costing
the nature and amount of the
systems are usually viewed as being on product or service brought to
opposite ends of a spectrum. the the marketplace for customer
fundamental criterion employed to
determine whether job costing or process
consumption
costing should be employed is

under a job-order system of cost

accounting, the dollar amount of the
general ledger entry involved in the
completed during the period
transfer of inventory from work-in-
process to finished goods is the sum
of the costs charged to all jobs

are determined by dividing total

fixed costs by a denominator
unit fixed costs
such as production or sales
volume

units of production is an
only one product is
appropriate method of assigning
manufactured
overhead when
the units transferred in from the first department yes or no
to the second department should be included in
the computation of the equivalent units for the
second department under which of the
following methods of process costing?

FIFO yes
weighted-average yes

the unrepresentative unit cost

that will otherwise result when
a valid reason for using POHR for
total factory overhead fluctuates
process costing is
significantly from period to
period

The wages of the factory

janitorial staff should be classified factory overhead cost
as

costs of the output of a previous

what are transferred-in costs in a internal process that is
process costing system? subsequently used in a
succeeding internal process

what is JE for purchase of 500 of

stores control 750
DM and 250 of supplies for
cash 750
cash?
 what is the entry to record
finished goods XX
completion of a particular
work-in-process XX
product or group of products

what is the JE to record legal

state unemployment taxes
corporation's payment of state
payable 600
unemployment taxes for 600 if
cash 600
tax has been accrued?

what is the JE to record the

RM inventory XX
purchase of materials on
A/P XX
account?

what is the nature of the work-in-

inventory
process account?

when a decision is made in an

organization, it is selected from a
group of alternative courses of
opportunity cost
action. the loss associated with
choosing the alternative that
does not maximize the benefit is
th
when the amount of over applied
factory overhead is significant,
the entry to close over applied
factory overhead will most likely
require
credit to cost of goods sold,
finished goods inventory, and
work-in-process inventory

when the number of units

manufactured increases, the most a decrease in the nonvariable
significant change in average unit element
cost will be reflected as

which concept of capacity

applies the least amount of theoretical capacity
overhead to units of production?

which ethical standard is most

clearly violated if an IMA
member knows of a problem that credibility
could mislead users but does
nothing about it?

the general ledger and subsidiary

accounts and related records,
which is the best description of
etc, used to accumulate the costs
traditional cost accounting?
of goods or services provided
by an entity
which is the true statement about
the cost of completed goods
transferred under FIFO to the
next production department or
to finished goods inventory?
the two amounts are considered
combined as the goods are
transferred

which method of measuring the

costs to be assigned to products
or services uses budgeted rates
extended costing
for direct costs but applies those
rates to the actual quantities of
the inputs?

which of the following

characteristics applies to process
equivalent units of production
costing but not to job-order
costing?

which of the following is true total fixed costs usually fall

regarding a relevant range? outside the relevant range

which of the following items is

not included in (charged to) costs of marketing departments
factory overhead?
which one of the following best both a product cost and a prime
describes direct labor? cost

which one of the following

categories of cost is most likely
power
not considered a component of
fixed factory overhead?

the wages of the workers on the

which one of the following costs shipping docks who load
is classified as a period cost? completed products onto
outgoing trucks

which one of the following costs

would be relevant in short-term incremental fixed costs
decision making?

which one of the following is

least likely to be an objective of a sales commission determination
cost accounting system?
 which professional organization
the institute of management
represents management
accountants (IMA)
accountants in the US?

to smooth seasonal variability of

why are annual overhead
both overhead costs and output
application rates used?
levels

why are transferred-in costs

they usually consist of the basic
differentiated from direct
units being produced
materials?

WIP account for month of april: $5,200

1 Balance 4,000
30 DM 24,000 WIP [4,000+24,000+16,000+12,800] 56,800
30 DL 16,000
30 OH 12,800
Fin. Goods [56,800-48,000] 8,800
30 to Fin. Goods (48,000)
2,000 is DL and 1,600 [2,000*80%] is
birk applies OH to production at POHR of 80% DL cost. job #5,
only job still in process on April 30, has been charged with DL OH.amount of DM charged was [8,800-
of $2,000. what was the amount of DM charged to job #5? 2,000-1,600] = 5,200

an inventory account indicating

the beginning and ending
the work-in-process account is
inventory of goods being
processed