ACCY 121 : Exam 2

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1. actual hours exceed A debit balance in the labor- 14. eventually Service department costs are:
standard hours. efficiency variance account applied by
indicates that: the user
departments
2. Assembly Which of the following departments
to the units
is not a service department in a
produced.
typical manufacturing company?
15. False (True/False): In a weighted-average process
3. at top management Long-range planning as a
costing system, the costs in the beginning
levels. management function is more
Work-in-Process Inventory are not used to
important:
compute the costs transferred-out.
4. both price and The variable overhead price
16. False (True/False): In general, the ending Work-in-
efficiency items. variance is due to:
Process Inventory value computed using
5. budget at actual The production volume variance is first-in, first-out (FIFO) will be the same as
levels of activity computed by the difference the ending value computed using weighted-
reached and fixed between the: average process costing.
overhead applied
17. False (True/False): The selection of an allocation
6. budgeted sales plus The number of units required for base in the direct method is easier than the
units in the ending production is equal to: selection of an allocation base in the step
inventory minus the method.
units in the beginning
18. False (True/False): The Delphi technique uses
inventory.
highly sophisticated computerized time
7. budgeted selling price The sales price variance is the series analysis to reduce the subjectivity
multiplied by the difference between the actual sales surrounding the sales forecast.
actual number of units revenues and the:
19. False (True/False): Denton Company has 10,000
sold.
units on hand at the beginning of the year
8. compare actual and The purpose of the flexible budget and plans to sell 100,000 units during the
budgeted results at is to: year. If the ending inventory needs to be
virtually any level of twice the beginning inventory, Denton will
production. need to produce 90,000 units during the
9. Cost of goods sold. Which of the following budgets is year.
not required in a service 20. favorable. If overhead is applied to production using
organization? direct labor hours and the direct labor
10. current costs plus cost In the computation of the efficiency variance is favorable, then the
of beginning Work-in- manufacturing cost per equivalent variable overhead efficiency variance is:
Process Inventory. unit, the weighted-average method 21. Inventory Which of the following best describes the
of process costing considers: valuation. objective of joint cost allocation?
11. Custodial Services. Which of the following service 22. It reduces the Which of the following is not a benefit of
departments could logically use need for budgeting?
space occupied (square footage) to tracking
allocate its costs to user actual cost
departments? activity.
12. Delphi technique. The forecasting method in which 23. Marketing Which of the following statements does not
individual forecasts of group and reflect a difficulty in preparing the marketing
members are submitted administrative and administrative budget?
anonymously and evaluated by the expenses
group as a whole is called: normally
13. an estimate of The starting point in preparing a have a one
productive capacity. comprehensive budget for a year time
manufacturing company limited by horizon.
its ability to produce and not by its
ability to sell is
24. master budget is based on one
specific level of production
and a flexible budget can be
prepared for any production
level within a relevant range.
25. Neither A nor B is false.
26. Neither A nor B is true.
27. only current period costs.
28. The order of service
department allocation has to
be determined.
The basic difference
between a master budget
and a flexible budget is
that a:
Which of the following
statements is (are) false?
(A) Operations costing
accounts for material costs
like job costing and
conversion costs like
process costing.
(B) An automobile
manufacturer is more likely
to use an operations
costing system than a
process costing system.
Which of the following
statements is (are) true
regarding the master
budget?
(A) A master budget
consists of (a)
organizational goals, (b)
strategic long-range profit
plan, and (c) tactical short-
range profit plan.
(B) A master budget
consists of only a
budgeted (a) income
statement, (b) balance
sheet, and (c) stockholders'
equity statement.
In computing the current
period's manufacturing
cost per equivalent unit,
the FIFO method of
process costing considers:
(CPA adapted)
Which of the following is a
weakness of the step
method of service cost
allocations?
29. Overstated; An error was made by ROC Company in
Overstated computing the percentage-of-completion of
the current year's ending Work-in-Process
Inventory. The error resulted in the
assignment of a lower percentage of
completion to each component of the
inventory than actually was the case. There
was no beginning Work-in-Process Inventory.
What is the effect of this error on (1) cost
assigned to cost of goods completed for the
period and (2) the computation of costs per
equivalent unit?
30. Production Which of these variances is least significant
volume for cost control?
variance.
31. sales dollars Criteria for selecting allocation bases for
generated service department allocations should not
during the include:
period.
32. The service If two service departments service the same
department number of departments, which service
that provides department's costs should be allocated first
the most when using the step method?
service to
other service
departments.
33. start and An equivalent unit of conversion costs is
complete a equal to the amount of conversion costs
unit. required to:
34. True (True/False): If materials are only added at
the end of the production process, then the
degree of completion for materials of units in
the ending Work-in-Process Inventory is
always 0%.
35. True (True/False): In the weighted-average
approach, the number of physical units
transferred out cannot be greater than the
equivalent number of units produced during
the period.
36. True (True/False): If the beginning Work-in-Process
inventory is zero, first-in, first-out (FIFO) and
weighted-average process costing will assign
the same amount to the units transferred out.
37. True (True/False): One reason to allocate service
department costs to user departments is to
encourage the user departments to monitor
their use of the service department costs.
38. True (True/False): With the reciprocal method, the
total service department costs less the direct
costs of the service department equals the
cost allocated to the service department.
39. True (True/False): An organization's sales staff is more likely to provide a lower sales forecast than a forecast
provided by market researchers.
40. Work-in-process In a process costing system, the application of factory overhead usually would be recorded as an
inventory control. increase in: (CPA adapted)