Bsa S-2C Quiz 2 (Afar 1) (Bsa S-2C

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BSA S-2C QUIZ 2 (AFAR 1) (BSA S-2C

- AFAR 1)
Job Order Costing and Accounting for Materials
Points: 69/75
1. The factor that need not be considered when calculating an inventory economic
order quantity (EOQ) is: *
(2/2 Points)
order-placing costs
risk of inventory obsolescence and deterioration
annual sales of a product
storage costs
safety stock level 
2. To backflush materials cost from Raw and In Process (RIP) to Finished Goods,
the calculation would be: *
(2/2 Points)
materials in ending RIP inventory plus materials received during the period minus
materials in the beginning RIP inventory
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materials in ending finished goods inventory plus materials cost transferred from RIP
minus materials in beginning finished goods inventory
materials in beginning finished goods inventory plus materials cost transferred from
RIP minus materials in ending finished goods inventory
materials in beginning RIP inventory plus materials received during the period

minus materials in ending RIP inventory
none of the foregoing
3. If the annual carrying cost percentage is 30% and average work in process is
$300,000 and management plans to use JIT to double the velocity of work in
process without changing total annual output, the savings in annual carrying
costs will be: *
(2/2 Points)
45000 
4. OG Company uses a job order costing system and the following information is
available from its records. The company has three jobs in process: #001, #002,
and #003.
Raw material used totaled P120,000. Direct labor per hour: P8.50 and Overhead
applied based on direct labor cost is 120%.
Direct material was requisitioned as follows for each job respectively: 35

percent, 25 percent, and 25 percent; the balance of the requisitions was
considered indirect. Direct labor hours per job are 2,500; 3,200; and 4,200;
respectively. Indirect labor is P33,000. Other actual overhead costs totaled
P36,000.
Assume the balance in Work in Process Inventory was P18,500 on June 1 and
P25,297 on June 30. The balance on June 30 represents one job that contains
direct material of P11,250. How many direct labor hours have been worked on
this job (rounded to the nearest hour)? *
(2/2 Points)
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751 
5. In backflush costing, if the conversion cost in Raw and In Process was $1,000 on
March 1 and $400 on March 31, the account to be credited for the $600
decrease would be: *
(2/2 Points)
Raw and In Process 
Finished Goods
Raw Materials
Cost of Goods Sold
6. WXC Corporation has a job order cost system. The following debits (credits)
appeared in Work in Process for the month of July:
July 1, balance: P12,000

July 31, direct materials: P40,000
July 31, direct labor: P30,000
July 31, factory overhead: P27,000
July 31, to finished goods: P(100,000)
WXC applies overhead to production at a predetermined rate of 90% based on

the direct labor cost. Job 104, the only job still in process at the end of July, has
been charged with factory overhead of P2,250. What was the amount of direct
materials charged to Job 104? *
(4/4 Points)
4250 
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7. SCCC Company has developed the following data to assist in controlling one of
its inventory items:
Economic order quantity: 1000 liters

Average daily use: 100 liters
Maximum daily use: 120 liters
Working days per year: 250 days
Safety stock: 140 liters
Cost of carrying inventory: $1.00 per liter per year
Lead time: 7 working days
Compute the cost of placing one order ($): *

(2/2 Points)
20 
8. In a period of rising prices, using which of the following inventory cost flow
methods would result in the highest ending inventory? *
(2/2 Points)
fifo 
average cost
weighted average cost
lifo
moving average cost
9. A company has been ordering more than the economic order quantity. This
would result in: *
(2/2 Points)
insufficient safety stock costs
carrying costs greater than order costs 
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more frequent order points
equal safety stock costs and carrying costs
carrying costs less than order costs

and #003.

P36,000.
If Job #003 is completed and transferred, what is the balance in Work in Process
Inventory at the end of the period if overhead is applied at the end of the
period? *
(0/2 Points)
287130
Correct answers: 178590
11. The NP Company estimated Department A's overhead at P255,000 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 P265,500; actual direct labor hours were 105,000. What was the
over- or under-applied overhead for the period? *
(2/2 Points)
P5,000 underapplied
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P2,250 underapplied
P15,000 underapplied
P15,000 overapplied
P2,250 overapplied 

Compute the normal maximum inventory (liters): *

(2/2 Points)
1140 
13. Overapplied factory overhead would result if: *

(2/2 Points)
factory overhead costs incurred were greater than costs charged to production
a firm incurred a significant amount of overhead
factory overhead costs incurred were less than costs charged to production 
factory overhead costs incurred were unreasonably large in relation to units

produced
the plant were operated at less than normal capacity
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14. A company orders 10,000 units annually of Material Z at one time. Material Z
costs P1 per unit, and order costs amount to P500 each time an order is placed.
The costs to carry Material Z in inventory amount to 20% of the materials cost.
For an entire year, the inventory carrying costs and order costs are: *
(2/2 Points)
1500 
15. The use of quantitative models can be modified to improve the management of
inventory by: *
(2/2 Points)
including only fixed costs in the EOQ analysis
purchasing inventory monthly to save on carrying cost
purchasing inventory only once a year to save on ordering cost
employing a minimum safety stock level because delivery time and inventory

usage rates may vary
eliminating semivariable costs from any consideration in the EOQ analysis because
of the difficulty of estimating those costs
16. In a job order costing system, the net cost of normal spoilage is equal to *
(2/2 Points)
the cost of spoiled work minus estimated spoilage cost
the units of spoiled work times the predetermined overhead rate
the cost of spoiled work minus the estimated disposal value 
estimated disposal value plus the cost of spoiled work
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and #003.

P36,000.
What is the prime cost of Job #001? *

(2/2 Points)
63250 
18. A unit that is rejected at a quality control inspection point, but that can be
reworked and sold, is referred to as a *
(2/2 Points)
defective unit 
scrap unit
spoiled unit
abnormal unit
lost unit
19. In backflush costing, if the conversion cost in the Raw and In Process was $500
on July 1 and $1,000 on July 31, the account to be credited at the end of July for
the $500 increase would be: *
(2/2 Points)
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Finished Goods
Raw Materials
Raw and In Process
none of the above
Cost of Goods Sold 

Compute the average inventory (liters): *

(2/2 Points)
640 
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and #003.

P36,000.
What is the total amount of actual overhead? *

(2/2 Points)
87000 
22. In a production environment that manufactures goods to customer

specifications, a job order costing system *
(2/2 Points)
can be used only if standard costs are used for materials and labor.
emphasizes that large customers create the most costs even though they also
provide the most revenues.
will provide reasonable product cost information only when all jobs utilize
approximately the same quantities of material and labor.
may be maintained using either actual or predetermined overhead rates. 
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
23. DB Company has materials cost in the December 30 Raw and In Process of
P12,500, materials received during December of P205,000 and materials cost in
the December 1 Raw and In Process of P10,000. The amount to be backflushed
from Raw and In Process to Finished Goods at the end of December would be: *
(0/2 Points)
Correct answers: 202500

Compute the order point (liters): *

(2/2 Points)
840 
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and #003.

P36,000.
What is the total amount of overhead applied to Job #002? *

(2/2 Points)
32640 
26. A company that uses a perpetual inventory system had the following
transactions for Material Z during July:
July 1 Beginning balance: 2,800 units @ $12.00 per unit

4 Issued 1,200 units
6 Received 1,000 units @ $13.30 per unit
8 Issued 1,000 units
14 Received 400 units @ $14.00 per unit
17 Issued 800 units
20 Received 500 units @ $14.16 per unit
How much is the ending inventory for Material Z under FIFO Costing? *
(2/2 Points)
23320 
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27. Of the following, the expense that is not relevant to determining the most
economic quantity to order is: *
(2/2 Points)
rental of warehouse space under a ten-year lease 
additional costs to store inventory
interest expense of financing purchases
spoilage costs
variable costs of placing an order
and #003.

P36,000.
How much overhead is applied to Work in Process? *

(2/2 Points)
100980 
29. A cost of having too few items on hand in inventory is: *

(2/2 Points)
costs of obsolescence
frequent stockouts 
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spoilage costs
payment of additional warehouse space
excessive insurance costs
30. Scrap includes all of the following except: *

(2/2 Points)
the trimmings remaining after processing materials
defective materials that cannot be used or returned to the vendor
broken parts resulting from employee or machine failures
partially or fully completed units that are in some way defective 
all of the foregoing
31. Of the following, the only activity that adds value to a product is: *
(2/2 Points)
processing time 
moving time
waiting time
inspection time
all of the foregoing
32. When rework occurs because of some action taken by the customer, the cost of
the rework should be charged to: *
(2/2 Points)
None of the foregoing.
Work in Process 
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Factory Overhead Control
Spoiled Goods Inventory
Applied Factory Overhead
33. A company that manufactures baseballs begins operations on January 1. Each

baseball requires three elements: a hard plastic core, several yards of twine that
are wrapped around the plastic core, and a piece of leather to cover the
baseball. The plastic core is started down a conveyor belt and is automatically
wrapped with the twine to the approximate size of the baseball, at which time
the leather cover is sewn to the wrapped twine. Finished baseballs are
inspected, and the ones that are defective due to internal production failure are
pulled out. Defective baseballs cannot be economically salvaged and are
destroyed. Cost and production reports for the first week of operations are:
Raw material cost $840

Conversion cost 315
$1,155
During the week, 2,100 baseballs were completed; 2,000 passed inspection.
There was no ending work in process. The cost of the spoilage charged to
Factory Overhead is: *
(3/3 Points)
55 
34. At the end of the year, GGG Company had the following account balances after
applied factory overhead had been closed to Factory Overhead Control:
Factory Overhead Control P1,000 CR

Cost of Goods Sold 980,000 DR
Work in Process 38,000 DR
Finished Goods 82,000 DR
The most common treatment of the balance in Factory Overhead Control would
be to: *
(2/2 Points)
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credit it to Cost of Goods Sold 
prorate it among Work in Process, Finished Goods, and Cost of Goods Sold
report it as miscellaneous operating revenue on the income statement
carry it as a deferred credit on the balance sheet
prorate it between Work in Process and Finished Goods
35. In a JIT system, velocity is inversely related to: *

(2/2 Points)
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risk of inventory obsolescence and deterioration

annual sales of a product

safety stock level 

none of the foregoing

Direct material was requisitioned as follows for each job respectively: 35

Raw and In Process 

Cost of Goods Sold

none of the foregoing

July 1, balance: P12,000

WXC applies overhead to production at a predetermined rate of 90% based on

Economic order quantity: 1000 liters

Compute the cost of placing one order ($): *

weighted average cost

moving average cost

insufficient safety stock costs

carrying costs greater than order costs 

more frequent order points

equal safety stock costs and carrying costs

carrying costs less than order costs

Direct material was requisitioned as follows for each job respectively: 35

Correct answers: 178590

Economic order quantity: 1000 liters

Compute the normal maximum inventory (liters): *

13. Overapplied factory overhead would result if: *

a firm incurred a significant amount of overhead

factory overhead costs incurred were unreasonably large in relation to units

the plant were operated at less than normal capacity

including only fixed costs in the EOQ analysis

purchasing inventory monthly to save on carrying cost

purchasing inventory only once a year to save on ordering cost

none of the foregoing

the cost of spoiled work minus estimated spoilage cost

the units of spoiled work times the predetermined overhead rate

the cost of spoiled work minus the estimated disposal value 

estimated disposal value plus the cost of spoiled work

Direct material was requisitioned as follows for each job respectively: 35

What is the prime cost of Job #001? *

Raw and In Process

none of the above

Cost of Goods Sold 

Economic order quantity: 1000 liters

Compute the average inventory (liters): *

Direct material was requisitioned as follows for each job respectively: 35

What is the total amount of actual overhead? *

22. In a production environment that manufactures goods to customer

none of the foregoing

may be maintained using either actual or predetermined overhead rates. 

Correct answers: 202500

Economic order quantity: 1000 liters

Compute the order point (liters): *

Direct material was requisitioned as follows for each job respectively: 35

What is the total amount of overhead applied to Job #002? *

July 1 Beginning balance: 2,800 units @ $12.00 per unit

rental of warehouse space under a ten-year lease 

additional costs to store inventory

interest expense of financing purchases

variable costs of placing an order

Direct material was requisitioned as follows for each job respectively: 35

How much overhead is applied to Work in Process? *

29. A cost of having too few items on hand in inventory is: *