Question 1

A manufacturing company applies overhead based on direct labor hours. At the beginning of the year, it estimated that overhead costs would be $720,000 and direct labor hours would be 90,000. Actual overhead costs incurred were $754,400, and actual direct labor hours were 92,000. What is the amount of overapplied or underapplied overhead at the end of the year?

Accepted Answer

A)   $34,400 overapplied
B)   $18,400 overapplied
C)   $34,400 underapplied
D)   $18,400 underappliedE) A) and C)
F) A) and B)

Question 2

The factory personnel whose wages are traceable directly to a product include

Accepted Answer

A)   maintenance personnel.
B)   support personnel.
C)   factory supervisors.
D)   employees who help to shape the product.E) None of the above
F) B) and C)

Question 3

Materials and supplies that cannot be traced conveniently to specific products are called

Accepted Answer

A)   indirect materials.
B)   raw materials.
C)   minor materials.
D)   direct materials.E) A) and C)
F) C) and D)

Question 4

Product costs could be reported as assets.

Accepted Answer

A) True 
 B)False

Question 5

Standard costing is based on actual direct materials and direct labor plus estimated overhead.

Accepted Answer

A) True 
 B)False

Question 6

Cost of goods manufactured is equal to

Accepted Answer

A)   Direct Materials + Direct Labor + Overhead.
B)   Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory.
C)   Beginning Work in Process Inventory + Period Costs - Ending Work in Process Inventory.
D)   Beginning Work in Process Inventory + Product Costs.E) All of the above
F) A) and B)

Question 7

Which of the following is an activity that causes changes in the amount of a cost pool?

Accepted Answer

A)   Cost element
B)   Cost function
C)   Cost driver
D)   Cost allocationE) A) and B)
F) A) and C)

Question 8

To reconcile total manufacturing costs with the total cost of goods manufactured during the period,

Accepted Answer

A)   subtract out all period costs from total manufacturing costs to arrive at cost of goods manufactured.
B)   add beginning and subtract ending finished goods inventory to total manufacturing costs.
C)   you must know how many goods were sold during the period.
D)   add beginning and subtract ending work in process inventory to total manufacturing costs.E) B) and C)
F) A) and D)

Question 9

Period costs flow through three types of inventory accounts before becoming part of the cost of goods sold amount.

Accepted Answer

A) True 
 B)False

Question 10

Overhead costs are not

Accepted Answer

A)   allocated to the Work in Process Inventory account.
B)   charged directly to the Finished Goods Inventory account.
C)   assigned to specific products.
D)   considered product costs.E) A) and D)
F) None of the above

Question 11

If overhead has been overapplied during the period, the adjusting entry could include a credit to the Cost of Goods Sold account.

Accepted Answer

A) True 
 B)False

Question 12

In a manufacturing environment, direct labor costs initially flow

Accepted Answer

A)   into the Materials Inventory account.
B)   directly to Cost of Goods Sold.
C)   into the Work in Process Inventory account.
D)   into the Finished Goods Inventory account.E) All of the above
F) B) and C)

Question 13

Which of the following is the formula used to compute a product's unit cost?

Accepted Answer

A)   (Direct Materials + Direct Labor)  / Number of Units Produced
B)   (Direct Materials + Direct Labor + Overhead)  / Number of Units Produced
C)   (Direct Labor + Overhead)  / Number of Units Produced
D)   (Indirect Materials + Indirect Labor + Overhead)  / Number of Units ProducedE) A) and B)
F) All of the above

Question 14

Inventoriable cost is a synonym of period cost.

Accepted Answer

A) True 
 B)False

Question 15

Salaries of supervisory production personnel should be classified as direct labor costs.

Accepted Answer

A) True 
 B)False

Question 16

Manufacturing costs behave as variable or fixed costs.

Accepted Answer

A) True 
 B)False

Question 17

Cost allocation requires pooling of overhead costs and the selection of a cost driver.

Accepted Answer

A) True 
 B)False

Question 18

The following information has been made available to you. Assume that overhead is applied on the basis of direct labor hours.
  
a. Compute the predetermined overhead rate.
b. Compute the amount of applied overhead for the year.
c. Compute the amount of underapplied or overapplied overhead.

Accepted Answer

a. $1,638,000 (estimated overh...

Question 19

In which one of the following accounts would all three product costs not be found?

Accepted Answer

A)   Work in Process Inventory
B)   Materials Inventory
C)   Finished Goods Inventory
D)   Cost of Goods SoldE) B) and D)
F) None of the above

Question 20

Normal costing is the sum of actual direct materials, actual direct labor, and actual overhead.

Accepted Answer

A) True 
 B)False

Exam 19: Cost Concepts and Cost Allocation

Standard costing is based on actual direct materials and direct labor plus estimated overhead.

Correct Answer
verified

Correct Answer
verified

Normal costing is the sum of actual direct materials, actual direct labor, and actual overhead.

Correct Answer
verified

To reconcile total manufacturing costs with the total cost of goods manufactured during the period,

Correct Answer
verified

Cost allocation requires pooling of overhead costs and the selection of a cost driver.

Correct Answer
verified

The following information has been made available to you. Assume that overhead is applied on the basis of direct labor hours. a. Compute the predetermined overhead rate. b. Compute the amount of applied overhead for the year. c. Compute the amount of underapplied or overapplied overhead.

Correct Answer
verified
a. $1,638,000 (estimated overh...
View Answer

Salaries of supervisory production personnel should be classified as direct labor costs.

Correct Answer
verified

Which of the following is the formula used to compute a product's unit cost?

Correct Answer
verified

If overhead has been overapplied during the period, the adjusting entry could include a credit to the Cost of Goods Sold account.

Correct Answer
verified

Inventoriable cost is a synonym of period cost.

Correct Answer
verified

In which one of the following accounts would all three product costs not be found?

Correct Answer
verified

Overhead costs are not

Correct Answer
verified

Cost of goods manufactured is equal to

Correct Answer
verified

Period costs flow through three types of inventory accounts before becoming part of the cost of goods sold amount.

Correct Answer
verified

Materials and supplies that cannot be traced conveniently to specific products are called

Correct Answer
verified

In a manufacturing environment, direct labor costs initially flow

Correct Answer
verified

Manufacturing costs behave as variable or fixed costs.

Correct Answer
verified

The factory personnel whose wages are traceable directly to a product include

Correct Answer
verified

Which of the following is an activity that causes changes in the amount of a cost pool?

Correct Answer
verified

Product costs could be reported as assets.

Correct Answer
verified

Exam 19: Cost Concepts and Cost Allocation

Standard costing is based on actual direct materials and direct labor plus estimated overhead.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Normal costing is the sum of actual direct materials, actual direct labor, and actual overhead.

Correct AnswerverifiedShow Answer

To reconcile total manufacturing costs with the total cost of goods manufactured during the period,

Correct AnswerverifiedShow Answer

Cost allocation requires pooling of overhead costs and the selection of a cost driver.

Correct AnswerverifiedShow Answer

The following information has been made available to you. Assume that overhead is applied on the basis of direct labor hours. a. Compute the predetermined overhead rate. b. Compute the amount of applied overhead for the year. c. Compute the amount of underapplied or overapplied overhead.

Correct Answerverifieda. $1,638,000 (estimated overh...View AnswerShow Answer

Salaries of supervisory production personnel should be classified as direct labor costs.

Correct AnswerverifiedShow Answer

Which of the following is the formula used to compute a product's unit cost?

Correct AnswerverifiedShow Answer

If overhead has been overapplied during the period, the adjusting entry could include a credit to the Cost of Goods Sold account.

Correct AnswerverifiedShow Answer

Inventoriable cost is a synonym of period cost.

Correct AnswerverifiedShow Answer

In which one of the following accounts would all three product costs not be found?

Correct AnswerverifiedShow Answer

Overhead costs are not

Correct AnswerverifiedShow Answer

Cost of goods manufactured is equal to

Correct AnswerverifiedShow Answer

Period costs flow through three types of inventory accounts before becoming part of the cost of goods sold amount.

Correct AnswerverifiedShow Answer

Materials and supplies that cannot be traced conveniently to specific products are called

Correct AnswerverifiedShow Answer

In a manufacturing environment, direct labor costs initially flow

Correct AnswerverifiedShow Answer

Manufacturing costs behave as variable or fixed costs.

Correct AnswerverifiedShow Answer

The factory personnel whose wages are traceable directly to a product include

Correct AnswerverifiedShow Answer

Which of the following is an activity that causes changes in the amount of a cost pool?

Correct AnswerverifiedShow Answer

Product costs could be reported as assets.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. $1,638,000 (estimated overh...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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