ACCOUNTING 221 CHAPTER 18 - SELF TEST

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CHAPTER 18 - SELF TEST.UNIVERSITY OF MARYLAND, UNIVERSITY COLLEGE – ACCOUNTING 221 18.13 Self-test 18.13.1 True-false Indicate whether each of the following statements is true or false. 1/ Man ... agerial accounting is for external use and gives less detailed information than financial accounting. False 2/ A manufacturer produces speedboats, and each one requires a motor. The motors are considered direct materials and are product costs. True 3/A Pepsi-Cola bottling plant is an example of a company that would use a job cost system. False 4/ A predetermined overhead rate is calculated by dividing the expected level of activity by the estimated total overhead cost. True 5/ Overhead cannot be entered in Work in Process Inventory when using a predetermined overhead rate. Only when the actual overhead costs are determined is the overhead entered. False 6/ Selling and administrative expenses are part of period costs under both absorption and variable costing methods. True 18.13.2 Multiple-choice Select the best answer for each of the following questions. 7/ Under which cost category are indirect material costs included? a. Direct materials. b. Overhead. c. Direct labor. d. None of the above. 8/ For financial accounting and external reporting purposes, all selling and administrative expenses are treated as:a. Period costs. b. Selling costs. c. Manufacturing overhead costs. d. Product costs. 9/ What are the differences between the cost of goods sold sections in a manufacturer's and a merchandiser's income statements? a. A merchandiser uses Merchandise Inventory and Direct Labor, whereas a manufacturer uses Finished Goods Inventory and Cost of Goods Manufactured. b. A merchandiser uses Merchandise Inventory and Cost of Goods Available for Sale, whereas a manufacturer uses Finished Goods Inventory and Cost of Goods Available for Sale. c. A merchandiser uses Work in Process Inventory and Cost of Goods Sold, whereas a manufacturer uses Finished Goods Inventory and Cost of Goods Sold. d. None of the above. 10/ A job cost system is used: a. When there are dissimilar products. b. By manufacturers and service companies. c. When goods are produced to meet a customer's particular needs. d. All of the above. 11/ Which of the following best describes the advantages of using a predetermined overhead rate?. a. Overhead costs are applied evenly throughout the year rather than fluctuating from month to month. b. Predetermined rates require managers to wait until long after the accounting period to get an estimate of product costs. c. Total unit costs of production are known sooner than using actual overhead rates, and overhead costs are evenly distributed throughout the year. d. Both (a) and (c) above. 12/ The expected level of activity in a production center is 30,000 machine-hours. Estimated overhead costs are indirect materials and indirect labor, USD 360,000; other overhead, USD 90,000. Which of the following is the predetermined overhead rate per machine-hour? a. USD 3. b. USD 12. c. USD 15. d. USD 20. (360,000 + 90,000)/30,000 = 15 You are given the following data relating to a company: Estimated manufacturing overhead per year USD 24,000 Expected level of activity per year 40,000 machine-hours Predetermined overhead rate USD 0.60 per machine-hour Actual overhead costs incurred during year USD 22,500 Actual machine-hours 35,00013/ Which of the following are the correct journal entries for the preceding data? a. Manufacturing overhead 22,500 Various accounts 22,500 Work in process inventory 21,000 Manufacturing overhead 21,000 b. Manufacturing overhead 22,500 Various accounts 22,500 Work in process inventory 15,428 Manufacturing overhead 15,428 c. Manufacturing overhead 24,000 Various accounts 24,000 Work in process inventory 15,428 Manufacturing overhead 15,428 d. Various accounts 22,500 Manufacturing overhead 22,500 Manufacturing overhead 15,428 Work in process inventory 15,428 Now turn to “Answers to self-test” at the end of the chapter to check your answers [Show More]

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