ACCT 2301 Exam1 2022 with Complete Solution

Which of the following is not an example of an indirect cost incurred in manufacturing automobiles? Machinery depreciation in the factory Cost of the automobile engines Plant supervisor salary Plant utilities - ANS ...

Which of the following is not an example of an indirect cost incurred in manufacturing automobiles? Machinery depreciation in the factory Cost of the automobile engines Plant supervisor salary Plant utilities - ANSWER Cost of the automobile engines Using traditional costing instead of ABC costing might lead to all of the following except expanding low-volume products that appear profitable cutting back on high-volume products that appear unprofitable raising the selling price of low-volume products raising the selling price of high-volume products - ANSWER raising the selling price of low-volume products A(n) _________________ is an estimated manufacturing overhead rate computed at the beginning of the year cost driver actual manufacturing overhead rate predetermined manufacturing overhead rate cost allocation - ANSWER predetermined manufacturing overhead rate Which of the following represents a sunk cost? A cost that is relevant to any decision An outlay expected to be incurred in the future A historical cost that is always relevant A historical cost that is never relevant - ANSWER A historical cost that is never relevant How do fixed costs per unit behave? They increase as production increases They decrease as production decreases They remain the same throughout production levels within the relevant range They increase as production decreases - ANSWER They increase as production decreases Before operating income can be determined for a manufacturer, which of the following is calculated? Cost of goods available for sale Cost of goods manufactured Cost of goods sold All of the above - ANSWER All of the above A lean company aims to eliminate which of the following wastes of the traditional operating company? Movement Overproduction Excess Transportation All of the above - ANSWER All of the above What is the promotion of products and services known as? Customer Service Marketing Design Distribution - ANSWER Marketing In the basic flow of inventory through a manufacturing system, which of the following occurs third in the job costing system? Finished goods inventory Raw Materials inventory Cost of goods sold Work in process inventory - ANSWER Finished goods inventory Which of the following is an example of a cost item that should be classified as an external failure cost? Cost if a lost unit Cost to redesign product Warranty claims Tooling changes - ANSWER Warranty Claims Determining how much manufacturing overhead is overallocated or underallocated is done before the period starts can be done at any time is done during the period is done at the end of the period - ANSWER is done at the end of the period Which of the following is a characteristic of a service company? Service companies transform raw materials into finished goods Service companies generally have no tangible products to sell Service companies make a product Service companies have a single category of inventory - ANSWER Service companies generally have not tangible products to sell Management can use job cost information for each of the following except bidding on custom jobs all of the listed choices are possible uses of job cost information determining the profitability of different jobs determining cost of goods sold - ANSWER all of the listed choices are possible uses of job cost information Which of the following is a sign that a product cost system is not working properly? Managers don't understand costs and profits The cost system has multiple allocation bases The cost system is fully depreciated The cost system was installed five years ago - ANSWER Managers don't understand costs and profits Product costs include direct materials indirect materials direct labor all of the above are included in product costs - ANSWER all of the above are included in product costs Job order costing might be used by a crude oil refinery custom home builder greeting card manufacturer paper company - ANSWER custom home builder When a company has established separate manufacturing overhead rates for each department, it is using departmental overhead rates a plantwide overhead rate cost distortion none of the above - ANSWER departmental overhead rates In the basic flow of inventory through a manufacturing system, which of the following occurs first in the job costing system? Cost of goods sold Work in process inventory Finished goods inventory Raw materials inventory - ANSWER Raw materials inventory Which of the following is an example of a cost item that should be classified as an internal failure cost? Rework costs Inspection costs Product return costs Employee training costs - ANSWER Rework costs Which of the following types of costing is used for many similar products? Batch costing Process costing Service costing Job costing - ANSWER Process costing When calculating a departmental overhead rate, what should the numerator be? Actual quantity of the departmental allocation base used by the job Total estimated departmental overhead cost pool Total estimated amount of the departmental allocation base Total estimated amount of manufacturing overhead for the factory - ANSWER Total estimated departmental overhead cost pool Which of the following is not a way in which management can use job cost information? Using the cost information in determining the bid price for custom orders Assessing and comparing the profitability of each product type Preparing the financial statements Determining the balance in the raw materials inventory - ANSWER Determining the balance in raw materials inventory Which type of company has three categories of inventory Service company Manufacturing company Merchandising company All of the above - ANSWER Manufacturing company If a frozen pizza plant is the cost object, classify each of the following costs as direct or indirect, respectively, property insurance, cafeteria workers wages, and janitorial supplies direct, indirect, and direct all are direct all are indirect direct, indirect, and indirect - ANSWER all are direct How do variable costs per unit behave? They decrease as production decreases They remain the same throughout production levels within the relevant range They decrease as production increases They increase as production decreases - ANSWER They remain the same throughout production levels within the relevant range An example of a controllable cost is depreciation on headquarters building advertising property insurance property taxes - ANSWER advertising Cost of goods manufactured reflects goods still in the factory at the end of the period goods sold during the period goods not yet started at the end of the of period goods completed during the period - ANSWER good completed during the period Inventorable product costs for manufactured product include marketing and research and development costs the costs of direct materials, direct labor, and manufacturing overhead the costs of direct materials and direct labor only none of the above - ANSWER the costs of direct materials, direct labor, and manufacturing overhead Which of the following is true about lean thinking? Finished goods are produced ahead of customers' orders to protect against running out of finished goods Raw materials are purchased in large quantities Customer orders drive the production process Inventory levels are maintained at high levels - ANSWER Customer orders drive the production process All of the following describe an ABC system except ABC systems may only be used by service companies ABC systems can create more accurate product costs ABC systems are used in both manufacturing and nonmanufacturing companies ABC systems are more complex and costly than traditional costing systems - ANSWER ABC systems may only be used by service companies Indications that a product cost system needs revision include the company uses a single-allocation base system developed long ago managers lose bids they expected to win and win bids they expected to lose employees do no believe the cost numbers are accurate all of the above - ANSWER all of the above The costs incurred to transport merchandise to a company's retail store would be considered to be what else Production or purchases Marketing Customer service Research and Development - ANSWER Production or purchases A ___________ company's balance sheet reports just one inventory called "Inventory" manufacturing service merchandising All of these types of companies - ANSWER merchandising A product support hotline would be considered distribution customer service marketing production or purchases - ANSWER customer service A factory janitor's wages would be classified as __________ when determining the cost of a manufactured product a direct cost an indirect cost a period cost none of the above - ANSWER an indirect cost All of the following are period costs except research and development expenses direct labor expenses distribution expenses marketing expenses - ANSWER direct labor expenses A merchandiser's purchases are equivalent to a manufacturer's cost of goods manufactured cost of goods sold raw materials inventory work in process inventory - ANSWER cost of goods manufactured A __________ cost is always irrelevant differential manufacturing conversion sunk - ANSWER sunk A(n) __________ cost is one whose total amount changes in direct proportion to a change in volume variable mixed fixed irrelevant - ANSWER variable A job costing system can be used by which types of companies? Service and merchandising businesses Service, manufacturing, and merchandising businesses Manufacturing and merchandising businesses Service and manufacturing businesses - ANSWER Service, manufacturing, and merchandising businesses A __________ is a document manufacturing production personnel use to request that the itemized materials be sent from the showroom into the factory materials requisition job cost record cost tickets manufacturing ticket - ANSWER materials requisition A ____________ is the primary factor that causes a cost to be incurred predetermined manufacturing overhead rate cost driver cost allocation materials requisition - ANSWER cost driver How is the cost-plus price determined? Cost + markup on cost Cost / markup on cost Cost x markup on cost Cost - markup on cost - ANSWER Cost + markup on cost What will the use of departmental overhead rates generally result in? The use of a separate cost allocation base for each department in the factory The use of a separate cost allocation base for each activity in the factory The use of a single overhead cost pool for the factory The use of a single cost allocation base - ANSWER The use of a separate cost allocation base for each department in the factory ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on the extent to which the activities are used types of activities used by the product both A and B none of the above - ANSWER both A and B A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is activity-based costing appraisal costs prevention costs value engineering - ANSWER activity-based costing A lean company aims to eliminate which of the following wastes of the traditional operating company Movement