Acc310 Cost Accounting: Week 2 Quiz (10 MCQs) – Version 4

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Acc310 Cost Accounting
Week 2 Quiz (10 MCQs) – Version 4

1. Which of the following costs would most likely be classified as variable assuming the account analysis method is used to determine cost behaviors? (Points : 1)
indirect materials.
supervisory salaries
equipment maintenance
annual Christmas party
building occupancy costs.

2. Which of the following costs are irrelevant for a special order that will allow an organization to utilize some of its present idle capacity? (Points : 1)
Direct materials
Indirect materials
Variable overhead
Unavoidable fixed overhead
Differential sales commission

3. The Silver Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in Department A and on a machine hours basis in Department B. At the beginning of 2008, the company made the following estimates:
Dept. A Dept. B
Direct labor cost $60,000 $40,000
Factory overhead $90,000 $45,000
Direct labor hours 6,000 9,000
Machine hours 2,000 15,000

What predetermined overhead rate would be used in Department A and Department B respectively? (Points : 1)
150% and 300%.
150% and $3.00.
$1.50 and 300%.
$1.50 and $3.00.

4. Which of the following would be the least appropriate allocation base for allocating overhead in a highly automated (i.e., capital-intensive) manufacturing company? (Points : 1)
electricity used
machine hours
direct labor hours
material consumed

5. Regression analysis does not assume a (Points : 1)
linear relationship between the dependent and independent variables(s).
normal distribution of the actual values (y) around the predicting equation (y').
constant variance for the independent error terms (e) from the predicting equation.
logical and causal relationship between the dependent and independent variable(s).

6. The Wiscow Manufacturing Company recorded overhead costs of $14,182 at an activity level of 4,200 machine hours and $8,748 at 2,300 machine hours. The records also indicated that overhead of $9,730 was incurred at 2,600 machine hours. What is the total estimated cost for 2,600 machine hours using the high-low method to estimate the cost equation? (Points : 1)

7. Determining the fixed and the variable components of a mixed cost can be accomplished by several methods. The cost of each method varies in direct relation to its degree of accuracy. Which of the following methods finds the fixed portion of a mixed cost before calculating the variable portion? (Points : 1)
Highlow method.
Account analysis.
Linear regression.
Engineering approach.

8. The loan department of a financial corporation makes loans to businesses. The costs of processing these loans are often several thousand dollars. All loans are initially evaluated using the same financial analysis software, but some require outside services such as appraisals and legal services. Which is the most appropriate costing system for the loan department? (Points : 1)
job-order costing
process costing
operation costing
batch costing

9. Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year:
Direct materials $150,000
Direct labor 200,000
Sales commissions 100,000
Indirect labor 50,000
Rent on office equipment 25,000
Depreciation – factory building 75,000
Utilities – factory 125,000

Techniques used 25,000 direct labor hours and 50,000 machine hours during the previous year. What is the predetermined overhead rate per direct labor hour? (Points : 1)

10. The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000.
Direct materials $ 20,000
Direct labor 55,000
Variable overhead 45,000
Fixed overhead 70,000
Total $190,000

The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit. If CJP accepts the offer, $4 per unit of the fixed overhead would be saved. In addition, some of CJP's facilities could be rented to a third party for $15,000 per year. At what price would CJP be indifferent to XYZ's offer? (Points : 1)
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