Acct231 Intermediate Accounting (18 MCQs and 5 Problems)

Acct231 Intermediate Accounting (18 MCQs and 5 Problems)
1. Because of automation, which component of product cost is declining?
a. Direct labor
b. Direct materials
c. Manufacturing overhead
d. Advertising

2. The management function that requires managers to look ahead and establish objectives is
a. controlling.
b. planning.
c. directing.
d. constraining.

3. A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a(n)
a. period cost.
b. indirect material
c. direct material.
d. miscellaneous expense

4. All of the following would be entries in assigning accumulated costs to the Work In Process Inventory except:
a. the purchase of raw materials.
b. raw materials are used.
c. overhead is applied.
d. factory labor is used.

5. Which one of the following is a source document that impacts the job cost sheet?
a. Raw materials receiving slips.
b. Materials purchase orders.
c Labor time tickets
d. Finished goods shipping documents.

6. Process costing is not used when
a. similar goods are being produced.
b. jobs have distinguishing characteristics
c. large volumes are produced.
d. a series of connected manufacturing processes is necessary.
7. When determining costs of jobs, how does a company account for indirect materials?
a. It is added to work in process as used.
b. It is transferred out of raw materials into manufacturing overhead when used
c. It remains part of raw materials inventory..
d. It is transferred out of raw materials into work in process as used.

8. A process cost system would be used for all of the following products except
a. chemicals.
b. computer chips.
c. motion pictures.
d. soft drinks.

9. The predetermined overhead rate is based on the relationship between
a. actual monthly costs and actual annual activity.
b. estimated annual costs and expected annual activity.
c. estimated monthly costs and actual monthly activity.
d. estimated annual costs and actual activity

10. When manufacturing overhead costs are assigned to production in a process cost system, they are debited to
a. the Work in Process account.
b. the Finished Goods Inventory account.
c. Cost of Goods Sold.
d. a Manufacturing Overhead account.

11. A process with no beginning work in process, completed and transferred out 65,000 units during a period and had 50,000 units in the ending work in process inventory that were 30% complete. The equivalent units of production for the period were:
a. 75,000 equivalent units.
b. 125,000 equivalent units.
c. 37,500 equivalent units
d. 80,000 equivalent units

12. Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system?
a. Raw materials are purchased
b. Cost of goods sold is recognized
c. Factory labor is incurred
d. Manufacturing overhead is incurred

13. Cinder Company had the following department information for the month:
Total materials costs $ 80,000
Equivalent units of materials 8,000
Total conversion costs $120,000
Equivalent units of conversion costs 16,000
How much is the total manufacturing cost per unit?
a. $8.33.
b. $7.50
c. $17.50
d. $10.00.

14. A cost which remains constant per unit at various levels of activity is a
a. fixed cost.
b. mixed cost.
c. variable cost.
d. manufacturing cost.

15. Sales are $500,000 and variable costs are $400,000. What is the contribution margin ratio?
a. 43%
b. 20%
c. 70%
d. Cannot be determined because amounts are not expressed per unit.

16. Which of the following is not a necessary step in preparing a production cost report?
a. Compute the equivalent units of production.
b. Prepare the job order cost sheet
c. Compute the physical unit flow.
d. Prepare a cost reconciliation schedule.

17. Fixed costs normally will not include
a. property taxes
b. supervisory salaries
c. direct labor
d. depreciation on buildings and equipment.

18. In applying the high-low method, which months are relevant?
Month Miles Total Cost
January 80,000 $ 96,000
February 50,000 80,000
March 70,000 94,000
April 90,000 130,000
a. January and February
b. January and April
c. February and April
d. February and March

PROBLEM 1
Jones Corporation has the following cost records for May 2013
Indirect factory labor 7,000 Advertising Expense 8,000
Direct materials used 12,000 Depreciation, factory equipment 3,200
Work in process, 5/1/13 6,000 Direct labor 13,000
Work in process, 5/31/13 7,800 Maintenance, factory equipment 1,000
Factory supervisor’s salary 4,500 Indirect materials 1,200
Sales Commission 10,000 Office Manager Salary 4,000

Instructions
a. Prepare a cost of goods manufactured schedule for May 2013.

PROBLEM 2
Newton, Inc. fixed costs are expected to be $85,000 and variable costs are expected to be $20 per product. Sales price is $40 per product.

Instructions
Determine the required sales in units to break even.

PROBLEM 3
Nison Company accumulates the following data concerning a mixed cost, using miles as the activity level.
Miles Driven Total Cost Miles Driven Total Cost
January 10,000 15,000 March 9,000 12,500
February 8,000 14,500 April 7,500 12,000
Instructions
Compute the variable and fixed cost elements using the high-low method.

PROBLEM 4
Rosa Winery has the following cost and production data for the Fermenting Department for December 2014
Cost data:
Beginning work in process inventory, December 1
Direct Materials 30,000
Conversion Cost 6,000
36,000
Cost incurred during production in December
Direct Materials 390,000
Conversion costs 122,000
Total Costs 548,000
Production data
Completed and transferred out 62,000
Ending work in process (gallons) 8,000
Ending work in process was 100% complete as to materials and 25% complete as to conversion costs.

Instructions
(a) Compute the equivalent units of production.
(b) Determine the unit production costs.
(c) Determine the costs to be assigned to units transferred out and ending work in process.
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