Question 21: Which of the Following Is a Trait of a Functional-Based Cost Management System

Question 21: Which of the following is a trait of a functional-based cost management system?

a) unit-based drivers

b) tracing intensive

c) use of both financial and non-financial measures of performance

d) detailed activity information

Question 22: ______is a unit-costing method that excludes prior-period work and costs in computing current-period unit work and costs.

a) FIFO costing method

b) Transferred-in cost

c) Weighted average method

d) Equivalent units

Question 23:______is devoted to providing information for external users.

a) Management accounting

b) Financial accounting

c) Internal accounting

d) Cost accounting

Question 24: Jacob Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $60,000 are allocated on the basis of standard service used. The Personnel Department costs of $9,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $18,000 and $30,000, respectively.

Data on standard service hours and number of employees are as follows:

Maint. Person. Dept. Dept.

Dept. Dept. X Y

Standard service hours used 100 50 300 150

Number of employees 5 10 45 45

Direct labor hours 50 50 250 250

Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours.

What is the overhead rate for Department Y assuming the direct method is used?

a) $218.00

b) $120.00

c) $250.00

d) $109.00

Question 25: A(n) ______is a computerized information system that strives to input data once and make it available to people across the company for different purposes.

a) cost management information system

b) enterprise resource planning system

c) internal accounting system

d) financial accounting information system

Question 26: Goal congruence can be defined as:

a) an incentive plan arranged so the managers goals are allied with the shareholders’ goals

b) managers operating the business in the best interest of the shareholders

c) tying management rewards to shareholder results

d) all of the above are correct

Question 27: Ring Company produces two types of product: Small and Large. Two work orders for two batches of the products are shown below, along with some additional cost information:

Small Large

Work Order 10 Work Order 11

Direct materials (actual costs) $45,000 $75,000

Applied conversion costs:

Mixing ? ?

Cooking $12,000 $12,000

Bottling $10,000 $15,000

Batch size (bottles) 5,000 5,000

In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted conversion costs for the department for the year were $50,000 for labor and $125,000 for overhead. Budgeted direct labor hours were 2,500. It takes three minutes to mix the ingredients needed for each bottle.

Small (Work Order 10) and Large (Work Order 11) flow through the Mixing Department first, then through the Cooking and Bottling departments.

Refer to Figure 6-15. What is Ring Company's unit cost of Small?

a) $3.50

b) $16.90

c) $23.90

d) $70.00

Question 28: The Kraig Corporation manufactures custom-made purses. The following data pertains to Job XY5:

Direct materials placed into production $4,000

Direct labor hours worked 50 hours

Direct labor rate per hour $ 15

Machine hours worked 100 hours

Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $60,000 for the year and the direct labor hours were estimated to be 15,000. Job XY5 consists of 50 units.

What the total cost assigned to Job XY5?

a) $5,150

b) $4,400

c) $4,200

d) $4,950

Question 29: Prime product costs include

a) only factory overhead.

b) only direct labor.

c) direct labor and factory overhead.

d) direct materials and direct labor.

Question 30: Which of the following methods allocates joint production costs based on the pounds of product produced?

a) sales-value-at-split-off method

b) constant gross margin percentage method

c) physical units method

d) replacement cost method

Question 31: Which of the following is NOT an example of a cost object?

a) a product

b) a driver

c) an activity

d) a department

Question 32: Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $120,000 are allocated on the basis of standard service used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $36,000 and $60,000, respectively.

Data on standard service hours and number of employees are as follows:

MD PD P1 P2

Standard service hours used 400 200 1,200 600

Number of employees 20 40 180 180

Direct labor hours 200 200 1,000 1,000

What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel Departments using the direct method?

a) $100,000

b) $60,000

c) $109,000

d) $69,000

Question 33: Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $120,000 are allocated on the basis of standard service used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $36,000 and $60,000, respectively.

Data on standard service hours and number of employees are as follows:

MD PD P1 P2

Standard service hours used 400 200 1,200 600

Number of employees 20 40 180 180

Direct labor hours 200 200 1,000 1,000

What are the total overhead costs associated with P1 after allocating the Maintenance and Personnel Departments using the direct method?

a) $120,000

b) $18,000

c) $36,000

d) $125,000

Question 34: Which of the following is not an example of a difference between the income statement of a service organization and the income statement of a manufacturing organization?

a) A service company will never have a work in process

b) The service company will not have a finished goods inventory

c) Fulfillment costs may be added to cost of goods sold in a service company

d) Research and development expenses are not usually a major component of a service

organization

Question 35: The following information pertains to North Company:

Units

Work in process, January 1 (20% complete) 8,000

Started in January 40,000

Work in process, January 31 12,000

Materials are added at the beginning of the process.

If equivalent units of production for conversion using the weighted average method was 39,000, ending work in process at January 31 must have been

a) 15.0% complete.

b) 30.0% complete.

c) 25.0% complete.

d) 97.5% complete.

Question 36: Direct labor costs are assigned to individual jobs using a source document known as a

a) job-order cost sheet.

b) payroll check.

c) time sheet.

d) requisition form.

Question 37: Figure 8-1

Armati, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below:

Armati, Inc., had the following budgeted data:

Unit sales for 2009 26,000

Unit production for 2009 26,000

Budgeted fixed overhead for 2009:

Supervision $ 800

Depreciation 2,000

Rent 100

Budgeted variable costs per unit:

Direct materials $0.15

Direct labor 0.20

Supplies 0.02

Indirect labor 0.05

Power 0.02

The following actually occurred:

Actual unit sales for 2009 24,000

Actual unit production for 2009 28,000

Actual fixed overhead for 2009:

Supervision $ 850

Depreciation 2,000

Rent 100

Actual variable costs:

Direct materials $3,500

Direct labor 4,900

Supplies 530

Indirect labor 1,250

Power 470

Refer to Figure 8-1. The static budget variance for total fixed overhead is

a) $50 U.

b) $50 F.

c) $-0-.

d) $100 U.

Question 38; Foster Company incurred $200,000 to manufacture the following products in a joint process:

Selling Price

Product Units Produced Weight per Unit per Unit

I 500 8 lbs. $ 5

J 1,000 6 lbs. 10

K 1,500 4 lbs. 10

L 2,000 2 lbs. 5

How much joint cost would be allocated to Product K based on the total sales value method?

a) $13,334

b) $80,000

c) $26,666

d) $60,000

Question 39: A materials price variance would NOT be caused by

a) ordering the wrong quality of materials.

b) ordering from the wrong supplier.

c) not taking a quantity discount.

d) requiring laborers to work overtime.

Question 40: Standard costing:

a) establishes price and quantity standards for inputs

b) provides journal entry support

c) is not used in unit costing

d) none of the above