Cost Accounting – Week 3

Average Rating

0 out of 5 stars. 0 votes.

Question 1

Twisty Taffy Company manufactures lollipops, jelly beans, and other types of sugary treats and uses normal costing. A job cost summary for a product manufactured within the company would not include ________.

Selected: cost of overhead allocatedThis answer is incorrect.
cost of sugar used
cost of overhead incurred
cost of labor used

Reconsider your response. Review Module 3, Page V. Which cost is not reflected as a debit to work-in-process, and therefore not recorded on a job cost summary?

1/1

Question 2

True or False: Materiality is not a consideration when choosing a method of disposing of over- or underallocated overhead.

True
Selected:FalseThis answer is correct.

Correct! Materiality may be the primary consideration for the method of disposal. A material difference would indicate an incorrect budget, in which case it is likely that the firm would use a proration approach. An immaterial variance is typically written off the COGS.

1/1

Question 3

True or False: A job costing system requires multiple work-in-process accounts, whereas a process costing system is less complex and never requires more than one work-in-process account.

True
Selected:FalseThis answer is correct.

Correct! A process costing system requires a work-in-process for each department through which units pass during the production process. Job costing systems typically require only one work-in-process account.

1/1

Question 4

Which firm would not likely use a job cost system?

a landscape contractor
a wedding photographer
Selected: a petroleum refineryThis answer is correct.
a hospital emergency room

Correct! A petroleum refinery manufactures a homogeneous product and applies a consistent process. There would not be a need to use a job costing system.

1/1

Question 5

Under normal costing, the overhead rate allocated to work-in-process is based on ________.

actual overhead costs
Selected: budgeted overhead costsThis answer is correct.
the prior year’s overhead costs
historical rate overhead costs

Correct! Normal costing requires actual variable costs of labor and material, with the budgeted rate of overhead allocated to production.

1/1

Question 6

Underallocated overhead is defined as: ________.

a lesser amount overhead was allocated to direct materials
Selected: overhead control exceeds allocated overheadThis answer is correct.
finished goods amount per unit will be stocked at greater than standard cost
when netting the overhead control and overhead allocated accounts, a net credit balance results

Correct! When total actual expenses recorded in the overhead control account exceed the amount recorded in the overhead allocated account, overhead is underallocated.

1/1

Question 7

Swiss Chocolate Manufacturing Company’s total budgeted overhead is $70,000. The company also budgeted 50,000 labor hours, and 35,000 machine hours. Job 323 incurs $20,000 of cacao, $30,000 of sugar, and $10,000 of direct labor for 1,000 direct labor hours and 500 machine hours. The company allocates overhead on the basis of machine hours. What is the total cost of Job 323?

$60,000
$61,400
$61,500
Selected: $61,000This answer is correct.

Correct! Overhead is $2.00 per machine hour x 500 hours = $1,000. Add this to the $20,000 of cacao, $30,000 of sugar, and $10,000 of direct labor for a total of $61,000.

1/1

Question 8

The summation of dollars accumulated on all open job cost sheets represents a subsidiary ledger for which account?

total payroll
cost of goods sold
raw materials
Selected: work-in-processThis answer is correct.

Correct! The total dollar amounts attributed to all open jobs that have not been finished constitute the work-in-process account balance. A subsidiary ledger for WIP includes all open job cost sheets.

1/1

Question 9

Selected: a debit to work-in-process for $1,000This answer is correct.
a debit to work-in-process for $1,400
credit to work-in-process for $1,500
a credit to work-in-process for $1,000

Correct! Overhead is $2.00 per machine hour x 500 hours = $1,000. To record the overhead allocated, debit work-in-process for $1,000 and credit overhead allocated for $1,000.

0/1

Question 10

The disposition methods for over- or underallocated overhead do not include the ________.

adjusted allocation-rate approach
write-off to COGS approach
statistical reattribution approach
Selected: proration approachThis answer is incorrect.

Reconsider your response. The potential disposition methods for expensing over- or underallocated overhead are given in Chapter 4 of your text.

1/1

Question 1

Twisty Taffy Company manufactures saltwater taffy and accounts for its production cost using a job costing system. There are two departments: candy production and packaging. The candy is kneaded and formed by machine. The packaging is completed by hand. What would be the most appropriate basis of overhead allocation in the packaging department?

material quantities
Selected: labor hoursThis answer is correct.
machine hours
material dollars

Correct! Since Twisty Taffy’s packaging process is manual, labor hours would be an appropriate driver that would likely cause increases in overhead.

1/1

Question 2

The disposition methods for over- or underallocated overhead do not include the ________.

adjusted allocation-rate approach
write-off to COGS approach
Selected: statistical reattribution approachThis answer is correct.
proration approach

Correct! The disposition methods for over- or underallocated overhead include adjusted allocation, write-off to COGS, and proration. Write-off to COGS is the most popular approach.

1/1

Question 3

$60,000
$61,400
$61,500
Selected: $61,000This answer is correct.

Correct! Overhead is $2.00 per machine hour x 500 hours = $1,000. Add this to the $20,000 of cacao, $30,000 of sugar, and $10,000 of direct labor for a total of $61,000.

1/1

Question 4

True or False: In a manufacturing company, the typical cost flow is sequential and consists of the following: work-in-process, raw materials, cost of goods sold, finished goods.

True
Selected:FalseThis answer is correct.

Correct! The appropriate sequence of cost flow is raw materials, work-in-process, finished goods, cost of goods sold.

1/1

Question 5

Selected: a debit to work-in-process for $1,000This answer is correct.
a debit to work-in-process for $1,400
credit to work-in-process for $1,500
a credit to work-in-process for $1,000

Correct! Overhead is $2.00 per machine hour x 500 hours = $1,000. To record the overhead allocated, debit work-in-process for $1,000 and credit overhead allocated for $1,000.

1/1

Question 6

cost of overhead allocated
cost of sugar used
Selected: cost of overhead incurredThis answer is correct.
cost of labor used

Correct! The cost of overhead incurred is the actual cost of overhead, recorded in the overhead control account. Job cost summaries reflect the cost of overhead allocated to work-in-process. Actual overhead costs are not debited to work-in-process under normal costing.

0/1

Question 7

Swiss Chocolate Manufacturing Company’s overhead control account has a debit balance of $36,000 and its overhead allocated account has a credit balance of $39,000. An entry to recognize the required adjustment would include ________.

CORRECT> a. a debit of $39,000 to COGS
Selected: a debit of $3,000 to COGSThis answer is incorrect.
a credit of $3,000 to COGS
a credit of $36,000 to work-in-process

Reconsider your response. Review the last paragraph in Module 3, Page V.

1/1

Question 8

An example of a homogeneous product is ________.

yachts
Selected: milkThis answer is correct.
wedding invitations
custom homes

Correct! A homogeneous product is one that is not customized, and is generic. When taken out of its packaging, it is not distinct from that of another brand.

1/1

Question 9

True or False: Process costing is employed when each product a company manufactures differs from another.

True
Selected:FalseThis answer is correct.

Correct! A company that manufactures custom products, which results in unique and discrete goods each manufacturing cycle, is best accommodated by job costing.

1/1

Question 10

Under normal costing, the overhead rate allocated to work-in-process is based on ________.

actual overhead costs
Selected: budgeted overhead costsThis answer is correct.
the prior year’s overhead costs
historical rate overhead costs

Correct! Normal costing requires actual variable costs of labor and material, with the budgeted rate of overhead allocated to production.

1/1

Question 1

The following annual information pertains to Twisty Taffy Company:
Actual overhead = $60,000
Actual machine hours = 12,000
Actual labor hours = 12,000
Budgeted overhead = $50,000
Budgeted machine hours = 12,500
Budgeted labor hours = 10,000
The company allocates overhead on the basis of machine hours. The total over- or underallocated overhead for the year was:

$10,000 underallocated
$10,000 overallocated
Selected: $12,000 underallocatedThis answer is correct.
$12,000 overallocated

Correct! Note calculation as shown:
Budgeted overhead = $50,000/ budgeted machine hours = 12,500 = $4/machine hour
Actual machine hours = 12,000 x $4/machine hour = $48,000
Actual overhead control $60,000 – overhead allocated $48,000 = $12,000 underallocated

1/1

Question 2

True or False: Process costing is employed when each product a company manufactures differs from another.

True
Selected:FalseThis answer is correct.

Correct! A company that manufactures custom products, which results in unique and discrete goods each manufacturing cycle, is best accommodated by job costing.

1/1

Question 3

True or False: In a manufacturing company, the typical cost flow is sequential and consists of the following: work-in-process, raw materials, cost of goods sold, finished goods.

True
Selected:FalseThis answer is correct.

Correct! The appropriate sequence of cost flow is raw materials, work-in-process, finished goods, cost of goods sold.

0/1

Question 4

$60,000
Selected: $48,000This answer is incorrect.
$50,000
$40,000

Reconsider your response. Review Module 3, Page V for the explanation of the
overhead allocation and the overhead control account.

0/1

Question 5

The disposition methods for over- or underallocated overhead do not include the ________.

Selected: adjusted allocation-rate approachThis answer is incorrect.
write-off to COGS approach
statistical reattribution approach
proration approach

Reconsider your response. The potential disposition methods for expensing over- or underallocated overhead are given in Chapter 4 of your text.

1/1

Question 6

$60,000
$61,400
$61,500
Selected: $61,000This answer is correct.

Correct! Overhead is $2.00 per machine hour x 500 hours = $1,000. Add this to the $20,000 of cacao, $30,000 of sugar, and $10,000 of direct labor for a total of $61,000.

1/1

Question 7

material quantities
Selected: labor hoursThis answer is correct.
machine hours
material dollars

Correct! Since Twisty Taffy’s packaging process is manual, labor hours would be an appropriate driver that would likely cause increases in overhead.

1/1

Question 8

The summation of dollars accumulated on all open job cost sheets represents a subsidiary ledger for which account?

total payroll
cost of goods sold
raw materials
Selected: work-in-processThis answer is correct.

1/1

Question 9

Twisty Taffy Company noted the following:

	Units
Work-in-process, July 1 (50% complete)	4,000
Units produced in July	20,000
Work-in-process, July 31	6,000

Materials are added at the beginning of the process.
Twisty Taffy uses the weighted average method; equivalent units of production for July were 19,500. Therefore, work-in-process at July 31 was ________.

Selected: 25.0% completeThis answer is correct.
40.0% complete
75.0% complete
80.0% complete

Correct! 4,000 + 20,000 – 6,000 = 18,000
19,500 – 18,000 = 1,500
1,500/6,000 = 25.0%

1/1

Question 10

An example of a homogeneous product is ________.

yachts
Selected: milkThis answer is correct.
wedding invitations
custom homes

Correct! A homogeneous product is one that is not customized, and is generic. When taken out of its packaging, it is not distinct from that of another brand.

1/1

Question 1

True or False: Direct materials usage is not traceable when using a process costing method.

True
Selected:FalseThis answer is correct.

Correct! Direct materials usage is always traceable regardless of the costing method, job, or process employed.

1/1

Question 2

$60,000
$61,400
$61,500
Selected: $61,000This answer is correct.

Correct! Overhead is $2.00 per machine hour x 500 hours = $1,000. Add this to the $20,000 of cacao, $30,000 of sugar, and $10,000 of direct labor for a total of $61,000.

1/1

Question 3

material quantities
Selected: labor hoursThis answer is correct.
machine hours
material dollars

Correct! Since Twisty Taffy’s packaging process is manual, labor hours would be an appropriate driver that would likely cause increases in overhead.

1/1

Question 4

Selected: a debit to work-in-process for $1,000This answer is correct.
a debit to work-in-process for $1,400
credit to work-in-process for $1,500
a credit to work-in-process for $1,000

Correct! Overhead is $2.00 per machine hour x 500 hours = $1,000. To record the overhead allocated, debit work-in-process for $1,000 and credit overhead allocated for $1,000.

1/1

Question 5

Twisty Taffy Company noted the following:

	Units
Work-in-process, July 1 (50% complete)	4,000
Units produced in July	20,000
Work-in-process, July 31	6,000

Selected: 25.0% completeThis answer is correct.
40.0% complete
75.0% complete
80.0% complete

Correct! 4,000 + 20,000 – 6,000 = 18,000
19,500 – 18,000 = 1,500
1,500/6,000 = 25.0%

1/1

Question 6

True or False: Materiality is not a consideration when choosing a method of disposing of over- or underallocated overhead.

True
Selected:FalseThis answer is correct.

1/1

Question 7

Under normal costing, the overhead rate allocated to work-in-process is based on ________.

actual overhead costs
Selected: budgeted overhead costsThis answer is correct.
the prior year’s overhead costs
historical rate overhead costs

Correct! Normal costing requires actual variable costs of labor and material, with the budgeted rate of overhead allocated to production.

1/1

Question 8

True or False: A job costing system requires multiple work-in-process accounts, whereas a process costing system is less complex and never requires more than one work-in-process account.

True
Selected:FalseThis answer is correct.

1/1

Question 9

Selected: $60,000This answer is correct.
$48,000
$50,000
$40,000

Correct! Within the overhead control account is accumulated all actual overhead expenses for the period. This is compared to the overhead allocated account for the period to determine over- or underallocated overhead for the period.

1/1

Question 10

True or False: Process costing is employed when each product a company manufactures differs from another.

True
Selected:FalseThis answer is correct.

Correct! A company that manufactures custom products, which results in unique and discrete goods each manufacturing cycle, is best accommodated by job costing.

Leave a Reply Cancel reply