20 terms

# Cost Accounting Final

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Long-range planning as a management function is more important...

A master budget

A continuous (rolling) budget
at top management levels.

presents the plan for only one level of activity and does not adjust to changes in the level of activity.

drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed.
Budgetary slack can best be defined as

In developing a master budget for a manufacturing company, which one of the following items should be done first?

The statistical method of forecasting that relies heavily on regression models is called
underestimation of budgeted revenues.

development of a sales budget.

econometric models.
The number of units required for production is equal to

The manufacturing overhead budget requires that costs be separated into their fixed and variable components. Another budget that has this requirement is the

Which one of the following budgets would be the last one prepared in the master budget preparation process?
budgeted sales plus units in the ending inventory minus the units in the beginning inventory.

Cash budget.
Sensitivity analysis can best be used in the budgeting process to

What are estimated net sales for 2010, assuming the sales return/gross sales relationship
remains constant?

The ending inventory of finished goods for each quarter should equal 25% of the next
quarter's budgeted sales in units. The finished goods inventory at the start of the year is 3,000
units. Scheduled production for the third quarter is (in units)
answer "what-if" questions regarding key projections.

\$646,893

17,500 units.
Four pounds of raw materials are required for each unit produced. Raw materials on hand at
the start of the year total 4,000 lbs. The raw materials inventory at the end of each quarter
should equal 10% of the next quarter's production needs in materials. Budgeted purchases of
raw materials in the second quarter would be (in lbs.)

One pound of material is required for each finished unit. The inventory of materials at the end
of each month should equal 20% of the following month's production needs. At the beginning
of Month 1, there was 3,200 lbs. of materials on hand. Purchases of raw materials for Month 1
would be (in pounds)
49,600 lbs.

17,200.
Pardee Company makes 30% of its sales for cash and 70% on account. 60% of the account
sales are collected in the month of sale, 25% in the month following sale, and 12% in the
second month following sale. The remainder is uncollectible. The following information has
been gathered for the current year:

The major objectives of any budget system are to (CIA adapted)
\$36,230.

foster the planning of operations, provide a framework for performance evaluation, and promote communication and coordination among organization segments.
The master budget process usually begins with the (CMA adapted)

What are total budgeted production costs for the year?

What is the expected cash balance of the company at the end of the coming month? (CIA
sales budget.

\$2,180,000

\$40,000
Research has shown that having several levels of management participate in the budgetary process is beneficial to both the company and the employees. However, there are certain behavioral problems encountered in the process, one of which is the use of budgetary slack. Budgetary slack can best be described as (CMA adapted)
the planned overestimation of budgeted expenses
For which of the following businesses would the job order cost system be appropriate?

Which of the following companies would most likely use job costing?

The journal entry to record requisitions of material for new jobs started during the period
Auto repair shop

A. a
Which of the following accounts is used to accumulate the actual manufacturing overhead costs incurred during a period?

In a job costing system, the dollar amount in the journal entry that transfers the costs of jobs from Work-in-Process Inventory to Finished Goods Inventory is the sum of the costs charged to all jobs

completed during the period.
The journal entry to record the completion of a job in a job costing system is

The journal entry to write-off an insignificant underapplied overhead balance at the end of
an accounting period is

If a company multiplies its predetermined overhead rate by the actual activity level of its allocation base, it is using
Finished Goods Inventory xxxx
Work in process inventory xxxx

Cost of good sold xxxx

normal costing.
Manufacturing overhead applied on the basis of direct labor hours was \$120,000, while actual manufacturing overhead incurred was \$124,000 for the month of April. Which of the following is always true given the statement above?

In a traditional job order costing system, the issue of indirect materials to a production
department increases:

The following examples briefly describe the manufacture of two different products.
Which costing method (job-order or process) would be the best method to use for each
project?
I. Fred Puetz manufactures Fred's Wine Cooler. Fred once made the statement, "People can
have any flavor of Fred's Wine Cooler they want as long it's boysenberry."
II. Ahmad Aerondonetics is manufacturing three space shuttles for the country of Kricherra.
Each shuttle is slightly different and production will last approximately two years.
C. Process - Job Order
In the computation of the manufacturing cost per equivalent unit, the weighted average method of process costing considers

Red Company had Work-in-Process Inventories that were 45% complete at the start of the month. Work-in-Process at the end of the month was 10% complete. Materials were added at the beginning of the process. If weighted-average process costing is used, the total equivalent units for materials will equal the number of units
current costs plus cost of beginning Work-in-Process Inventory.

transferred out during the process plus the units in the ending inventory.
Materials are added at the beginning of a process in a process costing system. The beginning Work-in-Process Inventory was 30% complete as to conversion costs. Using first-in, first-out (FIFO) process costing, the total equivalent units for material are

In a production-cost report using process costing, transferred-in costs are most similar to
units started this period in this process.

material added at the beginning of the process.
Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method?

Operations costing systems are used when the products have

Predetermined manufacturing overhead rates can be used in all of the following costing systems except
There is no beginning inventory.

some common characteristics and some individual characteristics.

D. actual costing.
In a process costing system, the application of factory overhead usually would be recorded
as an increase in: (CPA adapted)

In computing the current period's manufacturing cost per equivalent unit, the FIFO
method of process costing considers: (CPA adapted)

Activity-based costing (ABC) is a costing technique that uses a two stage allocation process. Which of the following statements best describes these two stages?
Work in process inventory control

only current period costs.

The costs are assigned to activities, and then to the products based upon their use of the activities.
The electricity used for production machinery would be classified as a

The number of services provided by an accounting firm would be classified as a(n)

Which of the following measures is used by activity-based costing (ABC) systems as an allocation base for allocating overhead costs to the units produced?
volume-related activity.

product-related activity.

all of the above
Volume-based costing allocates indirect product costs based on the volume of output,
using such allocation bases as direct labor hours, machine hours, or the amount of direct
material used in the production process. Activity-based costing (ABC) has consistently shown
that Volume-based costing ___________ the cost of high volume products and
______________ the cost of low volume products.
B. b
What is the typical effect on the numbers of cost pools and cost assignment bases when an
activity-based costing (ABC) system replaces a traditional costing system?
D. d