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MBA 613 Chapter 5

Terms in this set (15)

One of the reasons for using a predetermined manufacturing overhead rate is that it smooths out seasonal costs over the entire accounting period. True or False?
True
Inventory values calculated using variable costing as opposed to absorption costing will generally be higher. True or False?
False
Which of the following inventories results in recording an expense when its asset account is reduced in the accounting system
a) Raw materials
b) Work in Progress
c) Finished Goods Inventory
d) Both Raw Materials and Work in Progress
c) Finished Goods Inventory
Partially completed goods that are in the process of being converted into a finish product are defined as:
a) Work in progress inventories
b) Conversion inventories
c) Raw materials inventories
d) Operational inventories
a) Work in progress inventories
What is the purpose for using predetermined overhead rates?
a) Delays in product costing can be avoided
b) Variation in cost assignment due to seasonality can be prevented
c) Variation in cost assignment due to short-term variations in volume can be prevented
d) Use of predetermined overhead rates serves all the above purposes
d) Use of predetermined overhead rates serves all the above purposes
Which of the following is the most reasonable cost driver for direct material costs?
a) The quantity of direct materials used
b) Purchasing department activity
c) Direct labor hours
d) Square footage of the warehouse used to store raw materials
a) The quantity of direct materials used
When a job is completed in a job order costing system, the final cost of the job is determined by summing up:
a) The work-in-process inventory subsidiary ledgers
b) The statement of costs of goods manufactured
c) The finished goods activities report
d) The various costs on the job cost sheet
d) The various costs on the job cost sheet
Which of the following is not a record required for operating a job cost system?
a) Production orders
b) Job cost sheets
c) Equivalent units calculations
d) Materials requisition form
c) Equivalent units calculations
The purpose of the statement of cost of goods manufactured is to:
a) Calculate the cost of goods transferred to finished goods inventory during the period.
b) Calculate cost of goods sold.
c) Calculate net income.
d) Calculate period costs.
a) Calculate the cost of goods transferred to finished goods inventory during the period.
Gleeson Corp. obtained the following information from its absorption costing accounting records:

$24,000 Operating Income
$16,000 Total Product Costs incurred during the period
$0 Value of Beginning Work-in-Process and Finished Goods Inventories
$0 Value of Ending Work-in-Process and Finished Goods Inventories
$50,000 Sales

The total Period Costs incurred this period equals:

a) $15,000
b) $20,000
c) $48,000
d) $10,000
d) $10,000
Fieldman Corp. obtained the following information from its accounting records:

$19,000 Sales
$12,000 Beginning Finished Goods Inventory
$8,000 Ending Finished Goods Inventory
$9,000 Cost of Goods Sold

The Cost of Goods Manufactured this period equals:
a) $11,000
b) $10,000
c) $6,000
d) $5,000
d) $5,000
Which of the following is not included in work-in-process inventory?
a) Direct materials costs
b) Applied manufacturing overhead
c) Direct manufacturing labor costs
d) Sales commissions
d) Sales commissions
Using the weighted average method, whenever units in process are produced to a different percentage of completion for materials and labor, this creates a condition where:
a) The number of equivalent units in process will invariably be different for materials and conversion costs.
b) The cost per equivalent unit for materials and conversion will be equal.
c) It is inappropriate to use the process costing method.
d) None of the above
a) The number of equivalent units in process will invariably be different for materials and conversion costs.
Which of the following types of costs are classified as period costs under absorption costing, but not under variable costing?
a) All non-manufacturing costs
b) Only fixed non-manufacturing costs
c) The cost of purchasing long-lived assets for use in manufacturing
d) None of the above
d) None of the above
Fixed manufacturing overhead is recorded initially as an asset (inventory) under ______________ costing but as an operating expense under ______________ costing.
a) absorption; indirect
b) variable; absorption
c) absorption; variable
d) variable; direct
c) absorption; variable
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