ACC 211 Final Ch 4

Identify the formula to compute unit costs used by firms in process industries.
a.Process Costs ÷ Output
b.Output ÷ Total Job Costs
c.Total Job Costs ÷ Output
d.Output × Process Costs
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Identify the formula to compute unit costs used by firms in process industries.
a.Process Costs ÷ Output
b.Output ÷ Total Job Costs
c.Total Job Costs ÷ Output
d.Output × Process Costs
a.Process Costs ÷ Output
Identify a true statement about firms in process industries.
a.They operate only in the service sector.
b.They mass-produce large quantities of homogeneous products.
c.They accumulate costs by a particular customer order.
d.They calculate the unit cost as total job costs divided by output.
b.They mass-produce large quantities of homogeneous products.
Which of the following is true of overhead variance?
a.Overhead Variance = Actual Overhead - Applied Overhead
b.Overhead Variance = Overapplied Overhead - Underapplied Overhead
c.Overhead Variance = Underapplied Overhead - Actual Overhead
d.Overhead Variance = Underapplied Overhead - Overapplied Overhead
a.Overhead Variance = Actual Overhead - Applied Overhead
If actual overhead is greater than applied overhead, then the variance is called:
a.predetermined overhead.
b.an overapplied overhead.
c.the normal cost of goods sold.
d.underapplied overhead.
d.underapplied overhead.
Tuscany Company estimated the following costs at the beginning of a particular year:
Overhead $4,550,000
Direct labor cost $910,000

Tuscany uses normal costing and applies overhead on the basis of direct labor cost. (Direct labor cost equals total direct labor hours worked multiplied by the wage rate.) The direct labor cost was $46,000 for the month of January. Determine the overhead applied for the month of January.
a.$103,500
b.$230,000
c.$79,000
d.$184,000
b.$230,000

Predetermined Overhead Rate = $4,550,000 ÷ $910,000 = 5 or 500% of direct labor hours Overhead applied for the month of January = 5 × $46,000 = $230,000
The following information is related to Alpha Company:
Estimated manufacturing overhead costs for the year: $246,000
Actual manufacturing overhead costs for the year: $199,000
Estimated direct labor hours for the year49,000
Actual direct labor hours for the year: 34,000
Alpha uses normal costing and applies overhead on the basis of direct labor hours.The predetermined overhead rate of Alpha Company is:
a.$4.1 per hour.
b.$7.2 per hour.
c.$5.0 per hour.
d.$8.8 per hour.
c.$5.0 per hour.

Predetermined Overhead Rate = Estimated Annual Overhead ÷ Estimated Annual Activity Level = $246,000 ÷ 49,000 hours = $5.0 per hour
Identify the formula used to calculate applied overhead under normal costing.
a.Applied Overhead = Predetermined Overhead Rate × Estimated Activity Level
b.Applied Overhead = Actual Overhead Rate × Actual Activity Level
c.Applied Overhead = Actual Overhead Rate × Estimated Activity Level
d.Applied Overhead = Predetermined Overhead Rate × Actual Activity Level
d.Applied Overhead = Predetermined Overhead Rate × Actual Activity Level

Applied Overhead = Predetermined Overhead Rate × Actual Activity Level
The predetermined overhead rate equals:
a.actual annual overhead divided by actual annual activity level.
b.estimated annual overhead divided by estimated annual activity level.
c.actual annual overhead divided by estimated annual activity level.
d.estimated annual overhead divided by actual annual activity level.
b.estimated annual overhead divided by estimated annual activity level.
Theta Inc. uses normal costing and applies overhead based on direct material costs. The predetermined overhead rate for the current year is 250% of direct material costs. During the year, $3,700,000 of direct material costs and $4,200,000 of direct labor costs were incurred. Theta's applied overhead is:
a.$1,480,000.
b.$1,680,000.
c.$9,250,000.
d.$9,875,000.
c.$9,250,000.

Applied Overhead = Predetermined Overhead Rate × Overhead Driver (direct material costs) = 250% of $3,700,000 = $9,250,000
A job-order cost sheet includes information related to:
a.direct labor and actual overhead only.
b.direct materials and applied overhead only.
c.direct materials, direct labor, and applied overhead.
d.direct materials, direct labor, and actual overhead.
c.direct materials, direct labor, and applied overhead.
In a job-order system, all completed job-order cost sheets of a firm can serve as a subsidiary ledger for the: a.work-in-progress account. b.raw materials account. c.overhead control account. d.finished goods inventory account.d.finished goods inventory account.Which of the following costs are a part of the manufacturing cost flows? a.Office salaries b.Advertising costs c.Direct materials cost d.Sales commissionc.Direct materials costThe following information relates to Langley Inc. for the month of May: Beginning raw materials inventory: $18,000 Purchases of raw materials during May: $7,100 Ending raw materials inventory: $4,600 Determine the amount of raw materials used in production during May. a.$6,300 b.$15,500 c.$20,500 d.$29,700c.$20,500 Beginning Raw Materials Inventory + Purchases - Ending Raw Materials Inventory = $18,000 + $7,100 - $4,600 = $20,500.Which of the following is a reason for the occurrence of overhead variances? a.Nonuniform production and nonuniform actual overhead costs b.Only nonuniform production costs c.Only nonuniform actual overhead costs d.Nonuniform production and nonuniform direct materials costa.Nonuniform production and nonuniform actual overhead costsNonmanufacturing costs such as selling and administrative expenses are: a.used to determine net operating income for a period. b.reported on the balance sheet as current assets. c.part of gross margin calculations. d.reported on the income statement as part of cost of goods sold.a.used to determine net operating income for a period.Beta Corporation is planning operations for the coming year. Beta uses normal costing and applies overhead on the basis of direct labor hours. The estimated overhead cost amounts to $10,000,000, estimated direct labor hours are 100,000, estimated direct labor cost amounts to $2,900,000, and estimated direct materials cost is $27,000,000. What is Beta's predetermined overhead rate? a.$85 per direct labor hour b.$29 per direct labor hour c.$37 per direct labor hour d.$100 per direct labor hourd.$100 per direct labor hour Predetermined Overhead Rate = Estimated Annual Overhead ÷ Estimated Annual Activity level = $10,000,000 ÷ 100,000 = $100Which of the following costs are a part of the manufacturing cost flows? a.Office salaries b.Direct materials cost c.Advertising costs d.Sales commissionb.Direct materials costIdentify the journal entry that is made to adjust underapplied overhead? a.Debit Cost of Goods Sold; Credit Overhead Control b.Debit Overhead Control; Credit Sales Revenue c.Debit Overhead Control; Credit Cost of Goods Sold d.Debit Sales Revenue; Credit Overhead Controla.Debit Cost of Goods Sold; Credit Overhead ControlA company has $2,700 of overapplied overhead for a period. Identify the journal entry made to adjust the overapplied overhead at the end of the period. a.Debit Cost of Goods Sold for $2,700; Credit Overhead Control for $2,700 b.Debit Overhead Control for $2,700; Credit Cost of Goods Sold for $2,700 c.Debit Overhead Control for $2,700; Credit Work in Process for $2,700 d.Debit Work in Process for $2,700; Credit Overhead Control for $2,700b.Debit Overhead Control for $2,700; Credit Cost of Goods Sold for $2,700Area At the end of a period, all the nonmanufacturing costs flow to the: a.raw materials account. b.cost of goods produced account. c.finished goods account. d.period's income statement.d.period's income statement.Which of the following is an example of a producing department in a furniture manufacturing company? a.Maintenance department b.Housekeeping Department c.Personnel department d.Assembly departmentd.Assembly departmentThe sequential method of allocation of service costs: a.ignores support department interactions. b.performs cost allocations in a step-down fashion. c.ranks the support departments in order of the amount of service rendered, from the least to the greatest. d.fully accounts for support department interactions.b.performs cost allocations in a step-down fashion.Process costing is unsuitable for the: a.petroleum industry. b.food canning industry. c.cement industry. d.construction industry.d.construction industryManufacturing firms producing unique products require a: a.process costing system. b.segmented costing system. c.job-order costing system. d.just-in-time costing system.c.job-order costing system.Normal costing determines unit cost by adding: a.direct materials, direct labor, and estimated overhead. b.direct materials, direct labor, and overapplied overhead. c.direct materials, direct labor, and actual overhead. d.direct materials, direct labor, and underapplied overhead.a.direct materials, direct labor, and estimated overhead.If actual overhead is greater than applied overhead, then the variance is called: a.predetermined overhead. b.the normal cost of goods sold. c.underapplied overhead. d.an overapplied overhead.c.underapplied overhead.Identify the formula used to calculate applied overhead under normal costing. a.Applied Overhead = Actual Overhead Rate × Actual Activity Level b.Applied Overhead = Predetermined Overhead Rate × Actual Activity Level c.Applied Overhead = Predetermined Overhead Rate × Estimated Activity Level d.Applied Overhead = Actual Overhead Rate × Estimated Activity Levelb.Applied Overhead = Predetermined Overhead Rate × Actual Activity LevelWhich of the following details is provided by a materials requisition form? a.Unit cost of material b.Name of supplier of material c.Beginning balance of material d.Closing balance of materiala.Unit cost of materialIn job-order costing, the total of all the job-order cost sheets for the incomplete jobs at the end of the month will constitute the balance in: a.Raw Materials. b.Trade Debtors. c.Work in Process. d.Trade Creditors.c.Work in Process.A job-order cost sheet includes information related to: a.direct labor and actual overhead only. b.direct materials, direct labor, and applied overhead. c.direct materials, direct labor, and actual overhead. d.direct materials and applied overhead only.b.direct materials, direct labor, and applied overhead.Which of the following is true of a time ticket? a.It is used to post the cost of indirect labor to individual jobs. b.It is used for direct laborers as well as for indirect laborers. c.It contains the details of direct materials an employee has used. d.It is used to post the cost of direct labor to individual jobs.d.It is used to post the cost of direct labor to individual jobs.Nonmanufacturing costs such as selling and administrative expenses are: a.used to determine net operating income for a period. b.reported on the balance sheet as current assets. c.reported on the income statement as part of cost of goods sold. d.part of gross margin calculations.a.used to determine net operating income for a period.When a job is complete, the costs of the completed job are transferred from: a.the work-in-process account to the finished goods account. b.the work-in-process account to the overhead control account. c.the finished goods account to the sales revenue account. d.the finished goods account to the work-in-process account.a.the work-in-process account to the finished goods account.The following information relates to Langley Inc. for the month of May:Beginning raw materials inventory$16,000Purchases of raw materials during May$7,100Ending raw materials inventory$5,200Determine the amount of raw materials used in production during May. a.$14,100 b.$3,700 c.$28,300 d.$17,900d.$17,900 Beginning Raw Materials Inventory + Purchases - Ending Raw Materials Inventory = $16,000 + $7,100 - $5,200 = $17,900.Identify the journal entry made to record the purchase of raw materials on account. a.Debit Raw Materials; Credit Accounts Payable b.Debit Accounts Payable; Credit Raw materials c.Debit Supplies; Credit Accounts Receivable d.Debit Raw Materials; Credit Accounts Receivablea.Debit Raw Materials; Credit Accounts PayableWhen direct labor cost is incurred, but cash is not paid to the laborers, _____. a.the work-in-process account is debited b.the overhead control account is debited c.the wages payable account is debited d.the raw materials account is debiteda.the work-in-process account is debitedA company has $3,200 of overapplied overhead for a period. Identify the journal entry made to adjust the overapplied overhead at the end of the period. a.Debit Cost of Goods Sold for $3,200; Credit Overhead Control for $3,200 b.Debit Overhead Control for $3,200; Credit Work in Process for $3,200 c.Debit Work in Process for $3,200; Credit Overhead Control for $3,200 d.Debit Overhead Control for $3,200; Credit Cost of Goods Sold for $3,200d.Debit Overhead Control for $3,200; Credit Cost of Goods Sold for $3,200The sequential method of allocation of service costs: a.ignores support department interactions. b.ranks the support departments in order of the amount of service rendered, from the least to the greatest. c.fully accounts for support department interactions. d.performs cost allocations in a step-down fashiond.performs cost allocations in a step-down fashionWhich of the following methods of allocation completely ignores support department interactions and assigns support department costs only to the producing departments? a.The proportional method b.The direct method c.The sequential method d.The reciprocal methodb.The direct method