ACC 711: TEST QUESTIONS FROM CH 1- 4 THERE ARE NO Ch 5 Qs Student: ___________________________________________________________________________ 1. A staff position: A.

relates directly to the carrying out of the basic objectives of the organization. B. is supportive in nature, providing service and assistance to other parts of the organization. C. is superior in authority to a line position. D. none of these. 2. ______________ is an example of a line position. A. Controller for a merchandising company B. Chief financial officer of a merchandising company C. Store manager for Best Buy D. Human resources manager for a community college 3. Which of the following is NOT one of the five steps in the lean thinking model discussed in the text? A. Continuously pursue perfection in the business process. B. Identify value in specific products/services. C. Implement an enterprise system. D. Create a pull system that responds to customer orders. 4. One consequence of a change from a push to a properly implemented pull production system can be: A. an increase in work in process inventories. B. an extremely difficult cultural change due to enforced idleness when demand falls below production capacity. C. an increased mismatch between what is produced and what is demanded by customers. D. an increase in raw materials inventories. 5. All of the following are characteristics of a pull production system EXCEPT: A. Inventories are reduced to a minimum by purchasing raw materials and producing units only as needed to meet consumer demand. B. Raw materials are released to production far in advance of being needed to ensure no interruptions in work flows due to shortages of raw materials. C. Products are completed just in time to be shipped to customers. D. Manufactured parts are completed just in time to be assembled into products. 6. The Sarbanes-Oxley Act of 2002 contains all of the following provisions EXCEPT: A. The audit committee of the board of directors of a company must hire, compensate, and terminate the public accounting firm that audits the company's financial reports. B. Financial statements must be audited once every three years by the Government Accounting Office. C. Both the CEO and CFO must certify in writing that their company's financial statements and accompanying disclosures fairly represent the results of operations. D. A company's annual report must contain an internal control report.

7. The Institute of Management Accountants' Standards of Ethical Conduct contains a policy regarding confidentiality that requires that management accountants: A. refrain from disclosing confidential information acquired in the course of their work except when authorized by management. B. refrain from disclosing confidential information acquired in the course of their work in all situations. C. refrain from disclosing confidential information acquired in the course of their work except when authorized by management, unless legally obligated to do so. D. refrain from disclosing confidential information acquired in the course of their work in all cases since the law requires them to do so. 8. Which of the following is NOT one of the Institute of Management Accountants' five Standards of Ethical Conduct? A. Competence B. Confidentiality C. Independence D. Integrity 9. The cost of the cushions that are used to manufacture sofas is best described as a: A. manufacturing overhead cost. B. period cost. C. variable cost. D. conversion cost.

10. Chezpere Company manufactures and sells washing machines. In order to make assembly of the machines faster and easier, some of the metal parts in the machines are coated with grease. How should the cost of this grease be classified?

A. Item A B. Item B C. Item C D. Item D

11. A security guard's wages at a factory would be an example of:

A. Item A B. Item B C. Item C D. Item D 12. Manufacturing overhead includes: A. all direct material, direct labor and administrative costs. B. all manufacturing costs except direct labor. C. all manufacturing costs except direct labor and direct materials. D. all selling and administrative costs. 13. Direct costs: A. are incurred to benefit a particular accounting period. B. are incurred due to a specific decision. C. can be easily traced to a particular cost object. D. are the variable costs of producing a product. 14. The annual insurance premium for the factory building would be a: A. fixed cost, period cost, and indirect cost with regard to units of product. B. fixed cost, product cost, and direct cost with regard to units of product. C. variable cost, product cost, direct cost with regard to units of product. D. fixed cost, product cost, indirect cost with regard to units of product.

15. The fixed portion of the cost of electricity for a manufacturing plant is a:

A. Item A B. Item B C. Item C D. Item D

16. Conversion costs consist of: A. direct and indirect labor. B. direct labor and direct materials. C. direct labor and manufacturing overhead. D. prime costs and manufacturing overhead. 17. Which of the following is an example of a period cost? A. Fabric used to produce men's pants. B. Advertising cost for a new product campaign. C. Factory supervisor's salary. D. Monthly depreciation of production equipment. 18. In the preparation of the schedule of Cost of Goods Manufactured, the accountant incorrectly included as part of manufacturing overhead the rental expense on the firm's retail facilities. This inclusion would: A. overstate period expenses on the income statement. B. overstate the cost of goods sold on the income statement. C. understate the cost of goods manufactured. D. have no effect on the cost of goods manufactured. 19. Within the relevant range, as the number of units produced increases: A. the variable cost per unit remains the same. B. fixed costs in total remain the same. C. variable costs increase in total. D. all of the above. 20. Which of the following statements concerning direct and indirect costs is NOT true? A. Whether a particular cost is classified as direct or indirect does not depend on the cost object. B. A direct cost is one that can be easily traced to the particular cost object. C. The factory manager's salary would be classified as an indirect cost of producing one unit of product. D. A particular cost may be direct or indirect, depending on the cost object. 21. The idle time cost of assembly line workers in a manufacturing company is usually included as a part of: A. selling cost. B. direct labor cost. C. administrative cost. D. manufacturing overhead cost. 22. Which of the following would be classified as a prevention cost on a quality cost report? A. Net cost of spoilage. B. Supervision of testing and inspection activities. C. Liability arising from defective products. D. Technical support provided to suppliers. 23. Which of the following would be classified as an internal failure cost on a quality cost report? A. Systems development. B. Returns and allowances arising from quality problems. C. Net cost of scrap. D. Final product testing and inspection.

24. An increase in appraisal costs in a quality improvement program would usually have the following initial effects on internal and external failure costs:

A. Item A B. Item B C. Item C D. Item D 26. The information below relates to Derby Manufacturing Company's operations for a recent month. (Assume that all raw materials are direct materials.):

What was Derby's cost of goods manufactured for the month? A. $545,000 B. $560,000 C. $568,000 D. $587,000

27. The following inventory balances have been provided for the most recent year:

The cost of goods manufactured was $714,000. What was the cost of goods sold? A. $738,000 B. $693,000 C. $714,000 D. $733,000 Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device. 28. The salary that Mark earns at his present employ is: A. a variable cost B. a fixed cost C. a product cost D. an opportunity cost 29. Mark purchased a machine two years ago to make experimental boards. The machine will be used to manufacture the new board. The cost of this machine is: A. an opportunity cost B. a sunk cost C. a differential cost D. a period cost 30. Rent on the administrative office space is: A. a variable cost B. an opportunity cost C. a period cost D. a product cost 31. Property taxes on the building that will be purchased to house the manufacturing facility are: A. a product cost B. a variable cost C. an opportunity cost D. a period cost

32. Which of the following statements is correct concerning job-order costing? A. Job-order costing would be appropriate for a textbook publisher. B. All the costs appearing on a job cost sheet are actual costs. C. Indirect materials are charged to a specific job. D. Job-order costing is mainly used in firms with homogeneous products such as oil refineries. 33. Which of the following types of firms typically would use process costing rather than job-order costing? A. A small appliance repair shop. B. A manufacturer of commercial passenger aircraft. C. A specialty equipment manufacturer. D. A breakfast cereal manufacturer. 34. The job cost sheet: A. summarizes all costs charged to a particular job. B. contains only direct costs such as direct materials and direct labor. C. is discarded after production is completed on a particular job. D. is useful only in process costing. 35. What source document is used to determine the actual amount of direct materials to record on a job cost sheet? A. bill of materials B. production order C. materials purchase order D. materials requisition form 36. Which of the terms below would make the following sentence correct? Multiple overhead rate costing systems are usually more ____________ than plantwide overhead rates.

A. Item A B. Item B C. Item C D. Item D

37. What journal entry is made in a job-order costing system when $8,000 of materials are requisitioned for general factory use instead of for use in a particular job?

A. Item A B. Item B C. Item C D. Item D 38. If overhead is underapplied, then: A. actual overhead cost is less than estimated overhead cost. B. the amount of overhead cost applied to Work in Process is less than the actual overhead cost incurred. C. the predetermined overhead rate is too high. D. the Manufacturing Overhead account will have a credit balance at the end of the year.

39. Collins Company uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The following information applies to the company for the current year:

The manufacturing overhead cost for the current year will be: A. $17,000 overapplied B. $17,000 underapplied C. $55,000 overapplied D. $55,000 underapplied.

40. In October, Raddatz Inc. incurred $73,000 of direct labor costs and $6,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a: A. debit to Manufacturing Overhead of $6,000 B. debit to Work in Process of $79,000 C. credit to Manufacturing Overhead of $6,000 D. credit to Work in Process of $79,000 41. Kirk Manufacturing Company uses a job-order costing system. At the beginning of April, Kirk only had one job in process, Job #898. This job was finished during April by incurring additional direct costs of $350 for materials and $700 for labor. Also during April, Job #899 was started and finished. The direct costs assigned to this job were $1,200 for materials and $950 for labor. Job #900 was started during April but was not finished by the end of the month. The direct costs assigned to this job were $820 for materials and $540 for labor. Kirk applies manufacturing overhead to its products at a rate of 300% of direct labor cost. Kirk's cost of goods manufactured for April was $14,570. What was Kirk's work in process inventory balance at the beginning of April? A. $3,440 B. $6,420 C. $6,590 D. $9,570 42. Faughn Corporation has provided the following data concerning manufacturing overhead for July:

The company's Cost of Goods Sold was $243,000 prior to closing out its Manufacturing Overhead account. The company closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true? A. Manufacturing overhead was underapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $233,000 B. Manufacturing overhead was overapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $233,000 C. Manufacturing overhead was overapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $253,000 D. Manufacturing overhead was underapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $253,000 43. Which of the following statements related to job-order costing and process costing are true? A. Under both costing methods, manufacturing overhead costs are included in the computation of unit product costs. B. Under both costing methods, the journal entry to record the completion of production will involve crediting a work in process account. C. Under both costing methods, the journal entry to record the cost of goods sold will involve crediting the finished goods account. D. All of the above are true.

44. In process costing, a separate work in process account is kept for each: A. individual order. B. equivalent unit. C. processing department. D. cost category (i.e., materials, conversion cost). 45. The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method: A. does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production. B. considers ending work in process inventory to be fully complete. C. will always yield a higher cost per equivalent unit. D. All of the above. 46. In the computation of costs per equivalent unit, the weighted-average method of process costing considers: A. costs incurred during the current period only. B. costs incurred during the current period plus cost of ending work in process inventory. C. costs incurred during the current period plus cost of beginning work in process inventory. D. costs incurred during the current period less cost of beginning work in process inventory. 47. Health Beverage Company uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to Health's two departments for the month of January:

How many cases of cola were completed and transferred to Finished Goods Inventory during January? A. 66,000 B. 71,000 C. 72,000 D. 74,000

48. Colby Company has a process costing system in which the weighted-average method is used. The company adds all materials at the beginning of the process in the Molding Department, which is the first of two stages of its production process. Information concerning the materials used in the Molding Department during March is as follows:

What was the materials cost of the work in process inventory at March 31? A. $11,220 B. $7,500 C. $5,100 D. $7,650 49. Barnett Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in Department M. Conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1 and 50% complete with respect to the 6,000 units in work in process at May 31. During May, 12,000 units were completed and transferred to the next department. An analysis of the costs relating to work in process at May 1 and to production activity for May follows:

The total cost per equivalent unit for May was: A. $5.02 B. $5.10 C. $5.12 D. $5.25

50. Limber Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below:

According to the company's records, the conversion cost in beginning work in process inventory was $15,264 at the beginning of June. Additional conversion costs of $68,208 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) A. $0.873 B. $0.696 C. $0.842 D. $1.060