Accounting 2: Test Bank Quiz - MCQGeeks.com

Department S had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900.The total conversion costs for the period were:

0%
5,880
0%
$2.04
0%
$59,400
0%
13,400

which of the following is NOT a way in which process and job order cost systems are similar?

0%
fixed costs
0%
Paint manufacturer.
0%
Both job order costs cards.
0%
"What if" or sensitivity analysis

Given the following cost data, what type of cost is shown?Total Cost # of units$500 1$1,000 2$1,500 3$2,000 4

0%
$1, 875,000
0%
$247,500 increase
0%
Remains constant with changes in the activity level
0%
variable cost

If Department H had 500 units, 60% completed, in process at the beginning of the period, 6,000 units were completed during the period, and 600 units were 30% completed at the end of the period, what was the number of equivalent units of production for the period if the first-in, first-out method is used to cost inventories?

0%
15,865
0%
11,580
0%
False
0%
5,880

Which of the following statements is true regarding fixed and variable costs? Variable costing is useful to managers for all but the following: reporting to the public in certified financial statements

0%
Decreases with increasing production
0%
True
0%
Insurance premiums on factory building
0%
Fixed costs are constant in total, and variable costs are constant per unit

The Harold Corporation just started business in January ofThey had no beginning inventories. During 2010 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was $Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $2 per unit. Fixed manufacturing costs were $24,000 and fixed selling and administrative costs were $6,000.What would be the Harold Corporations Net income for 2010 using direct costing?

0%
$159,145
0%
$4,000 less
0%
13,400
0%
$110,000

Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,The contribution margin ratio and the unit contribution margin are:

0%
$247,500 increase
0%
margin of safety
0%
52% and $11 per unit
0%
14,166 units

Department R had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period, 30,000 units of direct materials were added during the period, 32,000 units were completed during the period, and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was:

0%
29,450
0%
$3.31
0%
$2.81
0%
13,400

Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities:On July 1: Beginning inventories 850 units, 60% completeDirect materials cost $5,000Conversion costs $4,000 During July: Number of units started 15,000Direct materials added $155,000Conversion costs added $83,520 On July 31: Ending inventories 1,600 units, 40% complete Using the FIFO method, the number of units started and completed in July was

0%
15,865
0%
13,400
0%
$59,400
0%
29,450

Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?

0%
Remains constant with changes in the activity level
0%
Straight-line depreciation on factory equipment
0%
Machine operator's wages (direct labor)
0%
14100 units

Which of the following describes the behavior of the fixed cost per unit?

0%
Decreases with increasing production
0%
direct materials and conversion costs.
0%
An oil refinery
0%
direct labor and factory overhead

Garmo Co. has an operating leverage ofNext year's sales are expected to increase by 10%. The company's operating income will increase by 50%.

0%
True
0%
False

Costs that vary in total in direct proportion to changes in an activity level are called:

0%
fixed costs
0%
Equivalent units.
0%
variable costs
0%
variable costs and fixed costs

If the costs for direct materials, direct labor, and factory overhead were $522,200, $82,700, and $45,300, respectively, for 16,000 equivalent units of production, the conversion cost per equivalent unit was $8.00.

0%
True
0%
False

In a process cost system, the amount of work in process inventory is valued by:

0%
Work in Process--Department 2 390,000 Work in Process--Department 1 390,000
0%
Fixed costs are constant in total and variable costs are constant on a per unit basis
0%
allocating department costs between completed and partially completed units.
0%
Fixed costs are constant in total, and variable costs are constant per unit

Variable cost per unit = $5.00Average Fixed Cost per unit = $7.00Units sold and produced in July 25,000What is total estimate cost for August if 30,000 units are projected to be produced and sold?

0%
$110,000
0%
$325,000
0%
$24,750
0%
False

The adoption of variable costing for managerial decision making is based on the premise that fixed factory overhead costs are related to productive capacity of the manufacturing plant and are normally not affected by the number of units produced.

0%
True
0%
False

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:Product Unit SellingPrice Unit VariableCost Unit ContributionMarginArks $120 $80 $40Bins 80 60 20 What was Carter Co.'s weighted average unit contribution margin?

0%
True
0%
$24
0%
$59,400
0%
44%

Just-in-time operations attempt to significantly reduce inspection time and moving time.

0%
True
0%
False

Equivalent units of production are the number of units that could have been manufactured from start to finish during an accounting period.

0%
True
0%
False

Which of the following entities would probably use a process costing system?

0%
An oil refinery
0%
Remains constant with changes in the activity level
0%
14100 units
0%
Insurance premiums on factory building

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. Such an analysis is called:

0%
False
0%
"What if" or sensitivity analysis
0%
Decreases with increasing production
0%
52% and $11 per unit

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.The journal entry to record the flow of costs into Department 1 during the period for direct materials is:

0%
Beginning Inventory of Direct Materials -50% ; Conversion Cost (CC) -30%. Ending Inventory Direct Materials -100%; Conversion Cost -55%.
0%
Debit: Work in process--Department 3 $50,000Credit: Materials $50,000
0%
Fixed costs are constant in total and variable costs are constant on a per unit basis
0%
debit: Work in Process--Department 1 100,000 Credit: Materials 100,000

In process cost accounting, the costs of direct materials and direct labor are charged directly to:

0%
14,166 units
0%
False
0%
expected to increase by 32%
0%
processing departments

The following production data were taken from the records of the Finishing Department for June:Inventory in process, 6-1, 25% completed 1,500 unitsTransferred to finished goods during June 5,000 unitsEquivalent units of production during June 5,200 units Determine the number of equivalent units of production in the June 30 Finishing Department inventory, assuming that the first-in, first-out method is used to cost inventories. Assume the completion percentage of 25% applies to both direct materials and conversion costs.

0%
$110,000
0%
.60
0%
2.0
0%
575 units

Given the following costs and activities for Downing Company electrical costs, use the high-low method to calculate Downings's variable electrical costs per machine hour. Costs Machine HoursApril $11,700 15,000May $13,200 17,500June $11,400 14,500

0%
575 units
0%
.60
0%
$24
0%
51000

The two categories of cost comprising conversion costs are:

0%
direct labor and factory overhead
0%
variable costs and fixed costs
0%
Straight-line depreciation on factory equipment
0%
sales mix

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:Product Unit SellingPrice Unit VariableCost Unit ContributionMarginArks $120 $80 $40Bins 80 60 20 What was Carter Co.'s weighted average variable cost?

0%
increased by 640 units
0%
1.4
0%
2.0
0%
64

Department G had 3,600 units, 25% completed at the beginning of the period, 15,000 units were completed during the period, 3,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:Work in process, beginning of period $40,000Costs added during period: Direct materials (10,400 at $8) 83,200 Direct labor 63,000 Factory overhead 25,000 Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the total cost of the units "started and completed" during the period (round unit cost calculations to four decimal places)?

0%
$2.04
0%
$159,145
0%
$9.84 and $9.58
0%
11,580

If fixed costs are $200,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?

0%
10,000
0%
13,400
0%
11,580
0%
False

Department J had no work in process at the beginning of the period, 18,000 units were completed during the period, 2,000 units were 30% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period (Assuming the company uses FIFO and rounds average cost per unit to two decimal places):Direct materials (20,000 at $5) $ 100,000Direct labor 142,300Factory overhead 57,200 Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the departmental work in process inventory at the end of the period?

0%
51,000
0%
74,000 units.
0%
4, 2, 3, 1
0%
$16,438

The Rocky Company reports the following data. Sales $700,000 Variable costs $300,000 Fixed costs $120,000 Rocky Company's operating leverage is:

0%
.60
0%
False
0%
True
0%
1.4

Equivalent production units, usually are determined for

0%
direct materials and conversion costs.
0%
Decreases with increasing production
0%
direct labor and factory overhead
0%
not be determined from the data given

If a business had a capacity of $8,000,000 of sales, actual sales of $5,000,000, break-even sales of $3,500,000, fixed costs of $1,400,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

0%
False
0%
30%
0%
$24
0%
True

Department B had 3,000 units in Work in process tat were 25% completed at the beginning of t period at a cost of $12,500.13,700 units were completed during the period, and 1,700 units were 95% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,The number of equivalent units of production for the period for conversion if the FIFO, is used to cost inventories was:

0%
15,865
0%
$2.04
0%
7,790
0%
15,865.

Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities:On July 1: Beginning inventories 850 units, 60% completeDirect materials cost $5,000Conversion costs $4,000 During July: Number of units started 15,000Direct materials added $155,000Conversion costs added $83,520 On July 31: Ending inventories 1,600 units, 40% complete Using the FIFO method, the cost per equivalent unit for materials used during July was

0%
$10.33
0%
51,000
0%
13,400
0%
$16,438

Given the following cost and activity observations for Taco Company's utilities, use the high-low method to calculate Taco's variable utilities costs per machine hour. Cost Machine Hours May $8,300 15,000 June 10,400 20,000 July 7,200 12,000 August 9,500 18,000

0%
$0.40
0%
$24,750
0%
False
0%
variable cost

Department S had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900.The total cost of units completed during the period were:

0%
15,865.
0%
$117,000
0%
$1,200,000
0%
$2.04

Cost-volume-profit analysis cannot be used if which of the following occurs?

0%
direct labor and factory overhead
0%
variable costs and fixed costs
0%
Decreases with increasing production
0%
Costs cannot be properly classified into fixed and variable costs

If Department K had 2,000 units, 45% completed, in process at the beginning of the period, 12,000 units were completed during the period, and 1,200 units were 40% completed at the end of the period, what was the number of equivalent units of production for the period if the first-in, first-out method is used to cost inventories?

0%
51,000
0%
7,790
0%
11,580
0%
$1,200,000

Equivalent production units, usually are determined for direct materials and conversion costs. In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?

0%
Debit Work in Process--Dept. B; credit Work in Process--Dept. A.
0%
Remains constant with changes in the activity level
0%
True
0%
Costs cannot be properly classified into fixed and variable costs

The following unit data were assembled for the assembly process of the Super Co. for the month of June. Direct materials are added at the beginning of the process. Conversion costs are added uniformly over the production process. The company uses the FIFO process. UnitsBeginning work in process 5,000 (60% complete) Units started in September 51,000Ending work in process 4,000 (30% complete) The number of equivalent units produced with respect to direct materials costs is:

0%
10,000
0%
51,000
0%
29,000
0%
$117,000

Costs that remain constant in total dollar amount as the level of activity changes are called:

0%
14100 units
0%
expected to increase by 32%
0%
sales mix
0%
fixed costs

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $100,000, $125,000, and $150,000 respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000 and work in process at the end of the period totaled $60,The journal entry to record the flow of costs into Department 2 during the period for direct materials is:

0%
debit: Work in process--Department 2 $60,000credit: Wages Payable $60,000
0%
Work in Process--Department 2 390,000 Work in Process--Department 1 390,000
0%
Machine operator's wages (direct labor)
0%
Fixed costs are constant in total, and variable costs are constant per unit

Variable costing is useful to managers for all but the following:

0%
product pricing
0%
True
0%
variable costs
0%
direct materials and conversion costs.

Department A had 4,000 units in work in process that were 60% completed as to labor and overhead at the beginning of the period, 29,000 units of direct materials were added during the period, 31,000 units were completed during the period, and 2,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories.The number of equivalent units of production for material costs for the period was:

0%
29,000
0%
15,865
0%
$159,145
0%
7,790

e debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows:April 1, work in process: Materials cost, 3,000 units $ 7,200 Conversion costs, 3,000 units, 40% completed 6,000Materials added during April, 10,000 units 25,000Conversion costs during April 30,800Goods finished during April, 12,000 units ---April 30 work in process, 1,000 units, 40% completed --- All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The conversion cost per equivalent unit for April is:

0%
$0.40
0%
$3.31
0%
$24750
0%
$2.75

The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows:April 1, work in process: Materials cost, 3,000 units $ 7,500 Conversion costs, 3,000 units, 80% completed 6,000Materials added during April, 10,000 units 29,000Conversion costs during April 35,000Goods finished during April, 11,500 units ---April 30 work in process, 1,500 units, 60% completed --- All direct materials are placed in process at the beginning of the process and the average cost method is used to cost inventories.The materials cost per equivalent unit (to the nearest cent) for April is:

0%
$2.04
0%
1,980
0%
51,000
0%
$2.81

Break-even analysis is one type of cost-volume-profit analysis

0%
True
0%
False

If a company uses a process costing system to account for the costs in its four production departments, how many Work-in-Process will it use?

0%
51000
0%
1.4
0%
False
0%
4

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.The journal entry to record the flow of costs into Department 1 during the period for direct labor is:

0%
Work in Process--Department 1 125,000 Wages Payable 125,000
0%
Work in Process--Department 2 390,000 Work in Process--Department 1 390,000
0%
Debit Work in Process--Dept. B; credit Work in Process--Dept. A.
0%
False

The relative distribution of sales among the various products sold by a business is termed the:

0%
False
0%
An oil refinery
0%
sales mix
0%
True

Calzone Co. has budgeted salary increases to factory supervisors totaling 10%. If selling prices and all other cost relationships are held constant, next year's break-even point will:

0%
not be determined from the data given
0%
expected to increase by 32%
0%
Insurance premiums on factory building
0%
variable costs and fixed costs

Assume that Corn Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $30 and $60 respectively. Corn has fixed costs of $378,The break-even point in units is:

0%
6,000 units
0%
$247,500 increase
0%
$1,200,000
0%
10,500 units

Zipee Inc.'s unit selling price is $90, the unit variable costs are $40.50, fixed costs are $170,000, and current sales are 12,000 units. How much will operating income change if sales increase by 5,000 units?

0%
$24,750
0%
52% and $11 per unit
0%
$247,500 increase
0%
$1,200,000

If a business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year, what are the current year's sales?

0%
$247,500 increase
0%
10,000
0%
$1,200,000
0%
30%

Which of the following describes the behavior of the variable cost per unit?

0%
variable costs and fixed costs
0%
Remains constant with changes in the activity level
0%
Machine operator's wages (direct labor)
0%
Fixed costs are constant in total, and variable costs are constant per unit

For which of the following businesses would a process cost system be appropriate?

0%
direct labor and factory overhead
0%
Paint manufacturer.
0%
fixed costs
0%
Decreases with increasing production

Which of the following is not characteristic of a process cost system?

0%
not be determined from the data given
0%
"What if" or sensitivity analysis
0%
Insurance premiums on factory building
0%
The system accumulates costs per job

If sales are $525,000, variable costs are 56% of sales, and operating income is $50,000, what is the contribution margin ratio?

0%
44%
0%
10,000
0%
increase
0%
True

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?

0%
Debit Work in Process--Dept. B; credit Work in Process--Dept. A.
0%
Work in Process--Department 3 585,000Work in Process--Department 2 585,000
0%
Insurance premiums on factory building
0%
Fixed costs are constant in total, and variable costs are constant per unit

The difference between the current sales revenue and the sales at the break-even point is called the:

0%
variable costs
0%
Equivalent units.
0%
Paint manufacturer.
0%
margin of safety

The four steps necessary to determine the cost of goods completed and the ending inventory valuation in a process cost system are:allocate costs to transferred and partially completed unitsdetermine the units to be assigned costsdetermine the cost per equivalent unitcalculate equivalent units of production The correct ordering of the steps is:

0%
$117,000
0%
$4,000 less
0%
$59,400
0%
4, 2, 3, 1

The following production data were taken from the records of the Finishing Department for June: Inventory in process, 6-1 ( 30% completed) 4,000 unitsCompleted units during June 71,000 unitsEnding inventory (60% complete) 7,000 unitsDetermine the number of conversion equivalent units of production in the June 30 Finishing Department inventory, assuming that the FIFO method is used to cost inventories.

0%
74,000 units.
0%
$3.00
0%
6,000 units
0%
10,500 units

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