03 Jan •Product cost.

ACC650 Managerial Accounting

Week 1 Quiz

•A custom-home builder would likely utilize:

•job-order costing.

•process costing.

•mass customization.

•process budgeting.

•joint costing.

Harrison Industries began July with a finished-goods inventory of $48,000. The finished-goods inventory at the end of July was $56,000 and the cost of goods sold during the month was $125,000. The cost of goods manufactured during July was:

•$104,000.

•$125,000.

•$117,000.

•$133,000.

•None of the answers is correct.

•Shu Corporation recently computed total product costs of $567,000 and total period costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company’s administrative assistant. On the basis of this information, Shu’s income statement should reveal operating expenses of:

•$35,000.

•$420,000.

•$455,000.

•$567,000.

•$602,000.

•Which of the following is not an element of competency?

•To develop appropriate knowledge about a particular subject.

•To perform duties in accordance with relevant laws.

•To perform duties in accordance with relevant technical standards.

•To refrain from engaging in an activity that would discredit the accounting profession.

•To prepare clear reports after an analysis of relevant and reliable information.

•Metalica Company applies overhead based on machine hours. At the beginning of 20×1, the company estimated that manufacturing overhead would be $500,000, and machine hours would total 20,000. By 20×1 year-end, actual overhead totaled $525,000, and actual machine hours were 25,000. On the basis of this information, the 20×1 predetermined overhead rate was:

•$0.04 per machine hour.

•$0.05 per machine hour.

•$20 per machine hour.

•$21 per machine hour.

•$25 per machine hour.

•The value chain of a manufacturer would tend to include activities related to:

•manufacturing.

•research and development.

•product design.

•marketing.

•all of the answers are correct.

•Farrina Manufacturing uses a predetermined overhead application rate of $8 per direct labor hour. A review of the company’s accounting records for the year just ended discovered the following:

Underapplied manufacturing overhead: $7,200

Actual manufacturing overhead: $392,000

Budgeted labor hours: 50,000

Simone’s actual labor hours worked totaled:

•48,100.

•49,100.

•49,900.

•50,900.

•cannot be determined based on the information presented.

•Conversion costs are:

•direct material, direct labor, and manufacturing overhead.

•direct material and direct labor.

•direct labor and manufacturing overhead.

•prime costs.

•period costs.

•Under- or overapplied manufacturing overhead at year-end is most commonly:

•charged or credited to Work-in-Process Inventory.

•charged or credited to Cost of Goods Sold.

•charged or credited to a special loss account.

•prorated among Work-in-Process Inventory, Finished-Goods Inventory, and Cost of Goods Sold.

•ignored because there is no effect on the Cash account.

•Strategic cost management is:

•the process of determining cost drivers.

•the recognition of the importance of cost relationships among the activities in the value chain.

•the process of managing cost relationships to the firm’s advantage

•cost-causing factors.

•two of the answers are correct.

•Which of the following employees would not be classified as indirect labor?

•Plant Custodian.

•Salesperson.

•An employee that packs products for shipment.

•Plant security guard.

•A line employee that produces parts for chairs using a saw and template.

•Which of the following is not a drawback of actual costing?

•Costs are subject to cyclicality.

•Costs avoid the estimation associated with predetermined overhead rates.

•Costs may not be evenly spread throughout the year due to large payments for overhead costs.

•Actual overhead costs may only be available after a production period has passed.

•All of these are drawbacks of actual costing.

•Gonzales Company has developed an integrated system that coordinates the flow of all goods, services, and information into and out of the organization, working with raw material vendors as well as customers to improve service and reduce costs. The firm is said to be using:

•participative management.

•top-down management.

•strategic cost management.

•supply chain management.

•management by objectives (MBO).

•Guaranteed Appliance Co. produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $500,000; assembly-line workers, $180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Guaranteed’s direct labor cost was:

•$110,000.

•$180,000.

•$155,000.

•$235,000.

•$735,000.

•How should a company that manufactures automobiles classify its partially completed vehicles?

•Supplies.

•Raw materials inventory.

•Finished goods inventory.

•Cost of goods manufactured.

•Work-in-process inventory.

•In order for a company to achieve a sustainable competitive advantage, it must:

•perform one or more activities in the value chain at the same quality level as its competitors.

•perform all activities in the value chain at the same quality level as its competitors.

•perform its value chain activities at a higher quality level than one of its competitors.

•perform at lower quality and higher cost than competitors.

•two of the answers are correct.

•Given the following information, what is the cost of unused capacity? Cost of material supplied is $8,600; Cost of material used is $8,000; Cost of material used per shelf is $8; Cost of material supplied per shelf is $8.60.

•$600.

•$6,000.

•$0.60.

•$1,000.

• There is no unused capacity.

•When selecting a volume-based cost driver, the goal is to:

• choose an input that varies in a pattern that is most similar to the pattern with which overhead costs vary.

•choose a period where a cost driver is at a low level so that overhead costs will be at a low level.

•choose labor hours for a computer-integrated manufacturing processes.

•eliminate complexity by using a plantwide overhead rate for all of a firm’s products.

•None of these are goals when selecting a volume-based cost driver.

•What would the cost of fire insurance for a manufacturing plant generally be categorized as?

•Prime cost.

•Direct material cost.

•Period cost.

•Direct labor cost.

•Product cost.

•The estimates used to calculate the predetermined overhead rate will virtually always:

•prove to be correct.

•result in a year-end balance of zero in the Manufacturing Overhead account.

•result in overapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amount.

•result in underapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amount.

•result in either underapplied or overapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amount.