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StudentID:22039100

Exam:061400RR-CostConceptsandTypesofCosting

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Questions1to20:
Selectthebest
answertoeach
question.Notethat
aquestionand
itsanswersmay
besplitacross
apagebreak,sobesurethatyouhaveseentheentirequestionandalltheanswers
beforechoosingananswer.

1.
Ifacompanywantstodecrease
itstotalquality
cost,itwouldusuallybebesttospendmoremoneyon
A.
internal and externalfailure.
B.
appraisal and externalfailure.
C. prevention and internalfailure.
D. prevention.

2. AtthebeginningofDecember,Sneeden
Corporationhad$32,000
ofrawmaterialsonhand.Duringthemonth,theCorporationpurchased
anadditional$71,000
ofrawmaterials.DuringDecember,
$75,000ofrawmaterialswasrequisitionedfromthestoreroomforuseinproduction.Whatarethetotalcredits
enteredin the
Raw Materials account during the month ofDecember?
A.$75,000 B.$71,000 C.$32,000 D.$103,000

3.
Which of the following is classified as a
direct laborcost?
A.
Neither wages of assembly-line workers nor a
factorysupervisor
B.
Wagesofafactorysupervisorbutnotassembly
lineworkers
C.
Wages of assembly-line workers but not a
factorysupervisor
D.
Both wages of assembly-line workers and a
factorysupervisor

4.
Under the FIFO method, unit
costswould
A. result from costs in the beginning inventory
being added in with current periodcosts.
B. contain some element of cost from the priorperiod.
C. not include costs incurred to complete
beginninginventory.
D. not contain some elements of cost from the
priorperiod.

5.
Supply costs at Chobot
Corporation’s chain of gyms are listedbelow:

Client-Visits SupplyCost

January

12,183

$26,642

February

12,408

$26,853

March

12,232

$26,675

April

12,579

$26,054

May

12,527

$26,988

June

12,608

$27,064

July

12,143

$26,585

August

12,005

$26,454

September

11,944

$26,393

Managementbelievesthatsupplycostisamixedcostthatdepends
onclient-visits.Usethehigh-low
methodtoestimatethevariableandfixedcomponentsofthiscost.Computethevariablecomponent
first,roundingofftothenearest
wholecent.Thencomputethefixedcomponent,roundingofftothenearest
whole dollar. These estimates would be closest to which value?
A.
$1.01 per client-visit; $14,330 permonth
B.
$0.99 per client-visit; $14,607 permonth
C.
$2.18 per client-visit; $26,745 permonth
D. $1.04 per client-visit; $13,949 permonth

6.
In describing the cost
equation, Y = a + bX, what is””a””?
A.
The total fixedcost
B.
The independent variable level ofactivity
C.
The variable cost per unit ofactivity
D.
The dependent variablecost

7. DubeySurgical
Hospitalusesthedirectmethodtoallocate
servicedepartmentcoststooperatingdepartments.The
hospitalhastwo
servicedepartments,Telecommunicationsand
Administration,andtwooperating departments,
Surgery andRecovery.

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TelecommunicationsDepartmentcosts
areallocatedonthebasis
ofthenumberoftelecommunicationsports
indepartmentsand
AdministrationDepartmentcosts
areallocatedonthebasis
ofemployees.Thetotal
SurgeryDepartmentcostafterservice
departmentallocationsisclosesttowhichvalue?
A.$478,133 B.$484,059 C.$481,336 D.$473,169

8.
Whichofthefollowing
costs,ifexpressed
onaperunitbasis,wouldbeexpectedtodecreaseasthelevelof production and salesincreases?
A.
Variable manufacturingoverhead
B.
Fixed manufacturingoverhead
C. Salescommissions
D. Directmaterials

9. LaurieCorporationusestheFIFOmethodinitsprocess
costingsystem.DepartmentAisthefirststageofLaurieCorporation’sproductionprocess.Thefollowinginformationisavailableforconversioncosts
forthe month of May for
DepartmentA:

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Howmanyaretheequivalentunitsofproductionforconversioncosts
forthemonth?
A.
44,000units
B.
38,000units
C.
36,000units
D.
42,000units

10. Giventhecostformula,
Y=$7,000+$1.80X,
whatwouldbethetotal
costforanactivitylevel
of4,000units?
A.$200 B.$7,200 C.$7,000
D.$14,200

11.
Electrical costs at one of
Kantola Corporation’s factories are listedbelow:

Machine-HoursElectricalCost

February

3,570

$36,405

March

3,580

$36,493

April

3,553

$36,302

May

3,627

$36,833

June

3,625

$36,800

July

3,565

$36,366

August

3,548

$36,237

September

3,542

$36,213

October

3,593

$36,577

Managementbelievesthatelectricalcostisamixedcostthatdependsonmachine-hours.Usethehigh-lowmethodtoestimatethevariableandfixedcomponentsofthiscost.
Computethevariable
componentfirst,roundingofftothenearest
wholecent.Thencomputethefixedcomponent,roundingofftothenearestwholedollar.What
wouldtheseestimatesbeclosestto?
A. $0.14 per machine-hour; $36,336 permonth
B. $7.48 per machine-hour; $9,708 permonth
C. $10.19 per machine-hour; $36,470 permonth
D. $7.29 per machine-hour; $10,392 permonth

12.
AdamsCorporationmakestwoproducts:ProductAandProductB.Annualproductionandsalesare
500unitsofProductAand900unitsofProductB.Thecompany
hastraditionallyuseddirectlabor-hoursasthebasisforapplying
allmanufacturingoverhead
toproducts.Product
Arequires0.4directlabor-hoursperunitandProductBrequires0.5directlabor-hoursperunit.Thetotalestimated
overheadfornextperiodis$67,522.
Thecompanyisconsideringswitchingtoanactivity-basedcosting
systemforthepurposeofcomputingunitproductcostsforexternalreports.Thenewactivity-basedcostingsystemwouldhavethreeoverheadactivity
costpoolsActivity1,Activity2,andGeneralFactorywithestimatedoverhead costs and expected activity as follows:

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(Note:TheGeneralFactory
activitycostpool’scostsareallocatedonthebasisofdirectlabor-hours.)TheoverheadcostperunitofProduct
Aunderthetraditionalcosting
systemisclosest
towhichvalue?
A.$41.55 B.$21.94 C.$3.56
D.$5.53

13.
PujolChildren’sClinicallocatesservice
departmentcoststooperatingdepartmentsusingthestep-downmethod.The
clinichastwo
servicedepartments,AdministrationandInformationTechnology(IT),andtwooperatingdepartments,PrenatalandPediatric.Dataconcerningthosedepartmentsarepresentedinthechartbelow.

.0/msohtmlclip1/01/clip_image005.jpg””>

Administrationcostsareallocated
firstonthebasisofemployeesandITcostsareallocated
secondonthebasis
ofPCs.ThetotalPediatricDepartmentcostafter
allocationsisclosest
towhichvalue?
A.$361,823B.$370,659C.$328,202D.$370,790

14.
What does overapplied
manufacturing overheadmean?
A.
Theestimatedmanufacturingoverheadcostwaslessthantheapplied
manufacturingoverheadcost.
B.
Theestimatedmanufacturingoverheadcostwaslessthantheactualmanufacturingoverhead
cost.
C.
Theappliedmanufacturingoverheadcostwaslessthantheactual
manufacturingoverheadcost.
D. Theappliedmanufacturingoverheadcostwasgreaterthantheactualmanufacturingoverhead
cost.

15. DuringOctober,
BeidlemanInc.transferred$52,000fromWorkinProcess
toFinishedGoodsandrecordedaCostofGoodsSoldof$55,000.
Thejournalentries
torecordthesetransactionswouldincludea

A.
credit to Work in Process of$52,000.
B.
credit to Finished Goods of$52,000.
C.
credit to Cost of Goods Sold of$55,000.
D.
debit to Finished Goods of$55,000.

16. Thefollowingtablepresentsinformationaboutunitsprocessedandprocessingcosts
incurredduringarecent
month in the Refining Department of a manufacturingcompany.

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Thebeginningworkinprocess
inventoryincluded$11,000
ofconversioncost.
Duringthemonth,
theDepartmentincurredanadditional$290,000
inconversioncosts.
Assumingthatthecompany
usestheweighted-averagecostmethod,whatisthecostperequivalentunitforconversioncostsforthemonthintheBlendingDepartment?Roundtothenearestcent.
A.$2.53 B.$2.50 C.$2.44
D.$2.55

17.
Eagle
Company’s quality cost reportis to be basedon the followingdata:

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Whatwouldbethetotal
preventioncostappearingonthequality
costreport?
A.$48,000 B.$77,000 C.$86,000 D.$57,000

18.
EpolitoCorporationincurred$87,000ofactualManufacturingOverheadcostsduring
September.Duringthesameperiod,
theManufacturingOverhead
appliedtoWorkinProcess
was$89,000.Thejournalentry
torecordtheincurrenceoftheactual
ManufacturingOverheadcosts
wouldincludea
A. debit to Work in Process of$89,000.
B. credit to Manufacturing Overhead of$87,000.
C. debit to Manufacturing Overhead of$87,000.
D. credit to Work in Process of$89,000.

19.
Job593wasrecently
completed.Thefollowing
datahavebeenrecordedonitsjobcostsheet:

.0/msohtmlclip1/01/clip_image010.jpg””>

TheCorporationappliesmanufacturingoverhead
onthebasisofmachine-hours.Thepredeterminedoverheadrateis$14permachine-hour.Whatamountwouldbethetotalcostrecordedonthejobcostsheet for Job593?
A.$6,705 B.$4,255 C.$3,219 D.$5,249

20.
NarverCorporationusestheweighted-averagemethodinitsprocesscosting
system.Operatingdataforthe Lubricating Department
for the month of October appearbelow:

.0/msohtmlclip1/01/clip_image011.jpg””>

Whatwerethe
equivalentunitsfor
conversioncostsintheLubricatingDepartmentforOctober?
A.47,780
B.37,100
C.43,100
D.44,780

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End ofexamExam:061400RR-CostConceptsandTypesofCosting.0/msohtmlclip1/01/clip_image001.gif””>Whenyouhavecompletedyourexamandreviewedyouranswers,clickSubmitExam.Answers
willnotberecordeduntilyouhitSubmitExam.Ifyouneedtoexitbeforecompletingtheexam,click
CancelExam.Questions1to20:
Selectthebest
answertoeach
question.Notethat
aquestionand
itsanswersmay
besplitacross
apagebreak,sobesurethatyouhaveseentheentirequestionandalltheanswers
beforechoosingananswer.1.
Ifacompanywantstodecrease
itstotalquality
cost,itwouldusuallybebesttospendmoremoneyonA.
internal and externalfailure.B.
appraisal and externalfailure.C. prevention and internalfailure.D. prevention.2. AtthebeginningofDecember,Sneeden
Corporationhad$32,000
ofrawmaterialsonhand.Duringthemonth,theCorporationpurchased
anadditional$71,000
ofrawmaterials.DuringDecember,
$75,000ofrawmaterialswasrequisitionedfromthestoreroomforuseinproduction.Whatarethetotalcredits
enteredin the
Raw Materials account during the month ofDecember?A.$75,000 B.$71,000 C.$32,000 D.$103,0003.
Which of the following is classified as a
direct laborcost?A.
Neither wages of assembly-line workers nor a
factorysupervisorB.
Wagesofafactorysupervisorbutnotassembly
lineworkersC.
Wages of assembly-line workers but not a
factorysupervisorD.
Both wages of assembly-line workers and a
factorysupervisor4.
Under the FIFO method, unit
costswouldA. result from costs in the beginning inventory
being added in with current periodcosts.B. contain some element of cost from the priorperiod.C. not include costs incurred to complete
beginninginventory.D. not contain some elements of cost from the
priorperiod.5.
Supply costs at Chobot
Corporation’s chain of gyms are listedbelow:Client-Visits SupplyCostJanuary12,183$26,642February12,408$26,853March12,232$26,675April12,579$26,054May12,527$26,988June12,608$27,064July12,143$26,585August12,005$26,454September11,944$26,393Managementbelievesthatsupplycostisamixedcostthatdepends
onclient-visits.Usethehigh-low
methodtoestimatethevariableandfixedcomponentsofthiscost.Computethevariablecomponent
first,roundingofftothenearest
wholecent.Thencomputethefixedcomponent,roundingofftothenearest
whole dollar. These estimates would be closest to which value?A.
$1.01 per client-visit; $14,330 permonthB.
$0.99 per client-visit; $14,607 permonthC.
$2.18 per client-visit; $26,745 permonthD. $1.04 per client-visit; $13,949 permonth6.
In describing the cost
equation, Y = a + bX, what is””a””?A.
The total fixedcostB.
The independent variable level ofactivityC.
The variable cost per unit ofactivityD.
The dependent variablecost7. DubeySurgical
Hospitalusesthedirectmethodtoallocate
servicedepartmentcoststooperatingdepartments.The
hospitalhastwo
servicedepartments,Telecommunicationsand
Administration,andtwooperating departments,
Surgery andRecovery..0/msohtmlclip1/01/clip_image002.jpg””>TelecommunicationsDepartmentcosts
areallocatedonthebasis
ofthenumberoftelecommunicationsports
indepartmentsand
AdministrationDepartmentcosts
areallocatedonthebasis
ofemployees.Thetotal
SurgeryDepartmentcostafterservice
departmentallocationsisclosesttowhichvalue?A.$478,133 B.$484,059 C.$481,336 D.$473,1698.
Whichofthefollowing
costs,ifexpressed
onaperunitbasis,wouldbeexpectedtodecreaseasthelevelof production and salesincreases?A.
Variable manufacturingoverheadB.
Fixed manufacturingoverheadC. SalescommissionsD. Directmaterials9. LaurieCorporationusestheFIFOmethodinitsprocess
costingsystem.DepartmentAisthefirststageofLaurieCorporation’sproductionprocess.Thefollowinginformationisavailableforconversioncosts
forthe month of May for
DepartmentA:.0/msohtmlclip1/01/clip_image003.jpg””>Howmanyaretheequivalentunitsofproductionforconversioncosts
forthemonth?A.
44,000unitsB.
38,000unitsC.
36,000unitsD.
42,000units10. Giventhecostformula,
Y=$7,000+$1.80X,
whatwouldbethetotal
costforanactivitylevel
of4,000units?A.$200 B.$7,200 C.$7,000D.$14,20011.
Electrical costs at one of
Kantola Corporation’s factories are listedbelow:Machine-HoursElectricalCostFebruary3,570$36,405March3,580$36,493April3,553$36,302May3,627$36,833June3,625$36,800July3,565$36,366August3,548$36,237September3,542$36,213October3,593$36,577Managementbelievesthatelectricalcostisamixedcostthatdependsonmachine-hours.Usethehigh-lowmethodtoestimatethevariableandfixedcomponentsofthiscost.
Computethevariable
componentfirst,roundingofftothenearest
wholecent.Thencomputethefixedcomponent,roundingofftothenearestwholedollar.What
wouldtheseestimatesbeclosestto?A. $0.14 per machine-hour; $36,336 permonthB. $7.48 per machine-hour; $9,708 permonthC. $10.19 per machine-hour; $36,470 permonthD. $7.29 per machine-hour; $10,392 permonth12.
AdamsCorporationmakestwoproducts:ProductAandProductB.Annualproductionandsalesare500unitsofProductAand900unitsofProductB.Thecompany
hastraditionallyuseddirectlabor-hoursasthebasisforapplying
allmanufacturingoverhead
toproducts.Product
Arequires0.4directlabor-hoursperunitandProductBrequires0.5directlabor-hoursperunit.Thetotalestimated
overheadfornextperiodis$67,522.
Thecompanyisconsideringswitchingtoanactivity-basedcosting
systemforthepurposeofcomputingunitproductcostsforexternalreports.Thenewactivity-basedcostingsystemwouldhavethreeoverheadactivity
costpoolsActivity1,Activity2,andGeneralFactorywithestimatedoverhead costs and expected activity as follows:.0/msohtmlclip1/01/clip_image004.jpg””>(Note:TheGeneralFactory
activitycostpool’scostsareallocatedonthebasisofdirectlabor-hours.)TheoverheadcostperunitofProduct
Aunderthetraditionalcosting
systemisclosest
towhichvalue?A.$41.55 B.$21.94 C.$3.56
D.$5.5313.
PujolChildren’sClinicallocatesservice
departmentcoststooperatingdepartmentsusingthestep-downmethod.The
clinichastwo
servicedepartments,AdministrationandInformationTechnology(IT),andtwooperatingdepartments,PrenatalandPediatric.Dataconcerningthosedepartmentsarepresentedinthechartbelow..0/msohtmlclip1/01/clip_image005.jpg””>Administrationcostsareallocated
firstonthebasisofemployeesandITcostsareallocated
secondonthebasis
ofPCs.ThetotalPediatricDepartmentcostafter
allocationsisclosest
towhichvalue?A.$361,823B.$370,659C.$328,202D.$370,79014.
What does overapplied
manufacturing overheadmean?A.
Theestimatedmanufacturingoverheadcostwaslessthantheapplied
manufacturingoverheadcost.B.
Theestimatedmanufacturingoverheadcostwaslessthantheactualmanufacturingoverhead
cost.C.
Theappliedmanufacturingoverheadcostwaslessthantheactual
manufacturingoverheadcost.D. Theappliedmanufacturingoverheadcostwasgreaterthantheactualmanufacturingoverhead
cost.15. DuringOctober,
BeidlemanInc.transferred$52,000fromWorkinProcess
toFinishedGoodsandrecordedaCostofGoodsSoldof$55,000.
Thejournalentries
torecordthesetransactionswouldincludeaA.
credit to Work in Process of$52,000.B.
credit to Finished Goods of$52,000.C.
credit to Cost of Goods Sold of$55,000.D.
debit to Finished Goods of$55,000.16. Thefollowingtablepresentsinformationaboutunitsprocessedandprocessingcosts
incurredduringarecent
month in the Refining Department of a manufacturingcompany..0/msohtmlclip1/01/clip_image006.jpg””>Thebeginningworkinprocess
inventoryincluded$11,000
ofconversioncost.
Duringthemonth,
theDepartmentincurredanadditional$290,000
inconversioncosts.Assumingthatthecompany
usestheweighted-averagecostmethod,whatisthecostperequivalentunitforconversioncostsforthemonthintheBlendingDepartment?Roundtothenearestcent.A.$2.53 B.$2.50 C.$2.44
D.$2.5517.
Eagle
Company’s quality cost reportis to be basedon the followingdata:.0/msohtmlclip1/01/clip_image008.jpg””>Whatwouldbethetotal
preventioncostappearingonthequality
costreport?A.$48,000 B.$77,000 C.$86,000 D.$57,00018.
EpolitoCorporationincurred$87,000ofactualManufacturingOverheadcostsduring
September.Duringthesameperiod,
theManufacturingOverhead
appliedtoWorkinProcess
was$89,000.Thejournalentry
torecordtheincurrenceoftheactual
ManufacturingOverheadcosts
wouldincludeaA. debit to Work in Process of$89,000.B. credit to Manufacturing Overhead of$87,000.C. debit to Manufacturing Overhead of$87,000.D. credit to Work in Process of$89,000.19.
Job593wasrecently
completed.Thefollowing
datahavebeenrecordedonitsjobcostsheet:.0/msohtmlclip1/01/clip_image010.jpg””>TheCorporationappliesmanufacturingoverhead
onthebasisofmachine-hours.Thepredeterminedoverheadrateis$14permachine-hour.Whatamountwouldbethetotalcostrecordedonthejobcostsheet for Job593?A.$6,705 B.$4,255 C.$3,219 D.$5,24920.
NarverCorporationusestheweighted-averagemethodinitsprocesscosting
system.Operatingdataforthe Lubricating Department
for the month of October appearbelow:.0/msohtmlclip1/01/clip_image011.jpg””>Whatwerethe
equivalentunitsfor
conversioncostsintheLubricatingDepartmentforOctober?A.47,780B.37,100C.43,100D.44,780.0/msohtmlclip1/01/clip_image001.gif””>End ofexam”