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Principles of Accounting, Volume 2: Managerial Accounting

Multiple Choice

Principles of Accounting, Volume 2: Managerial AccountingMultiple Choice
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1.

LO 5.1Which of the following production characteristics is better suited for process costing and not job order costing?

  1. Each product batch is distinguishable from the prior batch.
  2. The costs are easily traced to a specific product.
  3. Costs are accumulated by department.
  4. The value of work in process is the direct material used, the direct labor incurred, and the overhead applied to the job in process.
2.

LO 5.1A process costing system is most likely used by which of the following?

  1. airplane manufacturing
  2. a paper manufacturing company
  3. an accounting firm specializing in tax returns
  4. a hospital
3.

LO 5.1Which of the following is a prime cost?

  1. direct labor
  2. work in process inventory
  3. administrative labor
  4. factory maintenance expenses
4.

LO 5.1Which of the following is a conversion cost?

  1. raw materials
  2. direct labor
  3. sales commissions
  4. direct material used
5.

LO 5.1During production, how are the costs in process costing accumulated?

  1. to cost of goods sold
  2. to each individual product
  3. to manufacturing overhead
  4. to each individual department
6.

LO 5.2Which is not needed to compute equivalent units of production?

  1. the percentage of completion for inventory still in process
  2. the number of units transferred out
  3. the number of units started and completed
  4. the material cost per unit
7.

LO 5.2What is the cost of direct labor if the conversion costs are $330,000 and manufacturing overhead is $275,000?

  1. $55,000
  2. $275,000
  3. $330,000
  4. $605,000
8.

LO 5.2What is the conversion cost to manufacture insulated travel cups if the costs are: direct materials, $17,000; direct labor, $33,000; and manufacturing overhead, $70,000?

  1. $16,000
  2. $50,000
  3. $103,000
  4. $120,000
9.

LO 5.2Which of the following lists contains only conversion costs for an inflatable raft manufacturing corporation?

  1. vinyl for raft, machine operator, electricity, insurance
  2. machine operator, electricity, depreciation, plastic for air valves
  3. machine operator, electricity, depreciation, insurance
  4. vinyl for raft, electricity, insurance, plastic for air valves
10.

LO 5.3Direct material costs $3 per unit, direct labor costs $5 per unit, and overhead is applied at the rate of 100% of the direct labor cost. What is the value of the inventory transferred to the next department if beginning inventory was 2,000 units; 9,000 units were started; and 1,000 units were in ending inventory?

  1. $1,000
  2. $13,000
  3. $130,000
  4. $20,000
11.

LO 5.3Beginning inventory and direct material cost added during the month total $55,000. What is the value of the ending work in process inventory if beginning inventory was 2,000 units; 9,000 units were started; and 1,000 units were in ending inventory?

  1. $1,000
  2. $5,000
  3. $50,000
  4. $55,000
12.

LO 5.3The initial processing department had a beginning inventory of 750 units and an ending inventory of 1,350 units, and it started 9,500 units into production. How many were transferred out to the next department?

  1. 750
  2. 1,350
  3. 8,900
  4. 10,250
13.

LO 5.3There were 1,000 units in ending inventory after transferring 16,000 units to finished goods inventory. If the beginning inventory was 2,000 units, how many units were started in process?

  1. 1,000
  2. 2,000
  3. 15,000
  4. 17,000
14.

LO 5.4The costs to be accounted for consist of which of the following?

  1. costs of the units added during the period
  2. costs of the units in ending inventory
  3. costs of the units started and transferred during the period
  4. costs of the units in the beginning inventory and costs added during the period
15.

LO 5.4Which of the following is the step in which materials, labor, and overhead are detailed?

  1. determining the units to which costs are assigned
  2. determining the equivalent units of production
  3. determining the cost per equivalent units
  4. allocating the costs to the units transferred out and the units partially completed
16.

LO 5.5The journal entry to record the $500 of work in process ending inventory that consists of $300 of direct materials, $50 of manufacturing overhead, and $150 of direct labor is which of the following?


  1.  Debit Work in Process Inventory, Credit Accounts Payable 500 (When added to the process).

  2. Debit work in Process Inventory 500, credit Materials Inventory 300, Labor Payable 150, Manufacturing Overhead 50 (As incurred or applied).

  3. Debit Cost of Goods Sold and debit Work in Process Inventory 500 (When transferred).

  4. Debit Accounts Payable and credit Work in Process Inventory 500 (When added to the process).
17.

LO 5.5Assigning indirect costs to departments is completed by ________.

  1. applying the predetermined overhead rate
  2. debiting the manufacturing costs incurred
  3. applying the costs to manufacturing overhead
  4. applying the costs to work in process inventory
18.

LO 5.5In a process costing system, which account shows the overhead assigned to the department?

  1. cost of goods sold
  2. finished goods inventory
  3. raw material inventory
  4. work in process inventory
19.

LO 5.5In a process cost system, factory depreciation expense incurred is debited to ________.

  1. finished goods inventory
  2. work in process inventory
  3. manufacturing overhead
  4. cost of goods sold
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