Exam I

Question 1

Journal Entry: To record purchase of raw materials

Answer 1

Dr: Raw Materials Inventory
Cr: Accounts Payable

Question 2

Journal Entry: To record raw materials used in production.

Answer 2

Dr: Work in Process Inventory (WIP)
Cr: Raw Materials Inventory

Question 3

Journal Entry: To record production workers’ wages.

Answer 3

Dr: Work in Process Inventory (WIP)
Cr: Wages Payable

Question 4

Journal Entry: To apply mfg ovhd to WIP Inventory.

Answer 4

Dr: Work in Process Inventory
Cr: Manufacturing Overhead

Question 5

Journal Entry: Transfer completed products into Finished Goods.

Answer 5

Dr: Finished Goods Inventory
Cr: Work in Process Inventory

Question 6

Journal Entry: To record the cost of products sold to customers.

Answer 6

Dr: Cost of Goods Sold
Cr: Finished Goods Inventory

Question 7

How do you calculate over or under applied overhead for the year?

Answer 7

Need the Predetermined Overhead Rate.

Predetermined Overhead Rate: Est Mfg Ovd/ Est allocation base

Overhead applied = Predetermined Ovhd Rate X Actual Allocation Base Incurred

THEN: Overhead Applied - Actual Overhead = Under or Over Applied

Question 8

How to calculate Predetermined Overhead Rate?

Answer 8

Estimated Manufacturing Ovhd Cost / Estimated Allocation Base

Question 9

How to calculate Overhead APPLIED ?

Answer 9

Predetermined Ovhd Rate X Actual Allocation Base Incurred.

Question 10

Cost Behavior: Total Variable Cost:

Answer 10

Total Variable Cost increases and decreases in proportion to activity.

Question 11

Cost Behavior: Variable Cost Per Unit:

Answer 11

Variable cost per unit is constant.

Question 12

Cost Behavior: Total Fixed Cost:

Answer 12

Total fixed cost remains constant even when activity changes.

Question 13

Cost Behavior: Fixed Cost Per Unit:

Answer 13

Fixed cost per unit decreases as the activity level rises and increases as the activity level falls.

Question 14

What is the cost differences between Traditional Costing and ABC costing?

Answer 14

High Volume of Product - Become Cheaper.

Lower Volume Products - Become more Expensive.

Question 15

How to calculate COGM?

Answer 15

Finished Goods Inventory at Beginning of Year or WIP + DL + DM + Mfg Ovd - Ending Goods in Process Inventory or WIP = COGM

Question 16

General hospital administration costs are ____ costs of the radiology lab

Answer 16

Indirect Cost

Question 17

Cost of the steering wheel purchased by Ford from a supplier is a

Answer 17

Direct Cost

Question 18

A hospitals radiology department, salaries of the radiologists and x-ray film used is a ___ cost?

Answer 18

Direct Cost

Question 19

Factory’s Managers salaries at a multi-product plant is a ___ cost to any one product?

Answer 19

Indirect Cost

Question 20

Define Product Cost

Answer 20

Product Costs are only incurred if products are acquired or produced.

Question 21

Define Period Cost

Answer 21

Period Costs are associated over the passing of time and even if the business has no production they would still incur period costs.

Question 22

How do you calculate an activity rate for a activity cost pool?

Answer 22

Estimated Amount of Cost Pool/Estimated Amount of Allocation Base

Question 23

How do you calculate OVHD cost assigned to a product using ABC costing?

Answer 23

Ovhd Rate X Actual Allocation Base

+ All Cost Pools = Total Ovhd Cost for product.

Question 24

Journal Entry: Incurred Direct Labor Building a Product?

Answer 24

Dr: Work in Process (WIP)
Cr: Wages Payable

Question 25

How do you calculate contribution margin?

Answer 25

Net Revenue - Variable Expenses = CM

Question 26

Machine setup is a a ___ level activity?

Answer 26

Batch Level Activity

Question 27

Production Scheduling is a ___ level activity?

Answer 27

Batch Level Activity

Question 28

Research and development is a ___ level activity?

Answer 28

Product Level Activity

Question 29

Machine Maintenance is a ____ level activity?

Answer 29

Facility Level Activity

Question 30

Product design is a ___ level activity?

Answer 30

Product Level Activity

Question 31

Salary for stores managers is a __ level activity?

Answer 31

Facility Level Activity

Question 32

What costs do we include for external reporting purposes?

Answer 32

Direct Materials, Direct Labor, Manufacturing Overhead.

Question 33

In activity-based costing, unit product costs computed for external financial reports do NOT include: A. direct materials B. direct labor C. manufacturing overhead D. selling costs

Answer 33

D. Selling Costs

Question 34

Overapplied Overhead does what to COGS?

Answer 34

Cr: COGS & Lowers it.

Question 35

Underapplied Overhead does what to COGS?

Answer 35

Dr: COGS & Increases it.

Question 36

Cost Behavior - if we increase production what happens to Total Fixed Costs?

Answer 36

Remains Constant

Question 37

Cost Behavior - if we decrease production, what happens to Fixed Cost Per Unit?

Answer 37

Fixed Cost Per Unit Increases

Question 38

Cost Behavior - if we increase production, what happens to Variable Cost Per Unit?

Answer 38

Remains Constant

Question 39

Cost Behavior - if we decrease production what happens to our Total Variable Cost?

Answer 39

It Decreases

Question 40

ACTUAL: 1. If the level of activity increases within the relevant range: A) variable cost per unit and total fixed costs also increase. B) fixed cost per unit and total variable cost also increase. C) total cost will increase and fixed cost per unit will decrease. D) variable cost per unit and total cost also increase.

Answer 40

C) total cost will increase and fixed cost per unit will decrease.

Question 41

How do you calculate total of the Mfg Ovd?

Answer 41

Total of all indirect costs incurred during period. Depreciation, Property Taxes, Rent, Salaries of maintenance, manufacturing. Supplies not direct.y associated with products, Utilities, Janitorial Staff wages.

Question 42

Wheels going on a car is a ___ level activity?

Answer 42

Unit Level Activity

Question 43

Mixed Costs have

Answer 43

Different total across different volume and different per unit across different volume.

Question 44

What will you write on your exam when you see The Best Estimate of The Total Cost to Manufacture 10,900 amount of units is closet to?

Answer 44

EXEMPT - Mark E

Question 45

Using TRADITIONAL COSTING, what is the predetermined overhead rate?

Answer 45

Estimated Manufacturing Overhead/Estimated Allocation Base

Question 46

How do you calculate an Activity Rate for an activity cost pool?

Answer 46

Estimated Activity Amount/Estimated Allocation Base for it

Question 47

Which of the following is an example of a sunk cost? A. The amount a company pays for labor to produce its products. B. The amount a company originally paid for specialized equipment for a plant. C. The amount for which a company could rent equipment it owns to another company. D. The opportunity cost of a company owner's time.

Answer 47

B. The amount a company originally paid for specialized equipment for a plant.

Question 48

Administrative wages and salaries $92,000 Direct materials $176,000 Sales staff salaries $32,000 Factory depreciation $52,000 Corporate headquarters building rent $47,000 Indirect labor $23,000 Marketing $136,000 Direct labor $82,000 The total of the period costs listed above for December is: A. $82,000 B. $340,000 C. $389,000 D. $307,000

Answer 48

D. $307,000 - Admin wages & salaries - Sales Staff Salaries - Headquarters Rent - Marketing

Question 49

Define COGM

Answer 49

Calculates total value of inventory that was produced during the period ready for sale. Total amount of expenses incurred to turn WIP into Finished Goods