Flashcards in Module 17 Deck (33)
T/F: The process of assigning cost to inventories as they are converted from raw material to finished goods is called Product costing.
T/F: In a manufacturing organization, manufacturing supplies costs are recorded as expenses as they are used.
Which of the following inventories results in recording an expense when its asset account is reduced in the accounting system?
A. Raw materials
B. Work in process
C. Finished goods inventory
D. Both A and B
Finished goods inventory
Partially completed goods that are in the process of being converted into a finish product are defined as:
A. Work-in-process inventories
B. Conversion inventories
C. Raw materials inventories
D. Operational inventories
T/F: When goods are transferred from the factory to the finished goods warehouse, Work-In-Process is reduced and Cost of Goods Sold Expense is recorded.
T/F: In financial accounting, the term period costs refers to all expired costs not related to the manufacturing function, and product costs refers to all costs incurred during the period related to the manufacturing function
T/F: All depreciation on factory assets is recorded as an expense of the period
Which of the following views of product costs is consistent with financial reporting requirements?
A. Product costs are all costs incurred in the process of manufacturing products, even if they are only indirectly related to the production process.
B. Product costs are all labor and materials costs that are incurred in the process of manufacturing products.
C. Product costs are all costs directly incurred in the manufacturing and selling of the product.
D. Product costs include all costs incurred throughout the value chain.
Product costs are all costs incurred in the process of manufacturing products, even if they are only indirectly related to the production process.
Which of the following statements most accurately describes financial accounting’s view of period costs?
A. Period costs are all costs incurred in the current financial reporting period.
B. Period costs are all direct costs incurred in the current financial reporting period.
C. Period costs are all non-manufacturing expenses incurred in the current financial reporting period.
D. Period costs are a component of fully absorbed costs.
Period costs are all non-manufacturing expenses incurred in the current financial reporting period.
How is depreciation on the manufacturing building and equipment classified in financial reporting?
A. As an irrelevant cost because it has already been incurred
B. As a current expense
C. As part of the cost of the products produced
D. As a period cost
As part of the cost of the products produced
When is the cost of manufacturing equipment recognized as an expense?
A. When equipment depreciation is recorded
B. When inventory processing is completed and finished goods are recorded
C. When finished goods inventory is sold
D. None of the above
When finished goods inventory is sold
Which of the following costs are treated as part of the cost of product?
A. Wages of plant security guards
B. Insurance on the plant building and equipment
C. Depreciation on the kitchen sink in the plant cafeteria
D. All of the above are product costs
All of the above are product costs
Which of the following is not a period cost?
A. The president’s salary
B. Sales commissions
C. Depreciation on the mainframe computer in the Information Systems Department
D. Subsidy of the plant cafeteria
Subsidy of the plant cafeteria
The method of accounting for inventory that assigns all manufacturing costs to inventory is sometimes referred to as:
A. Prime costing
C. The weighted average cost method
D. Absorption costing
Which of the following is one of the three major components of product costs?
A. Research and development expenses
B. Manufacturing overhead
C. Marketing costs related to specific products
D. Selling, general and administrative expenses
Which of the following is the most reasonable cost driver for direct material costs?
A. The quantity of direct materials used
B. Purchasing department activity
C. Direct labor hours
D. Square footage of the warehouse used to store raw materials
The quantity of direct materials used
T/F: One of the reasons for using a predetermined overhead rate is that it smooths out seasonal costs over the entire accounting period.
T/F: If costs are accurately estimated when establishing an annual predetermined overhead rate, there should never be an overapplied or underapplied overhead balance
A single product produced by a continuous manufacturing process is an example of:
A. Process management
B. Job Costing
C. Process manufacturing
D. Process reengineering
When a job is completed in a job order costing system, the final cost of the job is determined by summing up:
A. The work-in-process inventory subsidiary ledgers
B. The statement of costs of goods manufactured
C. The finished goods activities report
D. The various costs on the job cost sheet
The various costs on the job cost sheet
Which of the following is an appropriate setting for job order production?
A. Products are produced in batches of identical units.
B. Products are produced in single units.
C. Neither A nor B are examples of job order production.
D. Both A and B are examples of job order production.
Both A and B are examples of job order production.
Which of the following is not a record required for operating a job cost system?
A. Production orders
B. Job cost sheets
C. Equivalent units calculations
D. Materials requisition forms
Equivalent units calculations
For which of the following products would job order costing be least likely to be used?
A. Residential building
B. Textbook printing
C. Mortgage loan processing
D. Newsprint paper Manufacturing
Newsprint paper Manufacturing
For which of the following manufactured products would job costing be more appropriate than process costing?
B. Designer dresses sold to celebrities
D. Liquid soap
Designer dresses sold to celebrities
T/F: A job costing system is a cost system designed to accumulate the manufacturing costs of producing unique jobs, such as building a house or a navel air craft carrier, but would not include producing a batch of several identical units of product, such as 100 chairs in a furniture factory
T/F: In a job costing system, costs are accumulated in a separate Work-in-Process account for each job
The purpose of the statement of cost of goods manufactured is to:
A. Calculate the cost of goods transferred to finished goods inventory during the period.
B. Calculate cost of goods sold.
C. Calculate net income.
D. Both A and B
Calculate the cost of goods transferred to finished goods inventory during the period
Which of the following results in an increase in work-in-process inventory?
A. Purchasing raw materials
B. Using direct manufacturing labor hours
C. Finishing a job in process
D. Selling finished goods inventory
Using direct manufacturing labor hours
When finished goods are sold, there is an increase in which of the following accounts?
A. Cost of Goods Sold
B. Cost of Goods Manufactured
C. Finished Goods Inventory
Cost of Goods Sold