Review Assessment: Online Assignment One S2 2012 Essay

1.The service department cost allocation method that completely ignores reciprocal services between service departments is called the: Answer Selected Answer: direct method. 2.In order to have a high-quality finished product: Answer Selected Answer: the product’s design specifications must meet customers’ expectations AND the product must meet the standards of its design. 3.The ‘direct method’ ignores the fact that: Answer Selected Answer: some service departments provide services to other service departments 4.Refer to the following data. Direct material used$150 000 Selling costs$5 000 Indirect labour$7 000 Administrative costs$10 000 Depreciation on factory equipment$70 000 Direct labour$40 000 Overtime premiums paid$20 000 Indirect materials$45 000 The product costs are: Answer Selected Answer: $332 000 5.The Casual Furniture Company manufactures outdoor furniture, and incurred the following costs during the month of January. Timber$25 000 Paint$5 000 Glue$500 Wages—assembly personnel$20 000 Wages—factory supervisor$3 500 Factory cleaner’s wages$2 000 Sales commissions$10 000 Administrative staff salaries$4 000 Depreciation—factory equipment$3 000 Depreciation—sales office equipment$1 000 Utilities, insurance—factory$6 000 Utilities, insurance—sales office$2 000 Advertising$8 000 Total costs$90 000 The manufacturing overhead is: Correct Answer: $15 000 6.Cost of Goods Manufactured = Beginning Work in Process + Total Manufacturing Costs – Ending Work in Process. Answer Selected Answer: True 7.When recording inventory in the financial statements, the accounting standards prescribe that the companies use the lower of cost or net realisable value. Answer Selected Answer: True 8.The Lots More Store has a Janitorial Department and a Personnel Department that provide services to three Sales Departments. The Janitorial Department cost is allocated based on space and the Personnel Department cost is allocated based on employees. The following information is available. PersonnelJanitorialSalesSalesSales DeptDept#1#2#3 Budget$45 000$30 000 Space (sq m)4 0001 00020 00030 00050 000 No. of Employees510154530 Using the step-down method, calculate the amount of Janitorial Department cost allocated to Sales Department #2, if the Personnel Department is allocated first. Answer Selected Answer: $10 350 9.Quality of conformance refers to: Answer Selected Answer: the degree to which the product meets its design specifications. 10.Which of the following is not an objective of management accounting? Answer Selected Answer: Providing information for profit and loss statements 11.Appraisal costs refer to costs incurred: Correct Answer: in determining whether defects exist. 12.Leisure Life manufactures a variety of sporting equipment. The firm’s predetermined overhead application rate was 150 per cent of direct labour cost. Job 101 included direct materials of $15 000 and direct labour of $6 000. The manufacturing overhead applied to Job 101 during the year was: Answer Selected Answer: $9 000 13.Which of the following is not a cost of quality? Answer Selected Answer: Productive inefficiency cost 14.If production increases, variable cost will: Correct Answer: remain constant on a per unit basis. 15.The service department cost allocation method that fully accounts for the mutual provision of services between service departments is called the: Answer Selected Answer: reciprocal method. 16.Which of the following statements is correct? Answer Selected Answer: Cost accounting is a subset of management accounting. 17.Richardson & Sons purchased direct material worth $15 000 during the most recent period. At the end of the period the direct material account balance was $6 000 larger than the beginning balance. Cost of goods sold was $150 000. Overhead is applied at 50 per cent of direct labour cost. Other account balances are: BeginningEnding Work in process$75 000$20 000 Finished goods$110 000$60 000 What is the amount of prime cost added to production for the period? Answer Selected Answer: $33 000 18.Product costs comprise: Answer Selected Answer: direct materials, direct labour and manufacturing overhead. 19.The flow of manufacturing costs through the system is: Answer Selected Answer: raw materials inventory; work in process inventory; finished goods inventory; cost of goods sold. 20.Whether a cost is classified as direct or indirect will depend on: Answer Selected Answer: the nature of the cost object AND whether the cost can be economically traced to the cost object. 21.Barrett Industries began the month of June with a finished goods inventory of $15 000. The finished goods inventory at the end of June was $10 000 and the cost of goods sold during the month was $20 000. The cost of goods manufactured during the month of June was: Answer Selected Answer: $15 000 22.In the manufacturing firm, inventories consist of: Answer Selected Answer: raw materials, work in process and finished goods. 23.Which of the following statements is correct in relation to determining whether a cost is direct or indirect? Answer Selected Answer: The wider the definition of the cost object the more costs that will be direct costs. 24.Refer to the following data. Direct material used$150 000 Selling costs$5 000 Indirect labour$7 000 Administrative costs$10 000 Depreciation on factory equipment$70 000 Direct labour$40 000 Overtime premiums paid$20 000 Indirect materials$45 000 The prime costs are: Answer Selected Answer: $190 000 25.A courier company may view kilometres driven as a possible cost driver. Answer Selected Answer: True 26.Rappaport Corporation reported the following data for the month of February: The direct materials cost for February is: Answer Selected Answer: $88,000 27.During the month of August, direct labor cost totaled $13,000 and direct labor cost was 20% of prime cost. If total manufacturing costs during August were $88,000, the manufacturing overhead was: Answer Selected Answer: $23,000 28. Rappaport Corporation reported the following data for the month of February: The adjusted cost of goods sold that appears on the income statement for February is: Answer Selected Answer: $240,000 29.A partial listing of costs incurred at Peggs Corporation during September appears below: The total of the period costs listed above for September is: Answer Selected Answer: $318,000 30.The following data pertain to Harriman Company’s operations during July: The ending finished goods inventory was: Answer Selected Answer: $7,000 31.For the current year, Paxman Company incurred $150,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount of $6,000 for the year. If the predetermined overhead rate was $8.00 per direct labor-hour, how many hours were worked during the year? Answer Selected Answer: 19,500 hours 32.Management of Berndt Corporation has asked your help as an intern in preparing some key reports for August. The beginning balance in the raw materials inventory account was $33,000. During the month, the company made raw materials purchases amounting to $62,000. At the end of the month, the balance in the raw materials inventory account was $30,000. Direct labor cost was $46,000 and manufacturing overhead was $74,000. The beginning balance in the work in process account was $13,000 and the ending balance was $19,000. The beginning balance in the finished goods account was $54,000 and the ending balance was $50,000. Sales totaled $270,000. Selling expense was $18,000 and administrative expense was $49,000. The net operating income for August was: Answer Selected Answer: $20,000 33.Management of Berndt Corporation has asked your help as an intern in preparing some key reports for August. The beginning balance in the raw materials inventory account was $33,000. During the month, the company made raw materials purchases amounting to $62,000. At the end of the month, the balance in the raw materials inventory account was $30,000. Direct labor cost was $46,000 and manufacturing overhead was $74,000. The beginning balance in the work in process account was $13,000 and the ending balance was $19,000. The beginning balance in the finished goods account was $54,000 and the ending balance was $50,000. Sales totaled $270,000. Selling expense was $18,000 and administrative expense was $49,000. The cost of goods sold for August was: Answer Selected Answer: $183,000 34.The corporate controller’s salary would be considered a(n): Answer Selected Answer: administrative cost. 35.Choice of allocation base should be made based on: Answer Selected Answer: whether the base actually drives the cost being allocated. 36.The three basic elements of manufacturing cost are direct materials, direct labor, and: Answer Selected Answer: manufacturing overhead. 37.An opportunity cost is: Answer Selected Answer: the benefit forgone by selecting one alternative instead of another. 38.Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice? Answer Selected Answer: Choice B 39.Buford Company rents out a small unused portion of its factory to another company for $1,000 per month. The rental agreement will expire next month, and rather than renew the agreement Buford Company is thinking about using the space itself to store materials. The term to describe the $1,000 per month is: Answer Selected Answer: opportunity cost. 40.Cost of goods manufactured will usually include: Answer Selected Answer: some costs incurred during the prior period as well as costs incurred during the current period.