Multiple Choice Quiz
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1
Which of the following statements is (are) true?
Companies that produce many different products or services are more likely to use jobA) order costing systems than process costing systems.
Costs are traced to departments and then allocated to units of product when job-order
B) costing is used.
Job-order costing systems are used by service firms and process costing systems are
C) used by manufacturers.
D)
2
All of the above.
The Agnew Company uses predetermined overhead rates to apply manufacturing overhead
to jobs. The predetermined overhead rate is based on machine hours in Department #1 and
direct labor cost in Department #2 and. At the beginning of the year, the company made the
following estimates:
Dept #1 Dept #2
Direct labor hours
16,000
12,000
5,000
1,000
Direct labor cost
$20,000
$15,000
Manufacturing overhead
$25,000
$30,000
Machine hours (MHs)
What predetermined overhead rates would be used in Department #1 and Department #2,
respectively?
A)
B)
C)
D)
3
110% and $15
$5.00 and 50%
$8.00 and 50%
$5.00 and 200%
Lily Company has the following estimated costs for next year:
Direct materials
Direct labor
$
30,000
110,000
Indirect materials
10,000
Rent on factory
equipment
32,000
Salary of production
supervisor
70,000
Advertising expense
22,000
Sales commissions
150,000
The company estimates that 10,000 direct labor and 16,000 machine hours will be worked
during the year. If overhead is applied on the basis of machine hours, the predetermined
overhead rate per hour will be:
A)
B)
C)
D)
4
B)
C)
D)
$15.26.
$17.12.
Finished Goods.
Manufacturing Overhead.
Raw Materials.
Work in Process.
In a job order cost system, the use of direct materials would be recorded as a debit to:
A)
B)
C)
D)
6
$13.88.
In a job-order cost system, indirect labor costs would be recorded as a debit to:
A)
5
$7.00.
Finished Goods inventory.
Manufacturing Overhead.
Raw Materials inventory.
Work in Process inventory.
Teoh Company's predetermined overhead rate is based on direct labor costs. The company's
Work in Process inventory account has a balance of $2,400, which relates to the one job
that was not complete at the end of an accounting period. The related job cost sheet
includes total charges of $400 for direct materials and $1,000 for direct labor. The
company's predetermined overhead rate, as a percentage of direct labor costs, must be:
A)
B)
C)
D)
100%.
50%.
40%.
17%.
7
Giovnazzi Company uses a predetermined overhead rate based on direct labor hours (DLHs)
to apply manufacturing overhead to jobs. At the beginning of the year, the company
estimated manufacturing overhead would be $200,000 and DLHs would be 20,000. The
actual figures for the year were $215,000 for manufacturing overhead and 21,000 DLHs.
The cost records for the year will show:
A)
B)
C)
D)
8
B)
C)
D)
overapplied overhead of $10,000.
underapplied overhead of $10,000.
5,500 hours
5,200 hours
5,000 hours
4,800 hours
Waclawiak Company manufactures a specialty line of silk-screened draperies. The company
uses a job-order costing system. During the month, the following costs were incurred on Job
A10: direct materials $54,800 and direct labor $19,200. In addition, selling and shipping
costs of $28,000 were incurred on the job. Manufacturing overhead was applied at the rate
of $25 per machine-hour (MH) and Job A10 required 320 MHs. If Job A10 consisted of 5,000
shirts, the cost of goods sold per shirt was:
A)
B)
C)
D)
10
underapplied overhead of $5,000.
McBride Company's predetermined overhead rate is based on direct labor hours (DLHs). At
the beginning of the current year, the company estimated that its manufacturing overhead
would total $220,000 during the year. During the year, the company incurred $200,000 in
actual manufacturing overhead costs. The Manufacturing Overhead account showed that
overhead was underapplied by $8,000 during the year. If the predetermined overhead rate
was $40.00 per DLH, how many DLHs were worked during the year?
A)
9
overapplied overhead of $5,000.
$50.00
$22.00
$16.40
$14.80
Skala Company uses a job-order costing system. Manufacturing overhead is applied to Work
in Process inventory using a predetermined overhead rate. During August, the company's
transactions included the following:
Direct materials issued to
production
$360,000
Indirect materials issued to
production
32,000
Direct labor cost incurred
428,000
Manufacturing overhead
cost applied
452,000
Manufacturing overhead
cost incurred
500,000
The company had no beginning or ending inventories in August. What was the cost of goods
manufactured for August?
A)
B)
C)
D)
$1,320,000
$1,288,000
$1,240,000
$1,208,000