AMIS 212
SAMPLE QUESTIONS FOR EXAM 1 REVIEW
1. Titan Company has set various goals, and management is now taking appropriate
action to ensure that the firm achieves these goals. One such action is to reduce outlays
for overhead, which have exceeded budgeted amounts. Which of the following
functions best describes this process?
A. Decision making.
B. Planning.
C. Directing.
D. Controlling.
E. Organizing.
2. Product costs are:
A. expensed when incurred.
B. inventoried.
C. treated in the same manner as period costs.
D. treated in the same manner as advertising costs.
E. subtracted from cost of goods sold.
3. Which of the following is a product cost?
A. Glass in an automobile.
B. Advertising.
C. The salary of the vice president-finance.
D. Rent on a factory.
E. Both "A" and "D."
4. Which of the following is not a period cost?
A. Legal costs.
B. Public relations costs.
C. Sales commissions.
D. Wages of assembly-line workers.
E. The salary of a company's chief financial officer (CFO).
5. Which of the following costs is not a component of manufacturing overhead?
A. Indirect materials.
B. Factory utilities.
C. Depreciation of a salespersons car.
D. Indirect labor.
E. Property taxes on the manufacturing plant.
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6. Prime costs are comprised of:
A. direct materials and manufacturing overhead.
B. direct labor and manufacturing overhead.
C. direct materials, direct labor, and manufacturing overhead.
D. direct materials and direct labor.
E. direct materials and indirect materials.
7. Assume the following information:
Direct materials purchase cost
$225,000
Direct materials used
275,000
Beginning direct materials inventory 125,000
The ending direct materials inventory is:
A. $175,000.
B. $75,000.
C. $50,000.
D. $100,000.
8. For the year just ended, Cole Corporation's manufacturing costs (raw materials used,
direct labor, and manufacturing overhead) totaled $1,500,000. Beginning and ending
work-in-process inventories were $60,000 and $90,000, respectively. Cole's balance
sheet also revealed respective beginning and ending finished-goods inventories of
$250,000 and $180,000. On the basis of this information, how much would the
company report as cost of goods manufactured (CGM) and cost of goods sold (CGS)?
A. CGM, $1,430,000; CGS, $1,460,000.
B. CGM, $1,470,000; CGS, $1,540,000.
C. CGM, $1,530,000; CGS, $1,460,000.
D. CGM, $1,570,000; CGS, $1,540,000.
E. Some other amounts.
9. An employee accidentally overstated the year's advertising expense by $50,000.
Which of the following correctly depicts the effect of this error?
A. Cost of goods manufactured will be overstated by $50,000.
B. Cost of goods sold will be overstated by $50,000.
C. Both cost of goods manufactured and cost of goods sold will be overstated by
$50,000.
D. Cost of goods sold will be overstated by $50,000, and cost of goods
manufactured will be understated by $50,000.
E. None of the above.
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10. Extron, Inc., has only variable costs and fixed costs. A review of the company's
records disclosed that when 100,000 units were produced, fixed manufacturing costs
amounted to $200,000 and the cost per unit manufactured totaled $5. On the basis of
this information, how much cost would the firm anticipate at an activity level of
97,000 units?
A. $485,000.
B. $491,000.
C. $494,000.
D. $500,000.
E. Some other amount not listed above.
11. Which of the following manufacturers would most likely use job-order costing?
A. Chemical manufacturers.
B. Microchip processors.
C. Custom-furniture manufacturers.
D. Gasoline refiners.
E. Fertilizer manufacturers.
12. Which of the following types of companies would most likely use process costing?
A. Aircraft manufacturers.
B. Textile manufacturers.
C. Textbook publishers.
D. Custom-machining firms.
E. Shipbuilders.
13. As production takes place, all manufacturing costs are added to the:
A. Work-in-Process Inventory account.
B. Manufacturing-Overhead Inventory account.
C. Cost-of-Goods-Sold account.
D. Finished-Goods Inventory account.
E. Production Labor account.
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14. The following information relates to October:
Production supervisor's salary
Factory maintenance wages
$2,500
250 hours at $8 per hour
The journal entry to record the preceding information is:
A. Manufacturing Overhead
4,500
Wages Payable
4,500
B. Wages Payable
4,500
Manufacturing Overhead
4,500
C. Work-in-Process Inventory
4,500
Wages Payable
4,500
D. Wages Payable
4,500
Work-in-Process Inventory
4,500
E. Work-in-Process Inventory
2,500
Manufacturing Overhead
2,000
Wages Payable
4,500
15. Gopher charges manufacturing overhead to products by using a predetermined
application rate, computed on the basis of machine hours. The following data pertain
to the current year:
Budgeted manufacturing overhead: $360,000
Actual manufacturing overhead: $315,000
Budgeted machine hours: 15,000
Actual machine hours: 10,000
Overhead applied to production totaled:
A. $210,000.
B. $240,000.
C. $472,500.
D. $540,000.
E. some other amount.
16. Maher, Inc. applies manufacturing overhead at the rate of $60 per machine hour.
Budgeted machine hours for the current period were anticipated to be 80,000;
however, a lengthy strike resulted in actual machine hours being worked of only
65,000. Budgeted and actual manufacturing overhead figures for the year were
$4,800,000 and $4,180,000, respectively. On the basis of this information, the
company's year-end overhead was:
A. overapplied by $280,000.
B. underapplied by $280,000.
C. overapplied by $620,000.
D. underapplied by $620,000.
E. underapplied by $900,000.
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17. Howard Manufacturing's overhead at year-end was underapplied by $5,800, a small
amount given the firm's size. The year-end journal entry to record this amount
would include:
A. a debit to Cost of Goods Sold.
B. a debit to Manufacturing Overhead.
C. a debit to Work-in-Process Inventory.
D. a credit to Cost of Goods Sold.
E. a credit to Work-in-Process Inventory.
18. Which of the following manufacturers would most likely not use a process-cost
accounting system?
A. A producer of computer monitors.
B. A paint manufacturer.
C. A producer of frozen orange juice.
D. A builder of customized yachts.
E. A lumber mill.
19. Which of the following companies would likely use a process-costing system?
A.
B.
C.
D.
E.
Custom Furniture
Manufacturer
Yes
Yes
No
No
No
Chemical
Producer
Yes
Yes
Yes
Yes
No
Soft Drink
Bottler
Yes
No
No
Yes
Yes
20. XYZ Co., had 3,000 units of work in process on April 1 that were 60% complete.
During April, 10,000 units were completed and as of April 30, 4,000 units that were
40% complete remained in production. How many units were started during April?
A. 8,600.
B. 9,800.
C. 11,000.
D. 12,200.
E. None of the above.
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Use the following to answer questions 21-26:
South River Chemical manufactures a product called Zbek. Direct materials are added at
the beginning of the process, and conversion activity occurs uniformly throughout
production. The beginning work-in-process inventory is 60% complete with respect to
conversion; the ending work-in-process inventory is 20% complete. The following data
pertain to May:
Work in process, May 1
Units started during May
Units completed and transferred
out
Work in process, May 31
Costs:
Work in process, May 1
Costs incurred during May
Totals
Units
15,000
60,000
68,000
7,000
Total
Direct
Materials
Conversion
Costs
$ 41,250
234,630
$275,880
$16,500
72,000
$88,500
$ 24,750
162,630
$187,380
21. Using the weighted-average method of process costing, the equivalent units of
production for direct materials total:
A. 68,000.
B. 69,400.
C. 74,000.
D. 75,000.
E. 75,400.
22. Using the weighted-average method of process costing, the equivalent units of
production for conversion activity total:
A. 60,400.
B. 68,000.
C. 69,400.
D. 74,000.
E. 75,000.
23. Using the weighted-average method of process costing, the cost per unit of direct
materials is:
A. $1.17.
B. $1.18.
C. $1.20.
D. $1.28.
E. $1.30.
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24. Using the weighted-average method of process costing, the cost per unit of
conversion activity is:
A. $2.50.
B. $2.53.
C. $2.70.
D. $2.76.
E. $3.10.
25. Using the weighted-average method of process costing, the cost of goods
completed and transferred during May is:
A. $249,560.
B. $250,240.
C. $258,400.
D. $263,840.
E. $275,880.
26.Using the weighted-average method of process costing, the total costs remaining in
work in process on May 31 are:
A. $0.
B. $12,040.
C. $17,480.
D. $25,640.
E. $26,320.
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