Accounting 202 Exam: Practice Quiz!

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  • 1/11 Questions

    How do you calculate the predetermined manufacturing overhead rate used to allocate manufacturing overhead costs?

    • . By dividing the total estimated manufacturing overhead costs by the total estimated amount of the allocation base
    • By dividing the total estimated amount of the allocation base by the total estimated manufacturing overhead costs
    • By dividing the total estimated manufacturing overhead costs by the total actual amount of the allocation base
    • By multiplying the total estimated manufacturing overhead costs by the total estimated amount of the allocation base
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About This Quiz

The 'Accounting 202 Exam: Practice Quiz!' assesses key skills in cost accounting, including calculating overhead rates, understanding manufacturing overhead, and job costing. It is designed for learners aiming to enhance their accounting expertise and apply these concepts in managerial decisions.

Accounting 202 Exam: Practice Quiz! - Quiz

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  • 2. 

    If manufacturing overhead has been overallocated during the period, and most of the jobs produced have been sold, then:

    • Cost of goods sold should be decreased

    • Cost of goods sold should be increased

    • Finished goods inventory should be increased

    • Work in process inventory should be decreased

    Correct Answer
    A. Cost of goods sold should be decreased
    Explanation
    If manufacturing overhead has been overallocated during the period, it means that more overhead costs have been allocated to the products than were actually incurred. This suggests that the cost of goods sold (COGS) has been overstated because it includes the excess overhead costs. To correct this, the COGS should be decreased by removing the overallocated amount. This adjustment will result in a decrease in the reported COGS and a more accurate representation of the actual cost of goods sold during the period.

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  • 3. 

    If manufacturing overhead has been under-allocated during the period, then:

    • The jobs produced during the period have been undercosted

    • The jobs produced during the period have been costed correctly

    • The jobs produced during the period have been overcosted

    • None of the above occur

    Correct Answer
    A. The jobs produced during the period have been undercosted
    Explanation
    If manufacturing overhead has been under-allocated during the period, it means that the actual overhead costs incurred are higher than the allocated amount. This indicates that the jobs produced during the period have not been assigned the full amount of overhead costs they should have been. Therefore, the jobs have been undercosted, as the allocated overhead costs are lower than the actual overhead costs incurred.

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  • 4. 

    Manufacturing overhead would include:

    • Indirect labor costs only

    • All manufacturing costs except direct materials and direct labor

    • All manufacturing costs

    • Indirect materials only

    Correct Answer
    A. All manufacturing costs except direct materials and direct labor
    Explanation
    Manufacturing overhead refers to all indirect costs incurred during the manufacturing process, excluding direct materials and direct labor. These costs include expenses such as factory rent, utilities, depreciation of machinery, maintenance, and supervision. By including all manufacturing costs except direct materials and direct labor in manufacturing overhead, it allows for a comprehensive assessment of the total expenses associated with the production process.

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  • 5. 

    Overallocated manufacturing overhead results when:

    • Production is less than last year

    • Actual overhead is less than allocated overhead

    • Estimated overhead is less than actual overhead

    • Actual overhead is less than expected

    Correct Answer
    A. Actual overhead is less than allocated overhead
    Explanation
    Overallocated manufacturing overhead occurs when the actual overhead costs incurred during production are less than the amount allocated or predetermined for that period. This indicates that the estimated overhead costs were higher than the actual costs, leading to an overallocation of overhead expenses. This can happen due to various reasons such as improved efficiency, cost-saving measures, or unexpected changes in production processes.

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  • 6. 

    The difference between the sales price and the job cost is:

    • Cost of goods sold

    • Gross profit

    • Net income

    • Operating income

    Correct Answer
    A. Gross profit
    Explanation
    The difference between the sales price and the job cost is referred to as gross profit. Gross profit represents the amount of money left over after deducting the direct costs of producing goods or services. It is a measure of the profitability of a company's core operations and does not take into account other expenses such as overhead costs or taxes. Gross profit is an important financial metric as it helps businesses determine their ability to cover operating expenses and generate profits.

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  • 7. 

    If manufacturing overhead has been overallocated during the period, then:

    • The jobs produced during the period have been undercosted

    • The jobs produced during the period have been costed correctly

    • The jobs produced during the period have been overcosted

    • None of the above occur

    Correct Answer
    A. The jobs produced during the period have been overcosted
    Explanation
    If manufacturing overhead has been overallocated during the period, it means that more overhead costs have been assigned to the jobs produced than what was actually incurred. This results in an overestimation of the cost of the jobs, leading to the conclusion that the jobs produced during the period have been overcosted.

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  • 8. 

    Management can use job cost information for each of the following EXCEPT:

    • Determining cost of goods sold

    • Determining the profitability of different jobs

    • Bidding on custom jobs

    • All of the listed choices are possible uses of job cost information

    Correct Answer
    A. All of the listed choices are possible uses of job cost information
    Explanation
    Management can use job cost information for each of the listed choices. Determining the cost of goods sold helps in evaluating the expenses associated with producing goods and calculating the overall cost of sales. Determining the profitability of different jobs helps in identifying which jobs are more profitable and making informed decisions regarding resource allocation. Bidding on custom jobs requires accurate job cost information to estimate the cost of the project and determine a competitive price. Therefore, all of the listed choices are possible uses of job cost information.

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  • 9. 

    When using cost-plus pricing, the markup is added to the job cost to help:

    • Cover operating expenses

    • Generate a profit

    • Determine the price to charge for the job

    • Do all of the above

    Correct Answer
    A. Do all of the above
    Explanation
    Cost-plus pricing is a method where the markup is added to the job cost to determine the price to charge for the job. This pricing strategy helps cover operating expenses and generate a profit. By including the markup, the business ensures that all costs associated with the job are covered, including operating expenses, while also allowing for a profit to be made. Therefore, the correct answer is "do all of the above."

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  • 10. 

    Underallocated manufacturing overhead results when:

    • Production is greater than last year

    • Actual overhead is greater than expected

    • Estimated overhead is greater than actual overhead

    • Actual overhead is greater than allocated overhead

    Correct Answer
    A. Actual overhead is greater than allocated overhead
    Explanation
    Underallocated manufacturing overhead occurs when the actual overhead costs incurred during production are higher than the amount allocated or assigned to that production. This means that the company did not allocate enough funds for overhead expenses, resulting in a shortfall. This could be due to various factors such as unexpected increases in costs, inefficiencies in the production process, or inaccurate estimation of overhead expenses. Regardless of the reason, underallocated manufacturing overhead indicates that the company needs to adjust its budgeting and allocation methods to ensure proper funding for overhead costs in the future.

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  • 11. 

    If a job consists of a batch of identical units, managers find the unit cost by:

    • Tracing direct materials to each unit

    • Multiplying the total job cost by the number of units in the job

    • Tracing direct labor to each unit

    • Dividing the total job cost by the number of units in the job

    Correct Answer
    A. Dividing the total job cost by the number of units in the job
    Explanation
    The correct answer is dividing the total job cost by the number of units in the job. This is because the unit cost is calculated by taking the total cost of the job and dividing it by the number of units produced. By doing this, managers can determine the cost of each individual unit in the batch. Tracing direct materials or direct labor to each unit would not provide an accurate unit cost calculation, as these costs may vary for each unit. Multiplying the total job cost by the number of units would give the total cost of all units, not the cost per unit.

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  • Current Version
  • Mar 19, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 23, 2012
    Quiz Created by
    Jc173
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