Chapter M3 Accounting

30 Questions

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Chapter M3 Accounting

Questions and Answers
  • 1. 
    A document which is used to track how much an employee works on each job in a factory is called the:
    • A. 

      Labor time ticket

    • B. 

      Labor requisition

    • C. 

      Job cost sheet

    • D. 

      Payroll stubs

  • 2. 
    Copies of a completed purchase requisition are forwarded to:
    • A. 

      Accounts payable only

    • B. 

      The purchasing department and accounts payable

    • C. 

      The purchasing department only

    • D. 

      The receiving department only

  • 3. 
    The entry to record the cost of wages earned by the production line workers who actually making the product would include a debit to:
    • A. 

      Direct Labor

    • B. 

      Overhead

    • C. 

      Work-in-Process

    • D. 

      Wage Expenses

  • 4. 
    The job order costing system would not be used to accumulate costs for which products listed below?
    • A. 

      Advertising posters

    • B. 

      Pencils

    • C. 

      Bridges

    • D. 

      Custom furniture

  • 5. 
      Assuming the cost per equivalent unit is $1.88, the value assigned to the ending inventory should be:
    • A. 

      $658

    • B. 

      $1,334.80

    • C. 

      $1,316

    • D. 

      None of these answers is correct.

  • 6. 
    Which manufactured product listed below would most likely be accounted for using a process costing system?
    • A. 

      Bridges

    • B. 

      Milk

    • C. 

      Ships

    • D. 

      Airplanes

  • 7. 
    Manufacturing overhead generally benefits:
    • A. 

      The administrative departments within a company

    • B. 

      The factory as a whole and therefore, all products

    • C. 

      Only specific production jobs

    • D. 

      The end user of a product

  • 8. 
    Assume that the equivalent units of production this month for Alabama Red’s Hot Sauces are 8,350.  If the costs in beginning inventory were $450.00 and current manufacturing costs were $5,311.50, then the cost assigned to the 8,000 units completed would be:
    • A. 

      None of these answers is correct.

    • B. 

      $5,520.00

    • C. 

      $5,120.00

    • D. 

      $5,761.50

  • 9. 
    Assume the cost per equivalent is $2.57.  Based on the information regarding units in Table M3-1, the costs assigned to the goods in ending inventory should be:
    • A. 

      $1,927.5

    • B. 

      $3,983.5

    • C. 

      $963.75

    • D. 

      None of these answers is correct.

  • 10. 
    Happy Faces Manufacturing uses machine hours to allocate manufacturing overhead to production.  Based on 20,000 machine hours and overhead cost of $40,000, the amount of overhead allocated for each machine hour would be:
    • A. 

      $0.50

    • B. 

      $1.00

    • C. 

      $0.25

    • D. 

      $2.00

  • 11. 
    Allocating manufacturing overhead is a two-stage process. The first stage is to __________ and the second stage is __________.
    • A. 

      Identify a cost object; allocate indirect costs

    • B. 

      Gather overhead into a cost pool; allocate overhead using an application rate

    • C. 

      Allocate overhead using an application rate; gather overhead into a cost pool

    • D. 

      None of these answers is correct.

  • 12. 
    The document that is sent to the vendor that specifies the quantity, type, and cost of materials needed is called a:
    • A. 

      Purchase requisition

    • B. 

      Receiving report

    • C. 

      Purchase order

    • D. 

      Materials requisition

  • 13. 
    When materials have been received and checked in, they are then stored in the:
    • A. 

      Administrative offices

    • B. 

      Materials stores warehouse

    • C. 

      Loading dock

    • D. 

      Finished goods distribution center

  • 14. 
    A method of allocating manufacturing costs to production during the period to determine an average cost per unit is known as:
    • A. 

      Job order costing

    • B. 

      Absorption costing

    • C. 

      Process costing

    • D. 

      Variable costing

  • 15. 
    A document that would track and summarize the direct materials, direct labor, and overhead costs for each job is known as a: 
    • A. 

      Purchase requisition

    • B. 

      Purchase order

    • C. 

      Job cost sheet

    • D. 

      Materials requisition

  • 16. 
    Minnow Manufacturing uses direct labor hours to allocate manufacturing overhead.  Based on overhead cost of $40,000 and 10,000 hours of labor, the overhead cost allocated for each hour of labor would be:
    • A. 

      $4.00

    • B. 

      $0.25

    • C. 

      $1.00

    • D. 

      $5.00

  • 17. 
    The element of cost associated with particular units of production that is abstract relative to the other elements is:
    • A. 

      Direct labor

    • B. 

      Manufacturing overhead

    • C. 

      Direct materials

    • D. 

      None of these answers is correct.

  • 18. 
      Assume the number of equivalent units is 4,500. Based on the cost information in Table M3-1, the cost per equivalent unit this year is:
    • A. 

      $2.47

    • B. 

      $2.43

    • C. 

      $2.53

    • D. 

      None of these answers is correct.

  • 19. 
    When product costs reflect the actual direct material costs, actual direct labor costs, and actual overhead costs, the cost system being used is a(n):
    • A. 

      Common cost system

    • B. 

      Direct cost system

    • C. 

      Actual cost system

    • D. 

      Normal costing system

  • 20. 
    The accounts payable department matches all documents received to determine how much should be paid.  Which one of the following documents used is externally generated?
    • A. 

      Receiving report

    • B. 

      Vendor invoice

    • C. 

      Purchase requisition

    • D. 

      Purchase order

  • 21. 
    When goods are completed and transferred to finished goods, the entry will contain a credit to:
    • A. 

      Finished Goods Inventory

    • B. 

      Manufacturing Overhead Cost Incurred

    • C. 

      Cost of Goods Sold

    • D. 

      Work-in-Process Inventory

  • 22. 
    Using Table M3-2, the amount in Finished Goods Inventory at the end of the month should be:
    • A. 

      $27,260

    • B. 

      $12,320

    • C. 

      $10,200

    • D. 

      $22,520

  • 23. 
    When ordered goods are received by the firm, the receiving clerk compares the goods received to the:
    • A. 

      Materials requisition

    • B. 

      Purchase order

    • C. 

      Purchase requisition

    • D. 

      Job cost sheet

  • 24. 
    The information found on a typical job cost sheet includes:
    • A. 

      Direct material, direct labor, and overhead costs

    • B. 

      Direct material and direct labor costs only

    • C. 

      Direct labor costs and overhead only

    • D. 

      Direct material costs only

  • 25. 
    When the goods produced by the firm require varying amounts of labor for each product, the firm should use what type of production costing system?
    • A. 

      Absorption

    • B. 

      Process

    • C. 

      Job order

    • D. 

      Variable

  • 26. 
    An appropriate cost allocation base should:
    • A. 

      Be correlated to the amount of administrative overhead incurred annually

    • B. 

      Be easy to identify, compute, and journalize

    • C. 

      Be correlated to the amount of overhead resources consumed

    • D. 

      None of these answers is correct.

  • 27. 
    The entry to allocate overhead to the goods being produced would include a credit to:
    • A. 

      Manufacturing Overhead Expense

    • B. 

      Work-in-Process Inventory

    • C. 

      Manufacturing Overhead Payable

    • D. 

      Manufacturing Overhead Applied

  • 28. 
    A materials requisition form is a request to __________ while a purchase requisition form is a request to __________.
    • A. 

      Use materials; sell materials

    • B. 

      Use materials; acquire materials

    • C. 

      Sell materials; use materials

    • D. 

      Acquire materials; use materials

  • 29. 
    In process costing, the number of units that would have been completed if all production efforts resulted in completed units is known as:
    • A. 

      Equivalent units

    • B. 

      Completed units

    • C. 

      Work-in-process units

    • D. 

      Universal cost tracking units

  • 30. 
    A document that tracks the costs of products and summarizes the cost information for each job is a:
    • A. 

      Job cost sheet

    • B. 

      Purchase order

    • C. 

      Receiving report

    • D. 

      Purchase requsition