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1) Which of the following is an example of a manufacturing overhead cost? A

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1) Which of the following is an example of a manufacturing overhead cost?

A.         Wages paid to security personnel at the corporate office building

B.         The cost of electricity used to run the oven in which Domino’s bakes it pizzas

C.        Cost of shipping product to customers

D.        The salary of the president of the company

 

2.         Westerhouse manufactures refrigerators. Which of the following items is most likely considered an indirect material cost for Westerhouse?

A.         Supplies used by the factory janitor

B.         Gasoline costs for trucks used to deliver products to customers

C.        Glass shelves for the refrigerators

D.        Refrigerator motors

 

3.         Which of the following costs is not part of manufacturing overhead?

A.         Electricity for the factory

B.         Depreciation of factory equipment

C.        Salaries for the production supervisors

D.        Health insurance for sales staff

 

4.         Product costs

A.         are also called period costs.

B.         are considered an asset until the finished goods are sold.

C.        become an expense in the period the costs are incurred.

D.        All of these answer choices are correct.

5.         Which of the following is a period cost?

1. Rent on a factory machine
2. Maintenance on production equipment
3. Indirect labor
4. Janitorial costs for the corporate office

 

 

6.         Which of the following is not a cost that is included in the ending balances of the Work in Process Inventory account in a job-order cost system?

1. Cost of Goods Sold
2. Costs of tires attached to wagons by a toy manufacturer
3. Factory-related costs
4. Cost of wages earned by assembly workers

 

7.         Which of the following lists presents the accounts in the order in which product costs flow?

1. Cost of Goods Sold, Work in Process Inventory, Raw Materials Inventory, Finished Goods Inventory
2. Work in Process Inventory, Finished Goods Inventory, Cost of Goods Sold, Raw Materials Inventory
3. Raw Materials Inventory, Finished Goods Inventory, Work in Process Inventory, Cost of Goods Sold
4. Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Cost of Goods Sold

 

8.         Cost of goods manufactured

1. is the amount transferred from Work in Process Inventory to Finished Goods Inventory during the period.
2. is equal to the beginning Work in Process Inventory plus the current period’s manufacturing costs plus the ending Work in Process Inventory.
3. is always equal to cost of goods sold.
4. is transferred to Raw Material Inventory account.

 

9. Which of the following is true in a job-order costing system?

1. Cost of goods sold will include the costs of all jobs that have been completed during the accounting period.
2. Work in Process Inventory will include the cost of all jobs that are currently completed and ready to deliver to customers.
3. Finished Goods Inventory will include the cost of all jobs that are completed but not yet shipped and sold.
4. Raw Materials Inventory will include the cost of jobs that have been started but are not yet completed.

 

10.       An allocation base is

1. a common activity that jobs share, which is used to spread the overhead costs among the various jobs.
2. the total amount of overhead assigned to a job.
3. used to estimate how many labor hours are needed to complete a job.
4. used to determine the total cost of a job completed during the period.

 

11.       Why is overhead applied using a predetermined overhead rate?

A.         The actual amount of overhead is not determined until year end and the company desires timely cost information.

B.         Actual manufacturing overhead costs are often larger than expected.

C.        It allows a company to overcost and undercost specific jobs as desired.

D.        It helps to reduce the overhead cost for the company.

 

12.       If the amount of underapplied overhead or overapplied overhead is immaterial in amount, the Manufacturing Overhead account is closed to

1. Raw Materials Inventory.
2. Work in Process Inventory.
3. Finished Goods Inventory.
4. Cost of Goods Sold.

 

13.       Stalk Products has $27,000 of underapplied overhead at the end of the year. Management has asked you what the impact on income will be if you prorate the underapplied overhead to the appropriate accounts. What will you tell them?

A.         Income will be higher if the underapplied overhead is prorated than if it is closed to Cost of Goods Sold.

B.         Income will be lower if the underapplied overhead is prorated than if it is closed to Cost of Goods Sold.

C.        Income will be the same regardless of which method is used.

D.        The answer depends on the reason that the underapplied exists.

 

14.       If the amount of underapplied overhead is large in amount, it is

1. closed to Finished Goods.
2. apportioned between Raw Materials, Finished Goods, and Work in Process Inventory.
3. apportioned among Work in Process, Finished Goods, and Cost of Goods Sold.
4. closed to Cost of Goods Sold.

 

 

15.  Why is factory overhead ‘applied’ to products and jobs by manufacturing companies?

A.         Actual overhead costs can never be accurately determined for jobs.

B.         Managers prefer job costs to be exact in amount for budgeting purposes.

C.        It allows managers more timely determination of product costs during the manufacturing process.

D.        It provides a more accurate cost of the job or products being processed.