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1.	Cost objects include
	a.	products.
	b.	customers.
	c.	departments.
	d.	all of the above.

2.	The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is
	a.	cost accumulation.
	b.	cost assignment.
	c.	cost tracing.
	d.	conversion costing.

3.	Cost tracing is
	a.	the assignment of direct costs to the chosen cost object.
	b.	a function of cost allocation.
	c.	the process of tracking both direct and indirect costs associated with a cost object.
	d.	the process of determining the actual cost of the cost object.

4.	The determination of a cost as being either direct or indirect depends upon
	a.	the accounting system.
	b.	the allocation system.
	c.	the cost tracing system.
	d.	the cost object chosen.

5.	Within the relevant range, if there is a change in the level of the cost driver then
	a.	total fixed costs and total variable costs will change.
	b.	total fixed costs and total variable costs will remain the same.
	c.	total fixed costs will remain the same and total variable costs will change.
	d.	total fixed costs will change and total variable costs will remain the same.

6.	Which of the following companies is part of the merchandising sector of our economy?
	a.	General Motors
	b.	Intel
	c.	The GAP
	d.	Robert Meyer Accounting Firm

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7.	Wages paid to machine operators on an assembly line are classified as a
	a.	direct material cost.
	b.	direct manufacturing labor cost.
	c.	manufacturing overhead cost.
	d.	period cost.

8.	Manufacturing overhead costs in an automobile manufacturing plant MOST likely include
	a.	labor costs of the painting department.
	b.	indirect material costs such as lubricants.
	c.	sales commissions.
	d.	steering wheel costs.

9.	Manufacturing overhead costs are also referred to as
	a.	indirect manufacturing costs.
	b.	prime costs.
	c.	period costs.
	d.	conversion costs.

THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.
Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers:

          Direct materials                      $30
          Direct manufacturing labor              5
          Variable manufacturing overhead        10
          Fixed manufacturing overhead           40
             Total manufacturing costs          $85
                                                ÍÍÍ

10.	What is the per unit cost when producing 1,500 axles?
	a.	$71.67
	b.	$107.50
	c.	$85.00
	d.	$170.00

THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.
Pederson Company reported the following:

           Manufacturing costs  $2,000,000
           Units manufactured       50,000
           Units sold               47,000 units sold for $75 per unit
           Beginning inventory           0 units

11.	What is the average manufacturing cost per unit?
	a.	$40.00
	b.	$42.55
	c.	$00.025
	d.	$75.00

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THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.
Gilley Incorporated reported the following information:

On January 31, 20x3:
     Job #101 was the only job in process with accumulated costs of 
     $3,000.

During February the following costs were added to production:
     Job #101                  $10,000
     Job #102                  $8,000
     Job #103                  $7,000

On February 28, 20x3:
     Job #101 was completed and sold for $18,000.
     Job #102 was completed but not sold.
     Job #103 remains in production.

12.	What is work-in-process inventory on February 28, 20x3?
	a.	$7,000
	b.	$8,000
	c.	$25,000
	d.	$3,000

13.	What is finished goods inventory on February 28, 20x3?
	a.	$7,000
	b.	$8,000
	c.	$21,000
	d.	$10,000

14.	What is cost of goods manufactured for February?
	a.	$10,000
	b.	$8,000
	c.	$13,000
	d.	$21,000

15.	What is cost of goods sold for February?
	a.	$18,000
	b.	$10,000
	c.	$13,000
	d.	$21,000

16.	What is gross margin for February?
	a.	$5,000
	b.	$18,000
	c.	$8,000
	d.	$13,000

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17.	A job that shows low profitability may be the result of
	a.	wasting direct materials.
	b.	inefficient direct manufacturing labor.
	c.	underpricing the job.
	d.	all of the above.

18.	Problems with accurate costing occur when
	a.	incorrect job numbers are recorded on source documents.
	b.	bar coding is used to record materials used on the job.
	c.	a computer screen requests an employee number before that employee is able to work on information related to a specific job.
	d.	all of the above occur.

19.	If actual indirect-cost rates were calculated monthly rather than annually, then for the month of February with only 28 days
	a.	variable indirect-cost rates would be lower.
	b.	total indirect-cost rates would be higher.
	c.	fixed indirect-cost rates would be lower.
	d.	monthly output would be higher.

20.	Annual cost rates are preferred over actual cost rates for all of the following reasons EXCEPT
	a.	budgeted costs allow managers to have cost information on a timely basis.
	b.	budgeted costs may be subject to short-run fluctuations.
	c.	budgeted indirect-cost rates are known prior to the inception of a new job.
	d.	budgeted-cost rates can be used to allocate direct or indirect costs.

21.	All of the following are true of the Work-in-Process Control account EXCEPT that
	a.	it tracks all direct material purchases.
	b.	the balance equals the sum of amounts from all in-process individual job-cost records.
	c.	it is an asset account.
	d.	it tracks job costs from beginning through completion.

22.	All are true of plant utility costs EXCEPT
	a.	the source document is the utility bill.
	b.	the cost increases the Manufacturing Overhead Control account.
	c.	the cost increases the Work-in-Process Control account.
	d.	it is an indirect cost.

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23.	When the allocated amount of indirect costs are less than the actual amount, indirect costs have been
	a.	overabsorbed.
	b.	underapplied.
	c.	underallocated.
	d.	both (b) and (c).

THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.
Joni's Kitty Supplies applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct manufacturing labor-hours @ $20 per hour; and a 20% markup rate on total manufacturing costs.

24.	Manufacturing overhead cost estimates for this special order total
	a.	$10,000.
	b.	$30,000.
	c.	$36,000.
	d.	none of the above.

THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.
Sunni Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 20x2:

            Direct materials                                $280,000
            Direct labor (7,000 hours @ $11/hour)           $ 77,000
            Indirect labor                                  $ 20,000
            Plant facility rent                             $ 60,000
            Depreciation on plant machinery and equipment   $ 30,000
            Sales commissions                               $ 40,000
            Administrative expenses                         $ 50,000

25.	The actual amount of manufacturing overhead costs incurred in June 20x2 total
	a.	$557,000.
	b.	$200,000.
	c.	$110,000.
	d.	$80,000.

26.	The amount of manufacturing overhead allocated to all jobs during June 20x2 totals
	a.	$77,000.
	b.	$105,000.
	c.	$110,000.
	d.	$200,000.

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27.	For June 20x2, manufacturing overhead was
	a.	overallocated.
	b.	underallocated.
	c.	neither overallocated nor underallocated.
	d.	unable to be determined.

THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.
Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job.

                                    Company   Winfield High School Job
    Direct materials                $40,000          $1,000
    Direct labor                    $10,000            $200
    Manufacturing overhead costs    $30,000
    Machine-hours                   100,000 mh          900 mh

28.	For Gibson Manufacturing, what is the annual manufacturing overhead cost-allocation rate?
	a.	$0.50
	b.	$0.80
	c.	$0.30
	d.	$33.33

29.	What amount of manufacturing overhead costs will be allocated to this job?
	a.	$270
	b.	$720
	c.	$450
	d.	$30,000

30.	What are the total manufacturing costs of this job?
	a.	$1,200
	b.	$1,470
	c.	$1,650
	d.	$1,920

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THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.

Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20x3, the following estimates were provided for the coming year:

                                          Machining   Assembly
             Direct labor-hours              30,000     60,000
             Machine-hours                   80,000     20,000
             Direct labor cost             $500,000   $900,000
             Manufacturing overhead costs  $420,000   $240,000

The accounting records of the company show the following data for Job #316:

                                          Machining   Assembly
             Direct labor-hours                 120         70
             Machine-hours                       60          5
             Direct material cost              $300       $200
             Direct labor cost                 $100       $400

31.	What amount of manufacturing overhead costs will be allocated to Job #316?
	a.	$439
	b.	$502
	c.	$595
	d.	$532

32.	Process costing should be used to assign costs to products when
	a.	the units produced are similar.
	b.	the units produced are dissimilar.
	c.	the calculation of unit costs requires the averaging of unit costs over all units produced.
	d.	either (a) or (c) are present.

33.	Conversion costs
	a.	include all the factors of production.
	b.	include direct materials.
	c.	in process costing are usually considered to be added evenly throughout the production process.
	d.	include both (b) and (c).

34.	The purpose of the equivalent-unit computation is
	a.	to convert completed units into the amount of partially completed output units that could be made with that quantity of input.
	b.	to assist the business in determining ending inventory.
	c.	to convert partially completed units into the amount of completed output units that could be made with that quantity of input.
	d.	both (b) and (c).

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35.	In the computation of the cost per equivalent unit, the weighted-average method of process costing considers
	a.	all the costs entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period.
	b.	all the costs that have entered work in process from the units started or transferred in during the current accounting period.
	c.	all the costs that have entered work in process during the current accounting period from the units started or transferred in minus the costs associated with ending inventory.
	d.	all the costs that have entered work in process during the current accounting period from the units started or transferred in plus the costs associated with ending inventory.

36.	If there was no beginning work in process and no ending work in process under the weighted-average process costing method, the number of equivalent units for direct materials, if direct materials were added at the start of the process, would be
	a.	equal to the units started or transferred in.
	b.	equal to the units completed.
	c.	less than the units completed.
	d.	both (a) and (b).

37.	Under the weighted-average method, the stage of completion of beginning work in process
	a.	is relevant in determining the equivalent units.
	b.	must be combined with the work done during the current period in determining the equivalent units.
	c.	is irrelevant in determining the equivalent-unit calculation.
	d.	can almost always be determined with a high degree of precision.

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THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW.
The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing.

     Data for the Assembly Department for June 20x3 are:
          Work in process, beginning inventory            250 units
              Direct materials (100% complete)
              Conversion costs (50% complete)
          Units started during June                       800 units
          Work in process, ending inventory:              150 units
              Direct materials (100% complete)
              Conversion costs (75% complete)

     Costs for June 20x3:
          Work in process, beginning inventory:
              Direct materials                             $180,000
              Conversion costs                             $270,000
          Direct materials costs added during June       $1,000,000
          Conversion costs added during June             $1,000,000

38.	What are the equivalent units for direct materials and conversion costs, respectively, for June?
	a.	1,200.5 units; 1,160.64 units
	b.	1,050 units; 1,012.5 units
	c.	1,050 units; 1,050 units
	d.	962 units; 990 units

39.	What is the direct materials cost per equivalent unit during June?
	a.	$1,123.81
	b.	$1,730.20
	c.	$1,579,00
	d.	$1,890.35

40.	What is the conversion cost per equivalent unit in June?
	a.	$1,254.32
	b.	$1,579.14
	c.	$1,730.20
	d.	$1,890.35

41.	What amount of direct materials costs is assigned to the ending Work-in-Process account for June?
	a.	$168,571.50
	b.	$283,552.50
	c.	$259,530
	d.	$236,850

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1.	d
2.	b
3.	a
4.	d
5.	c
6.	c
7.	b
8.	b
9.	a
10.	a
$107,500/1,500 = $71.67
11.	a
$2,000,000/50,000 = $40.00
12.	a
Job #103  $7,000
13.	b
Job #102  $8,000
14.	d
(Job #101  $13,000) + (Job #102  $8,000)
15.	c
Job #101  $13,000
16.	a
$18,000 - $13,000 = $5,000
17.	d
18.	a
19.	b
20.	b
21.	a
22.	c
23.	d
24.	b
$60 ð 500 dlh = $30,000
25.	c
$20,000 + $60,000 + $30,000 = $110,000
26.	b
7,000 ð $15 per dlh = $105,000
27.	b
Underallocated: Allocated only $105,000 of the $110,000 actual overhead
28.	c
$30,000/100,000mh = $0.30 per mh
29.	a
900 mh ð $0.30 per mh = $270
30.	b
DM $1,000 + DML $200 + MOH $270 = $1,470
31.	c
($5.25 ð 60 mh) + [($240,000/60,000) ð 70dlh] = $595
32.	d
33.	c
34.	c
35.	a
36.	d
37.	c

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38.	b
                                Direct materials      Conversion costs
Completed and transferred out                900                 900.0
Work in process, ending                      150                 112.5
Total equivalent units                     1,050               1,012.5
                                           ÍÍÍÍÍ               ÍÍÍÍÍÍÍ
39.	a
$180,000 + $1,000,000 = $1,180,000
$1,180,000/1,050 units = $1,123.81
40.	a
$270,000 + $1,000,000 = $1,270,000
$1,270,000/1,012.5 = $1,254.32
41.	a
$1,180,000/1,050 = $1,124 cost per equivalent unit
$1,124 ð 150 = $168,571.50