ACCT212 Week 3-4 2023 with verified questions and answers

A process cost report summarizes the following process costing steps: (Check all that apply). physical flow of units equivalent units of production costs per equivalent unit of production The journal entry to record the purchase of materials on account in process cost accounting is a(n): increase in assets and an increase in liabilities True or false: Using the weighted-average method, the computation of EUP separates units into direct materials and conversion. True Department A had a beginning inventory balance of 25 units. During the accounting period, the department started an additional 275 units and had an ending balance of 50 units. units were transferred out. 250 The journal entry to record the transfer of units from Process 1 to the Process 2 in process costing is: debit Work in Process Inventory - 2 and credit Work in Process Inventory - 1 The parts of the process cost report include: (Check all that apply.) equivalent units of production. physical flow of units. cost assignment and reconciliation. The journal entry to record the purchase of materials on account in process cost accounting is: debit Raw Materials Inventory and credit Accounts Payable Department D had materials costs of $10,000 in beginning work in process inventory and added an additional $50,000 in materials costs this period. If the department had 20,000 EUP for materials, the cost per equivalent unit of production is $ 3 A system that contains features of both process and job order operations is called a(n) costing system. hybrid The journal entry to record the transfer of partially completed work in process to the next process in process costing is a(n): decrease in one asset and an increase in another asset Department A completed and transferred to finished goods a total of 60,000 units. Their ending inventory consisted of 40,000 units which were 80% complete with respect to direct materials and 30% complete with respect to conversion cost. The cost per EUP for direct materials is $4.00 and for conversion is $3.50. The cost of ending work in process inventory is $. Beginning work in process are 25,000 units and units started this period are 75,000 units. The total units to account for using the FIFO method are . 100,000 Beginning work in progress Inventory + Units started this period A system which uses both a process costing system and a job order system will most likely use which type system? Hybrid Department C had direct materials EUP cost of $4.00 and conversion EUP cost of $2.50. If the department had 38,000 units completed and transferred to the next department, their cost of units completed for direct materials is $. A manufacturing department completed and transferred to finished goods a total of 50,000 units. They also had 2,500 units in ending work in process inventory. Of this ending inventory, direct materials were 60% complete and conversion costs were 20% complete. Their cost per EUP for direct materials is $5.75 and $1.25 for conversion cost. The cost of units completed this period is $. ... The cost object of the cost assignment under the plantwide overhead rate method is the unit of product Landen Company uses a single plantwide overhead rate based on direct labor hours. Total budgeted overhead costs are $200,000. Total budgeted direct materials are $50,000 and total budgeted direct labor hours are 80,000. What is the plantwide overhead rate per direct labor hour? $2.50 The overhead rate method which uses a different overhead rate for each department is the departmental method Which of the following are a type of overhead allocation method? (Check all that apply). activity-based costing method departmental overhead rate method plantwide overhead rate method True or false: The cost object of the plantwide overhead rate method is the unit of product. True The basic principle of activity-based costing is that a(n) is what causes overhead cost to be incurred. activity Landen Company uses a single plantwide overhead rate of $100 per direct labor hour (DLH). Landen has two products as follows: basic chairs which used 20 DLH and deluxe chairs which used 35 DLH. What is the total amount allocated to these products?` $5,500 The overhead rate method uses a different overhead rate per production department. departmental The first step in applying activity-based costing is identifying the activities. True or false: The departmental overhead rate method uses a three-step process where costs are assigned to cost pools in the first step and overhead rates are computed in the last step. False Each of the following are types of allocation methods: plantwide rate method, departmental overhead rate method and activity-based costing method. overhead The basis of the activity-based costing method is a(n) activity (Identifying, Assigning,Tracing) activities is the first step in applying activity-based costing. identifyin When using activity-based costing, it is very important that the activities in each cost pool are similar If a company uses activity-based costing, the most appropriate cost driver for the production department would be the: number of direct labor hours Activities causing overhead include all of the following: facility-level unit-level batch-level Advantages of the activity-based costing include: Check all that apply. accurate assignment of costs to products better production and pricing decisions more effective overhead cost control True or false: The plantwide overhead rate method uses multiple rates to allocate overhead costs to products. False In activity-based costing, activities in each cost pool should be (similar / dissimilar) . similar In order for a service provider to use activity-based costing, they should classify costs by level. activity All of the following are types of activities which cause overhead except: customer-level A report which focuses on providing gross profit margin per customer, is referred to as a customer profitability report. One of the characteristics of activity-based costing is that it allows (more, less) effective control over costs. more ABC can be used by service providers who usually classify costs by activity level A report which focuses on individual customers and shows total profit margin generated by specific customers is known as a profitability report. customer Cost-volume-profit analysis helps managers predict how changes in and levels affect income. cost and sales Which of the following is the correct statement about fixed costs? The fixed cost per unit will decrease when volume increases. A cost changes in proportion to changes in volume of activity. variable CVP analysis looks at how _ is affected by sales price per unit, variable costs per unit, volume, and fixed costs. income The three methods used to classify costs into their fixed and variable components includes scatter diagrams high-low method regression A cost remains unchanged when the volume of activity changes within the relevant range. fixed Which of the following is the correct statement about variable costs? The variable cost per unit does not change when volume changes. Jack works on the production line at an assembly plant. Jack receives a base salary plus $1.25 per unit assembled. This is an example of a ______ cost. mixed When preparing a scatter diagram, the estimated line of cost behavior is drawn on a scatter diagram to show the relation between: cost and unit volume When using the high-low method, the slope represents: the variable cost per unit Each of the following are methods used to separate mixed costs into their fixed and variable components except: low-high method A statistical method for identifying cost behavior is called . regression RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The contribution margin per unit is $. 4 True or false: On a scatter diagram, costs are plotted on the horizontal axis. False The break-even point can be expressed as sales in or . units or dollars The high-low method uses ___ points to estimate the cost equation. two Assuming all other factors remain constant, if fixed costs increase, then the break-even point will: increase A statistical method of identifying cost behavior that is computed using spreadsheet programs or calculators is: least-squares regression A company has a margin of safety of 20%. If expected sales are $50,000, then break-even sales are: $40,000 LMN Company produces a product that sells for $1. The company has production costs of $600,000, half of which are fixed costs. Assuming production and sales of 750,000 units, the contribution margin per unit is $. 0.6 The break-even point is the sales level at which a company: (Check all that apply.) contribution margin equals fixed costs. has income of $0. Assuming all other factors remain constant, if variable cost per unit increases, then the break-even point will: increase A company sells 800 units at $16 each, has variable costs of $12 per unit, and fixed costs of $1,200. Income is $. 2000 Maker's Company produces a product that has a variable cost of $4 per unit. The company's fixed costs are $40,000. The product sells for $12 per unit. The company is considering purchasing a new manufacturing machine which would improve efficiency. The new machine would decrease the variable cost to $3, but increase fixed costs by $5,000. The revised break-even point in dollars is $. 60000 The margin of safety is: (Check all that apply.) the amount sales can drop before the company incurs a loss. the difference between expected sales and break-even sales divided by expected sales. Sales mix is the (volume/proportion/mix) of the sales volume for each product. proportion Managers make assumptions in CVP analysis. These assumptions include: (Check all that apply.) costs can be classified as variable or fixed. costs are linear within the relevant range. A company produces a product with variable costs of $2.50 per unit. The product sells for $5.00 per unit. The company has fixed costs of $3,000 and desires a target income of $10,000. The sales level in dollars to achieve the desired target income is $. 26000 Sales mix is the proportion of _____ for various products. sales volume When using absorption costing when production is greater than sales, a portion of fixed overhead is allocated to: ending inventory Which costing method can be helpful to management in setting prices because it reflects full costs that sales must exceed for the company to be profitable? Absorption costing True or false: When units produced are less than units sold, net income under absorption costing will be less than net income computed under variable costing. True Over the _ run, selling prices must cover both fixed and variable costs. long Regardless of whether variable costing or absorption costing is used, if quantity produced differs from quantity sold, income will be (similar, different, indeterminable). different A system of rewarding managers by linking bonuses to income computed under absorption costing may result in: excess inventory buildup Service firms should focus on _____ costs in managerial decisions. variable Under absorption costing, fixed overhead is allocated to products sold, so when production is greater than units sold, net income will be (greater, less) than income calculated under variable costing. greater Cost information from (neither, both) costing method(s) is helpful to management in setting prices. both (absorption, variable) costing is acceptable for external reporting under U.S. GAAP. absorption Managers should accept special orders if the special-order price is greater than variable cost Differences in income between variable costing and absorption costing is due to timing Since service firms do not produce inventory, they should focus primarily on variable costs. The costing system which is considered acceptable for external reporting under U.S. GAAP is absorption costing