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INTRODUCTIONuTOuCOSTuACCOUNTING
MULTIPLEuCHOICE
1.u u Factoryuoverheaduincludes:
a. Indirectulaborubutunotuindirectumaterials.
b. Indirectumaterialsubutunotuindirectulabor.
c. Allumanufacturingucosts,uexceptuindirectumaterialsuanduindirectulabor.
d. Allumanufacturingucosts,uexceptudirectumaterialsuandudirectulabor.
ANS: D
Factoryuoverheaduincludesuallumanufacturingucostsuexceptudirectumaterialsuandudirectulabor.
2.u u Theutermu"primeucost"urefersuto:
a. Theusumuofudirectulaborucostsuanduallufactoryuoverheaducosts.
b. Theusumuofurawumaterialucostsuandudirectulaborucosts.
c. Allucostsuassociateduwithumanufacturinguotheruthanudirectulaborucostsuandurawumaterialucosts.
d. Manufacturingucostsuincurredutouproduceuunitsuofuoutput.
ANS: B
Theutermu"primeucost"urefersutoutheusumuofurawumaterialsucostsuandudirectulaborucosts.
3.u u Theutermu"conversionucosts"urefersuto:
a. Theusumuofudirectulaborucostsuanduallufactoryuoverheaducosts.
b. Theusumuofurawumaterialucostsuandudirectulaborucosts.
c. Allucostsuassociateduwithumanufacturinguotheruthanudirectulaborucosts.
d. Directulaborucostsuincurredutouproduceuunitsuofuoutput.
ANS: A
Theutermu"conversionucosts"urefersutoutheusumuofudirectulaborucostsuanduallufactoryuoverheaducosts.
4.u u Autypicalufactoryuoverheaducostuis:
a. Freightuout.
b. Stationeryuanduprinting.
c. Depreciationuonumachineryuanduequipment.
d. Postage.
ANS: C
Depreciationuonumachineryuanduequipmentuisuaufactoryuoverheaducostu(i.e.,uituisuaumanufacturingucost,u
butuitucan'tubeuidentifieduwithuspecificujobsuoruprocesses),uwhereasutheuotheruthreeuitemsuareusellinguan
duadministrativeuexpenses.
5.u Underuaujobuorderusystemuofucostuaccounting,utheudollaruamountuofutheuentryutoutransferuinventoryufro
muWorkuinuProcessutouFinisheduGoodsuisutheusumuofutheucostsuchargedutouallujobs:
a. Inuprocessuduringutheuperiod.
b. Completeduandusolduduringutheuperiod.
c. Completeduduringutheuperiod.
d. Starteduinuprocessuduringutheuperiod.
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ANS: C
Whenujobsuareucompleteduduringutheuperiod,uFinisheduGoodsuisudebiteduanduWorkuinuProcessuisucredite
duforutheucostuofutheufinishedujobs.
6.u Whichuofutheufollowinguproductionuoperationsuwouldubeumostulikelyutouemployuaujobuorderusystemuof
ucostuaccounting?ua. Candyumanufacturing
b. Crudeuoilurefining
c. Printingutextubooks
d. FlouruMilling
ANS: C
Printinguwouldubeumostulikelyutouemployuaujobuorderusystemuofucostuaccountingudueutoutheunumberuofuc
ustomujobsuinvolved.u Theumanufactureuofucandy,utheuvulcanizinguofurubber,uandutheurefininguofucrudeu
oiluwouldunormallyubeuaucontinuousuprocessuofuproducingulikeugoodsuanduwouldubeuaccounteduforuund
erutheuprocessucostusystem.
7.u Inujobuorderucosting,utheubasicudocumentuforuaccumulatingutheucostuofueachuorderuisuthe:ua.uJobucostushe
et.
b. Requisitionusheet.
c. Purchaseuorder.
d. Invoice.
ANS: A
Inujobuorderucosting,utheubasicudocumentutouaccumulateutheucostuofueachuorderuisutheujobucostusheet.
8.u u Whenushoulduprocessucostingutechniquesubeuuseduinuassigningucostsutouproducts?
a. Inusituationsuwhereustandarducostingutechniquesushouldunotubeuused
b. Ifutheuproductuisucomposeduofumass-produceduhomogeneousuunits
c. Whenuproductionuisuonlyupartiallyucompleteduduringutheuaccountinguperiod
d. Ifutheuproductuisumanufactureduonutheubasisuofueachuorderureceived
ANS: B
Processucostingutechniquesushouldubeuuseduinuassigningucostsutouproductsuifutheuproductuisucomposeduo
fumass-produceduhomogeneousuunits.
9. Anuindustryuthatuwouldumostulikelyuuseuprocessucostinguproceduresuis:
a. Beverage.
b. HomeuConstruction.
c. Printing.
d. Shipbuilding.
ANS: A
Beverageuproductionuusuallyuconsistsuofumanufacturingu"longuruns"uofuhomogeneousuproductsuforuwhic
huprocessucostinguisuused.u Theuotheruthreeuindustriesuwoulduutilizeujobuorderucosting.
10.u Underuaujobuorderusystemuofucostuaccounting,uCostuofuGoodsuSolduisudebiteduanduFinisheduGoodsuis
ucrediteduforua:ua. Transferuofumaterialsutoutheufactory.
b. Shipmentuofucompletedugoodsutoutheucustomer.
c. Transferuofucompleteduproductionutoutheufinishedugoodsustoreroom.
d. Purchaseuofugoodsuonuaccount.
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ANS: B
Whenucompletedugoodsuareushippedutoucustomers,uCostuofuGoodsuSolduisudebiteduanduFinisheduGoodsui
sucredited.
11.u u PayrolluisudebiteduanduWagesuPayableuisucrediteduto:
a. Payutheupayrollutaxes.
b. Recordutheupayroll.
c. Payutheupayroll.
d. Distributeutheupayroll.
ANS: B
Whenutheupayrolluisurecorded,uPayrolluisudebiteduanduWagesuPayableuisucredited.u Whenupayrollutaxesuar
eupaid,utheuvariousuliabilityuaccountsuareudebiteduanduCashuisucredited.u Whenutheupayrolluisupaid,uWag
esuPayableuisudebiteduanduCashuisucredited.u Whenutheupayrolluisudistributed,uWorkuinuProcess,uFactoryu
Overhead,uanduSellinguanduAdministrativeuExpensesuareudebiteduanduPayrolluisucredited.
12.u Selectedudatauconcerningutheupastufiscaluyear'suoperationsu(000'suomitted)uofutheuStanleyuManufacturi
nguCompanyuareupresentedubelow:
INVENTORIES
Beginning Endin
g
Rawumaterials $u90 $u85
Workuinuprocess 50 65
Finished 100 90
goods
Otherudata:
Rawumaterialsuused $365
Totalumanufacturingucostsucharged
touproductionuduring
theuyearu(incl
udesurawumaterials,udirectulabor,uand
ufactory
overhead) 680
Costuofugoodsuavailableuforusale 765
Sellinguandugeneraluexpenses 250
Theucostuofurawumaterialsupurchaseduduringutheuyearu
amounteduto:
a. $455.
b. $450.
c. $365.
d. $360.
ANS:u D
Rawumaterialsuused $365
Adduendinguinventoryuofurawumaterials u 85
INTRODUCTIONuTOuCOSTuACCOUNTING
MULTIPLEuCHOICE
1.u u Factoryuoverheaduincludes:
a. Indirectulaborubutunotuindirectumaterials.
b. Indirectumaterialsubutunotuindirectulabor.
c. Allumanufacturingucosts,uexceptuindirectumaterialsuanduindirectulabor.
d. Allumanufacturingucosts,uexceptudirectumaterialsuandudirectulabor.
ANS: D
Factoryuoverheaduincludesuallumanufacturingucostsuexceptudirectumaterialsuandudirectulabor.
2.u u Theutermu"primeucost"urefersuto:
a. Theusumuofudirectulaborucostsuanduallufactoryuoverheaducosts.
b. Theusumuofurawumaterialucostsuandudirectulaborucosts.
c. Allucostsuassociateduwithumanufacturinguotheruthanudirectulaborucostsuandurawumaterialucosts.
d. Manufacturingucostsuincurredutouproduceuunitsuofuoutput.
ANS: B
Theutermu"primeucost"urefersutoutheusumuofurawumaterialsucostsuandudirectulaborucosts.
3.u u Theutermu"conversionucosts"urefersuto:
a. Theusumuofudirectulaborucostsuanduallufactoryuoverheaducosts.
b. Theusumuofurawumaterialucostsuandudirectulaborucosts.
c. Allucostsuassociateduwithumanufacturinguotheruthanudirectulaborucosts.
d. Directulaborucostsuincurredutouproduceuunitsuofuoutput.
ANS: A
Theutermu"conversionucosts"urefersutoutheusumuofudirectulaborucostsuanduallufactoryuoverheaducosts.
4.u u Autypicalufactoryuoverheaducostuis:
a. Freightuout.
b. Stationeryuanduprinting.
c. Depreciationuonumachineryuanduequipment.
d. Postage.
ANS: C
Depreciationuonumachineryuanduequipmentuisuaufactoryuoverheaducostu(i.e.,uituisuaumanufacturingucost,u
butuitucan'tubeuidentifieduwithuspecificujobsuoruprocesses),uwhereasutheuotheruthreeuitemsuareusellinguan
duadministrativeuexpenses.
5.u Underuaujobuorderusystemuofucostuaccounting,utheudollaruamountuofutheuentryutoutransferuinventoryufro
muWorkuinuProcessutouFinisheduGoodsuisutheusumuofutheucostsuchargedutouallujobs:
a. Inuprocessuduringutheuperiod.
b. Completeduandusolduduringutheuperiod.
c. Completeduduringutheuperiod.
d. Starteduinuprocessuduringutheuperiod.
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ANS: C
Whenujobsuareucompleteduduringutheuperiod,uFinisheduGoodsuisudebiteduanduWorkuinuProcessuisucredite
duforutheucostuofutheufinishedujobs.
6.u Whichuofutheufollowinguproductionuoperationsuwouldubeumostulikelyutouemployuaujobuorderusystemuof
ucostuaccounting?ua. Candyumanufacturing
b. Crudeuoilurefining
c. Printingutextubooks
d. FlouruMilling
ANS: C
Printinguwouldubeumostulikelyutouemployuaujobuorderusystemuofucostuaccountingudueutoutheunumberuofuc
ustomujobsuinvolved.u Theumanufactureuofucandy,utheuvulcanizinguofurubber,uandutheurefininguofucrudeu
oiluwouldunormallyubeuaucontinuousuprocessuofuproducingulikeugoodsuanduwouldubeuaccounteduforuund
erutheuprocessucostusystem.
7.u Inujobuorderucosting,utheubasicudocumentuforuaccumulatingutheucostuofueachuorderuisuthe:ua.uJobucostushe
et.
b. Requisitionusheet.
c. Purchaseuorder.
d. Invoice.
ANS: A
Inujobuorderucosting,utheubasicudocumentutouaccumulateutheucostuofueachuorderuisutheujobucostusheet.
8.u u Whenushoulduprocessucostingutechniquesubeuuseduinuassigningucostsutouproducts?
a. Inusituationsuwhereustandarducostingutechniquesushouldunotubeuused
b. Ifutheuproductuisucomposeduofumass-produceduhomogeneousuunits
c. Whenuproductionuisuonlyupartiallyucompleteduduringutheuaccountinguperiod
d. Ifutheuproductuisumanufactureduonutheubasisuofueachuorderureceived
ANS: B
Processucostingutechniquesushouldubeuuseduinuassigningucostsutouproductsuifutheuproductuisucomposeduo
fumass-produceduhomogeneousuunits.
9. Anuindustryuthatuwouldumostulikelyuuseuprocessucostinguproceduresuis:
a. Beverage.
b. HomeuConstruction.
c. Printing.
d. Shipbuilding.
ANS: A
Beverageuproductionuusuallyuconsistsuofumanufacturingu"longuruns"uofuhomogeneousuproductsuforuwhic
huprocessucostinguisuused.u Theuotheruthreeuindustriesuwoulduutilizeujobuorderucosting.
10.u Underuaujobuorderusystemuofucostuaccounting,uCostuofuGoodsuSolduisudebiteduanduFinisheduGoodsuis
ucrediteduforua:ua. Transferuofumaterialsutoutheufactory.
b. Shipmentuofucompletedugoodsutoutheucustomer.
c. Transferuofucompleteduproductionutoutheufinishedugoodsustoreroom.
d. Purchaseuofugoodsuonuaccount.
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ANS: B
Whenucompletedugoodsuareushippedutoucustomers,uCostuofuGoodsuSolduisudebiteduanduFinisheduGoodsui
sucredited.
11.u u PayrolluisudebiteduanduWagesuPayableuisucrediteduto:
a. Payutheupayrollutaxes.
b. Recordutheupayroll.
c. Payutheupayroll.
d. Distributeutheupayroll.
ANS: B
Whenutheupayrolluisurecorded,uPayrolluisudebiteduanduWagesuPayableuisucredited.u Whenupayrollutaxesuar
eupaid,utheuvariousuliabilityuaccountsuareudebiteduanduCashuisucredited.u Whenutheupayrolluisupaid,uWag
esuPayableuisudebiteduanduCashuisucredited.u Whenutheupayrolluisudistributed,uWorkuinuProcess,uFactoryu
Overhead,uanduSellinguanduAdministrativeuExpensesuareudebiteduanduPayrolluisucredited.
12.u Selectedudatauconcerningutheupastufiscaluyear'suoperationsu(000'suomitted)uofutheuStanleyuManufacturi
nguCompanyuareupresentedubelow:
INVENTORIES
Beginning Endin
g
Rawumaterials $u90 $u85
Workuinuprocess 50 65
Finished 100 90
goods
Otherudata:
Rawumaterialsuused $365
Totalumanufacturingucostsucharged
touproductionuduring
theuyearu(incl
udesurawumaterials,udirectulabor,uand
ufactory
overhead) 680
Costuofugoodsuavailableuforusale 765
Sellinguandugeneraluexpenses 250
Theucostuofurawumaterialsupurchaseduduringutheuyearu
amounteduto:
a. $455.
b. $450.
c. $365.
d. $360.
ANS:u D
Rawumaterialsuused $365
Adduendinguinventoryuofurawumaterials u 85
