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INTRODUCTIONaTOaCOSTaACCOUNTING
MULTIPLEaCHOICE
1.a a Factoryaoverheadaincludes:
a. Indirectalaborabutanotaindirectamaterials.
b. Indirectamaterialsabutanotaindirectalabor.
c. Allamanufacturingacosts,aexceptaindirectamaterialsaandaindirectalabor.
d. Allamanufacturingacosts,aexceptadirectamaterialsaandadirectalabor.
ANS: D
Factoryaoverheadaincludesaallamanufacturingacostsaexceptadirectamaterialsaandadirectalabor.
2.a a Theaterma"primeacost"arefersato:
a. Theasumaofadirectalaboracostsaandaallafactoryaoverheadacosts.
b. Theasumaofarawamaterialacostsaandadirectalaboracosts.
c. Allacostsaassociatedawithamanufacturingaotherathanadirectalaboracostsaandarawamaterialacosts.
d. Manufacturingacostsaincurredatoaproduceaunitsaofaoutput.
ANS: B
Theaterma"primeacost"arefersatoatheasumaofarawamaterialsacostsaandadirectalaboracosts.
3.a a Theaterma"conversionacosts"arefersato:
a. Theasumaofadirectalaboracostsaandaallafactoryaoverheadacosts.
b. Theasumaofarawamaterialacostsaandadirectalaboracosts.
c. Allacostsaassociatedawithamanufacturingaotherathanadirectalaboracosts.
d. Directalaboracostsaincurredatoaproduceaunitsaofaoutput.
ANS: A
Theaterma"conversionacosts"arefersatoatheasumaofadirectalaboracostsaandaallafactoryaoverheadacosts.
4.a a Aatypicalafactoryaoverheadacostais:
a. Freightaout.
b. Stationeryaandaprinting.
c. Depreciationaonamachineryaandaequipment.
d. Postage.
ANS: C
Depreciationaonamachineryaandaequipmentaisaaafactoryaoverheadacosta(i.e.,aitaisaaamanufacturingacost,ab
utaitacan'tabeaidentifiedawithaspecificajobsaoraprocesses),awhereasatheaotherathreeaitemsaareasellingaanda
administrativeaexpenses.
5.a Underaaajobaorderasystemaofacostaaccounting,atheadollaraamountaofatheaentryatoatransferainventoryafrom
aWorkainaProcessatoaFinishedaGoodsaisatheasumaofatheacostsachargedatoaallajobs:
a. Inaprocessaduringatheaperiod.
b. Completedaandasoldaduringatheaperiod.
c. Completedaduringatheaperiod.
d. Startedainaprocessaduringatheaperiod.
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ANS: C
Whenajobsaareacompletedaduringatheaperiod,aFinishedaGoodsaisadebitedaandaWorkainaProcessaisacredited
aforatheacostaofatheafinishedajobs.
6.a Whichaofatheafollowingaproductionaoperationsawouldabeamostalikelyatoaemployaaajobaorderasystemaofa
costaaccounting?aa. Candyamanufacturing
b. Crudeaoilarefining
c. Printingatextabooks
d. FlouraMilling
ANS: C
Printingawouldabeamostalikelyatoaemployaaajobaorderasystemaofacostaaccountingadueatoatheanumberaofac
ustomajobsainvolved.a Theamanufactureaofacandy,atheavulcanizingaofarubber,aandathearefiningaofacrudeaoi
lawouldanormallyabeaaacontinuousaprocessaofaproducingalikeagoodsaandawouldabeaaccountedaforaunderat
heaprocessacostasystem.
7.a Inajobaorderacosting,atheabasicadocumentaforaaccumulatingatheacostaofaeachaorderaisathe:aa.aJobacostashee
t.
b. Requisitionasheet.
c. Purchaseaorder.
d. Invoice.
ANS: A
Inajobaorderacosting,atheabasicadocumentatoaaccumulateatheacostaofaeachaorderaisatheajobacostasheet.
8.a a Whenashouldaprocessacostingatechniquesabeausedainaassigningacostsatoaproducts?
a. Inasituationsawhereastandardacostingatechniquesashouldanotabeaused
b. Ifatheaproductaisacomposedaofamass-producedahomogeneousaunits
c. Whenaproductionaisaonlyapartiallyacompletedaduringatheaaccountingaperiod
d. Ifatheaproductaisamanufacturedaonatheabasisaofaeachaorderareceived
ANS: B
Processacostingatechniquesashouldabeausedainaassigningacostsatoaproductsaifatheaproductaisacomposedaof
amass-producedahomogeneousaunits.
9. Anaindustryathatawouldamostalikelyauseaprocessacostingaproceduresais:
a. Beverage.
b. HomeaConstruction.
c. Printing.
d. Shipbuilding.
ANS: A
Beverageaproductionausuallyaconsistsaofamanufacturinga"longaruns"aofahomogeneousaproductsaforawhic
haprocessacostingaisaused.a Theaotherathreeaindustriesawouldautilizeajobaorderacosting.
10.a Underaaajobaorderasystemaofacostaaccounting,aCostaofaGoodsaSoldaisadebitedaandaFinishedaGoodsaisa
creditedaforaa:aa. Transferaofamaterialsatoatheafactory.
b. Shipmentaofacompletedagoodsatoatheacustomer.
c. Transferaofacompletedaproductionatoatheafinishedagoodsastoreroom.
d. Purchaseaofagoodsaonaaccount.
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ANS: B
Whenacompletedagoodsaareashippedatoacustomers,aCostaofaGoodsaSoldaisadebitedaandaFinishedaGoodsais
acredited.
11.a a PayrollaisadebitedaandaWagesaPayableaisacreditedato:
a. Payatheapayrollataxes.
b. Recordatheapayroll.
c. Payatheapayroll.
d. Distributeatheapayroll.
ANS: B
Whenatheapayrollaisarecorded,aPayrollaisadebitedaandaWagesaPayableaisacredited.a Whenapayrollataxesaar
eapaid,atheavariousaliabilityaaccountsaareadebitedaandaCashaisacredited.a Whenatheapayrollaisapaid,aWage
saPayableaisadebitedaandaCashaisacredited.a Whenatheapayrollaisadistributed,aWorkainaProcess,aFactoryaOv
erhead,aandaSellingaandaAdministrativeaExpensesaareadebitedaandaPayrollaisacredited.
12.a Selectedadataaconcerningatheapastafiscalayear'saoperationsa(000'saomitted)aofatheaStanleyaManufacturin
gaCompanyaareapresentedabelow:
INVENTORIES
Beginning Endin
g
Rawamaterials $a90 $a85
Workainaprocess 50 65
Finished 100 90
goods
Otheradata:
Rawamaterialsaused $365
Totalamanufacturingacostsacharged
toaproductionaduring
theayeara(incl
udesarawamaterials,adirectalabor,aanda
factory
overhead) 680
Costaofagoodsaavailableaforasale 765
Sellingaandageneralaexpenses 250
Theacostaofarawamaterialsapurchasedaduringatheayeara
amountedato:
a. $455.
b. $450.
c. $365.
d. $360.
ANS:a D
Rawamaterialsaused $365
Addaendingainventoryaofarawamaterials a 85
INTRODUCTIONaTOaCOSTaACCOUNTING
MULTIPLEaCHOICE
1.a a Factoryaoverheadaincludes:
a. Indirectalaborabutanotaindirectamaterials.
b. Indirectamaterialsabutanotaindirectalabor.
c. Allamanufacturingacosts,aexceptaindirectamaterialsaandaindirectalabor.
d. Allamanufacturingacosts,aexceptadirectamaterialsaandadirectalabor.
ANS: D
Factoryaoverheadaincludesaallamanufacturingacostsaexceptadirectamaterialsaandadirectalabor.
2.a a Theaterma"primeacost"arefersato:
a. Theasumaofadirectalaboracostsaandaallafactoryaoverheadacosts.
b. Theasumaofarawamaterialacostsaandadirectalaboracosts.
c. Allacostsaassociatedawithamanufacturingaotherathanadirectalaboracostsaandarawamaterialacosts.
d. Manufacturingacostsaincurredatoaproduceaunitsaofaoutput.
ANS: B
Theaterma"primeacost"arefersatoatheasumaofarawamaterialsacostsaandadirectalaboracosts.
3.a a Theaterma"conversionacosts"arefersato:
a. Theasumaofadirectalaboracostsaandaallafactoryaoverheadacosts.
b. Theasumaofarawamaterialacostsaandadirectalaboracosts.
c. Allacostsaassociatedawithamanufacturingaotherathanadirectalaboracosts.
d. Directalaboracostsaincurredatoaproduceaunitsaofaoutput.
ANS: A
Theaterma"conversionacosts"arefersatoatheasumaofadirectalaboracostsaandaallafactoryaoverheadacosts.
4.a a Aatypicalafactoryaoverheadacostais:
a. Freightaout.
b. Stationeryaandaprinting.
c. Depreciationaonamachineryaandaequipment.
d. Postage.
ANS: C
Depreciationaonamachineryaandaequipmentaisaaafactoryaoverheadacosta(i.e.,aitaisaaamanufacturingacost,ab
utaitacan'tabeaidentifiedawithaspecificajobsaoraprocesses),awhereasatheaotherathreeaitemsaareasellingaanda
administrativeaexpenses.
5.a Underaaajobaorderasystemaofacostaaccounting,atheadollaraamountaofatheaentryatoatransferainventoryafrom
aWorkainaProcessatoaFinishedaGoodsaisatheasumaofatheacostsachargedatoaallajobs:
a. Inaprocessaduringatheaperiod.
b. Completedaandasoldaduringatheaperiod.
c. Completedaduringatheaperiod.
d. Startedainaprocessaduringatheaperiod.
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ANS: C
Whenajobsaareacompletedaduringatheaperiod,aFinishedaGoodsaisadebitedaandaWorkainaProcessaisacredited
aforatheacostaofatheafinishedajobs.
6.a Whichaofatheafollowingaproductionaoperationsawouldabeamostalikelyatoaemployaaajobaorderasystemaofa
costaaccounting?aa. Candyamanufacturing
b. Crudeaoilarefining
c. Printingatextabooks
d. FlouraMilling
ANS: C
Printingawouldabeamostalikelyatoaemployaaajobaorderasystemaofacostaaccountingadueatoatheanumberaofac
ustomajobsainvolved.a Theamanufactureaofacandy,atheavulcanizingaofarubber,aandathearefiningaofacrudeaoi
lawouldanormallyabeaaacontinuousaprocessaofaproducingalikeagoodsaandawouldabeaaccountedaforaunderat
heaprocessacostasystem.
7.a Inajobaorderacosting,atheabasicadocumentaforaaccumulatingatheacostaofaeachaorderaisathe:aa.aJobacostashee
t.
b. Requisitionasheet.
c. Purchaseaorder.
d. Invoice.
ANS: A
Inajobaorderacosting,atheabasicadocumentatoaaccumulateatheacostaofaeachaorderaisatheajobacostasheet.
8.a a Whenashouldaprocessacostingatechniquesabeausedainaassigningacostsatoaproducts?
a. Inasituationsawhereastandardacostingatechniquesashouldanotabeaused
b. Ifatheaproductaisacomposedaofamass-producedahomogeneousaunits
c. Whenaproductionaisaonlyapartiallyacompletedaduringatheaaccountingaperiod
d. Ifatheaproductaisamanufacturedaonatheabasisaofaeachaorderareceived
ANS: B
Processacostingatechniquesashouldabeausedainaassigningacostsatoaproductsaifatheaproductaisacomposedaof
amass-producedahomogeneousaunits.
9. Anaindustryathatawouldamostalikelyauseaprocessacostingaproceduresais:
a. Beverage.
b. HomeaConstruction.
c. Printing.
d. Shipbuilding.
ANS: A
Beverageaproductionausuallyaconsistsaofamanufacturinga"longaruns"aofahomogeneousaproductsaforawhic
haprocessacostingaisaused.a Theaotherathreeaindustriesawouldautilizeajobaorderacosting.
10.a Underaaajobaorderasystemaofacostaaccounting,aCostaofaGoodsaSoldaisadebitedaandaFinishedaGoodsaisa
creditedaforaa:aa. Transferaofamaterialsatoatheafactory.
b. Shipmentaofacompletedagoodsatoatheacustomer.
c. Transferaofacompletedaproductionatoatheafinishedagoodsastoreroom.
d. Purchaseaofagoodsaonaaccount.
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ANS: B
Whenacompletedagoodsaareashippedatoacustomers,aCostaofaGoodsaSoldaisadebitedaandaFinishedaGoodsais
acredited.
11.a a PayrollaisadebitedaandaWagesaPayableaisacreditedato:
a. Payatheapayrollataxes.
b. Recordatheapayroll.
c. Payatheapayroll.
d. Distributeatheapayroll.
ANS: B
Whenatheapayrollaisarecorded,aPayrollaisadebitedaandaWagesaPayableaisacredited.a Whenapayrollataxesaar
eapaid,atheavariousaliabilityaaccountsaareadebitedaandaCashaisacredited.a Whenatheapayrollaisapaid,aWage
saPayableaisadebitedaandaCashaisacredited.a Whenatheapayrollaisadistributed,aWorkainaProcess,aFactoryaOv
erhead,aandaSellingaandaAdministrativeaExpensesaareadebitedaandaPayrollaisacredited.
12.a Selectedadataaconcerningatheapastafiscalayear'saoperationsa(000'saomitted)aofatheaStanleyaManufacturin
gaCompanyaareapresentedabelow:
INVENTORIES
Beginning Endin
g
Rawamaterials $a90 $a85
Workainaprocess 50 65
Finished 100 90
goods
Otheradata:
Rawamaterialsaused $365
Totalamanufacturingacostsacharged
toaproductionaduring
theayeara(incl
udesarawamaterials,adirectalabor,aanda
factory
overhead) 680
Costaofagoodsaavailableaforasale 765
Sellingaandageneralaexpenses 250
Theacostaofarawamaterialsapurchasedaduringatheayeara
amountedato:
a. $455.
b. $450.
c. $365.
d. $360.
ANS:a D
Rawamaterialsaused $365
Addaendingainventoryaofarawamaterials a 85
