Exam: 061400RR – Cost Concepts and Types of Costing

Exam: 061400RR – Cost Concepts and Types of CostingWhen you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded untilyou hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam.Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across apage break, so be sure that you have seen the entire question and all the answers before choosing an answer.1. If a company wants to decrease its total quality cost, it would usually be best to spend more money onA. internal and external failure.B. appraisal and external failure.C. prevention and internal failure.D. prevention.2. At the beginning of December, Sneeden Corporation had $32,000 of raw materials on hand. Duringthe month, the Corporation purchased an additional $71,000 of raw materials. During December,$75,000 of raw materials was requisitioned from the storeroom for use in production. What are the totalcredits entered in the Raw Materials account during the month of December?A. $75,000B. $71,000C. $32,000D.$103,0003. Which of the following is classified as a direct labor cost?A. Neither wages of assembly-line workers nor a factory supervisorB. Wages of a factory supervisor but not assembly line workersC. Wages of assembly-line workers but not a factory supervisorD. Both wages of assembly-line workers and a factory supervisor4. Under the FIFO method, unit costs wouldA. result from costs in the beginning inventory being added in with current period costs.B. contain some element of cost from the prior period.C. not include costs incurred to complete beginning inventory.D. not contain some elements of cost from the prior period.5. Supply costs at Chobot Corporation’s chain of gyms are listed below:Client-Visits Supply CostJanuary12,183$26,642February12,408$26,853March12,232$26,675AprilMayJuneJulyAugustSeptember12,57912,52712,60812,14312,00511,944$26,054$26,988$27,064$26,585$26,454$26,393Management believes that supply cost is a mixed cost that depends on client-visits. Use the high-lowmethod to estimate the variable and fixed components of this cost. Compute the variable component first,rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearestwhole dollar. These estimates would be closest to which value?A.$1.01 per client-visit; $14,330 per monthB.$0.99 per client-visit; $14,607 per monthC.$2.18 per client-visit; $26,745 per monthD. $1.04 per client-visit; $13,949 per month6. In describing the cost equation, Y = a + bX, what is "a"?A.The total fixed costB.The independent variable level of activityC.The variable cost per unit of activityD. The dependent variable cost7. Dubey Surgical Hospital uses the direct method to allocate service department costs to operatingdepartments. The hospital has two service departments, Telecommunications and Administration, andtwo operating departments, Surgery and Recovery.Telecommunications Department costs are allocated on the basis of the number oftelecommunications ports in departments and Administration Department costs are allocated on thebasis of employees. The total Surgery Department cost after service department allocations is closestto which value?A.$478,133 B.$484,059C.$481,336D.$473,1698. Which of the following costs, if expressed on a per unit basis, would be expected to decrease as thelevel of production and sales increases?A.Variable manufacturing overheadB.Fixed manufacturing overheadC.Sales commissionsD. Direct materials9. Laurie Corporation uses the FIFO method in its process costing system. Department A is the firststage of Laurie Corporation’s production process. The following information is available for conversioncosts for the month of May for Department A:How many are the equivalent units of production for conversion costs for the month?A.44,000 unitsB.38,000 unitsC.36,000 unitsD. 42,000 units10. Given the cost formula, Y = $7,000 + $1.80X, what would be the total cost for an activity levelof 4,000 units?A. $200B. $7,200C. $7,000D. $14,2001. Electrical costs at one of Kantola Corporation’s factories are listed below:Machine-Hours Electrical CostFebruary3,570$36,405March3,580$36,493April3,553$36,302May3,627$36,833June3,625$36,800July3,565$36,366August3,548$36,237September3,542$36,213October3,593$36,577Management believes that electrical cost is a mixed cost that depends on machine-hours. Use the highlow method to estimate the variable and fixed components of this cost. Compute the variable componentfirst, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to thenearest whole dollar. What would these estimates be closest to?A. $0.14 per machine-hour; $36,336 per monthB. $7.48 per machine-hour; $9,708 per monthC. $10.19 per machine-hour; $36,470 per monthD. $7.29 per machine-hour; $10,392 per month2. Adams Corporation makes two products: Product A and Product B. Annual production and sales are500 units of Product A and 900 units of Product B. The company has traditionally used direct labor-hoursas the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hoursper unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for nextperiod is $67,522. The company is considering switching to an activity-based costing system for thepurpose of computing unit product costs for external reports. The new activity-based costing system wouldhave three overhead activity cost pools—Activity 1, Activity 2, and General Factory—with estimatedoverhead costs and expected activity as follows:(Note: The General Factory activity cost pool’s costs are allocated on the basis of direct labor-hours.)The overhead cost per unit of Product A under the traditional costing system is closest to whichvalue?A. $41.55B. $21.94C. $3.56D. $5.5313.Pujol Children’s Clinic allocates service department costs to operating departments using the stepdown method. The clinic has two service departments, Administration and Information Technology(IT), and two operating departments, Prenatal and Pediatric. Data concerning those departments arepresented in the chart below.Administration costs are allocated first on the basis of employees and IT costs are allocated second onthe basis of PCs. The total Pediatric Department cost after allocations is closest to which value?A.$361,823 B.$370,659C.$328,202D.$370,7904. What does overapplied manufacturing overhead mean?A. The estimated manufacturing overhead cost was less than the applied manufacturing overhead cost.B. The estimated manufacturing overhead cost was less than the actual manufacturing overhead cost.C. The applied manufacturing overhead cost was less than the actual manufacturing overhead cost.D. The applied manufacturing overhead cost was greater than the actual manufacturing overhead cost.15.During October, Beidleman Inc. transferred $52,000 from Work in Process to Finished Goods andrecorded a Cost of Goods Sold of $55,000. The journal entries to record these transactions wouldinclude aA. credit to Work in Process of $52,000.B. credit to Finished Goods of $52,000.C. credit to Cost of Goods Sold of $55,000.D. debit to Finished Goods of $55,000.16.The following table presents information about units processed and processing costs incurredduring a recent month in the Refining Department of a manufacturing company.The beginning work in process inventory included $11,000 of conversion cost. During the month, theDepartment incurred an additional $290,000 in conversion costs.Assuming that the company uses the weighted-average cost method, what is the cost per equivalent unitfor conversion costs for the month in the Blending Department? Round to the nearest cent.A. $2.53B. $2.50C. $2.44D. $2.557. Eagle Company’s quality cost report is to be based on the following data:What would be the total prevention cost appearing on the quality cost report?A.$48,000 B.$77,000 C.$86,000 D.$57,00018.Epolito Corporation incurred $87,000 of actual Manufacturing Overhead costs duringSeptember. During the same period, the Manufacturing Overhead applied to Work in Process was$89,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costswould include aA. debit to Work in Process of $89,000.B. credit to Manufacturing Overhead of $87,000.C. debit to Manufacturing Overhead of $87,000.D. credit to Work in Process of $89,000.9. Job 593 was recently completed. The following data have been recorded on its job cost sheet:The Corporation applies manufacturing overhead on the basis of machine-hours. The predeterminedoverhead rate is $14 per machine-hour. What amount would be the total cost recorded on the job costsheet for Job 593?A. $6,705B. $4,255C. $3,219D. $5,24920. Narver Corporation uses the weighted-average method in its process costing system. Operating datafor the Lubricating Department for the month of October appear below:What were the equivalent units for conversion costs in the Lubricating Department for October?A. 47,780B. 37,100C. 43,100D. 44,780End of exam