Test Bank For Principles Of Cost Accounting, 16th Edition

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CHAPTER 1: INTRODUCTION TO COST ACCOUNTINGStudent: ___________________________________________________________________________1.The business entity that converts purchased raw materials into finished goods by using labor, technology, andfacilities is a:A.Manufacturer.B.Merchandiser.C.Service business.D.Not-for-profit service agency.2.The business entity that purchases finished goods for resale is a:A.Manufacturer.B.Merchandiser.C.Service business.D.For-profit service business.3.The type of merchandiser who purchases goods from the producer and sells them to shops that sell them tothe consumer is a:A.Manufacturer.B.Retailer.C.Wholesaler.D.Service business.4.Examples of service businesses include:A.Airlines, architects, and hair stylists.B.Department stores, poster shops, and wholesalers.C.Aircraft producers, home builders, and machine tool makers.D.None of these are correct.5.ISO 9000 is a set of international standards for:A.determining the selling price of a product.B.cost control.C.quality management.D.planning,

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6.Unit cost information is important for making all of the following marketing decisionsexcept:A.Determining the selling price of a product.B.Bidding on contracts.C.Determining the amount of advertising needed to promote the product.D.Determining the amount of profit that each product earns.7.The process of establishing objectives or goals for the firm and determining the means by which they will bemet is:A.controlling.B.analyzing profitability.C.planning.D.assigning responsibility.8.Control is the process of monitoring the company’s operations to determine whether the company’sobjectives are being achieved.Effective control is achieved through all of the followingexcept:A.periodically measuring and comparing company results.B.assigning responsibility for costs to employees responsible for those costs.C.constantly monitoring employees to ensure they do exactly as they are told.D.taking necessary corrective action when variances warrant doing so.9.Dan Louis is the supervisor of the Assembly Department of Wiggerman Corporation.He has control overand is responsible for manufacturing costs traced to the department.The Assembly Department is an exampleof a(n):A.cost center.B.inventory center.C.supervised work center.D.worker’s center.10.Which of the following items of cost would beleastlikely to appear on a performance report based onresponsibility accounting for the supervisor of an assembly line in a large manufacturing situation?A.Direct laborB.Indirect materialsC.Selling expensesD.Repairs and maintenance

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11.Which of the following items of cost would beleastlikely to appear on a performance report based onresponsibility accounting for the supervisor of an assembly line in a large manufacturing situation?A.Direct laborB.Supervisor's salaryC.MaterialsD.Repairs and maintenance12.Responsibility accounting would most likely hold a manager of a manufacturing unit responsible for:A.cost of raw materials.B.quantity of raw materials used.C.the number of units ordered.D.amount of taxes incurred.13.Which of the following statements best describes a characteristic of a performance report prepared for useby a production line department head?A.The costs in the report should include only those controllable by the department head.B.The report should be stated in dollars rather than in physical units so the department head knows the financialmagnitude of any variances.C.The report should include information on all costs chargeable to the department, regardless of their origin orcontrol.D.It is more important that the report be precise than timely.14.A budget:A.is a monthly financial statement issued to a company’s lenders.B.is management’s operating plan expressed in units and dollars.C.documents the production department’s schedule.D.is the basis for the annual sales forecast.15.Joshua Company prepares monthly performance reports for each department.The budgeted amounts ofwages for the Finishing Department for the month of August and for the eight-month period ended August 31were $12,000 and $100,000, respectively.Actual wages paid through July were $91,500, and wages for themonth of August were $11,800.The month and year-to-date variances, respectively, for wages on the Augustperformance report would be:A.$200 F; $8,500 FB.$200 F; $3,300 UC.$200 U; $3,300 UD.$200 U; $8,500 F

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16.The January performance report for cab no. 52 of Teri’s Taxi Service was as follows:ExpenseBudgetedActualVarianceDriver’s wages$2,000$1,800$200 FGasoline30027030 FMaintenance200400200 UInsurance10011010UTotal$2,600$2,580$20F(A) Possible reason(s) for the variance in the driver’s wages could be:A.A new driver was assigned to cab no. 52 on January 5, replacing one who retired after 30 years of service.B.The cab was in the shop for repairs for a few days.C.Business wasslow so cab no. 52 was idled for two days.D.All of the above are possible reasons.17.As a result of recent accounting scandals involving companies such as Enron and World Com, theSarbanes-Oxley Act of 2002 was written to protect shareholders of public companies by improvingA.management accounting.B.corporate governance.C.professional competence.D.the corporate legal process.18.Which of the following isnota key element of the Sarbanes Oxley Act to improve corporate governance?A.The establishment of the Public Company Accounting Oversight BoardB.Requiring a company’s annual report to contain an internal control report that includes management’sopinion on the effectiveness of internal controlC.Severe criminal penalties for retaliation against“whistleblowers”D.Requiring that the company’s performance reports are prepared in accordance with generally acceptedaccounting principles19.Cost accounting differs from financial accounting in that financial accounting:A.Is mostly concerned with external financial reporting.B.Is mostly concerned with individual departments of the company.C.Provides the additional information required for special reports to management.D.Puts more emphasis on future operations.20.Taylor Logan is an accountant with the Tanner Corporation.Taylor’s duties include preparing reports thatfocus on both historical and estimated data needed to conduct ongoing operations and do long-rangeplanning.Taylor is a(n)A.certified financial planner.B.management accountant.C.financial accountant.D.auditor.

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21.The following data were taken from Mansfield Merchandisers on January 31:Merchandise inventory, January 1$90,000Sales salaries35,000Merchandise inventory, January 3165,000Purchases560,000What was the Cost of goods sold in January?A.$585,000B.$650,000C.$620,000D.$535,00022.Umberg Merchandise Company’s cost of goods sold last month was $1,350,000.the MerchandiseInventory at the beginning of the month was $250,000 and there was $325,000 of Merchandise Inventory at theend of the month.Umberg’s merchandise purchases were:A.$1,350,000B.$1,275,000C.$1,425,000D.$1,675,00023.Ashley Corp. had finished goods inventory of $50,000 and $60,000 at April 1 and April 30, respectively,and cost of goods manufactured of $175,000 in April.Cost of goods sold in April was:A.$165,000B.$175,000C.$185,000D.$225,00024.The balance in Post Industries’Finished Goods account at December 30 was $425,000.Its December costof goods manufactured was $1,350,000, its total manufacturing costs were $1,500,000 and its cost of goods soldin December was $1,455,000.What was the balance in Post’s Finished Goods at December 1?A.$380,000B.$320,000C.$470,000D.$530,00025.Inventory accounts for a manufacturer include all of the followingexcept:A.Merchandise Inventory.B.Finished Goods.C.Work in Process.D.Materials.

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26.For a manufacturer, the total cost of manufactured goods completed but still on hand is:A.Merchandise Inventory.B.Finished Goods.C.Work in Process.D.Materials.27.For a manufacturer, manufacturing costs incurred to date for goods in various stages of production, butnotyet completed is:A.Merchandise Inventory.B.Finished Goods.C.Work in Process.D.Materials.28.For a manufacturer, the cost of all materials purchases and on hand to be used in the manufacturing processis:A.Merchandise Inventory.B.Finished Goods.C.Work in Process.D.Materials.29.In the financial statements, Materials should be categorized as:A.Revenue.B.Expenses.C.Assets.D.Liabilities.30.A(n) __________ requires estimating inventory balances during the year for interim financial statementsand shutting down operations to count all inventory items at the end of the year.A.periodic inventory systemB.inventory control accountC.perpetual inventory systemD.inventory cost method

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31.Witt Company, like most manufacturers, maintains a continuous record of purchases, materials issued intoproduction and balances of all goods in stock, so that inventory valuation data is available at anytime.This isan example of a(n)A.perpetual inventory system.B.inventory control account.C.periodic inventory system.D.inventory cost method.32.Which of the following is most likely to be considered an indirect material in the manufacture of a sofa?A.LumberB.GlueC.FabricD.Foam rubber33.The Macke Company’s payroll summary showed the following in November:Sales department salaries$10,000Supervisor salaries20,000Assembly workers’wages25,000Machine operators’wages35,000Maintenance workers’wages15,000Accounting department salaries5,000What is the amount that would be included in direct labor in November?A.$25,000B.$60,000C.$95,000D.$120,00034.The wages of which of the following employees wouldnotbe included in the product cost for amanufacturer of custom-built home cooking appliances?A.shipping clerkB.appliance body welderC.factory janitorD.shop floor supervisor35.The Shiplett Company’s payroll summary showed the following in November:Supervisors’salaries$40,000Legal department salaries10,000Maintenance workers’wages30,000Machine operators’wages70,000Assembly workers’wages50,000Sales department salaries20,000

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What is the amount that would be included in factory overhead in November?A.$240,000B.$190,000C.$70,000D.$30,00036.Factory overhead includes:A.Indirect labor but not indirect materials.B.Indirect materials but not indirect labor.C.All manufacturing costs, except indirect materials and indirect labor.D.All manufacturing costs, except direct materials and direct labor.37.A typical factory overhead cost is:A.Freight out.B.Stationery and printing.C.Depreciation on machinery and equipment.D.Postage.38.Factory overhead would include:A.Wages of office clerk.B.Sales manager’s salary.C.Supervisor’s salary.D.Tax accountant’s salary.39.The term "prime cost" refers to:A.The sum of direct labor costs and all factory overhead costs.B.The sum of direct material costs and direct labor costs.C.All costs associated with manufacturing other than direct labor costs and direct material costs.D.Manufacturing costs incurred to produce units of output.40.The following data are from Burton Corporation, a manufacturer, for the month of September:Direct materials used$135,000Supervisors’salaries6,000Machine operators’wages200,000Sales office rent and utilities22,000Machine depreciation35,000Secretary to the Chief Executive Officer salary3,000Factory insurance15,000

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Compute the prime costs.A.$344,000B.$135,000C.$335,000D.$256,00041.The term "conversion costs" refers to:A.The sum of direct labor costs and all factory overhead costs.B.The sum of direct material costs and direct labor costs.C.All costs associated with manufacturing other than direct labor costs.D.Direct labor costs incurred to produce units of output.42.The following data are from Baker Company, a manufacturer, for the month of October:Machine operators’wages$100,000Supervisors’salaries3,000Factory insurance7,500Secretary to the Chief Executive Officer salary1,500Machine depreciation17,500Sales office rent and utilities11,000Direct materials used67,500Compute the conversion costs.A.$167,500B.$104,500C.$140,500D.$128,00043.Payroll is debited and Wages Payable is credited to:A.Pay the payroll taxes.B.Record the payroll.C.Pay the payroll.D.Distribute the payroll.44.Which of the following isnota cost that is accumulated in Work in Process?A.Direct materialsB.Administrative expenseC.Direct laborD.Factory overhead

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45.The entry to record depreciation of the production equipment would be:A.Debit-Depreciation Expense-EquipmentCredit-Accumulated Depreciation-EquipmentB.Debit-Depreciation Expense-EquipmentCredit-Factory OverheadC.Debit-Factory OverheadCredit-Accumulated Depreciation-EquipmentD.Debit-Work-in-ProcessCredit-Accumulated Depreciation-Equipment46.At a certain level of operations, per unit costs and selling price are as follows:manufacturing costs, $50;selling and administrative expenses, $10; selling price, $80.Given this information, the mark-on percentage tomanufacturing cost used to determine selling price must have been:A.40 percent.B.60 percent.C.33 percent.D.25 percent.47.Arnold Furniture Company produced 4,000 chairs in July.The manufacturing costs were:Direct materials$25,000Direct labor11,000Factory overhead12,000Selling expense5,000Administrative expense6,000The cost per tent is:A.$14.75.B.$12.00.C.$9.00.D.$6.25.48.Mountain Company produced 20,000 blankets in June to be sold during the holiday season.Themanufacturing costs were:Direct materials$125,000Direct labor55,000Factory overhead60,000

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Management has decided that the mark-on percentage necessary to cover the product’s share of selling and administrative expenses and to earn asatisfactory profit is 30%.The selling price per blanket should be:A.$12.00.B.$15.60.C.$23.60.D.$31.20.49.The statement of costs of goods manufactured shows:A.Office supplies used in accounting office.B.Deprecation of factory building.C.Salary of sales manager.D.Rent paid on finished goods warehouse.50.Selected data concerning the past fiscal year's operations (000's omitted) of the Stanley ManufacturingCompany are presented below:INVENTORIESBeginningEndingMaterials$ 90$85Work in process5065Finished goods10090Other data:Direct materials used$365Total manufacturing costs charged to production duringthe year (includes directmaterials, direct labor, and factory overhead)680Cost of goods available for sale765Selling and general expenses250Assuming Stanley doesnotuse indirect materials, the cost of materials purchased during the year amounted to:A.$455.B.$450.C.$365.D.$360.51.Selected data concerning the past fiscal year's operations (000's omitted) of Kraig Fabricators are presentedbelow:INVENTORIES

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BeginningEndingMaterials$180$170Work in process100130Finished goods200180Other data:Direct materials used$730Total manufacturing costs charged to production duringthe year (includes direct materials, direct labor, and factoryoverhead)1,360Cost of goods available for sale1,530Selling and general expenses500The cost of goods manufactured during the year was:A.$1,410.B.$1,330.C.$1,420.D.$1,470.52.Selected data concerning the past fiscal year's operations (000's omitted) of Hercules Mills are presentedbelow:INVENTORIESBeginningEndingMaterials$ 18$17Work in process1013Finished goods2018Other data:Direct materials used$ 73Total manufacturing costs charged to production duringthe year (includes direct materials, direct labor, and factoryoverhead)136Cost of goods available for sale153Selling and general expenses50The cost of goods sold during the year was:A.$135.B.$146.C.$153.D.$155.53.Which of the following production operations would be most likely to employ a job order system of costaccounting?A.Candy manufacturingB.Crude oil refiningC.Printing business cardsD.Flour milling

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54.A law firm wanting to track the costs of serving different clients may use a:A.process cost system.B.job order cost system.C.cost control system.D.standard cost system.55.When should process costing techniques be used in assigning costs to products?A.In situations where standard costing techniques should not be usedB.If products manufactured are substantially identicalC.When production is only partially completed during the accounting periodD.If products are manufactured on the basis of each order received56.An industry that would mostlikely use process costing procedures is:A.Beverage.B.Home Construction.C.Printing.D.Shipbuilding.57.A standard cost system is one:A.that provides a separate record of cost for each special-order product.B.that uses predetermined costs to furnish a measurement that helps management make decisions regarding theefficiency of operations.C.that accumulates costs for each department or process in the factory.D.where costs are accumulated on a job cost sheet.58.In job order costing, the basic document for accumulating the cost of each job is the:A.Job cost sheet.B.Requisition sheet.C.Purchase order.D.Invoice.

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59.Under a job order cost system of accounting, the entry to distribute payroll to the appropriate accountswould be:A.Debit-PayrollCredit-Wages PayableB.Debit-Work in ProcessDebit-Factory OverheadDebit-Selling and Administrative ExpenseCredit-PayrollC.Debit-Work in ProcessDebit-Finished GoodsDebit-Cost of Goods SoldCredit-PayrollD.Debit-Work in ProcessDebit-Factory OverheadDebit-Selling and Administrative ExpenseCredit-Wages Payable60.Under a job order system of cost accounting, the dollar amount of the entry to transfer inventory from Workin Process to Finished Goods is the sum of the costs charged to all jobs:A.In process during the period.B.Completed and sold during the period.C.Completed during the period.D.Started in process during the period.61.Under a job order system of cost accounting, Cost of Goods Sold is debited and Finished Goods is creditedfor a:A.Transfer of materials to the factory.B.Shipment of completed goods to the customer.C.Transfer of completed production to the finished goods storeroom.D.Purchase of goods on account.62.The Institute of Management Accountants (IMA) Statement of Professional Practice includes all of thefollowing standardsexcept:A.Confidentiality.B.Commitment.C.Integrity.D.Competence.

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63.According to the Institute of Management Accountants (IMA) Statement of Ethical Professional Practice,performing professional duties in accordance with relevant laws, regulations and technical standards is acomponent of which standard?A.CompetenceB.ConfidentialityC.IntegrityD.Credibility64.Joey Bruce is a cost accountant at ABC Industries.Joey told Tanner Scott, his financial advisor, that hewas working on a project to determine the feasibility of a merger of ABC Industries with Left Guard Company,a major competitor.Which of the Institute of Management Accountant’s (IMA) ethical standards may havebeen violated?A.CompetenceB.ConfidentialityC.IntegrityD.Credibility65.According to the Institute of Management Accountants (IMA) Statement of Ethical Professional Practice,under the Integrity Standard, each member has the responsibility to:A.Communicate information fairly and objectively.B.Keep information confidential.C.Mitigate actual conflicts of interest.D.Maintain an appropriate level of professional competence.66.Tom Jones, a management accountant, was faced with an ethical conflict at the office.According to theInstitute of Management Accountants’(IMA) Statement of Professional Practice, the first action Tom shouldpursue is to:A.follow his organization’s established policies on the resolution of such conflict.B.contact the local newspaper.C.contact the company’s audit committee.D.consult an attorney.

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