20 Multiple Choice Questions In Accounting For Managers

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Question 1 of 20

5.0 Points

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is:

MACROBUTTON HTMLDirect A. appraisal costs.
MACROBUTTON HTMLDirect B. value engineering.
MACROBUTTON HTMLDirect C. activity-based costing.
MACROBUTTON HTMLDirect D. prevention costs.

Question 2 of 20

5.0 Points

Which of the following is a lean strategy?

MACROBUTTON HTMLDirect A. Group like machines together.
MACROBUTTON HTMLDirect B. Produce in smaller batches than a traditional system.
MACROBUTTON HTMLDirect C. Maintain a higher level of inventory than a traditional system.
MACROBUTTON HTMLDirect D. Lengthen setup times relative to a traditional system.

Question 3 of 20

5.0 Points

The first step in developing an ABC system is:

MACROBUTTON HTMLDirect A. calculate an activity cost allocation rate for each activity.
MACROBUTTON HTMLDirect B. allocate the costs to the cost object using the activity cost allocation rates.
MACROBUTTON HTMLDirect C. select an allocation base for each activity.
MACROBUTTON HTMLDirect D. identify the primary activities and estimate a total cost pool for each.

Question 4 of 20

5.0 Points

Which term listed below describes costs incurred when the company fails to detect poor quality goods or services before delivery to the customer?

MACROBUTTON HTMLDirect A. Internal failure costs
MACROBUTTON HTMLDirect B. Value-added activity
MACROBUTTON HTMLDirect C. External failure costs
MACROBUTTON HTMLDirect D. Just-in-time production

Question 5 of 20

5.0 Points

The entry to record the purchase of raw materials on account using a job costing system would include a:

MACROBUTTON HTMLDirect A. credit to work-in-process inventory.
MACROBUTTON HTMLDirect B. debit to accounts payable.
MACROBUTTON HTMLDirect C. debit to work-in-process inventory.
MACROBUTTON HTMLDirect D. debit to raw materials inventory.

Question 6 of 20

5.0 Points

Showboat Corporation had actual manufacturing overhead costs for the most recent year of $29,500. Manufacturing overhead is allocated using a predetermined manufacturing overhead rate of $1.50 per direct labor hour. Direct labor cost is $19 per hour. At the end of the year, Cabaret Corporation found it had over allocated manufacturing overhead by $1,250. How much manufacturing overhead was allocated in total during the year?

MACROBUTTON HTMLDirect A. $28,250
MACROBUTTON HTMLDirect B. $29,500
MACROBUTTON HTMLDirect C. $30,750
MACROBUTTON HTMLDirect D. $1,250

Question 7 of 20

5.0 Points

Venus Crates manufactures custom crates for a variety of uses. The following data have been recorded for Job 551, which was recently completed. Direct materials used cost $7,200. There were 82 machine hours used on this job. The predetermined overhead rate is $30 per machine hour used. There were 175 direct labor hours worked on this job at a direct labor wage rate of $24 per hour. What is the total manufacturing cost of Job 551?

MACROBUTTON HTMLDirect A. $13,860
MACROBUTTON HTMLDirect B. $4,200
MACROBUTTON HTMLDirect C. $2,460
MACROBUTTON HTMLDirect D. $7,457

Question 8 of 20

5.0 Points

A(n) ________ is an estimated manufacturing overhead rate computed before the year begins.

MACROBUTTON HTMLDirect A. cost allocation
MACROBUTTON HTMLDirect B. cost driver
MACROBUTTON HTMLDirect C. predetermined manufacturing overhead rate
MACROBUTTON HTMLDirect D. actual manufacturing overhead rate

Question 9 of 20

5.0 Points

The cost of downtime caused by quality problems with the raw materials would be classified as what type of cost?

MACROBUTTON HTMLDirect A. Prevention cost
MACROBUTTON HTMLDirect B. Appraisal cost
MACROBUTTON HTMLDirect C. External failure cost
MACROBUTTON HTMLDirect D. Internal failure cost

Question 10 of 20

5.0 Points

Watson’s Computer Company uses ABC to account for its manufacturing process.

Activities	Indirect activity budget	Allocation base (cost driver)
Materials handling	$52,000	Based on number of parts
Machine setup	30,000	Based on number of setups
Assembling	9,750	Based on number of parts
Packaging	15,300	Based on number of finished units

Watson’s Computer Company expects to produce 2,250 computers. Watson’s Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for materials handling will be:

MACROBUTTON HTMLDirect A. $4.
MACROBUTTON HTMLDirect B. $6.80.
MACROBUTTON HTMLDirect C. $23.11.
MACROBUTTON HTMLDirect D. $7.01.

Question 11 of 20

5.0 Points

In job costing, the journal entry to record the use of direct materials on jobs is to debit work-in-process inventory and credit:

MACROBUTTON HTMLDirect A. raw materials inventory.
MACROBUTTON HTMLDirect B. finished goods inventory.
MACROBUTTON HTMLDirect C. manufacturing overhead.
MACROBUTTON HTMLDirect D. wages payable.

Question 12 of 20

5.0 Points

Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?

MACROBUTTON HTMLDirect A. Internal failure costs
MACROBUTTON HTMLDirect B. Backflush costing
MACROBUTTON HTMLDirect C. Just-in-time
MACROBUTTON HTMLDirect D. External failure costs

Question 13 of 20

5.0 Points

The predetermined indirect cost allocation rate is computed as:

MACROBUTTON HTMLDirect A. total estimated indirect costs / total estimated amount of the allocation base.
MACROBUTTON HTMLDirect B. total amount of the allocation base / total estimated indirect costs.
MACROBUTTON HTMLDirect C. total estimated indirect costs + total estimated amount of the allocation base.
MACROBUTTON HTMLDirect D. total amount of the allocation base – total estimated indirect costs.

Question 14 of 20

5.0 Points

Which of the following is a result of cost distortion?

MACROBUTTON HTMLDirect A. Over costing of all products
MACROBUTTON HTMLDirect B. Under costing of all products
MACROBUTTON HTMLDirect C. Accurate costing of all products
MACROBUTTON HTMLDirect D. Over costing of some products and under costing of other products

Question 15 of 20

5.0 Points

Which of these documents informs the storeroom to send specific materials to the factory floor?

MACROBUTTON HTMLDirect A. Receiving report
MACROBUTTON HTMLDirect B. Bill of materials
MACROBUTTON HTMLDirect C. Purchase order
MACROBUTTON HTMLDirect D. Materials requisition

Question 16 of 20

5.0 Points

Here are selected data for Sunny Sky Corporation.

Beginning raw materials inventory	$37,000	Beginning work-in-process inventory	$62,200
Beginning finished goods inventory	58,300	Cost of materials purchased	151,000
Cost of direct materials requisitioned	91,300	Direct labor incurred	135,000
Actual manufacturing overhead	160,000	Cost of goods manufactured	287,000
Cost of goods sold	265,000	Manufacturing overhead rate (% of direct labor)	125%

What is the ending work-in-process inventory balance?

MACROBUTTON HTMLDirect A. $161,500
MACROBUTTON HTMLDirect B. $170,250
MACROBUTTON HTMLDirect C. $211,200
MACROBUTTON HTMLDirect D. $229,950

Question 17 of 20

5.0 Points

Service firms develop a predetermined rate for some costs. This rate is called the:

MACROBUTTON HTMLDirect A. labor rate.
MACROBUTTON HTMLDirect B. direct cost rate.
MACROBUTTON HTMLDirect C. indirect cost allocation rate.
MACROBUTTON HTMLDirect D. hourly cost rate.

Question 18 of 20

5.0 Points

If jobs have been under costed due to under allocation of manufacturing overhead, then cost of goods sold (COGS) is too low and which of the following corrections must be made?

MACROBUTTON HTMLDirect A. Decrease COGS for the amount of the under allocation
MACROBUTTON HTMLDirect B. Increase COGS for double the amount of the under allocation
MACROBUTTON HTMLDirect C. Decrease COGS for double the amount of the under allocation
MACROBUTTON HTMLDirect D. Increase COGS for the amount of the under allocation

Question 19 of 20

5.0 Points

The benefits of using the ABC costing system are higher if the company:

MACROBUTTON HTMLDirect A. has high indirect costs.
MACROBUTTON HTMLDirect B. produces many different products that use differing amounts of resources.
MACROBUTTON HTMLDirect C. has high indirect costs and produces many different products that use differing amounts of resources.
MACROBUTTON HTMLDirect D. produces only one product.

Question 20 of 20

5.0 Points

Kramer Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each coffee table consists of 20 separate parts totaling $240 in direct materials, and each requires 5 hours of machine time to produce. Additional information follows.

Activity	Allocation Base	Cost Allocation Rate
Materials handling	Number of parts	$2.00 per part
Machining	Machine hours	$2.75 per machine hour
Assembling	Number of parts	$1.00 per part
Packaging	Number of finished units	$3.00 per finished unit

What is the cost of machining per coffee table?

MACROBUTTON HTMLDirect A. $15
MACROBUTTON HTMLDirect B. $21
MACROBUTTON HTMLDirect C. $13.75
MACROBUTTON HTMLDirect D. $55