Accounting 2
Accounting 2
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| 1. Which of the following costs is classified as a prime cost? | ||||
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| 2. Which of the following is classified as a direct labor cost? | |||||||||||||
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| 3. Which is a proper journal entry to record issuing raw materials to be used on a job?
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| 4. Eagle Company’s quality cost report is to be based on the following data:
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| 5. The management of Digges Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The Corporation’s controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 51,000 machine-hours. In addition, capacity is 63,000 machine-hours and the actual level of activity for the year is 53,300 machine-hours. All of the manufacturing overhead is fixed and is $1,702,890 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. If the Corporation bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied? | ||||
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6. Electrical costs at one of Kantola Corporation’s factories are listed below:
Management believes that electrical cost is a mixed cost that depends on machine-hours. Use the high-low method 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 nearest whole dollar. What would these estimates be closest to? |
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| 7. During October, Dorinirl Corporation incurred $60,000 of direct labor costs and $5,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a | ||||
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| 8. What does contribution margin represent? | ||||
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| 9. Adams Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 900 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for next period is $67,522. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools—Activity 1, Activity 2, and General Factory—with estimated overhead costs and expected activity as follows:
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| 10. Rice Corporation uses the cost formula Y = $4,800 + $0.40X for the maintenance cost, where X is machine-hours. The August budget is based on 9,000 hours of planned machine time. What is the maintenance cost expected to be incurred during August? | ||||
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| 11. In July, Essinger Inc. incurred $72,000 of direct labor costs and $3,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a | ||||
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| 12. In a manufacturing company, what is the term for direct labor costs combined with direct materials costs? | ||||
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| 13. Which is a method of separating a mixed cost into its fixed and variable elements by fitting a line to the data that minimizes the sum of the squared errors? | ||||
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| 14. At the beginning of December, Sneeden Corporation had $32,000 of raw materials on hand. During the 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 total credits entered in the Raw Materials account during the month of December? | ||||
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| 15. Prophit Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Pediatrics. Data concerning those departments are presented in the chart below.
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| 16. Rariton Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department’s operations in January.
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| 17. Which of the following journal entries would be used to record application of manufacturing overhead to work in process in a process costing system with two processing departments, department A and department B?
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| 18. Under the FIFO method, unit costs would | ||||
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| 19. In describing the cost equation, Y = a + bX, what is “a”? | ||||
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| 20. Discretionary fixed costs | ||||
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1.
Which of the following costs is classified as a prime cost?
A.
Both direct materials and indirect materials
B.
Neither direct materials nor indirect materials
C.
Direct materials
D.
Indirect materials
2.
Which of the following is classified as a direct labor cost?
A.
Wages of assembly
–
line workers but not a factory supervisor
B.
Both wages of assembly
–
line workers and a factory supervisor
C.
Wages of a factory supervisor but not assembly line workers
D.
Neither wages of assembly
–
line workers nor a factory su
pervisor
3.
Which is a proper journal entry to record issuing raw materials to be used on a job?
A.
Option B
B.
Option D
C.
Option A
D.
Option C
4.
Eagle Company’s quality cost report is to be based on the following data:
1. Which of the following costs is classified as a prime cost?
A. Both direct materials and indirect materials
B. Neither direct materials nor indirect materials
C. Direct materials
D. Indirect materials
2. Which of the following is classified as a direct labor cost?
A. Wages of assembly-line workers but not a factory supervisor
B. Both wages of assembly-line workers and a factory supervisor
C. Wages of a factory supervisor but not assembly line workers
D. Neither wages of assembly-line workers nor a factory supervisor
3. Which is a proper journal entry to record issuing raw materials to be used on a job?
A. Option B
B. Option D
C. Option A
D. Option C
4. Eagle Company’s quality cost report is to be based on the following data:
