Question 1

Managerial accounting reports information primarily for stakeholders that are external to the company.

Accepted Answer

A) True 
 B)False

Question 2

Direct materials costs are included in the conversion costs of a product.

Accepted Answer

A) True 
 B)False

Question 3

Activity-based costing is a method of accumulating and allocating costs by department.

Accepted Answer

A) True 
 B)False

Question 4

Product cost consists of factory overhead.

Accepted Answer

A) True 
 B)False

Question 5

Depreciation on factory equipment is an example of a_____.

Accepted Answer

A)   period cost
B)   product cost
C)   selling cost
D)   prime costE) All of the above
F) C) and D)

Question 6

Using the job order cost system, service business are able to bill clients on a weekly or monthly basis, even when the job has not been completed.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following businesses is most likely to use a job order costing system?

Accepted Answer

A)   A paper mill
B)   A swimming pool installer
C)   A company that manufactures chlorine for swimming pools
D)   An oil refineryE) A) and B)
F) B) and D)

Question 8

Costs are often classified by their relationship to a segment of operations, called a _____.

Accepted Answer

A)   prime cost
B)   controlling account
C)   cost object
D)   cost sheetE) C) and D)
F) B) and C)

Question 9

A job order cost system accumulates costs for each of the departments or processes within the factory.

Accepted Answer

A) True 
 B)False

Question 10

Dividing estimated total factory overhead costs by estimated activity base will give the _____.

Accepted Answer

A)   underabsorbed factory overhead rate
B)   predetermined factory overhead rate
C)   ​overabsorbed factory overhead rate
D)   ​actual factory overhead rateE) All of the above
F) C) and D)

Question 11

If factory overhead applied is less than the actual costs, the overhead is said to be underapplied.

Accepted Answer

A) True 
 B)False

Question 12

In response to materials requisition, materials are transferred from the storeroom to the factory.

Accepted Answer

A) True 
 B)False

Question 13

A manufacturing business reports three types of inventory on its balance sheet: direct materials, products in the process of being manufactured, and finished products.

Accepted Answer

A) True 
 B)False

Question 14

At the end of the fiscal year, if the balance in Factory Overhead is small, it would normally be:

Accepted Answer

A)   transferred to Work-in-Process.
B)   transferred to Cost of Goods Sold.
C)   transferred to Finished Goods.
D)   allocated between Work-in-Process and Finished Goods.E) B) and C)
F) A) and C)

Question 15

Recording direct labor costs in a job order cost accounting system:

Accepted Answer

A)   increases Factory Overhead and decreases Work-in-Process.
B)   increases Finished Goods and increases Wages Payable.
C)   increases Work-in-Process and increases Wages Payable.
D)   increases Factory Overhead and increases Wages Payable.E) B) and C)
F) A) and D)

Question 16

Which of the following best explains a job order cost system?

Accepted Answer

A)   It provides product costs for each manufacturing department or process.
B)   It is often used by companies that manufacture custom products for customers or batches of similar products.
C)   It is often used by companies that manufacture units of a product that are indistinguishable from each other.
D)   It is used by companies that manufacture units of a product using a continuous production process.E) B) and D)
F) C) and D)

Question 17

Reporting under managerial accounting is not restricted by specific rules such as generally accepted accounting principles (GAAP).

Accepted Answer

A) True 
 B)False

Question 18

Which of the following manufacturing costs is an indirect cost of producing a product?

Accepted Answer

A)   Oil lubricants used for factory machinery
B)   Commissions for sales personnel
C)   Hourly wages of an assembly worker
D)   Memory chips for a microcomputer manufacturerE) A) and B)
F) A) and C)

Question 19

Which of the following is true of just-in-time processing?

Accepted Answer

A)   In just-in-time processing, supervisors enter materials into manufacturing so as to keep all the manufacturing departments (processes)  operating.
B)   In just-in-time processing, a worker typically performs only one function.
C)   It assigns service activities to centralized service departments.
D)   It is a management approach that focuses on reducing time and cost and eliminating poor quality.E) A) and C)
F) All of the above

Question 20

Which of the following statements is a difference between financial accounting and managerial accounting?

Accepted Answer

A)   Under financial accounting, reports are prepared using GAAP, whereas under managerial accounting, information that is useful to management for its decision making is not recorded using GAAP.
B)   Financial accounting focuses on providing information for internal use, whereas managerial accounting focuses on providing information for external use.
C)   Under financial accounting, reports are prepared as and when management needs them, whereas under managerial accounting, reports are prepared on a monthly basis.
D)   Financial accounting has a subjective approach, whereas managerial accounting has an objective approach.E) B) and D)
F) None of the above

Exam 10: Accounting for Manufacturing Operations

Which of the following best explains a job order cost system?

Correct AnswerverifiedShow Answer

A manufacturing business reports three types of inventory on its balance sheet: direct materials, products in the process of being manufactured, and finished products.

Correct AnswerverifiedShow Answer

Product cost consists of factory overhead.

Correct AnswerverifiedShow Answer

Which of the following statements is a difference between financial accounting and managerial accounting?

Correct AnswerverifiedShow Answer

If factory overhead applied is less than the actual costs, the overhead is said to be underapplied.

Correct AnswerverifiedShow Answer

In response to materials requisition, materials are transferred from the storeroom to the factory.

Correct AnswerverifiedShow Answer

Direct materials costs are included in the conversion costs of a product.

Correct AnswerverifiedShow Answer

Which of the following is true of just-in-time processing?

Correct AnswerverifiedShow Answer

Activity-based costing is a method of accumulating and allocating costs by department.

Correct AnswerverifiedShow Answer

Depreciation on factory equipment is an example of a_____.

Correct AnswerverifiedShow Answer

Recording direct labor costs in a job order cost accounting system:

Correct AnswerverifiedShow Answer

Which of the following businesses is most likely to use a job order costing system?

Correct AnswerverifiedShow Answer

Managerial accounting reports information primarily for stakeholders that are external to the company.

Correct AnswerverifiedShow Answer

Reporting under managerial accounting is not restricted by specific rules such as generally accepted accounting principles (GAAP).

Correct AnswerverifiedShow Answer

Using the job order cost system, service business are able to bill clients on a weekly or monthly basis, even when the job has not been completed.

Correct AnswerverifiedShow Answer

Costs are often classified by their relationship to a segment of operations, called a _____.

Correct AnswerverifiedShow Answer

A job order cost system accumulates costs for each of the departments or processes within the factory.

Correct AnswerverifiedShow Answer

Which of the following manufacturing costs is an indirect cost of producing a product?

Correct AnswerverifiedShow Answer

Dividing estimated total factory overhead costs by estimated activity base will give the _____.

Correct AnswerverifiedShow Answer

At the end of the fiscal year, if the balance in Factory Overhead is small, it would normally be:

Correct AnswerverifiedShow Answer

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