Chapter 18,19 & 20 Pretest 1. What is the primary criterion for the preparation of managerial accounting reports? a.

Relevance of the reports b. Meet the manager needs c. Timing of the reports d. Cost of the reports

ANS: B 2. Which of the following is most associated with financial accounting? a. Can have both objective and subjective information. b. Can be prepared periodically, or as needed. c. Prepared in accordance with GAAP d. Can be prepared for the entity or segment.

ANS: C 3. Compute conversion costs given the following data: Direct Materials, $352,700; Direct Labor, $196,300; Factory Overhead, $177,600. a. $549,000 b. $726,600 c. $373,900 d. $530,300

ANS: C

4. The cost of materials entering directly into the manufacturing process is classified as: a. direct labor cost b. factory overhead cost

c. burden cost d. direct materials cost

ANS: D 5. The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished product is classified as: a. factory overhead cost b. direct labor cost c. wages expense d. direct materials cost

ANS: B 6. Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as: a. factory overhead cost b. miscellaneous expense c. product costs d. other manufacturing costs

ANS: A 7. Which of the following costs are referred to as conversion costs? a. Direct labor cost and factory overhead cost b. Direct materials cost and direct labor cost c. Factory overhead cost d. Direct materials cost and factory overhead cost

ANS: A 8. Which of the following is considered a part of factory overhead cost?

a. Sales commissions b. Depreciation of factory buildings c. Depreciation of office equipment d. Direct materials used

ANS: B 9. Which of the following are the two main types of cost accounting systems for manufacturing operations? a. Process cost and general accounting systems b. Job order cost and process cost systems c. Job order and general accounting systems d. Process cost and replacement cost systems

ANS: B 10. The Collins Company forecasts that total overhead for the current year will be $12,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $8,000,000 and the actual machine hours are 100,000 hours. If the Collins Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date) the overhead is over/under applied by? a. $2,000,000 over b. $2,000,000 under c. $4,000,000 over d. $4,000,000 under

ANS: B

11. The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis is: a. process b. departmental

c. first-in, first-out d. job order

ANS: A 12. In process cost accounting, the costs of direct materials and direct labor are charged directly to: a. service departments b. processing departments c. customer accounts receivable d. job orders

ANS: B 13. In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries? a. Debit Work in Process--Dept. B; credit Work in Process--Dept. A. b. Debit Work in Process--Dept. B; credit Finished Goods--Dept. A. c. Debit Work in Process--Dept. B; credit Cost of Goods Sold--Dept. A. d. Debit Finished Goods; credit Work in Process--Dept. B.

ANS: A 14. The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and: a. indirect expenses b. direct expenses c. sales salaries expense d. factory overhead

ANS: D

15. Department R had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period, 30,000 units of direct materials were added during the period, 32,000 units were completed during the period, and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was: a. 32,450 b. 29,450 c. 31,950 d. 26,000

ANS: B 16. Department A had 1,000 units in Work in Process that were 70% completed at the beginning of the period at a cost of $7,000. 4,000 units of direct materials were added during the period at a cost of $8,200. 4,500 units were completed during the period, and 500 units were 60% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $28,700 and factory overhead was $4,510. The cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost inventories was: a. $1,025 b. $5,000 c. $5,075 d. $3,455

ANS: D