Question 1

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. The company expects to make 2,000 comforters during the current year. With respect to the comforters, how would the hourly wages of sewing machine operators be classified?

Accepted Answer

A)   Direct and variable
B)   Direct and fixed
C)   Indirect and variable
D)   Indirect and fixedE) C) and D)
F) A) and D)

Question 2

Jessup Company expects to incur overhead costs of $20,000 per month and direct production costs of $125 per unit. The estimated production activity for the upcoming year is 1,000 units. If the company desires to earn a gross profit of $50 per unit, the sales price per unit would be which of the following amounts?

Accepted Answer

A)   $175
B)   $195
C)   $415
D)   $290E) C) and D)
F) A) and B)

Question 3

Which of the following statements is correct regarding direct and indirect costs?

Accepted Answer

A)   Direct costs cannot easily be traced to a cost object, whereas indirect costs can be easily traced to a cost object.
B)   Direct costs can be easily traced to a cost object, whereas indirect costs cannot be easily traced to a cost object.
C)   Direct costs are always relevant to a particular cost decision, whereas indirect costs are never relevant to a cost decision.
D)   Direct costs are never relevant to a particular cost decision, whereas indirect costs are always relevant to a cost decision.E) A) and D)
F) None of the above

Question 4

Preston Company has three divisions. The company should consider a cost to be a direct cost of a division if:

Accepted Answer

A)   It meets guidelines imposed by generally accepted accounting principles.
B)   It can be traced to a division in a cost-effective manner.
C)   It is a variable cost.
D)   It can be allocated to a division.E) B) and C)
F) None of the above

Question 5

Indirect costs are often pooled, and not allocated individually because:

Accepted Answer

A)   individual allocation would be more timely.
B)   individual allocation would be more accurate.
C)   individual allocation would be tedious.
D)   the benefits of individual allocation of indirect costs are greater than the costs.E) A) and C)
F) B) and C) C

Question 6

For a manufacturer, measures of volume may include:

Accepted Answer

A)   Number of units produced.
B)   Number of square feet occupied.
C)   Amount of direct materials used in production.
D)   Both number of units produced and amount of direct materials used in production are correct.E) B) and C)
F) None of the above

Question 7

During the current year, Kemp Construction Company built 23 custom homes that ranged in size from 2,500 square feet to 8,000 square feet. One home was completed each month during January, February, and March. Three homes were completed during April and May. Two homes were completed during each of the months from June through December. Based upon this information, the most appropriate allocation base (i.e., cost driver)  for the assignment of indirect overhead costs to each house would be the:

Accepted Answer

A)   Number of homes built during the month.
B)   Number of months in the year.
C)   Number of homes built during the year.
D)   Size of the home.E) B) and C)
F) C) and D) D

Question 8

A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true?

Accepted Answer

A)   The costs of wood and glue would be treated as direct costs.
B)   Wood, glue, and varnish would all be direct materials.
C)   Wood would be accounted for as a direct cost, and glue and varnish as indirect costs.
D)   The concepts of direct and indirect costs are not applicable here.E) A) and D)
F) B) and D)

Question 9

A factor having a "cause and effect" relationship with a cost object is called a(n) :

Accepted Answer

A)   cost driver
B)   allocation base
C)   direct cost
D)   indirect costE) A) and B)
F) C) and D) A

Question 10

Which of the following costs generally can be traced directly to units of product?

Accepted Answer

A)   Indirect materials
B)   Overhead costs
C)   Assembly labor
D)   Indirect materials and assembly laborE) A) and B)
F) None of the above

Question 11

Herald Manufacturing Company uses a predetermined overhead rate to allocate fixed manufacturing overhead to production on a monthly basis. At the end of the accounting period it was determined that actual overhead cost was less than the estimated overhead cost and that the actual volume of production was higher than estimated. Based on this information alone:

Accepted Answer

A)   The correct amount of cost was assigned to products during the accounting period.
B)   Too much cost was assigned to products during the accounting period.
C)   Too little cost was assigned to products during the accounting period.
D)   The answer cannot be determined from the information provided.E) A) and C)
F) A) and D)

Question 12

Indicate whether each of the following statements is true or false.

Accepted Answer

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Question 13

Which of the following regarding direct costs is a correct statement?

Accepted Answer

A)   Direct costs are always fixed costs.
B)   Direct costs are always variable costs.
C)   Direct costs are easily traced to cost objects.
D)   Direct costs are never selling and administrative expenses.E) All of the above
F) C) and D)

Question 14

Southeast Manufacturing Company has identified the following cost objects: Cost Object 1: The cost of operating the finishing department
Cost Object 2: The cost of a particular product made in June
Cost Object 3: The cost of operating the factory
With respect to these cost objects, the cost of the salary of the supervisor of the finishing department is directly traceable to cost objects:

Accepted Answer

A)   1 and 2.
B)   2 and 3.
C)   1 and 3.
D)   1, 2, and 3.E) None of the above
F) C) and D)

Question 15

A cost pool should be made up of costs with a common cost object.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is incorrect?

Accepted Answer

A)   A predetermined overhead rate may be used to allocate overhead costs when volume varies during the year.
B)   A predetermined overhead rate is calculated using actual cost and volume data.
C)   A predetermined overhead rate is calculated by dividing costs by volume, using a measure of volume such as direct labor hours or direct materials cost.
D)   A company may need to allocate overhead costs to products to make pricing decisions for the products.E) A) and B)
F) None of the above

Question 17

Cost allocation involves:

Accepted Answer

A)   Identifying a cost driver for each cost to be allocated.
B)   Calculating an allocation rate for each cost to be allocated.
C)   Multiplying the allocation rate by the weight of the cost driver.
D)   All of the answers are correct.E) A) and B)
F) None of the above

Question 18

The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

Accepted Answer

A) True 
 B)False

Question 19

The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship.

Accepted Answer

A) True 
 B)False

Question 20

Marsden Company has three departments occupying the following amount of floor space:  How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round intermediate calculations.)

Accepted Answer

A)   $100,000
B)   $50,000
C)   $66,667
D)   None of the answers are correct.E) None of the above
F) C) and D)

Exam 12: Cost Accumulation, Tracing, and Allocation

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. The company expects to make 2,000 comforters during the current year. With respect to the comforters, how would the hourly wages of sewing machine operators be classified?

Correct Answer
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Correct Answer
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Which of the following statements is correct regarding direct and indirect costs?

Correct Answer
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Preston Company has three divisions. The company should consider a cost to be a direct cost of a division if:

Correct Answer
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Indirect costs are often pooled, and not allocated individually because:

Correct Answer
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C

For a manufacturer, measures of volume may include:

Correct Answer
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Correct Answer
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D

A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true?

Correct Answer
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A factor having a "cause and effect" relationship with a cost object is called a(n) :

Correct Answer
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A

Which of the following costs generally can be traced directly to units of product?

Correct Answer
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Indicate whether each of the following statements is true or false.

Correct Answer
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Which of the following regarding direct costs is a correct statement?

Correct Answer
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Correct Answer
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A cost pool should be made up of costs with a common cost object.

Correct Answer
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Which of the following statements is incorrect?

Correct Answer
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Cost allocation involves:

Correct Answer
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The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

Correct Answer
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The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship.

Correct Answer
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Marsden Company has three departments occupying the following amount of floor space: How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round intermediate calculations.)

Correct Answer
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Exam 12: Cost Accumulation, Tracing, and Allocation

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. The company expects to make 2,000 comforters during the current year. With respect to the comforters, how would the hourly wages of sewing machine operators be classified?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is correct regarding direct and indirect costs?

Correct AnswerverifiedShow Answer

Preston Company has three divisions. The company should consider a cost to be a direct cost of a division if:

Correct AnswerverifiedShow Answer

Indirect costs are often pooled, and not allocated individually because:

Correct AnswerverifiedC

For a manufacturer, measures of volume may include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true?

Correct AnswerverifiedShow Answer

A factor having a "cause and effect" relationship with a cost object is called a(n) :

Correct AnswerverifiedA

Which of the following costs generally can be traced directly to units of product?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements is true or false.

Correct Answerverified_TB3570_00...View AnswerShow Answer

Which of the following regarding direct costs is a correct statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A cost pool should be made up of costs with a common cost object.

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Cost allocation involves:

Correct AnswerverifiedShow Answer

The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

Correct AnswerverifiedShow Answer

The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship.

Correct AnswerverifiedShow Answer

Marsden Company has three departments occupying the following amount of floor space: How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round intermediate calculations.)

Correct AnswerverifiedShow Answer

Correct Answer
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C

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D

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A

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_TB3570_00...
View Answer

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