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Exam 6: Fundamentals of Product and Service Costing

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Question 31

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A system that mass-produces a single,homogenous output in a continuous process is:

A) continuous flow process.
B) cost management system.
C) two-stage allocation system.
D) operations cost.

E) A) and D)
F) A) and C)

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Question 32

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For which of the following businesses would the job order cost system be appropriate?

A) law office
B) crude oil refinery
C) baby formula manufacturer
D) soft drink producer

E) B) and C)
F) All of the above

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Question 33

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Techniques,Inc.uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs.The following information has been collected for the previous year: Techniques used 25,000 direct labor hours and 50,000 machine hours during the previous year.What is the predetermined overhead rate per direct labor hour?

The Silver Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in Department A and on a machine hours basis in Department B.At the beginning of the year,the company made the following estimates: What predetermined overhead rate would be used in Department A and Department B respectively?

Fab Co.manufactures textiles.Among Fab's 2010 manufacturing costs were the following salaries and wages: What was the amount of Fab's 2010 indirect labor? (CPA adapted)

Cost pools are:

For Case (C) above,what is the Transferred-In (TI) ?

Which of the following statements regarding the two-stage cost allocation process is (are) false? (A) If a company has three cost pools,then it should also have three different cost allocation bases. (B) The selection of an appropriate cost allocation base is more important for single-stage cost allocation systems than for two-stage cost allocation systems.

The predetermined manufacturing overhead rate for the year was 140% of direct labor cost; employees were paid $17.50 per hour.If the estimated direct labor hours were 15,000,what was the estimated manufacturing overhead?

The predetermined manufacturing overhead rate for 2010 was $4.00 per direct labor hour; employees were paid $5.00 per hour.If the estimated direct labor cost was $75,000,what was the estimated manufacturing overhead?

For Case (B) above,what is the Ending Balance (EB) ?

Which of the following would be the least appropriate allocation base for allocating overhead in a highly automated (i.e.,capital-intensive) manufacturing company?

The following information has been gathered for Cheatham Law Offices for its fiscal year ending December 31: What is the predetermined office overhead rate per billable labor dollar?

How does job costing differ from process costing?

The predetermined overhead rate is calculated by dividing the prior period's overhead cost by the prior period's allocation base (i.e.,activity level).

The loan department of a financial corporation makes loans to businesses.The costs of processing these loans are often several thousand dollars.All loans are initially evaluated using the same financial analysis software,but some require outside services such as appraisals and legal services.Which is the most appropriate costing system for the loan department?

In general,indirect costs are allocated,while direct costs are assigned.

A company is considering the use of a single-stage cost allocation process.Under what conditions would this choice be justified?

For Case (A) above,what is the Transferred-Out (TO) ?

For Case (A) above,what is the Ending Balance (EB) ?