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A company adopts a job-order costing system. What year-end journal entry could it make to dispose of $4,150 of overapplied manufacturing overhead cost?

1. (A) Dr Finished Goods $4,150 Cr Manufacturing Overhead. $4,150

2. (B) Dr Cost of Goods Sold. $4,150. Cr Manufacturing Overhead. $4,150

3. (C) Dr Manufacturing Overhead. $4,150 Cr Finished Goods $4,150

4. (D) Dr Manufacturing Overhead $4,150. Cr Cost of Goods Sold. $4,150

2. In process costing, a transferred-in cost is

1. (A) a cost transferred from an earlier department.

2. (B) a cost which has been transferred in from the vendor who has supplied the raw materials.

3. (C) the cost of the labor that has been added to the process during the month.

4. (D) the conversion costs which were included in the beginning work in process inventory.

3. Examples of a typical cost driver include

1. (A) machine hours.

2. (B) direct labor hours.

3. (C) number of purchase orders issued.

4. (D) All of the above.

4. 4 An engineering firm has surplus capacity and intents to secure a short-term contract to supply components. It has decided to bid for the contract at a price which will just cover all relevant costs.

   Which ONE of the following costs should be included in the calculation of the minimum price it can bid?

   1. (A) The cost of hiring a supervisor to oversee the contracts progress.

   2. (B) The cost of a research project undertaken last year which has resulted in an improved method of manufacturing components.

   3. (C) The cost of labor which will be transferred to the contract from another production line where it is currently idle.

   4. (D) The depreciation charge on existing machinery owned by the firm which will be used to manufacture the components.

5. 5 Which of the following statements are correct with regard to marginal costing?

   1. (i) Period costs are costs treated as expenses in the period incurred.

   2. (ii) Product costs can be identified with goods produced.

   3. (iii) Unavoidable costs are relevant for decision making.

   1. (A) (i) and (ii) only

   2. (B) (i) and (iii) only

   3. (C) (ii) and (iii) only

   4. (D) (i), (ii) and (iii)

6. 6 In a period, opening stocks were 12,600 units and closing stocks 14,100 units. The profit based on marginal costing was $50,400 and profit using absorption costing was $60,150. The fixed overhead absorption rate per unit is

   1. (A) $4.77.

   2. (B) $6.50.

   3. (C) $6.77.

   4. (D) None of the above

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7. 7 Under the FIFO process costing method, the two categories of completed units used to compute the total cost of units completed during a period are

   1. (A) beginning work-in-process units and units started

   2. (B) units started and completed and ending work-in-process units.

   3. (C) beginning work-in-process units and units started and completed during the current period.

   4. (D) None of the above

   5. The following are the different methods used to assign overhead costs to cost objects:

      1. (i) plantwide rate

      2. (ii) departmental rate

      3. (iii) activity-based costing activity rate

      Rank these methods of assigning overhead costs from least accurate to most accurate:

      1. (A) (i), (ii), (iii)

      2. (B) (ii), (i), (iii)

      3. (C) (i), (iii), (ii)

      4. (D) (iii), (ii), (i)

   6. 9 Which of the following costs are always irrelevant in decision making?

      1. (A) Avoidable costs

      2. (B) Sunk costs

      3. (C) Opportunity costs

      4. (D) Fixed costs

   7. 10 Research has shown that managers perform best when

   8. (A) there is no budget to worry about.

   9. (B) budgets contain a maximum of slack.

   10. (C) there is a moderately difficult but achievable budget.

   11. (D) the budget is obviously unachievable, but presents a tremendous challenge.

   12. 4