2. The formula for pre-determined overhead rate is: a. Estimated allocation base divided by estimated overhead b. Estimated allocation base minus estimated overhead c. Estimated overhead minus estimated allocate base d. None of the above 3. If Product T requires highly skilled employees to make it and Product Pis labor intensive and if machine hours is 20% of the non-overhead cost, then a. The allocation base for Product P should be direct labor cost and the allocation base for Product T should be direct labor hours. b. Machine hours should be the allocation base for both products. c. Direct labor hours should be the basis for both products d. The allocation base for Product T should be direct labor costs and the allocation base for Product P should be direct labor hours 4. Process costing does not separate and record costs for each unit, whereas job costing does. a. True b. False 5. A costing system used in manufacturing goods that have some common characteristics and some individual characteristics is known as a. Job costing b. Process costing 4. Process costing does not separate and record costs for each unit, whereas job costing does. a. True b. False 5. A costing system used in manufacturing goods that have some common characteristics and some individual characteristics is known as a. Job costing b. Process costing c. Operations costing d. Flow costing 6. Applied overhead costs are debited to the Manufacturing Overhead account. a. True b. False 7. Applied overhead costs are credited to the Manufacturing Overhead account. a. True b. False 8. The primary difference between normal costing and actual costing is that normal costing estimates only for indirect costs. a. True b. False 9. In process costing, Beginning WIP + Units Started = Units Transferred Out + Ending WIP. a. True b. False 10. All other factors held constant, overstating the stage of completion of ending inventory has what affect on net income? a. It understates net income b. It overstates net income c. It has not affect on net income d. None of the above 11. The weighted average process costing method assumes that all beginning WIP units are transferred out first. a. True b. False 12. A disadvantage of FIFO process costing method is that it mixes current period costs with cost of production in the beginning inventory, making it impossible for managers to know how much it cost to make a product in the current period. a. True b. False 13. A disadvantage of weighted-average process costing method is that it mixes current period costs with cost of production in the beginning inventory, making it impossible for managers to know how much it cost to make a product in the current period. a. True b. False 14. Current period costs divided by EU of production this period = Cost per EU. a. True b. False 15. FIFO process costing is simpler than weighted-average process costing. a. True b. False 16. FIFO process costing is more informative than weighted-average process costing a. True b. False Chapters 6 - 9 17. What would be the most likely cost driver(s) for the activity of evaluating bids? a. Type of bid b. Number of bids c. Amount of bid d. b&c e. a & b 18. The cost associated with field testing of a product would be classified as appraisal costs. a. True b. False 19. Theoretical capacity is less than practical capacity. a. True b. False 20. The set of activities that transform raw resources into products for customers is called a. Process costing b. ABC c. The value chain d. The cost driver 1
