Question 1 4 pts Departments that provide essential services to producing departments are referred to as maintenance departments. managerial accounting departments. profit centers. support departments. Which of the following entities would be most likely to use process costing? a roofing company O paint manufacturer a law firm an auto body repair shop In a normal costing system, the cost of a job includes normal direct materials, normal direct labor, and normal overhead. actual direct materials, actual direct labor, and estimated overhead. actual direct materials, actual direct labor, and actual overhead. estimated direct materials, estimated direct labor, and estimated overhead. At the beginning of the year BIG Company forecasted total overhead of $5,000,000 with 100,000 total machine hours. At year end, the actual overhead totals $5,100,000 and the actual machine hours are 99,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours. At the end of the year), overhead is $200,000 underapplied $300,000 underapplied $ 50,000 overapplied $150,000 underapplied Direct materials costs must be recorded for each job. The source document which is used to assign the cost of direct materials to a job is known as: materials requisition form job cost sheet direct materials ticket receiving report In a job order cost accounting system, the entry to record the flow of direct materials into production is: debit Work in Process, credit Accounts Payable debit Raw Materials, credit Work in Process debit Finished Goods, credit Raw Materials Od debit Work in Process, credit Raw Materials In a job order cost accounting system, the entry to record the flow of direct labor costs into production is: debit Wages Expense, credit Work in Process debit Finished Goods, credit Wages Payable debit Wages Expense, credit Wages Payable debit Work in Process, credit Wages Payable At the end of the fiscal year, the balance in Factory Overhead Control account is immaterial. The balance would normally be reported as other income/expense on the income statement transferred to cost of Goods Sold transferred to finished Goods allocated between Work in Process and Finished Goods Upon completion of a job in the factory job, the journal entry would include a credit to: Factory Overhead Finished Goods Work in Process Cost of Goods Sold Finished goods are sold on account. In addition to recording the sales revenue, which of the following entries would be recorded under a perpetual inventory system? debit cost of Goods Sold, credit Work in Process debit Cost of Goods Sold, credit Finished Goods debit Sales, credit Finished Goods debit Work in Process, credit Finished Goods Smith Company is changing to an activity-based costing method. They have identified three cost pools: setups, inspections, and moving. Which of the following activity drivers is least likely to be used to assign activity costs to products? number of units of product produced number of quality inspections of products number of machine setups number of times products are moved on the factory floor ABC Company produces four products which are diverse and require substantially different proportions of production resources. Using multiple department factory overhead rates instead of a single plant-wide factory overhead rate generally: is simpler and less expensive to compute and apply than a plant- wide rate results in more distorted product costs results in more accurate product costs applies overhead costs to all products in direct proportion to the total number (for all departments) of direct labor hours required to produce the product. 4 pts Which of the following conditions would most likely suggest the need for using activity-based costing? O a high proportion of nonunit overhead costs are incurred in the factory all products produced in the factory are substantially similar products which consume nonunit level activities in the same proportion as unit level overhead activities products require different materials and quantities of materials Activity rates are determined by dividing the actual cost for each activity pool by the actual activity base for that pool. dividing the actual cost for each activity pool by the estimated activity base for that pool. dividing the cost budgeted for each activity pool by the estimated activity driver quantity for that pool. dividing the cost budgeted for each activity pool by the actual activity base in that pool. Which of the following is not a correct statement regarding activity-based costing (ABC)? ABC requires a careful analysis of activities which may result in the discovery of inefficiencies. ABC can be used as a decision-making tool for firms. ABC is generally easier to apply in the determination of inventory costs than traditional methods of allocating overhead to products. ABC generally results in the determination of more accurate product costs for firms which produce diverse products. The Green Company manufactures small lamps and desk lamps. The following shows the activities required to produce a batch of small lamps (4000 units) and a batch of desk lamps (4000 units): Setups Inspections Small lamps 4,000 15,000 Desk lamps 16,000 7,000 Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps. Activity Pool Activity Base Budgeted Amount Setups 20,000 setups $ 80,000 Inspections 22,000 inspections $132.000 $100,000 $106.000 $102,000 $122,000 Which of the following is required to prepare the production budget? direct materials needed for production direct labor needed for production both direct materials and direct labor needed for production expected unit sales Which of the following is not an accurate statement regarding budgeting? Budgeting forces managers to plan for the future. Budgeting provides information for decision making. Budgeting ensures that the most accurate product costing methods will be applied. Budgeting provides a standard for performance evaluation. The percentage of accounts receivable that is uncollectible can be ignored for cash budgeting because it has already been used in the reporting of bad debt expense in the budgeted income statement. it is included in cash sales. it is reported in notes to the balance sheet related to accountings receivable. for most companies, it is not a material amount. none of the answers are correct. To create meaningful performance reports, actual costs and expected costs should be compared at the static budget level of activity weekly at the actual level of activity daily The of the following budgets would normally be prepared before the other listed budgets as a part of the preparation of the master budget: production budget cash budget sales budget direct materials purchases budget ABC Company has been a leading manufacturer of widgets for many years. ABC Company projected sales for the first quarter of 2020 as follows: January 1000 units, February = 1300 units and March = 1600 units. Management wants ending inventory for each month to be equal to 20% of the next month's projected unit sales. The estimated January 1, 2020, inventory is 200 units. What is the budgeted production (in units) for February? 1600 1420 O 1360 1760 Orange Company is a seller of high quality products sold only to large wholesale firms. Orange Company sales products to customers on account only (no cash sales). Projected sales in units for the first quarter of 2020 are as follows: January 2000 units, February 2600 units and March - 2800 units. The sales price of each unit is $10. Management expects the following collection pattern: 80% of sales revenue will be collected in the month of sale and 20% in the next month. Cash collections on account for February are: $22,400 $26,400 $24,800 $ 26,000 Tan Company purchases all raw materials on account. Projected raw materials purchases for the first three months of 2020 are as follows: January - 1000 pounds, February - 1600 pounds and March - 1600 pounds. The purchase price of each pound is $5. Management expects the following payment pattern: 40% of purchases are paid for in month of purchase and 60% are paid for in next month. Cash payments for purchases of raw materials for February are: $5600 $6600 $8000 $6200 Question 1 4 pts Departments that provide essential services to producing departments are referred to as maintenance departments. managerial accounting departments. profit centers. support departments. Which of the following entities would be most likely to use process costing? a roofing company O paint manufacturer a law firm an auto body repair shop In a normal costing system, the cost of a job includes normal direct materials, normal direct labor, and normal overhead. actual direct materials, actual direct labor, and estimated overhead. actual direct materials, actual direct labor, and actual overhead. estimated direct materials, estimated direct labor, and estimated overhead. At the beginning of the year BIG Company forecasted total overhead of $5,000,000 with 100,000 total machine hours. At year end, the actual overhead totals $5,100,000 and the actual machine hours are 99,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours. At the end of the year), overhead is $200,000 underapplied $300,000 underapplied $ 50,000 overapplied $150,000 underapplied Direct materials costs must be recorded for each job. The source document which is used to assign the cost of direct materials to a job is known as: materials requisition form job cost sheet direct materials ticket receiving report In a job order cost accounting system, the entry to record the flow of direct materials into production is: debit Work in Process, credit Accounts Payable debit Raw Materials, credit Work in Process debit Finished Goods, credit Raw Materials Od debit Work in Process, credit Raw Materials In a job order cost accounting system, the entry to record the flow of direct labor costs into production is: debit Wages Expense, credit Work in Process debit Finished Goods, credit Wages Payable debit Wages Expense, credit Wages Payable debit Work in Process, credit Wages Payable At the end of the fiscal year, the balance in Factory Overhead Control account is immaterial. The balance would normally be reported as other income/expense on the income statement transferred to cost of Goods Sold transferred to finished Goods allocated between Work in Process and Finished Goods Upon completion of a job in the factory job, the journal entry would include a credit to: Factory Overhead Finished Goods Work in Process Cost of Goods Sold Finished goods are sold on account. In addition to recording the sales revenue, which of the following entries would be recorded under a perpetual inventory system? debit cost of Goods Sold, credit Work in Process debit Cost of Goods Sold, credit Finished Goods debit Sales, credit Finished Goods debit Work in Process, credit Finished Goods Smith Company is changing to an activity-based costing method. They have identified three cost pools: setups, inspections, and moving. Which of the following activity drivers is least likely to be used to assign activity costs to products? number of units of product produced number of quality inspections of products number of machine setups number of times products are moved on the factory floor ABC Company produces four products which are diverse and require substantially different proportions of production resources. Using multiple department factory overhead rates instead of a single plant-wide factory overhead rate generally: is simpler and less expensive to compute and apply than a plant- wide rate results in more distorted product costs results in more accurate product costs applies overhead costs to all products in direct proportion to the total number (for all departments) of direct labor hours required to produce the product. 4 pts Which of the following conditions would most likely suggest the need for using activity-based costing? O a high proportion of nonunit overhead costs are incurred in the factory all products produced in the factory are substantially similar products which consume nonunit level activities in the same proportion as unit level overhead activities products require different materials and quantities of materials Activity rates are determined by dividing the actual cost for each activity pool by the actual activity base for that pool. dividing the actual cost for each activity pool by the estimated activity base for that pool. dividing the cost budgeted for each activity pool by the estimated activity driver quantity for that pool. dividing the cost budgeted for each activity pool by the actual activity base in that pool. Which of the following is not a correct statement regarding activity-based costing (ABC)? ABC requires a careful analysis of activities which may result in the discovery of inefficiencies. ABC can be used as a decision-making tool for firms. ABC is generally easier to apply in the determination of inventory costs than traditional methods of allocating overhead to products. ABC generally results in the determination of more accurate product costs for firms which produce diverse products. The Green Company manufactures small lamps and desk lamps. The following shows the activities required to produce a batch of small lamps (4000 units) and a batch of desk lamps (4000 units): Setups Inspections Small lamps 4,000 15,000 Desk lamps 16,000 7,000 Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps. Activity Pool Activity Base Budgeted Amount Setups 20,000 setups $ 80,000 Inspections 22,000 inspections $132.000 $100,000 $106.000 $102,000 $122,000 Which of the following is required to prepare the production budget? direct materials needed for production direct labor needed for production both direct materials and direct labor needed for production expected unit sales Which of the following is not an accurate statement regarding budgeting? Budgeting forces managers to plan for the future. Budgeting provides information for decision making. Budgeting ensures that the most accurate product costing methods will be applied. Budgeting provides a standard for performance evaluation. The percentage of accounts receivable that is uncollectible can be ignored for cash budgeting because it has already been used in the reporting of bad debt expense in the budgeted income statement. it is included in cash sales. it is reported in notes to the balance sheet related to accountings receivable. for most companies, it is not a material amount. none of the answers are correct. To create meaningful performance reports, actual costs and expected costs should be compared at the static budget level of activity weekly at the actual level of activity daily The of the following budgets would normally be prepared before the other listed budgets as a part of the preparation of the master budget: production budget cash budget sales budget direct materials purchases budget ABC Company has been a leading manufacturer of widgets for many years. ABC Company projected sales for the first quarter of 2020 as follows: January 1000 units, February = 1300 units and March = 1600 units. Management wants ending inventory for each month to be equal to 20% of the next month's projected unit sales. The estimated January 1, 2020, inventory is 200 units. What is the budgeted production (in units) for February? 1600 1420 O 1360 1760 Orange Company is a seller of high quality products sold only to large wholesale firms. Orange Company sales products to customers on account only (no cash sales). Projected sales in units for the first quarter of 2020 are as follows: January 2000 units, February 2600 units and March - 2800 units. The sales price of each unit is $10. Management expects the following collection pattern: 80% of sales revenue will be collected in the month of sale and 20% in the next month. Cash collections on account for February are: $22,400 $26,400 $24,800 $ 26,000 Tan Company purchases all raw materials on account. Projected raw materials purchases for the first three months of 2020 are as follows: January - 1000 pounds, February - 1600 pounds and March - 1600 pounds. The purchase price of each pound is $5. Management expects the following payment pattern: 40% of purchases are paid for in month of purchase and 60% are paid for in next month. Cash payments for purchases of raw materials for February are: $5600 $6600 $8000 $6200