Variable costs are: Multiple Choice costs that are not worth the effort to trace to a specific cost object costs that change, in total, in direct proportion to changes in activity levels. always irrelevant. costs that remain constant no matter the activity level Which of the following is an example of a variable cost for a manufacturing firm? Multiple Choice The cost of rent on the factory. The cost of factory supervision. The cost of raw materials. The cost of depreciation on equipment. A fixed cost: Multiple Choice goes up in total when activity increases. goes up per unit when activity increases. goes down in total when activity increases. goes down per unit when activity increases. For a cost to be relevant, it must: Multiple Choice differ between decision alternatives. have already been incurred. not influence a decision. not be a differential cost. Manufacturing costs are generally classified into which of the following categories? Multiple Choice Relevant costs and irrelevant costs Direct materials, direct labor, and manufacturing overhead Prime costs and conversion costs Conversion costs, marketing costs, and administrative costs If a company uses a predetermined overhead rate, which of the following statements is correct? Multiple Choice Manufacturing Overhead will be debited for estimated overhead. Manufacturing Overhead will be credited for estimated overhead. Manufacturing Overhead will be debited for actual overhead. Manufacturing Overhead will be credited for actual overhead. Which of the following would be used to transfer the cost of completed goods during the period to the Finished Goods account? Multiple Choice Credit to Raw Materials Inventory. Credit to Work in Process Inventory. Debit to Manufacturing Overhead. Credit to Manufacturing Overhead. Manufacturing overhead was estimated to be $331,200 for the year along with 20,700 direct labor hours. Actual manufacturing overhead was $421,800, and actual labor hours were 21,300. The amount debited to the Manufacturing Overhead account would be: Multiple Choice $331,200 $421,800. $440,300. $340,800 Exami Beginning Ending Inventory Inventory (1/1) (12/31) $ 22,600 $ 36,500 $ 19,800 $ 22,800 $ 39, 400 $ 25,100 Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Additional information for the year is as follows: Raw materials purchases $105,700 Direct labor $ 76,400 Manufacturing overhead applied $ 82,400 Indirect materials $ Compute the direct materials used in production Multiple Choice $36,500 $119,600 $22,600 Manufacturing overhead was estimated to be $312,000 for the year along with 20,800 direct labor hours. Actual manufacturing overhead was $335,000, and actual labor hours were 23,300. Which of the following would be correct? Multiple Choice Overhead is underapplied by $14,500. Overhead is underapplied by $23,000. Overhead is overapplied by $23,000. Overhead is overapplied by $14,500. Work in Process Inventory Finished Goods Inventory (1/1) $ ?? $ ?? (12/31) $ 40,000 $ 35,000 Additional information for the year is as follows: Direct materials used $225,000 Direct labor $175,000 Manufacturing overhead applied $185,000 Cost of goods manufactured $550,000 Unadjusted cost of goods sold $569,000 What was the beginning Finished Goods Inventory balance on 1/1? Multiple Choice $54,000 $70,000 $55,000 Thich of the following is the best example of a unit-level activity? Multiple Choice Human resources Research and development Painting a final product Product testing Which of the following is not true of activity cost drivers? Multiple Choice They are measures of the underlying activity that occurs in each activity cost pool. They ideally have a cause and effect relationship with underlying activities. They are strictly volume-based allocation measures. They are used in Stage 2 cost allocations. LMN, Inc. uses a 5,400 square foot factory space that it rents for $3,300 a month for all its manufacturing activities. Linden has decided to switch to an activity-based costing system, and has identified its activities as follows: Preparation and Setup, Machining, Finishing, and Quality Control. 2,900 square feet of the factory are used for machining, while 1,000 square feet (each) are used for Preparation and Setup and Quality Control. Finishing uses 500 square feet. When assigning indirect costs to each activity, how much factory rent should be assigned to the Preparation and Setup cost pool? Multiple Choice $1,100 $2,200 $275 $611 Hahn, Inc. produces two different products (Product A and Product X) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The activity rate for Machining is $130 per machine hour, and the activity rate for Inspection is $580 per batch. The activity drivers are used as follows: Machine hours Number of batches Product A Product X Total 1,900 3,100 5,000 67 49 18 What is the amount of Inspection cost assigned to Product X? Multiple Choice $38,860 $28,420 $247,000 $10,440 Karnes, Inc. produces two different products (Standard and Luxury) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $176,000, while the cost of Inspection is $44,000. Standard uses 25% of total machine hours and 60% of total batches. What is the total activity cost assigned to Standard? Multiple Choice $70,400 $26.400 $149,600 $44,000 Wacker, Inc. produces two different products (Product 5 and Product Z) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $82,000, while the cost of Inspection is $3,400. Product 5 uses 34% of total machine hours and 80% of total batches. What is the total Machining cost assigned to Product Z? Multiple Choice $1.156 $27,880 $54,120 $2,244 Variable costs are: Multiple Choice costs that are not worth the effort to trace to a specific cost object costs that change, in total, in direct proportion to changes in activity levels. always irrelevant. costs that remain constant no matter the activity level Which of the following is an example of a variable cost for a manufacturing firm? Multiple Choice The cost of rent on the factory. The cost of factory supervision. The cost of raw materials. The cost of depreciation on equipment. A fixed cost: Multiple Choice goes up in total when activity increases. goes up per unit when activity increases. goes down in total when activity increases. goes down per unit when activity increases. For a cost to be relevant, it must: Multiple Choice differ between decision alternatives. have already been incurred. not influence a decision. not be a differential cost. Manufacturing costs are generally classified into which of the following categories? Multiple Choice Relevant costs and irrelevant costs Direct materials, direct labor, and manufacturing overhead Prime costs and conversion costs Conversion costs, marketing costs, and administrative costs If a company uses a predetermined overhead rate, which of the following statements is correct? Multiple Choice Manufacturing Overhead will be debited for estimated overhead. Manufacturing Overhead will be credited for estimated overhead. Manufacturing Overhead will be debited for actual overhead. Manufacturing Overhead will be credited for actual overhead. Which of the following would be used to transfer the cost of completed goods during the period to the Finished Goods account? Multiple Choice Credit to Raw Materials Inventory. Credit to Work in Process Inventory. Debit to Manufacturing Overhead. Credit to Manufacturing Overhead. Manufacturing overhead was estimated to be $331,200 for the year along with 20,700 direct labor hours. Actual manufacturing overhead was $421,800, and actual labor hours were 21,300. The amount debited to the Manufacturing Overhead account would be: Multiple Choice $331,200 $421,800. $440,300. $340,800 Exami Beginning Ending Inventory Inventory (1/1) (12/31) $ 22,600 $ 36,500 $ 19,800 $ 22,800 $ 39, 400 $ 25,100 Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Additional information for the year is as follows: Raw materials purchases $105,700 Direct labor $ 76,400 Manufacturing overhead applied $ 82,400 Indirect materials $ Compute the direct materials used in production Multiple Choice $36,500 $119,600 $22,600 Manufacturing overhead was estimated to be $312,000 for the year along with 20,800 direct labor hours. Actual manufacturing overhead was $335,000, and actual labor hours were 23,300. Which of the following would be correct? Multiple Choice Overhead is underapplied by $14,500. Overhead is underapplied by $23,000. Overhead is overapplied by $23,000. Overhead is overapplied by $14,500. Work in Process Inventory Finished Goods Inventory (1/1) $ ?? $ ?? (12/31) $ 40,000 $ 35,000 Additional information for the year is as follows: Direct materials used $225,000 Direct labor $175,000 Manufacturing overhead applied $185,000 Cost of goods manufactured $550,000 Unadjusted cost of goods sold $569,000 What was the beginning Finished Goods Inventory balance on 1/1? Multiple Choice $54,000 $70,000 $55,000 Thich of the following is the best example of a unit-level activity? Multiple Choice Human resources Research and development Painting a final product Product testing Which of the following is not true of activity cost drivers? Multiple Choice They are measures of the underlying activity that occurs in each activity cost pool. They ideally have a cause and effect relationship with underlying activities. They are strictly volume-based allocation measures. They are used in Stage 2 cost allocations. LMN, Inc. uses a 5,400 square foot factory space that it rents for $3,300 a month for all its manufacturing activities. Linden has decided to switch to an activity-based costing system, and has identified its activities as follows: Preparation and Setup, Machining, Finishing, and Quality Control. 2,900 square feet of the factory are used for machining, while 1,000 square feet (each) are used for Preparation and Setup and Quality Control. Finishing uses 500 square feet. When assigning indirect costs to each activity, how much factory rent should be assigned to the Preparation and Setup cost pool? Multiple Choice $1,100 $2,200 $275 $611 Hahn, Inc. produces two different products (Product A and Product X) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The activity rate for Machining is $130 per machine hour, and the activity rate for Inspection is $580 per batch. The activity drivers are used as follows: Machine hours Number of batches Product A Product X Total 1,900 3,100 5,000 67 49 18 What is the amount of Inspection cost assigned to Product X? Multiple Choice $38,860 $28,420 $247,000 $10,440 Karnes, Inc. produces two different products (Standard and Luxury) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $176,000, while the cost of Inspection is $44,000. Standard uses 25% of total machine hours and 60% of total batches. What is the total activity cost assigned to Standard? Multiple Choice $70,400 $26.400 $149,600 $44,000 Wacker, Inc. produces two different products (Product 5 and Product Z) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $82,000, while the cost of Inspection is $3,400. Product 5 uses 34% of total machine hours and 80% of total batches. What is the total Machining cost assigned to Product Z? Multiple Choice $1.156 $27,880 $54,120 $2,244