Q: Which of the following is the correct formula for calculating the predetermined overhead rate (POHR) using a single plantwide allocation base?

$$\text{POHR} = \frac{\text{Estimated Total Manufacturing Overhead}}{\text{Estimated Total Allocation Base}}$$

Q: Which of the following is the correct formula for calculating equivalent units of production (EUP) for materials in a process costing system?

$$\text{EUP} = \text{Units Transferred Out} + (\text{Ending WIP Units} \times \text{Percentage Complete for Materials})$$

Q: A company has the following data for the month: Direct Materials Used: $$12,000 Direct Labor: 8$$,000 Manufacturing Overhead Applied: $$10,000 Beginning WIP: 2$$,000 Ending WIP: $3,000 What is the Cost of Goods Manufactured (COGM)?

$$\text{COGM} = \12$$,000 + \$$8,000 + \10$$,000 + \$$2,000 - \3$$,000 = \$$29,000$$

Q: A company’s T-account for Work in Process shows the following: Beginning Balance: $$4,000 Direct Materials: 6$$,000 Direct Labor: $$5,000 Manufacturing Overhead Applied: 7$$,000 Ending Balance: $3,000 What is the amount transferred to Finished Goods during the period?

$$\text{Transferred to FG} = \4$$,000 + \$$6,000 + \5$$,000 + \$$7,000 - \3$$,000 = \$$19,000$$

Question 1

A company incurs the following costs during the month: $$5,000 for raw materials used in production, 3$$,000 for factory supervisor salaries, $$2,000 for sales commissions, and 1$$,500 for office rent. Which of the following correctly categorizes the $3,000 factory supervisor salary?

Accepted Answer

Product cost (Manufacturing Overhead) and Conversion cost

Question 2

Which of the following is the correct formula for calculating the predetermined overhead rate (POHR) using a single plantwide allocation base?

Accepted Answer

$$	ext{POHR} = \frac{	ext{Estimated Total Manufacturing Overhead}}{	ext{Estimated Total Allocation Base}}$$

Question 3

A company uses job-order costing. The following journal entry is made:

Debit: Work in Process $$8,000
Credit: Manufacturing Overhead 8$$,000

What does this entry represent?

Accepted Answer

Allocation of manufacturing overhead to jobs using the predetermined overhead rate

Question 4

Which of the following costs would be classified as both a period cost and an administrative cost?

Accepted Answer

Salary of the company’s accountant

Question 5

A company completed Job 101 and sold it for $$15,000. The job’s cost was 9$$,000. Which journal entry correctly records the cost of goods sold at the time of sale?

Accepted Answer

Debit: Cost of Goods Sold $$9,000; Credit: Finished Goods 9$$,000

Question 6

Which of the following is the correct formula for calculating equivalent units of production (EUP) for materials in a process costing system?

Accepted Answer

$$	ext{EUP} = 	ext{Units Transferred Out} + (	ext{Ending WIP Units} 	imes 	ext{Percentage Complete for Materials})$$

Question 7

A company has the following data for the month:

Direct Materials Used: $$12,000
Direct Labor: 8$$,000
Manufacturing Overhead Applied: $$10,000
Beginning WIP: 2$$,000
Ending WIP: $3,000

What is the Cost of Goods Manufactured (COGM)?

Accepted Answer

$$	ext{COGM} = \12$$,000 + \$$8,000 + \10$$,000 + \$$2,000 - \3$$,000 = \$$29,000$$

Question 8

Which of the following best describes the difference between prime costs and conversion costs?

Accepted Answer

Prime costs = Direct Materials + Direct Labor; Conversion costs = Direct Labor + Manufacturing Overhead

Question 9

A company uses activity-based costing (ABC) and has the following data for two products:

Product A: 1,000 units, 500 machine hours, 200 setups
Product B: 500 units, 1,000 machine hours, 100 setups

If overhead is allocated based on machine hours and setups, which product is likely to have a higher overhead cost per unit under ABC compared to the traditional method?

Accepted Answer

Product A, because it uses more setups per unit

Question 10

A company’s T-account for Work in Process shows the following:

Beginning Balance: $$4,000
Direct Materials: 6$$,000
Direct Labor: $$5,000
Manufacturing Overhead Applied: 7$$,000
Ending Balance: $3,000

What is the amount transferred to Finished Goods during the period?

Accepted Answer

$$	ext{Transferred to FG} = \4$$,000 + \$$6,000 + \5$$,000 + \$$7,000 - \3$$,000 = \$$19,000$$

Question 11

Which of the following journal entries correctly records the use of direct materials in production?

Accepted Answer

Debit: Work in Process; Credit: Raw Materials

Question 12

A company’s predetermined overhead rate is $4 per direct labor hour. Job 202 used 300 direct labor hours. How much overhead is allocated to Job 202?

Accepted Answer

$$\4$$ 	imes 300 = \$$1,200$$

Question 13

Which of the following statements about activity-based costing (ABC) is true?

Accepted Answer

ABC allocates overhead based on multiple activities that drive costs, rather than a single allocation base

Question 14

A company’s Finished Goods T-account shows:

Beginning Balance: $$2,000
Transferred In: 10$$,000
Ending Balance: $1,500

What is the Cost of Goods Sold for the period?

Accepted Answer

$$	ext{COGS} = \2$$,000 + \$$10,000 - \1$$,500 = \$$10,500$$

Question 15

Which of the following is NOT included in manufacturing overhead?

Accepted Answer

Wages of sales staff

Question 16

A company estimates $200,000 in total manufacturing overhead and 10,000 direct labor hours for the year. If actual direct labor hours for a job are 250, what is the overhead applied to the job?

Accepted Answer

$$	ext{POHR} = \frac{\200$$,000}{10,000} = \$$20$$ per DLH; $$\20$$ 	imes 250 = \$$5,000$$

Question 17

Which of the following best describes the flow of costs in a manufacturing company?

Accepted Answer

Raw Materials → Work in Process → Finished Goods → Cost of Goods Sold

Question 18

A company’s activity-based costing system has two activities: machine setups and quality inspections. The company expects 1,000 setups and 2,000 inspections for the year. Estimated overhead for setups is $$50,000 and for inspections is 30$$,000. What is the overhead rate per setup?

Accepted Answer

$$\frac{\50$$,000}{1,000} = \$$50$$ per setup

Question 19

Which of the following is an example of a conversion cost but NOT a prime cost?

Accepted Answer

Factory utilities

Managerial Accounting: Cost Classification, Job Order Costing, Process Costing, and Overhead Allocation

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