1. Product costing information is used by managers: a. to make decisions and strategyb. for planning and controlc. for cost management*d. All of these answers are correct.

2. __________ is the process of distributing indirect costs to products.*a. Cost allocationb. Job order costingc. Cost poolingd. Cost tracing

3. A __________ links an indirect cost to a cost object.*a. cost-allocation base or cost driverb. cost poolc. cost assignmentd. cost tracing

4. A job that shows low profitability may be the result of: a. wasting direct materialsb. inefficient laborc. underpricing the job*d. All of these answers are correct.

5. If pre-determined overhead rates were calculated monthly rather than annually, then

for the month of February with only 28 days:a. pre-determined overhead rates would be lower*b. pre-determined overhead rates would be higherc. there would be no effect on pre-determined overhead ratesd. monthly output would be higher

6. In a job-costing system, a manufacturing firm typically uses a pre-determined overhead rate to estimate the __________ allocated to a job.a. direct materialsb. direct labor*c. manufacturing overhead costsd. total costs

7. A job-cost sheet details the:a. direct materials purchased and paid for

*b. direct labor costs incurred c. indirect labor costs incurredd. actual overhead costs incurred

8. All of the following are true of the Work-in-Process Control account EXCEPT that:*a. it tracks all direct material purchasesb. the balance equals the sum of amounts from all in-process individual job-cost

recordsc. it is an asset accountd. it tracks job costs from beginning through completion

9. All of the following increase the Work-in-Process Control account EXCEPT:

a. allocated manufacturing overhead costsb. direct materials*c. actual plant insurance costsd. direct manufacturing labor

10. All of the following are true of plant utility costs EXCEPT:a. the source document is the utility billb. the cost increases the Manufacturing Overhead account*c. the cost increases the Work-in-Process Control accountd. it is an indirect cost

11. The ending balance in the Finished Goods Control account represents the costs of all jobs that:a. have not been completed*b. have been completed but not soldc. have been completed and sold to customersd. are reported on the income statement

12. When the allocated amount of overhead costs are more than the actual amount,

overhead costs have been:a. Both underapplied and underallocated are correct.b. underappliedc. underallocated*d. overapplied

13. The simplest approach to dealing with underallocated or overallocated overhead is the __________ approach.a. adjusted allocation-rateb. prorationc. write-off to cost of goods soldd. Both a and b are correct.

14. Sara employs 25 professional cleaners. Budgeted costs total $900,000 of which $525,000 are direct costs and $375,000 are overhead costs. Budgeted professional labor-hours are 500,000 and actual professional labor-hours were 504,000. What is the pre-determined overhead rate per professional labor-hour?a. $1.80 per hour b. $1.7857 per hour *c. $0.75 per hour d. $1.05 per hour

$375,000 / 500,000 = $.75

15 THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 15 AND 16:For 20X5, Marcotte’s Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accounting records contain the following information:

Estimated ActualManufacturing overhead costs $100,000 $120,000Machine-hours 20,000 25,000

Using job order costing, the 20X5 pre-determined manufacturing overhead rate is:a. $4.00 per machine-hourb. $4.80 per machine-hour*c. $5.00 per machine-hourd. $6.00 per machine-hour

$100,000 / 20,000 mh = $5

16. Using normal costing, the amount of manufacturing overhead costs allocated to jobs during 20X5 is:a. $150,000*b. $125,000c. $120,000d. $100,000

25,000 mh x $5.00 per machine-hour = $125,000

17. Joni’s Kitty Supplies applies manufacturing overhead costs to products at a pre-determined manufacturing overhead rate of $60 per direct labor-hour. A retail outlet has requested a bid on an order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct labor-hours. Each direct laborer is paid $20 per direct labor-hour;

. Estimated total product costs for this order, using job order costing, equal:a. $96,000b. $50,000*c. $80,000d. None of these answers is correct.

Direct Materials $40,000 + Direct Labor $10,000 (500 x $20) + MOH $30,000 (500 x $60)= $80,000

18. USE THE FOLLOWING INFORMATION FOR QUESTIONS 18 THROUGH 20:Sunny Company manufactures pipes and applies manufacturing overhead costs to production at a pre-determined overhead rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 20X2:

Direct materials $280,000Direct labor (7,000 hours @ $11/hour) $ 77,000Indirect labor $ 20,000Plant facility rent $ 60,000Depreciation on plant machinery and equipment $ 30,000Sales commissions $ 40,000Administrative expenses $ 50,000

The actual amount of manufacturing overhead costs incurred in June 20X2 totals:a. $557,000b. $200,000*c. $110,000d. $ 80,000

Indirect labor $20,000 + Plant facility rent $60,000 + Depreciation on plant machinery and equipment $30,000 = $110,000

19. The amount of manufacturing overhead allocated to all jobs during June 20X2 totals:a. $77,000*b. $105,000c. $110,000d. $200,000

7,000 direct labor-hour x $15 per direct labor hour = $105,000

20. For June 20X2, manufacturing overhead was:a. overallocated *b. underallocatedc. neither overallocated nor underallocatedd. indeterminable

Underallocated: Allocated overhead = $105,000 (7,000 x $15 per dlh) while actual overhead =$110,000