UMUC ACCt301 quiz 3 (Ch 17-20)

Question
1. Which of the following statements concerning job costing systems is incorrect?
a. Cost drivers are those items which cause actual overhead to exceed applied overhead.
b. Job costing systems are appropriate to both manufacturing and service businesses.
c. Traditionally, direct labor has been a very popular overhead application base.
d. In a service business, indirect costs of providing a service are treated as overhead and applied in a manner similar to that for factory overhead.
2. Which of the following statements about differences between financial and managerial accounting is incorrect?
a. Managerial accounting information is prepared primarily for external parties such as stockholders and creditors; financial accounting is directed at internal users.
b. Financial accounting is aggregated; managerial accounting is focused on products and departments.
c. Managerial accounting pertains to both past and future items; financial accounting focuses primarily on past transactions and events.
d. Financial accounting is based on generally accepted accounting practices; managerial accounting faces no similar constraining factors.
3. Which cost accumulation procedure is best suited to the continuous mass production of similar units?
a. Job order
b. Process
c. Standard
d. Actual
4. Lansing Corporation provides household painting services. During June, its busiest month, Lansing had total direct labor hours of 20,000 and total costs of $274,000. During December, its slowest month, the company had direct labor hours of 12,500 and total costs of $214,000. The company is planning for 16,000 direct labor hours in July. How many dollars should the company budget for fixed costs during July?
a. $114,000
b. $162,000
c. $242,000
d. $251,500
Lansing Corporation using the high-low system, the variation between the highest and lowest action levels was 7,500 hours (20,000-12,500). The exact difference in cost was $60,000 ($274,000-$214,000). These division  reveal a changeable per-hour cost of $8.00 ($60,000/ 7,500 hours). On 20,000 direct labor hours total variable costs would amount to $160,000 (20,000 hours times & $8.00 per hour), leaving fixed costs of $114,000 ($274,000- $160,000). In slowest month, the fixed costs would also be calculated to be $114,000. Therefore, during the July period the probability continues at $114,000 for fixed costs.
5. If one would prepare a graph with a horizontal axis representing units of production and a vertical axis representing per-unit production cost, how would a line representing fixed production cost be drawn?
a. As a horizontal line
b. As a vertical line
c. As a straight line sloping upward to the right
d. As a straight line sloping downward to the right
6. Acronyms are perhaps overused, but nonetheless important to know. Which of the following acronyms is used to describe a process for an inventory management process that attempts to minimize the money invested in inventory?
a. CFM
b. TQM
c. ABC
d. JIT
7. The appropriate journal entry to transfer the cost of completed units from the Work in Process account would involve a credit to Work in Process and a debit to which of the following accounts?
a. Income Summary
b. Raw Materials Inventory
c. Finished Goods
d. Manufacturing Summary
8. The overhead application rate is calculated by:
a. Dividing the estimated factory overhead by the estimated application base.
b. Dividing estimated per unit factory overhead by the sum of the per unit cost for direct labor and direct materials.
c. Multiplying the estimated factory overhead by the estimated application base.
d. Dividing the estimated application base by the estimated factory overhead.
9. The appropriate journal entry to record the application of overhead in a job costing system involves a debit to Work in Process and a credit to:
a. Cost of Goods Sold
b. Factory Overhead
c. Cash
d. Income Summary
10. Beginning work in process was 1,200 units, 2,800 additional units were put into production, and ending work in process was 500 units. How many units were completed?
a. 500
b. 3,000
c. 3,300
d. 3,500
1,200 beginning units + 2,800 additional units are results in 4,000 units to account for which 500 remain in ending inventory. Therefore, 3,500 units were completed (4,000 – 500=3,500).