Module 3 Mastery Test

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Colorado State University, Global Campus *

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460

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Accounting

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Feb 20, 2024

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Question 1 1 / 1 pts In a manufacturing company, the typical cost flow is sequential. Which of the following is correct with respect to the order of cost flow? Work-in-process, raw materials, finished goods, cost of goods sold. Raw materials, work-in-process, finished goods, cost of goods sold. Raw materials, cost of goods sold, work-in-process, finished goods. Work-in-process, cost of goods sold, raw materials, finished goods. Correct! The appropriate sequence of cost flow is raw materials, work-in- process, finished goods, then cost of goods sold. Question 2 1 / 1 pts ________ is a costing system in which costs are accumulated according to processes and departments and then assigned the costs to many almost identical or homogenous products. Under this system, costs are assigned according to when costs are introduced into the process. Process costing Job costing Correct! Process costing separates costs into cost categories for the purpose of applying costs to a pool of inventory evenly. Question 3 1 / 1 pts ________ is employed when each product a company manufactures differs from another.

Process costing Job costing Correct! A company that manufactures custom products, which results in unique and discrete goods each manufacturing cycle, is best accommodated by job costing. Question 4 1 / 1 pts What is the basic supporting document in a job costing system? Job cost sheet Cost of goods manufactured statement Raw materials subsidiary ledger Work-in-process control report Correct! The job cost sheet is a document that is initiated when a job production or process begins. Question 5 1 / 1 pts Twisty Taffy Company manufactures saltwater taffy and accounts for its production cost using a job costing system. There are two departments: candy production and packaging. The candy is kneaded and formed by machine. The multi-step packaging process is completed by hand. What would be the most appropriate basis of overhead allocation in the packaging department? Materials quantities Machine hours

Direct labor hours Materials dollars spent Correct! Since Twisty Taffy's packaging process is manual, direct labor hours would be an appropriate driver, as labor directly impacts overhead utilization levels. Question 6 1 / 1 pts Under normal costing, the overhead rate allocated to work-in-process is based on ________. actual overhead costs budgeted overhead costs the prior year’s overhead costs historical rate overhead costs Correct! Normal costing requires actual variable costs of labor and material, with the budgeted rate of overhead allocated to production. Incorrect Question 7 0 / 1 pts Direct materials usage is not traceable when using the ________method. process costing job costing

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either the process or the job costing methods none of these answers is correct Try again! Please review page 1 of the Module 3 lecture. Question 8 1 / 1 pts To determine equivalent units of production, factory overhead and direct labor costs are usually grouped together and called ________. product costs conversion costs prime costs direct costs Correct! Since direct labor is often the basis for overhead application and because direct labor is usually small in most processing industries, grouping the two cost elements is understandable. Incorrect Question 9 0 / 1 pts The allowable disposition methods for over- or under-allocated overhead do not include the ________. adjust the production costs of the period approach adjust the cost of goods sold account approach

proration approach statistical reattribution approach Try again! The potential disposition methods for expensing over- or under- allocated overhead are given in Chapter 4 in the Blocher et al. (2022) textbook, in the section entitled "Disposition Underapplied and Overapplied Overhead". Question 10 1 / 1 pts DC Corporation has completed $214,000 worth of inventory. The journal entry to record the transfer to finished goods is ________. debit cost of goods sold and credit cash debit finished goods and credit work-in-process debit work-in-process and credit finished goods debit cost of goods sold and credit finished goods Correct! The entry would involve an increase or debit to finished goods and a corresponding decrease or credit to work-in-process. Question 1 1 / 1 pts ________ is employed when each product a company manufactures differs from another. Process costing Job costing

Correct! A company that manufactures custom products, which results in unique and discrete goods each manufacturing cycle, is best accommodated by job costing. Question 2 1 / 1 pts Under normal costing, the overhead rate allocated to work-in-process is based on ________. actual overhead costs budgeted overhead costs the prior year’s overhead costs historical rate overhead costs Correct! Normal costing requires actual variable costs of labor and material, with the budgeted rate of overhead allocated to production. Question 3 1 / 1 pts An example of a homogeneous product that would be a good candidate for implementing process costing is ________. instant oatmeal engraved wedding invitations custom homes cruise ships

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Correct! A homogeneous product is one that is not customized and is generic. When taken out of its packaging, it is not distinct from that of another brand. Question 4 1 / 1 pts DC Corporation has completed $214,000 worth of inventory. The journal entry to record the transfer to finished goods is ________. debit cost of goods sold and credit cash debit finished goods and credit work-in-process debit work-in-process and credit finished goods debit cost of goods sold and credit finished goods Correct! The entry would involve an increase or debit to finished goods and a corresponding decrease or credit to work-in-process. Question 5 1 / 1 pts What is the basic supporting document in a job costing system? Job cost sheet Cost of goods manufactured statement Raw materials subsidiary ledger Work-in-process control report

Correct! The job cost sheet is a document that is initiated when a job production or process begins. Incorrect Question 6 0 / 1 pts Nuts n Grains Company manufactures granola bars, trail mix, and other types of healthy snacks and uses normal costing. A job cost sheet for a product manufactured within the company would not include ________. payroll information cost of ingredients used cost of overhead allocated cost of labor used Try again! Please read Chapter 4 in the Blocher et al. (2022) textbook, in the section entitled "Job Costing: The Cost Flows". Question 7 1 / 1 pts RadioWaves, Inc. is a manufacturer of weather radios. It has two departments: assembly and testing. In March 2021, the company incurred $800,000 on direct materials and $705,000 on conversion costs. Assume there was no beginning inventory of any kind on March 1, 2021. During March, 7,000 units were started into production and all 7,000 were completed by the end of the month. What is the approximate unit cost of an assembled radio at the end of March? $114 $215 $101

$15 Correct! Total manufacturing costs were $1,505,000. Since everything was completed at the end of the month, you would divide the number of units into the total manufacturing costs or $1,505,000/7,000=$215. Incorrect Question 8 0 / 1 pts The overhead control account for Fast Motors Manufacturing Company has a debit balance of $52,000. For the same period, its overhead allocated account has a credit balance of $39,000. Using the write-off method, an entry to recognize the required adjustment would include ________. a debit of $39,000 to cost of goods sold a debit of $13,000 to cost of goods sold a credit of $13,000 to overhead control account a credit of $39,000 to work-in-process Try again! Please review page 5 of the Module 3 lecture or Chapter 4 in the Blocher et al. (2022) textbook, in the section entitled "Disposition of Underapplied and Overapplied Overhead." Question 9 1 / 1 pts Under-allocated overhead is defined as ________. a lesser amount of overhead was allocated to direct materials finished goods amount per unit will be stocked at greater than standard cost

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when netting the overhead control and overhead allocated accounts, a net credit balance results overhead control exceeds allocated overhead Correct! When total actual expenses recorded in the overhead control account exceed the amount recorded in the overhead allocated account, overhead is under-allocated. Question 10 1 / 1 pts Willy Wonka Chocolate Manufacturing Company’s total budgeted overhead is $100,000. The company also budgeted 50,000 labor hours and 25,000 machine hours. Job 42A incurs $25,000 of cacao, $35,000 of sugar, and $10,000 of direct labor for 1,000 direct labor hours and 500 machine hours. The company allocates overhead based on machine hours. What is the total cost of Job 42A? $60,000 $74,000 $61,500 $72,000 Correct! Overhead is $100,000/25,000 machine hours = $4.00. $4.00 per machine hour x 500 hours = $2,000. Add this to the $25,000 of cacao, $35,000 of sugar, and $10,000 of direct labor for a total of $72,000.

Module 3 Mastery Test

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