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1
A product-costing system accumulates the costs incurred in a production process and assigns those costs to the organization's final production.
A)True
B)False
2
product-costing system is of little value in financial accounting.
A)True
B)False
3
Hospitals would have little need for a product-costing system.
A)True
B)False
4
The need for product costs is not limited to manufacturing firms.
A)True
B)False
5
When products are finished, the Work-in-Process account is reduced and the Cost of Goods Sold expense account is increased by the value of the finished products.
A)True
B)False
6
During the time period in which products are sold, the product cost of the inventory sold is removed from the Finished-Goods Inventory account and added to the Cost of Goods Sold account.
A)True
B)False
7
A process-costing system is most likely used by companies that use continuous processes to produce identical units of product or services.
A)True
B)False
8
A process-costing system treats each individual job as a unit of output.
A)True
B)False
9
The manufacturer of custom kitchen cabinets is most likely to use a job-order costing system.
A)True
B)False
10
Determining a per-unit cost is not possible when using a job-order costing system.
A)True
B)False
11
The costs of direct material, direct labor, and manufacturing overhead for a particular job or batch are maintained on a job-cost record.
A)True
B)False
12
The Work-in-Process Inventory account has a subsidiary ledger in a job-order costing system.
A)True
B)False
13
To request a release of raw materials for production, a production supervisor completes a bill of materials.
A)True
B)False
14
For products and product components that are produced routinely, the required materials are known in advance based on a bill of materials.
A)True
B)False
15
Proactively working with some or all of the organizations in a company's supply chain is called supply chain management.
A)True
B)False
16
In complex manufacturing operations, in which production takes place in several stages, material-requirements planning (MRP) may be used.
A)True
B)False
17
A time record is used to record direct labor only.
A)True
B)False
18
The process of assigning manufacturing-overhead costs to production jobs is called overhead application.
A)True
B)False
19
A predetermined overhead rate is computed by dividing the budgeted manufacturing-overhead cost by the budgeted amount of cost driver (or activity base).
A)True
B)False
20
If the balance of the Manufacturing Overhead account is $450,000, the predetermined overhead rate is $10 per unit, and 44,000 units have been produced, then $450,000 should be added (debited) to the Work-in-Process Inventory account at the end of the accounting period.
A)True
B)False
21
The source document for the accounting entry to record the purchase of raw materials on account is a materials requisition.
A)True
B)False
22
When indirect materials are requisitioned, their cost is charged to the Manufacturing Overhead account.
A)True
B)False
23
When recording the direct labor cost of $140,000 for the production of 45,000 units of product, the accounting entry requires a debit to Wages Expense and a credit to Wages Payable.
A)True
B)False
24
For a manufacturing firm using a job-order costing system, there are no depreciation expense accounts for accumulating the depreciation expense on assets used in the production process.
A)True
B)False
25
The monthly, expired portion of prepaid insurance on factory equipment is charged to the Manufacturing Overhead account.
A)True
B)False
26
At the end of the accounting period, the total value of the job-cost records representing unfinished work should be equal to the balance of the Work-in-Process account.
A)True
B)False
27
The application of manufacturing overhead to the Work-in-Process Inventory account will always result in a zero balance in the Manufacturing Overhead account.
A)True
B)False
28
The expired portion of prepaid office rent is charged to the Manufacturing Overhead account.
A)True
B)False
29
When a perpetual Finished-Goods Inventory account is maintained, the sale of products requires two journal entries.
A)True
B)False
30
When the application of manufacturing overhead exceeds the actual manufacturing overhead costs, the Manufacturing Overhead account is underapplied.
A)True
B)False
31
If a firm's accountant makes a year-end accounting entry debiting Cost of Goods Sold and crediting Manufacturing Overhead, the Manufacturing Overhead account had been underapplied.
A)True
B)False
32
The proration of underapplied or overapplied manufacturing overhead is used by a large number of firms.
A)True
B)False
33
When preparing financial statements, the managerial accountant will first prepare a schedule of cost of goods manufactured.
A)True
B)False
34
The schedule of cost of goods manufactured is used to report the total cost of direct material, direct labor, and manufacturing overhead.
A)True
B)False
35
The schedule of cost of goods manufactured reports the actual manufacturing overhead and the applied manufacturing overhead.
A)True
B)False
36
The cost of goods sold that is reported in the schedule of cost of goods sold is the total of the actual raw material used, direct labor, and actual manufacturing overhead.
A)True
B)False
37
The major disadvantage of using an actual overhead rate is the timeliness of the information.
A)True
B)False
38
A major disadvantage of using an actual overhead rate is the month-to-month fluctuations that might occur.
A)True
B)False
39
In order to smooth out fluctuations in the predetermined overhead rate, a normalized overhead rate is often calculated and used.
A)True
B)False
40
The product-costing system that uses the actual overhead rate is referred to as normal costing.
A)True
B)False
41
Most companies use actual costing when adding direct labor, direct material, and manufacturing overhead to the work-in-process.
A)True
B)False
42
When using actual costing, the amount added to the work-in-process for manufacturing overhead is calculated as the actual rate multiplied times the actual amount of cost driver used.
A)True
B)False
43
There should be a correlation between the incurrence of overhead costs and the cost driver.
A)True
B)False
44
As automation reduces direct labor, firms are switching to machine hours, process time, or throughput time as the cost driver for allocating manufacturing-overhead costs.
A)True
B)False
45
When a manufacturing firm has several production departments, the use of a plantwide overhead rate provides the most accurate assignment of overhead costs to the firm's products.
A)True
B)False
46
Departmental overhead centers do not include service departments.
A)True
B)False
47
At the conclusion of the first stage of the two-stage cost allocation process, all manufacturing-overhead costs have been assigned to the production departments.
A)True
B)False
48
The second part of the first stage of the two-stage allocation process is called service department cost allocation.
A)True
B)False
49
The second stage of the two-stage cost allocation process, overhead absorption occurs.
A)True
B)False
50
Job-order costing also is used in nonmanufacturing organizations.
A)True
B)False
51
Electronic data interchange (EDI) is the direct exchange of data between organizations via a computer-to-computer interface.
A)True
B)False
52
Bar-code technology is becoming widely used in recording important events in manufacturing processes.
A)True
B)False





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