Choice Multiple Quiz
Page 1 of 3
Home > Chapter 3 > Multiple Choice Quiz
Course-wide Content
Check Figures
Video Library
Internet Exercises
Chapter 3
Quizzes
Multiple Choice Quiz
More Resources
Excel Templates
Practice Exams
Powerpoint Presentations
Narrated Slides
iPod Content
Multiple Choice Quiz
(See related pages)
Results Reporter
O ut of 10 questions, you answered 10 correctly with a final grade of 100%
10 correct (100%)
0 incorrect (0%)
0 unanswered (0%)
Your Results:
The correct answer for each question is indicated by a
1
CORRECT
.
Illini Company has the following estimated costs for next year:
The company estimates that 16,000 direct labor and 106,000 machine hours will be worked during the year. If overhead is applied
on the basis of direct labor hours, the predetermined overhead rate per direct labor hour will be:
A) $7.00.
B) $13.88.
C) $15.26.
D) $17.12.
Feedback:
The correct answer is A (Learning Objective 3):
The predetermined overhead rate per hour is determined as follows:
2
CORRECT
The Hoffman Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead
rate is based on machine hours in the Mixing Department and direct labor cost in the Assembly Department. At the beginning of the
year, the company made the following estimates:
What predetermined overhead rates would be used in the Mixing and Assembly Departments, respectively?
A) 110% and $15
B) $5.00 and 50%
C) $8.00 and 50%
D) $5.00 and 200%
Feedback:
The correct answer is D (Learning Objective 3):
The predetermined overhead rates are determined as follows.
Mixing Department:
Predetermined overhead rate = Estimated overhead cost Estimated machine hours
Predetermined overhead rate = $25,000 5,000 MHs = $5.00 per MH
Assembly Department:
Predetermined overhead rate = Estimated overhead cost Estimated direct labor cost
Predetermined overhead rate = $30,000 $15,000 = 200%
3
CORRECT
Which of the following statements is (are) true?
A) Companies that produce many different products or services are more likely to use job-order costing systems than process
costing systems.
B) Job-order costing systems are used by service firms and process costing systems are used by manufacturing firms.
C) Costs are traced to departments and then allocated to units of product when job-order costing is used.
D) All of the above.
Feedback:
The correct answer is A (Learning Objective 1):
A job-order costing system is typically used in situations where many different products are produced each period.
G enerally, a process costing system is used in situations where the company produces many units of a single product for
long periods.
http://highered.mcgraw-hill.com/sites/0073379611/student_view0/chapter3/multiple_choice... 3/6/2012
Multiple Choice Quiz
4
CORRECT
Page 2 of 3
In a job-order cost system, indirect materials costs would be recorded as a debit to:
A) Finished Goods.
B) Manufacturing Overhead.
C) Raw Materials.
D) Work in Process.
Feedback:
The correct answer is B (Learning Objective 4):
Indirect materials costs are a manufacturing overhead cost. Actual manufacturing overhead costs are recorded directly
as a debit to the Manufacturing Overhead account.
5
CORRECT
In a job order cost system, the use of direct materials would be recorded as a debit to:
A) Finished Goods inventory.
B) Manufacturing Overhead.
C) Raw Materials inventory.
D) Work in Process inventory.
Feedback:
The correct answer is D (Learning Objective 4):
When direct materials are requisitioned from the storeroom for use in production, they are recorded as a debit to the
Work in Process account.
6
CORRECT
Duffy Company's predetermined overhead rate is based on direct labor costs. The company's Work in Process inventory account has
a balance of $2,400, which relates to the one job that was in process at the end of an accounting period. The related job cost sheet
includes total charges of $400 for direct materials and $1,000 for direct labor. The company's predetermined overhead rate, as a
percentage of direct labor costs, must be:
A) 100%.
B) 50%.
C) 40%.
D) 17%.
Feedback:
The correct answer is A (Learning Objectives 3 and 5):
First, determine the amount of manufacturing overhead applied to the uncompleted job(s) as follows.
Work in Process Inventory account balance = Direct materials + Direct labor + Manufacturing overhead
Work in Process Inventory account balance = $400 + $1,000 + Manufacturing overhead; Manufacturing overhead =
$1,000
Then, solve for the predetermined overhead rate (based on direct labor cost here) as follows. Manufacturing overhead
applied = Predetermined overhead rate x Direct labor cost
$1,000 = Predetermined overhead rate x $1,000; Predetermined overhead rate = $1,000 $1,000 100%
7
CORRECT
Q = uante Company uses a predetermined overhead rate based on direct labor hours (DLHs) to apply manufacturing overhead to jobs.
At the beginning of the year, the company estimated manufacturing overhead would be $200,000 and DLHs would be 20,000. The
actual figures for the year were $215,000 for manufacturing overhead and 21,000 DLHs. The cost records for the year will show:
A) overapplied overhead of $5,000.
B) underapplied overhead of $5,000.
C) overapplied overhead of $10,000.
D) underapplied overhead of $10,000.
Feedback:
The correct answer is B (Learning Objectives 5 and 8):
First, determine the predetermined overhead rate (based on direct labor hours here) as follows. Estimated overhead
costs of $200,000 Estimated DLHs of 20,000 = Predetermined overhead rate of $10.00 per DLH. Then, determine the
a mount of manufacturing overhead applied during the period as follows. Predetermined overhead rate of $10.00 per DLH
x A ctual direct labor hours of 21,000 = Overhead applied of $210,000. Finally, compare the actual manufacturing
overhead costs to the amount applied, and decide whether it is underapplied or overapplied as follows. Actual overhead
of $215,000 Applied overhead of $210,000 = $5,000 of Underapplied overhead.
8
CORRECT
Clarke Company's predetermined overhead rate is based on direct labor hours (DLHs). At the beginning of the current year, the
company estimated that its manufacturing overhead would total $220,000 during the year. During the year, the company incurred
$200,000 in actual manufacturing overhead costs. The Manufacturing Overhead account showed that overhead was underapplied by
$8,000 during the year. If the predetermined overhead rate was $40.00 per DLH, how many DLHs were worked during the year?
A) 5,500 hours
B) 5,200 hours
C) 5,000 hours
D) 4,800 hours
Feedback:
The correct answer is D (Learning Objectives 3 and 5):
First, determine the amount of overhead applied to production by reference to the information about the Manufacturing
Overhead account as follows.
Actual overhead of $200,000 Amount applied to production = Amount underapplied of $8,000; Amount applied to
production = $192,000. Then, solve for the DLHs (the activity base for the overhead rate) as follows. Predetermined
overhead rate of $40.00 per DLH x Actual DLHs = Manufacturing overhead applied of $192,000 (from above); Actual
DLHs = 4,800.
9
CORRECT
Costa Company manufactures a specialty line of silk-screened ties. The company uses a job-order costing system. During the
month, the following costs were incurred on Job 1041: direct materials $54,800 and direct labor $19,200. In addition, selling and
shipping costs of $28,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour (MH)
and Job 1041 required 320 MHs. If Job 1041 consisted of 5,000 ties, the cost of goods sold per tie was:
A) $50.00
B) $22.00
C) $16.40
D) $14.80
Feedback:
The correct answer is C (Learning Objectives 5 and 6):
Note that the selling and shipping costs should be ignored; these costs are operating costs, and, as such, are not a
http://highered.mcgraw-hill.com/sites/0073379611/student_view0/chapter3/multiple_choice... 3/6/2012
Multiple Choice Quiz
Page 3 of 3
c omponent of cost of goods sold.
First, determine the amount of manufacturing overhead applied to the job was follows:
Overhead applied = Predetermined overhead rate x Actual machine-hours
Overhead applied = $25.00 per MH x 320 machine-hours = $8,000.
Then, accumulate the total manufacturing costs for the job, and divide by the number of units in the job to get the cost
(or cost of goods sold) per unit as follows:
10
CORRECT
Centrum Company uses a job-order costing system. Manufacturing overhead is applied to Work in Process inventory using a
predetermined overhead rate. During the current month, the company's transactions included the following:
The company had no beginning or ending inventories in the current month. What was the cost of goods manufactured?
A) $1,320,000
B) $1,288,000
C) $1,240,000
D) $1,208,000
Feedback:
The correct answer is C (Learning Objective 6):
The cost of goods manufactured is determined as follows:
E-mail Your Results
Date: Tue Mar 06 08:01:04 2012
My name:
Section ID:
E-mail these results to:
E-mail address:
Format:
Me:
HTML
My Instructor:
HTML
My TA:
HTML
Other:
HTML
E-mail The Results
To learn more about the book this website supports, please visit its Information Center .
2010 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Notice.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.
http://highered.mcgraw-hill.com/sites/0073379611/student_view0/chapter3/multiple_choice... 3/6/2012