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Unformatted text preview: # 4 # 2006 6 CGA # 20072008 MA1 MULTIPLE CHOICE: Choose the one alternative that best completes the statement or answers the question (2 marks each, 20 Marks in total) 1. Which of the following are included in manufacturing overhead? ( C ) A. All direct material, direct labour, and administrative costs B. All manufacturing costs except direct labour C. All manufacturing costs except direct labour and direct materials D. All selling and administrative costs 2. Work-in-process inventory would normally include: ( A ) A. goods partially worked on but not yet fully completed B. direct materials in stock and awaiting use in the manufacturing process C. products in their original form intended to be sold without changing their basic form D. goods fully completed but not yet sold 3. Crossland Companys direct labour cost is 30% of its conversion cost. The manufacturing overhead cost for the last period was 49,000 and the direct materials cost was 20,000. What was the direct labour cost? ( C ) A. 6,000 B. 14,700 C. 21,000 D. 34,300 4. Answer the following questions using the information below: Cannady produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit. Given this change in the cost: ( D ) A. SR6 is definitely more accurately costed B. SR6 has benefited from the new system C. SR6 will now command a higher sales price D. the costing results for SR6 under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system 5. How widespread is the use of actual overhead costs in assigning overhead cost to jobs? ( B ) A. It is virtually universal among all companies. B. It rarely occurs because actual overhead costs are not available until after a period is over. C. It frequently occurs because companies prefer actual data to estimated data. D. It never occurs because job costing relies on estimates of all costs (labour, materials, and overhead) in assigning costs to products. 6. A major advantage of using the FIFO process-costing method is that: ( B ) A. FIFO makes the unit cost calculations simpler B. FIFO provides managers with information about changes in the costs per unit from one period to the next 1 7 2007-11-9 # 4 # 2006 6 CGA # C. in contrast with the weighted-average method, FIFO is fully supported by GAAP D. All of these answers are correct 7. Which of the following is an important consideration in selecting a cost driver? ( D ) A. Whether the entity is a service or manufacturing entity since activity-based costing cannot be applied to service entities B. The need to spread overhead costs to high volume products C. The tendency of activity-based costing to cause fewer and fewer overhead costs to be directly traceable to individual products D. The degree to which the cost driver measures actual consumption of products by the activity involved D....
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- Spring '10