A PROCESS COST SYSTEM WOULD BE USED FOR

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PRODUCT DESCRIPTION
A process cost system would be used for
a. advertising
b. cereal.
c. patient healthcare.
d. motion pictures.
2.
When computing the predetermined overhead rate, the following are used
a. actual monthly costs and actual annual activity.
b. estimated monthly costs and actual monthly activity.
c. estimated annual costs and expected annual activity.
d. estimated annual costs and actual activity
3.
Manufacturing overhead costs that are assigned to production in a process cost system are

2. debited to
a. the Finished Goods Inventory account.
b. Cost of Goods Sold.
c. the Work in Process account
d. a Manufacturing Overhead account.
4.
Small amounts of lubricant used in the production process of an auto manufacturer is
classified as a(n)
a. indirect material
b. period cost.
c. direct material.
d. miscellaneous expense
2
5.
In assigning accumulated costs to the Work In Process Account, all of the following

3. would be entries except:
a. raw materials are used.
b. the purchase of raw materials.
c. overhead is applied.
d. factory labor is used.
6.
The management function that requires managers to ensure that various departmental
activities are coordinated.
a. controlling.
b. planning
c. directing.
d. constraining.
7.
In job costing, how does a company account for indirect materials?
a. It is added to work in process as used.
b. It remains part of raw materials inventory..

4. c. It is transferred out of raw materials into work in process as used
d. It is transferred out of raw materials into manufacturing overhead when used
8.
When there is an increase in automation there is a decline in which component of product
cost?
a. Direct labor
b. Direct materials
c. Manufacturing overhead
d. Advertising
9..
Cinder Company had the following department information for the month:
Total materials costs
Equivalent units of materials
Total conversion costs
Equivalent units of conversion costs
a.

5. b
c.
d.
10.
$ 80,000
10,000
$120,000
12,000
How much is the total manufacturing cost per unit?
$8
$15.50
$18
$10.00.
A source document that is used in assigning cost to the job cost sheet?
a. Materials requisition slip
b. Raw materials receiving slips.

6. c. Materials purchase orders.
d. Finished goods shipping documents.
3
11.
A process with no beginning work in process, completed and transferred out 65,000 units
during a period and had 50,000 units in the ending work in process inventory that were
20% complete. The equivalent units of production for the period were:
a. 80,000 equivalent units.
b. 125,000 equivalent units.
c. 75,000 equivalent units
c. 115,000 equivalent units
12.
Sales are $500,000 and variable costs are $200,000. What is the contribution margin ratio?
a. 40%
b. 60%

7. c. 20%
d. Cannot be determined because amounts are not expressed per unit.
13.
All of the following are done in preparing a production cost report, except?
a. Compute the equivalent units of production.
b. Prepare the job order cost sheet
c. Compute the physical unit flow.
d. Prepare a cost reconciliation schedule.
14.
In a job order cost system, accumulating manufacturing costs include all of the following
except
a. Cost of goods sold is recorded
b. Raw materials are purchased
c. Factory labor is incurred
d. Manufacturing overhead is incurred

8. 15.
In applying the high-low method, which months are relevant?
Month
Miles
Total Cost
May
80,000
$ 96,000
June
50,000
80,000
July
90,000
130,000
August
70,000
94,000
a.
b.

9. c.
d.
May and June
May and July
June and May
July and June
16.
Which of the following is not used in process costing
a. similar goods are being produced.
b. large volumes are produced.
c. products are heterogeneous
d. a series of connected manufacturing processes is necessary.
17.
A cost that changes in total cost but has a constant unit cost at each level of activity is a

10. 4
a.
b.
c.
d.
18.
fixed cost.
variable cost.
mixed cost.
manufacturing cost.
Fixed costs normally will not include
a. property taxes
b. supervisory salaries
c. depreciation on buildings and equipment.
d. labor
PROBLEM 1

11. Millar Company has the following cost records for May 2015
Indirect factory labor
$ 10,000
Direct materials used
Advertis
ing
Expense
$ 8,000
13,000 Depreciation, factory equipment
3,200
Work in process, 5/1/15
3,000 Direct labor

12. Work in process, 5/31/15
6,500 Maintenance, office equipment
2,000
Depreciation, office equipment
1,000 Indirect materials
1,200
Sales Commission
Instructions
10,000 Office Manager Salary
Prepare a cost of goods manufactured schedule for May 2015

13. MILLAR COMPANY
Cost of Goods Manufactured
Schedule For the Year Ended May 31, 2015
11,000
4,000
5
6
PROBLEM 2
Mottle Inc. fixed costs are expected to be $70,000 and variable costs are expected to be $20 per
product. Sales
price is $40 per product and targeted net income is $300,000
.
Instructions
a. Determine the required sales in units and dollars to break even.

14. b. Determine the required sales in units to achieve targeted net income of $300,000.
7
PROBLEM 3
Marvin Company estimates that annual manufacturing overhead costs will be $900,000.
Estimated annual
operating activity bases are: direct labor cost $400,000, direct labor hours 300,000, and machine
hours 100,000.
a. Compute the predetermined overhead rate for each activity base.
b. If Job 101 has 60,000 direct labor hours, compute the manufacturing overhead that it should
be assigned
using the predetermined overhead rate computed in question a. above.
c. If Job 102 has 25,000 machine hours, compute the manufacturing overhead that it should be
assigned using
the predetermined overhead rate computed in question a. above.
8
PROBLEM 4
Blake Johnson has the following cost and production data for the Mixing Department for
December 2013

15. Cost data:
Beginning work in process inventory, December 1
Direct Materials
Conversion Cost
Cost incurred during production in December
Direct Materials
Conversion costs
Total Costs
$30,000
$ 6,000
$36,000
$390,000
$122,000
$512,000
$548,000
Production data

16. Completed and transferred out
Ending work in process
52,000
8,000
Ending work in process was 100% complete as to materials and 25% complete as to conversion
costs.
Instructions
(a)
(b)
Compute the equivalent units for materials and conversion costs.
Determine the unit cost for materials and conversion
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