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50 Multiple Choice Questions in Accounting

Please see attached file for complete details:

1. Paulson Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year:

Paulson estimated that 40,000 direct labor hours and 20,000 machine hours would be worked during the year. The predetermined overhead rate per machine hour will be:
A) $1.60.
B) $2.10.
C) $1.00.
D) $1.05.

2. Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves?
A) machine-hours
B) power consumption
C) direct labor-hours
D) machine setups

3. Nil Co. uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. For the year ended December 31, Nil's estimated manufacturing overhead was $600,000, based on an estimated volume of 50,000 direct labor hours, at a direct labor rate of $6.00 per hour. Actual manufacturing overhead amounted to $620,000, with actual direct labor cost of $325,000. For the year, manufacturing overhead was:
A) overapplied by $20,000.
B) underapplied by $22,000.
C) overapplied by $30,000.
D) underapplied by $30,000.

Use the following to answer question 4:

Leija Manufacturing Company uses a job-order costing system and started the month of March with one job in process (Job #359). This job had $500 of cost assigned to it at this time. During March, Leija assigned production costs as follows to the jobs worked on during the month:

During March, Leija completed and sold Job #359. Job #360 was also completed but was not sold by month end. Job #361 was not completed by the end of March.

4. What is Leija's cost of goods manufactured for March?
A) $ 6,500
B) $14,100
C) $14,600
D) $16,500

5. Which of the following entries or sets of entries would record sales of $200,000 for the month of July of goods costing $119,000?
A)

B)

C)

D)

6. Pinnini Co. uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. Last year, Pinnini Company incurred $225,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied $14,500 for the year. If the predetermined overhead rate was $5.00 per direct labor hour, how many hours did the company work during the year?
A) 45,000 hours
B) 47,900 hours
C) 42,100 hours
D) 44,000 hours

Use the following to answer question 7:

Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training.

7. What journal entry would Munos make to record the completion of Job KN668 at a total cost of $7,600?
A)

B)

C)

D)

8. The balance in the Work in Process account equals:
A) the balance in the Finished Goods inventory account.
B) the balance in the Cost of Goods Sold account.
C) the balances on the job cost sheets of uncompleted jobs.
D) the balance in the Manufacturing Overhead account.

Use the following to answer question 9:

Maverick Company had the following transactions last year:

1) Raw materials purchased on account totaled $165,000.
2) Raw materials issued from storeroom, $140,000 (90% direct materials, 10% indirect materials).
3) Factory utility costs incurred, $35,000.
4) Employee salaries and wages incurred, $200,000 (80% direct labor, 10% indirect labor and 10% selling and administrative).
5) Depreciation on factory equipment, $30,000.
6) Depreciation on autos used by the sales staff, $15,000.
7) Overhead was applied to production at a rate of 50% of direct labor cost.
8) Goods costing $310,000 were transferred from Work in Process to Finished Goods.

9. The cost of goods manufactured was:
A) $366,000.
B) $420,000.
C) $385,000.
D) $310,000.

Use the following to answer questions 10-11:

Madtack Company's beginning and ending inventories for the month of November were as follows:

Madtack applies manufacturing overhead cost to jobs at the rate of 70% of direct labor cost incurred. The company does not close under- or overapplied manufacturing overhead to Cost of Goods Sold until the end of the year.

10. Madtack Company's manufacturing overhead for November was:
A) overapplied by $8,000.
B) underapplied by $8,000.
C) overapplied by $132,000.
D) underapplied by $132,000.

11. Madtack Company's total manufacturing cost for November was:
A) $502,000.
B) $510,000.
C) $363,000.
D) $495,000.

12. A proper journal entry to record issuing raw materials to be used on a job would be:
A)

B)

C)

D)

13. Jameson Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for the next year:

Jameson estimates that 24,000 direct labor hours will be worked during the year. The predetermined overhead rate per hour will be:
A) $2.00
B) $2.79
C) $3.00
D) $4.00

14. In a job order cost system, the use of indirect materials previously purchased is recorded as a decrease in:
A) Raw Materials inventory.
B) Work in Process inventory.
C) Manufacturing Overhead.
D) Finished Goods inventory.

15. The use of the FIFO method would result in the quantity schedule of a company's production report showing:
A) units transferred out as one amount with no distinction made for beginning inventory.
B) units transferred out as two amounts?one for beginning inventory and the other for units started and completed during the month.
C) units transferred out as two amounts?one for units completed during the period and one for ending inventory.
D) units transferred out as three amounts?one for beginning inventory, one for units started and completed during the period, and one for ending inventory.

Use the following to answer question 16:

Loraine Company applies manufacturing overhead to jobs using a predetermined overhead rate of 70% of direct labor cost. Any under- or overapplied overhead cost is closed to Cost of Goods Sold at the end of the month. During August, the following transactions were recorded by the company:

16. The entry to dispose of the under- or overapplied overhead cost for the month would include:
A) a credit of $100 to Cost of Goods Sold.
B) a credit of $6,000 to Manufacturing Overhead.
C) a debit of $6,000 to Cost of Goods Sold.
D) A credit of $100 to the Manufacturing Overhead Account.

17. Equivalent units for a process costing system using the weighted-average method would be equal to:
A) units completed during the period and transferred out.
B) units started and completed during the period plus equivalent units in the ending work in process inventory.
C) units completed during the period less equivalent units in the beginning inventory, plus equivalent units in the ending work in process inventory.
D) units completed during the period plus equivalent units in the ending work in process inventory.

Use the following to answer questions 18-19:

Barker Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:

The ending inventory was 85% complete with respect to materials and 20% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

18. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $32,501
B) $7,647
C) $38,237
D) $19,773

19. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $26.35
B) $25.85
C) $26.65
D) $25.56

20. On November 1, Riser Company had 5,000 units of work in process in Department No. 1 that were 100% complete with respect to material costs and 20% complete with respect to conversion costs. During November, 32,000 units were started in Department No. 1 and 34,000 units were completed and transferred to Department No. 2. The work in process on November 30, was 100% complete with respect to material costs and 40% complete with respect to conversion costs. By what amount would the equivalent units for conversion costs for the month of November differ if the FIFO method were used instead of the weighted-average method?
A) 1,000 decrease.
B) 3,000 decrease.
C) 1,500 decrease.
D) 2,200 decrease.

Use the following to answer question 21:

Guo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 500 units. The costs and percentage completion of these units in beginning inventory were:

The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

21. The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $623,600
B) $638,122
C) $614,200
D) $569,305

22. Salter Company uses the FIFO method in its process costing system. The company reported 25,000 equivalent units for materials last month. The company's beginning work in process inventory consisted of 6,000 units, 40% complete with respect to materials. The ending work in process inventory consisted of 4,000 units, 70% complete with respect to materials. The number of units started during the month was:
A) 25,400 units.
B) 23,400 units.
C) 22,600 units.
D) 24,600 units.

Use the following to answer question 23:

Muzyka Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

23. What are the equivalent units for conversion costs for the month in the first processing department?
A) 5,600
B) 5,060
C) 4,500
D) 320

Use the following to answer question 24:

Hache Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

24. What are the equivalent units for conversion costs for the month in the first processing department?
A) 5,900
B) 4,400
C) 4,850
D) 450

25. Which of the following characteristics applies to process costing, but does not apply to job order costing?
A) the need for averaging.
B) the use of equivalent units of production.
C) separate, identifiable jobs.
D) the use of predetermined overhead rates.

26. Onyemah Company uses the FIFO method in its process costing system. Operating data for the Brazing Department for the month of November appear below:

What were the equivalent units for conversion costs in the Brazing Department for November?
A) 42,040
B) 39,120
C) 35,600
D) 39,400

27. Carrington Company produces canned vegetable soup. The company uses the weighted-average method in its process costing system. The company sold 300,000 units in January. Data concerning inventories follow:

What were the equivalent units for conversion costs for January?
A) 285,000 units.
B) 303,000 units.
C) 300,000 units.
D) 309,000 units.

Use the following to answer question 28:

Carmon Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 700 units. The costs and percentage completion of these units in beginning inventory were:

The ending inventory was 70% complete with respect to materials and 35% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

28. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $23.23
B) $19.94
C) $21.85
D) $21.20

Use the following to answer question 29:

Lumb Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

29. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $32,892
B) $23,325
C) $17,413
D) $38,696

30. Stover Company uses the weighted-average method in its process costing system. Information concerning Department A for the month of June follows:

All materials are added at the beginning of the process. The cost per equivalent unit for materials costs is closest to:
A) $0.83.
B) $0.85.
C) $0.97.
D) $1.01.

31. A key concept of the Just-In-Time is:
A) the raw materials, work in process, and finished goods inventories of manufacturing companies act as buffers so that operations can proceed smoothly even if suppliers are late with deliveries or a department is unable to operate for a brief period due to breakdowns or other reasons.
B) the use of many suppliers in order to ensure rapid delivery of materials for production.
C) the maintenance of a stock of raw materials so that defective materials can be replaced quickly in order to maintain a high rate of productivity.
D) inventories are costly to carry and create operational problems.

32. The organization chart:
A) shows lines of authority within an organization.
B) shows whether or not the organization is decentralized.
C) shows both formal and informal channels of communication between managers.
D) none of these.

33. The term throughput means:
A) the length of time required to turn materials into products.
B) the total volume of production through a facility during a period.
C) the time involved in changing equipment, moving material about, and putting forms and jigs in place to accommodate the production of a different item.
D) production of goods without the accumulation of raw materials or work in process inventories.

34. The Standards of Ethical Conduct for Management Accountants developed by the Institute of Management Accountants state that communication of ethical problems to authorities or individuals not employed or engaged by the organization is:
A) not considered appropriate, except where legally prescribed.
B) always appropriate since managers of the organization are unlikely to take actions necessary to resolve the problems.
C) sometimes appropriate, depending on the actions of management.
D) sometimes appropriate if the people involved are at the upper levels of the organization.

35. Delegating decisions to lower levels of management results in increased:
A) profitability.
B) centralization.
C) control.
D) decentralization.

36. Higgins Company's manufacturing overhead is 40% of its total conversion costs. If direct labor is $18,000 and if direct materials are $24,000, the manufacturing overhead is:
A) $27,000.
B) $28,000.
C) $16,000.
D) $12,000.

37. Haaker Inc. is a merchandising company. Last month the company's cost of goods sold was $87,000. The company's beginning merchandise inventory was $21,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's merchandise purchases for the month?
A) $84,000
B) $126,000
C) $90,000
D) $87,000

38. Which of the following would be classified as an appraisal cost on a quality cost report?
A) Re-entering data because of keying errors.
B) Quality data gathering, analysis, and reporting.
C) Debugging software errors.
D) Test and inspection of in-process goods.

Use the following to answer question 39:

The following data (in thousands of dollars) have been taken from the accounting records of Karmin Corporation for the just completed year.

Use these data to answer the following series of questions.

39. The net operating income for the year (in thousands of dollars) was:
A) $60.
B) $290.
C) $110.
D) $10.

40. The following costs were incurred in April:

Prime costs during the month totaled:
A) $53,000.
B) $67,000.
C) $38,000.
D) $103,000.

41. The property taxes on the factory building for a manufacturer would be an example of:

Prime Cost Conversion Cost
A) No Yes
B) Yes No
C) Yes Yes
D) No No

42. In a manufacturing company, direct labor costs combined with direct materials costs are known as:
A) period costs.
B) conversion costs.
C) prime costs.
D) opportunity cost.

43. Which of the following would be classified as an appraisal cost on a quality cost report?
A) Test and inspection of in-process goods.
B) Technical support provided to suppliers.
C) Debugging software errors.
D) Audits of the effectiveness of the quality system.

44. Which of the following combinations of costs make up prime cost?
A) Direct materials cost and manufacturing overhead cost.
B) Direct labor cost and manufacturing overhead cost.
C) Marketing cost and administrative costs.
D) Direct materials cost and direct labor cost.

45. The salary paid to the maintenance supervisor in a manufacturing plant is an example of:
Product Cost Manufacturing Overhead
A) No Yes
B) Yes No
C) Yes Yes
D) No No

Use the following to answer question 46:

Hampton Corp. reported the following data for last year:

46. The prime cost is:
A) $800.
B) $900.
C) $500.
D) $400.

47. Which of the following is an element of prime cost?

Direct materials Indirect materials
A) Yes No
B) Yes Yes
C) No Yes
D) No No

Use the following to answer question 48:

Fackler Company's quality cost report is to be based on the following data:

48. What would be the total appraisal cost appearing on the quality cost report?
A) $130,000
B) $152,000
C) $146,000
D) $219,000

49. Which of the following costs would be included both as part of prime cost and as part of conversion cost?
A) Direct materials.
B) Direct labor.
C) Manufacturing overhead.
D) None of these.

Use the following to answer question 50:

Eaglin Company's quality cost report is to be based on the following data:

50. What would be the total external failure cost appearing on the quality cost report?
A) $259,000
B) $110,000
C) $119,000
D) $515,000

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Solution Summary

Answers to 50 Multiple Choice Questions in Accounting on predetermined overhead rate, job-order costing system, cost of goods manufactured, journal entry, weighted-average method in process costing system, FIFO method in process costing system, equivalent units, Just-In-Time, organization chart, throughput, manufacturing overhead, Prime costs, appraisal cost on a quality cost report, external failure cost appearing on the quality cost report etc.

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