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Cost and batch accounting

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2. Horton and Sons produces specialty furniture. The company has received an order to create 50 custom tables for a customer. What type of costing method should they use?
Inventory costing,

Cost of goods sold

Batch costing

Job order costing

Question . Omega Manufacturing bases its rate on direct labor cost. At the beginning of the year, the company made the following estimates:

Direct labor-hours: 30,000

Machine-hours: 5,000

Materials overhead cost: $486,000

Direct labor cost: $270,000

What is the predetermined overhead rate?




Question 6. 6. Omega Manufacturing had a total applied manufacturing overhead of $486,000 budgeted direct labor cost was $270,000. Their actual manufacturing overhead was $350,000 and actual direct labor cost was $300,000. Which of the following would best describe the overhead?



Question 7. 7. A sporting goods company manufactures sports shoes in batches. Why should a job order costing system be implemented for the production of the shoes?
To find the total cost of doing a run of the shoes
To find the exact cost per unit for each run of the shoes

To find if manufacturing the shoes will be profitable

To let managers decide if making the shoes is worth the cost

Question 8. 8. Depont Enterprises uses the job order costing system. They have received their first product order and need to make entries to the accounts. How should the flow of costs be recorded for their first job?
Work in process inventory, finished goods inventory, job cost record, cost of goods sold

Work in process inventory, finished goods inventory, costs of goods sold, job cost record

Job cost record, work in process inventory, finished goods inventory, cost of goods sold

Job cost record, work in process inventory, cost of goods sold, finished goods inventory

Question 9. 9. John knows that 1,000 widgets are needed in the upcoming job order. What type of document does he need to fill out in order to put the widgets into production?
Materials requisition
Job cost record

Direct materials requisition

Subsidiary ledger

Question 10. 10. Under a job order costing system, how are accumulated costs treated when a company finishes a job?
Accumulated costs are recorded as overhead on the income statement

Accumulated costs are assigned to batches and transferred to Work in Process Inventory (WIP)

Accumulated costs are moved from Work in Process Inventory (WIP) to finished goods inventory

Accumulated costs are recorded as cost of goods sold on the income statement

Question 11. 11. Why do organizations prepare specific strategic budgets?
They show how many resources are needed to implement a business strategy
They help identify where the main focus should be placed in an organization

They give managers detailed information on costs in a company

They allow managers to create more detailed plans

Question 12. 12. Seaside Software Company is a decentralized company with management taking control at different levels. When looking at information flow, what type of budget should be implemented?
Bottom-up budget

Strategic budget

Participative budget

Top-down budget

Question 13. 13. Sara's Cake Company uses the following materials in its cakes:

1 cup flour

0.25 cups sugar

2 eggs

0.25 cups cocoa powder

Here are the costs for each of the items:

Flour: $0.50 per cup

Sugar: $0.20 per cup

Eggs: $0.25 per egg

Cocoa: $0.80 per cup

What is the standard materials cost of a single cake?

$2.25 per cake

$1.25 per cake

$1.05 per cake

$1.00 per cake

Question 14. 14. Sara's Cake Company needs to figure out what her labor cost is for baking each cake. She currently pays the following an hour:

$10 base hourly rate for bakers

$14 base hourly rate for sales representatives

$2 in payroll taxes per hour

$2 in health and fringe benefits per hour

It takes the following time to to bake a cake:

Mixing: 15 minutes

Baking: 1 hour

Frosting: 15 minutes

What is the standard cost for labor for baking a cake?
$42 per cake

$36 per cake

$21 per cake

$15 per cake

Question 15. 15. Which one of the following budgets is the last component before creating budgeted (pro-forma) financial statements?
Sales budget

Direct labor budget

Production budget

Cash budget

Question 16. 16. When creating a master budget, which one of the following is not directly related to manufacturing? Manufacturing overhead budget

Cash budget

Sales and administrative budget

Sales budget

Question 17. 17. B&B Used Car Sales likes to keep a minimum cash balance of $25,000. Last year, the company had sales of $225,000. Of those sales, $100,000 were made on account. The company made a gross profit of $75,000. At the end of the year, it had a cash deficit of $32,000. How much cash would B&B need to borrow in short-term loans to cover the cash requirements?




Question 18. 18. Which of the following statements describes pro-forma financial statements?
They are based on estimations of future investment
They are based on estimations of future operations

They are a combination of actual and estimated operations

They are a combination of past and current operations

Question 19. 19. Which of the following would be considered a goal of budget planning?
To have management set budget goals through a top-down approach
To define realistic goals that will contribute to the financial well-being of the company

To analyze the financial and operation amounts for a specific project

To decide the cost of the direct materials needed for production

Question 20. 20. Hansen Company has prepared a budgeted income statement. Reported were the following amounts.

1. Sales revenue - $350,000
2. Cost of goods sold - $175,000
3. Variable operating expenses - $55,000
4. Fixed operating expenses - $11,000

What is the gross profit amount?




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Solution Summary

This solution helps to answer question related with costing methods.