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Costs in a process cost system are traced

A) Costs in a process cost system are traced to?
Would it be:
1. Specific jobs
2. Specific customers
3. Specific production departments
4. Specific corporate administrators

Not absolutely sure on a choice.

B) Which of the following is a period cost?
Would it be:
1. Manufacturing plant maintenance
2. Wages for production line workers
3. Raw material costs
4. Salary for the vice president of finance

C) The ideal example of a business requiring a process costing system?
Would it be:
1. Custom cabinet shop
2. Automobile repair shop
3. Antique furniture restorer
4. Soap manufacturer
I think it is Antique furniture restorer or Automobile repair shop. Not absolutely sure.

D) Which is most likely to be a variable cost?

Would it be:
1. Rent
2. Advertising
3. Cost of material used in production
4. Depreciation?

I think it is cost of material used in production. Not absolutely sure.

E) Full costing includes which of the following in determining product cost?
Would it be:
1. All fixed and variable costs of production
2. Administrative overhead
3. Only variable costs of production
4. Only fixed costs of production

Not absolutely sure on a choice.

F) Which of the following is likely to be a fixed cost?
Would it be:
1. Rent
2. Assembly labor cost
3. Commission
4. The cost of material used in production

G) The contribution margin ratio measures?
Would it be:
1. Profit per dollar of sales
2. Profit per unit
3. Contribution margin per dollar of sales
4. Ratio of variable to fixed costs

H) To determine the profit-maximizing price, a manager must do what?
Would it be:
1. Estimate the quantity demanded for various prices
2. Estimate variable costs
3. Both 1 and 2
4. None of the above

I) Controllable costs for a manager of department A include what?
Would it be:
1. All costs related to department A's final product
2. Costs of material and labor used in department A
3. Cost of the finance department
4. All of the above

J) Allocation of indirect costs?
Would it be:
1. Can often be justified in a variety of ways that lead to substantially different costs being allocated.
2. Is an inherently arbitrary process, a characteristic that can lead to problems.
3. Can be done with great accuracy and precision, if the proper techniques are used.
4. Both 1 and 2

K) In the cost allocation process, an allocation base?
Would it be:
1. Ideally should result in cost being allocated based on a cause and effect relationship
2. Must be some characteristic that is common to all of the cost objectives
3. Both 1 and 2
4. None of the above

L. Full costing differs from variable costing in that?
1. Full costing includes fixed manufacturing overhead in inventory
2. Full costing includes variable manufacturing overhead in inventory
3. Full costing excludes selling costs from consideration
4. Full costing excludes administration costs from consideration

Not absolutely sure on a choice.

Solution Preview

A) Costs in a process cost system are traced to?
Would it be:
1. Specific jobs
2. Specific customers
3. Specific production departments
4. Specific corporate administrators

Not absolutely sure on a choice.

In a process systems the costs are traced to production departments. The products passes through various processing/production departments which accumulate the cost. Answer is 3.

B) Which of the following is a period cost?
Would it be:
1. Manufacturing plant maintenance
2. Wages for production line workers
3. Raw material costs
4. Salary for the vice president of finance

Period costs are those which are expensed in the period they are incurred. These are usually non manufacturing costs. The salary of vice president of finance is a period cost.

C) The ideal example of a business requiring a process costing system?
Would it be:
1. Custom cabinet shop
2. Automobile repair shop
3. Antique furniture restorer
4. Soap manufacturer
I think it is Antique furniture restorer or Automobile repair shop. Not absolutely sure.

A process costing system would be used where you make homogenous products..that is similar products are made on a large scale. A soap manufacturer would need a process costing systems, since each soap is the same as any other soap.
An antique restorer or automobile would use a job ...

Solution Summary

The solution explains various multiple choice questions in accounting

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