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    Multiple Choice

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    1. The journal entry to record $200 of depreciation on factory equipment for the current period involves which of the following?
    a. Debit to Manufacturing Overhead for $200..
    b. Debit to Depreciation Expense Factory Equipment for $200.
    c. Debit to Accumulated Depreciation Factory Equipment for $200.
    d. Credit to Manufacturing Overhead for $200.

    2. Which costing system would better account for a unique individual product?
    a. Job costing system.
    b. Overhead costing system.
    c. Product costing system.
    d. Process costing system.

    3. Ending work in process is subtracted from total manufacturing costs incurred during the year to obtain cost of goods manufactured.
    TRUE
    FALSE

    4. Selling and administrative expenses are subtracted from cost of goods sold to obtain operating income.
    TRUE
    FALSE

    5. What is Total Quality Management?
    a. An exchange of information with suppliers and customers to create efficient and effective processes.
    b. A software system that integrates a company's functions, departments and data into a single system.
    c. A philosophy of supplying customers with superior products and services.
    d. A system in which a company produces what it needs when it needs it.

    6. A food and beverage company would most likely use a job costing system.
    TRUE
    FALSE

    7. The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
    Purchases $126,000
    Selling and Administrative Expenses $90,000
    Merchandise Inventory, 1/1/2009 $14,000
    Merchandise Inventory, 12/31/2009 $10,000
    Sales Revenue $250,000

    What is the cost of goods sold for 2009?

    a. $104,000.
    b. $130,000.
    c. $124,000.
    d. $140,000.

    8. Potts Company uses a job costing system and had the following data available for 2009.

    Materials Purchased on Account $75,000
    Materials Requisitioned (includes $2,000 of indirect materials) $43,000
    Direct Labor incurred $75,000
    Manufacturing Overhead Incurred $95,000
    Cost of goods completed $226,750
    Cost of Goods sold $138,000
    Beginning materials inventory $15,000
    Beginning work in process inventory $32,000
    Beginning finished goods inventory $31,000
    Predetermined manufacturing overhead rate 125%
    (as a percent of direct labor costs)
    a. Credit to manufacturing overhead $93,750.
    b. Debit to manufacturing overhead $95,000.
    c. Credit to work in process $95,000.
    d. Debit to work in process for $93,750

    9. Which of the following cost would appear on the income statements for both a merchandiser and a manufacture?
    a. Cost of goods manufactured
    b. Direct materials used.
    c. Direct labor incurred
    d. Operating expenses

    10. The main cost drive for service firms is usually labor hours.
    True
    False

    11. James and John provide lawn mowing services in the local community. During the month of July they incurred the following operating costs to mow 200 lawns.

    Wages expense $5,000
    Gasoline expense $1,500
    Depreciation on equipment $1,000

    They earned $20,000 from moving lawns in July.

    Compute the ratio of operating expense to total revenue

    a. 50.0%
    b. The100.0%
    c. 37.5%
    d. 62.5%

    12. The record at Smith and Jones Company show Job. No. 110 charged with $11,000 of direct materials and $12,500 of direct labor. Smith and Jones Company allocates manufacturing overhead at 85% of direct labor cost. What is the cost of job no. 110?
    a. $34,125
    b. $20,625
    c. $22,500
    d. $21,625

    13. Buncombe company present the following costs data for 2009:

    Estimated manufacturing overhead cost $240,000
    Estimated direct labor costs $300,000
    Estimated direct labor hours $30,000
    Actual direct labor costs $315,000
    Actual direct labor hours $33,000
    Allocation base: direct labor costs
    Other expense
    Factory depreciation on equipment $65,300
    Factory rent $51,000
    Factory utilities $28,900
    Factory property taxes $26,000
    Indirect labor $23,800
    a. 105%.
    b. 125%
    c. 76%.
    d. 80%.

    14. Which of the following companies is most likely to use job costing?
    a. DuPont chemical company
    b. Kellogg's cereal company
    c. Exxon Mobil oil refinery
    d. Elizabeth's Custom Furniture Company

    15. The entry to transfer work in process to finished goods includes a credit to the Finished Goods Inventory account.
    TRUE
    FALSE

    16. Your company sends you to a conference on a new accounting rule, and you skip the afternoon session to go sightseeing. Which IMA guideline has been violated?
    a. Competence
    b. Confidentiality
    c. Objectivity
    d. Integrity

    17. Customer service expense would be found on the Income Statement of a service company but not the Income Statement of a manufacturer.
    TRUE
    FALSE

    18. The same accounts are used when preparing the Income Statement for a merchandiser and the Income Statement for a manufacturer.
    TRUE
    FALSE

    19. Since service firms do not carry inventory, it is not necessary to know the costs related to different jobs.
    TRUE
    FALSE

    20. Beginning inventory. Purchases, and Freight in equal Cost of Goods Sold
    TRUE
    FALSE

    21. Which of the following statements about financial accounting is TRUE?
    a. Financial accounting reports can influence employee behavior.
    b. Financial accounting provides help in planning and controlling operations.
    c. Financial provides detailed reports on parts of the company.
    d. Financial accounting helps investors make decisions.

    22. A lawn mowing business would be classified as which type of company?
    a. Simple company
    b. Merchandising company
    c. Manufacturing company
    d. Service company

    23. The primary goal of Managerial accounting is to provide information to which of the following?
    a. investors
    b. external auditors
    c. creditors
    d. management

    24. Service firms as well as manufacturing companies trace direct labor to individual jobs.
    TRUE
    FALSE

    25. The entry to transfer direct labor and indirect labor costs from manufacturing wages into production includes a debit to which of the following?
    a. Manufacturing Overhead
    b. Finished Goods Inventory and Work in Process Inventory
    c. Manufacturing Overhead and Work in Process Inventory
    d. Finished Goods Inventory

    26. Great Pets provides pet walking services in the local community. In October, the following operating costs were incurred to walk 250 pets.

    Wages Expense $2,400
    Supplies $600
    Telephone Expense $500
    Miscellaneous Expense $50

    Great Pets earned $7,500 in revenues from per walking for the month of October.

    What is the Operating Income for October?

    a. $3,950
    b. $7,500
    c. $3,550
    d. None of the above

    27. Manufacturing Overhead is credited for actual manufacturing overhead costs incurred throughout the year.
    TRUE
    FALSE

    28. The key to assigning indirect manufacturing costs to jobs is to identify a manufacturing overhead allocation base.
    TRUE
    FALSE

    29. The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.

    Purchases $126,000
    Selling and Administrative Expenses $90,000
    Merchandise Inventory, 1/1/2009 $14,000
    Merchandise Inventory, 12/31/2009 $10,000
    Sales Revenue $250,000

    What is the profit margin percentage?

    a. 36%
    b. 100%
    c. 12%
    d. 56%

    30. When indirect materials are requisitioned for a job, the Materials Inventory account is credited.
    TRUE
    FALSE

    31. Merchandising companies typically have a single category of inventory.
    TRUE
    FALSE

    32. Each time jobs are completed, the entire balance in Manufacturing Overhead is transferred to Finished Goods Inventory.
    TRUE
    FALSE

    33. Managerial accounting develops reports for internal parties.
    TRUE
    FALSE

    © BrainMass Inc. brainmass.com October 9, 2019, 9:56 pm ad1c9bdddf
    https://brainmass.com/business/quality-management/multiple-choice-202263

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    Solution Preview

    Please see the attached file. All answers / explanations in blue

    1. The journal entry to record $200 of depreciation on factory equipment for the current period involves which of the following?
    a. Debit to Manufacturing Overhead for $200..
    b. Debit to Depreciation Expense Factory Equipment for $200.
    c. Debit to Accumulated Depreciation Factory Equipment for $200.
    d. Credit to Manufacturing Overhead for $200.

    Depreciation on manufacturing equipment is an overhead and so would be debited to manufacturing overhead. The entry would be
    Manufacturing Overhead Dr 200
    Accumulated Depreciation Cr 200

    2. Which costing system would better account for a unique individual product?
    a. Job costing system.
    b. Overhead costing system.
    c. Product costing system.
    d. Process costing system.

    Job order is used for unique products and process costing for homogenous products.

    3. Ending work in process is subtracted from total manufacturing costs incurred during the year to obtain cost of goods manufactured.
    TRUE
    FALSE

    The formula is Cost of goods manufactured = Opening WIP + Manufacturing costs for the period - ending WIP

    4. Selling and administrative expenses are subtracted from cost of goods sold to obtain operating income.
    TRUE
    FALSE

    Operating income = Gross Margin - Selling and administrative expenses

    5. What is Total Quality Management?
    a. An exchange of information with suppliers and customers to create efficient and effective processes.
    b. A software system that integrates a company's functions, departments and data into a single system.
    c. A philosophy of supplying customers with superior products and services.
    d. A system in which a company produces what it needs when it needs it.

    6. A food and beverage company would most likely use a job costing system.
    TRUE
    FALSE

    The products would be homogenous in nature and so a process costing system would be more appropriate

    7. The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
    Purchases $126,000
    Selling and Administrative Expenses $90,000
    Merchandise Inventory, 1/1/2009 $14,000
    Merchandise Inventory, 12/31/2009 $10,000
    Sales Revenue $250,000

    What is the cost of goods sold for 2009?

    a. $104,000.
    b. $130,000.
    c. $124,000.
    d. $140,000.

    Cost of goods sold = Opening Inventory + Purchases - Ending Inventory
    = 14,000+126,000-10,000 = 130,000

    8. Potts Company uses a job costing system and had the following data available for 2009.

    Materials Purchased on Account $75,000
    Materials Requisitioned (includes ...

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