2. The expense of operating a shipping department would likely be classified in

Question

2. The expense of operating a shipping department would likely be classified in which cost behavior category?
A. Fixed
B. Mixed
C. Variable

3. Property tax on an office building would likely be classified in which cost behavior category?
A. Fixed
B. Mixed
C. Variable

4. Inventoriable costs eventually appear as expenses on an income statement as part of:
A. the cost of goods sold
B. selling expenses
C. administrative expenses

5. Which of the following would one be able to find on a job cost sheet in a typical job cost system?
Actual direct material cost Actual manufacturing overhead cost
A. Yes Yes
B. Yes No
C. No Yes
D. No No

6. Which of the following enterprises would be more likely to use process costing rather than job-order costing?
A. A manufacturer of yachts
B. A small appliance repair shop
C. A tire manufacturer

7. A predetermined overhead rate is based on direct labor-hours to apply manufacturing overhead to jobs. For a particular month, manufacturing overhead cost was estimated to be $30,000; direct labor-hours were estimated to be based 10,000. Actual overhead was $32,500; actual direct labor-hours were 11,000. By how much was overhead overapplied or underapplied?
A. $2,500 overaplied
B. $2,500 underapplied
C. $500 overapplied
D. $500 underapplied

8. In job order costing, the different between total manufacturing costs and the cost of goods manufactured is:
A. the change in work-in-process inventory over the related period
B. work-in-process inventory at the end of the related period
C. Zero as total manufacturing costs and the cost of goods manufactured are the same thing

9. In process costing, a separate work in process account is kept for each:
A. processing department
B. individual order
C. equivalent unit

Explanation / Answer

2) Variable cost 3) Fixed cost 4) The cost of goods sold 5) D 6) A manufacturer of yachts 7) The formula for calculating the predetermined overhead cost is Predetermined overhead cost = Estimated annual overhead costs / Expected annual operating activity                                               = $30,000 / 10,000                                               = 3 DLH The actual direct labor hours are 11,000 Actual manufacturing overhead = Actual direct labor hours * 3DLH                                                 = 11,000 * 3                                                 = $33,000 Therefore, the manufacturing overhead is underapplied by $500 Correct option is D) 8) B 9) Processing department

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