6 Easy Multiple Choice Questions. Correct Answers Needed To Compare. 18) A prede
ID: 2451646 • Letter: 6
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6 Easy Multiple Choice Questions. Correct Answers Needed To Compare.
18) A predetermined overhead application rate:
a.Expresses an expected relationship between overhead costs and an activity base.
b.Can be determined by dividing budgeted direct labor cost by the budgeted factory overhead costs.
c.Is computed at the end of the period once actual overhead costs are known.
d.Applies the same amount of overhead to each product or service.
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19) The advantage of using a predetermined overhead application rate is that:
a.Units produced are charged with a "normal" amount of manufacturing overhead regardless of whether they are produced in a high-volume month or a low-volume month.
b.Overhead costs will be limited to the predetermined amount.
c.Entries need not be made to record actual overhead costs incurred.
d.The unit cost of production will be lower than it would be if actual overhead costs were assigned to units produced.
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20) The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery. Payments made to Winter for last week's work should be:
a.Debited to Work in Process Inventory.
b.Credited to the Direct Labor account.
c.Debited to the Direct Labor account.
d.Debited to the Manufacturing Overhead account.
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21)The basic types of cost accounting systems are:
a.Job order cost systems, activity based cost systems, and process cost systems.
b.Direct cost systems and indirect cost systems.
c.Completed job cost systems and work in process cost systems.
d.Fixed cost systems and variable cost systems.
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22) Overhead costs are assigned to production using an overhead application rate, whereas no such "application rate" is used to assign the costs of direct materials and direct labor to production. The reason for this difference in procedures is that:
a.Overhead is an indirect cost which cannot be traced easily and directly to specific units of product.
b.Overhead is always larger in dollar amount than either direct materials or direct labor.
c.The amounts of direct material and direct labor applicable to each unit of production cannot be determined as easily as the amount of overhead.
d.Overhead is always equal to a constant percentage of direct labor costs.
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23) The computation of equivalent units is generally not necessary when:
a.Beginning work-in-process inventories are significantly larger than ending work-in-process inventories.
b.Beginning and ending work in process inventories differ only slightly.
c.The number of units in ending work-in-process exceeds the number of units completed and transferred to finished goods during the period.
d.Per-unit costs become distorted as a result of not computing equivalent units of production.
Explanation / Answer
18) A predetermined overhead application rate:-
Answer:- a.) Expresses an expected relationship between overhead costs and an activity base.
19) The advantage of using a predetermined overhead application rate is that:-
Answer:- a.) Units produced are charged with a "normal" amount of manufacturing overhead regardless of whether they are produced in a high-volume month or a low-volume month.
20) The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery. Payments made to Winter for last week's work should be:-
Answer:- d.) Debited to the Manufacturing Overhead account.
21) The basic types of cost accounting systems are:-
Answer;- b.) Direct cost systems and indirect cost systems.
22) Overhead costs are assigned to production using an overhead application rate, whereas no such "application rate" is used to assign the costs of direct materials and direct labor to production. The reason for this difference in procedures is that:-
Answer:- a.) Overhead is an indirect cost which cannot be traced easily and directly to specific units of product.
23) The computation of equivalent units is generally not necessary when:-
Answer:- b.) Beginning and ending work in process inventories differ only slightly.
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