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web.groovymark@gmail.com
- December 8, 2024
Question 41
What is the journal entry to record applied overhead in job order costing?
a) Debit finished goods inventory, credit manufacturing overhead
b) Debit work-in-process inventory, credit manufacturing overhead
c) Debit cost of goods sold, credit work-in-process inventory
d) Debit manufacturing overhead, credit raw materials inventory
Answer: b) Debit work-in-process inventory, credit manufacturing overhead
Explanation: When overhead is applied to a job, work-in-process inventory is debited to reflect the cost added to the job, and manufacturing overhead is credited to decrease overhead.
Question 42
In job order costing, which cost is directly traceable to individual jobs?
a) Indirect labor
b) Manufacturing overhead
c) Direct labor
d) Indirect materials
Answer: c) Direct labor
Explanation: Direct labor is a cost that can be directly traced to individual jobs, unlike indirect costs, which are allocated to jobs using an overhead rate.
Question 43
In a process costing system, what is the purpose of the weighted average method?
a) To track individual job costs
b) To average costs of all units produced, both completed and partially completed
c) To allocate fixed costs equally across products
d) To calculate the cost of direct labor
Answer: b) To average costs of all units produced, both completed and partially completed
Explanation: The weighted average method in process costing averages the costs of units completed and units still in process to determine the cost per equivalent unit.
Question 44
What is a key difference between job order costing and process costing?
a) Job order costing is used for large, continuous production runs, while process costing is used for custom jobs.
b) Process costing assigns costs to specific jobs, while job order costing assigns costs to departments.
c) Job order costing assigns costs to individual jobs, while process costing averages costs over all units produced.
d) Process costing does not use overhead allocation, while job order costing does.
Answer: c) Job order costing assigns costs to individual jobs, while process costing averages costs over all units produced.
Explanation: Job order costing is used for custom jobs where costs are assigned to specific jobs, while process costing is used for large-scale production where costs are averaged across units.
Question 45
What happens when actual overhead costs are higher than applied overhead?
a) Overhead is overapplied
b) Overhead is underapplied
c) Direct materials are overstated
d) Fixed costs are reduced
Answer: b) Overhead is underapplied
Explanation: When actual overhead costs exceed applied overhead, it results in underapplied overhead, meaning not enough overhead has been allocated to jobs.
Question 46
In CVP analysis, what is represented by the break-even point?
a) The point at which total revenue equals total costs
b) The point at which total variable costs exceed total revenue
c) The point at which fixed costs exceed variable costs
d) The point at which total costs equal profit
Answer: a) The point at which total revenue equals total costs
Explanation: The break-even point is the level of sales at which total revenue equals total costs, resulting in no profit or loss.
Question 47
What is the purpose of the predetermined overhead rate in job order costing?
a) To calculate total labor costs
b) To allocate overhead costs to individual jobs
c) To track direct materials used in production
d) To record indirect labor costs
Answer: b) To allocate overhead costs to individual jobs
Explanation: The predetermined overhead rate is used in job order costing to apply overhead costs to jobs based on a chosen allocation base, such as labor hours or machine hours.
Question 48
What is a contribution margin?
a) Total sales minus total costs
b) Total variable costs minus total fixed costs
c) Sales revenue minus variable costs
d) Sales revenue minus fixed costs
Answer: c) Sales revenue minus variable costs
Explanation: The contribution margin is the difference between sales revenue and variable costs, representing the amount available to cover fixed costs and generate profit.
Question 49
In process costing, what is the first step in calculating equivalent units of production?
a) Determine the cost of direct labor
b) Identify the percentage of completion for units in ending work-in-process inventory
c) Calculate the total fixed costs
d) Apply overhead to each process
Answer: b) Identify the percentage of completion for units in ending work-in-process inventory
Explanation: In process costing, the first step in calculating equivalent units of production is to assess the percentage of completion for partially finished units in ending inventory.
Question 50
In job order costing, how are indirect costs assigned to individual jobs?
a) Directly traced to jobs based on time spent
b) Allocated using a predetermined overhead rate
c) Divided equally among all jobs
d) Assigned based on material costs
Answer: b) Allocated using a predetermined overhead rate
Explanation: Indirect costs, such as overhead, are allocated to individual jobs using a predetermined overhead rate, which is based on an allocation base like labor hours or machine hours.
