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web.groovymark@gmail.com
- December 8, 2024
Question 41
How are actual overhead costs recorded in job order costing?
a) As debits to the cost of goods sold
b) As debits to the manufacturing overhead account
c) As credits to the finished goods inventory
d) As debits to the work-in-process inventory
Answer: b) As debits to the manufacturing overhead account
Explanation: Actual overhead costs are recorded as debits to the manufacturing overhead account, and they are later allocated to jobs using the predetermined overhead rate.
Question 42
What happens to costs when a job is completed in a job order costing system?
a) They are transferred from work-in-process to cost of goods sold
b) They are transferred from work-in-process to finished goods
c) They are expensed immediately
d) They remain in the work-in-process account
Answer: b) They are transferred from work-in-process to finished goods
Explanation: When a job is completed, the total costs associated with that job are transferred from the work-in-process account to the finished goods account.
Question 43
Which of the following is considered a direct cost?
a) Factory supervisor’s salary
b) Rent on the factory building
c) Direct materials used in production
d) Indirect labor
Answer: c) Direct materials used in production
Explanation: Direct materials are considered a direct cost because they can be directly traced to the production of specific goods or services.
Question 44
What is a common cost driver in activity-based costing?
a) Number of units produced
b) Total sales revenue
c) Number of machine hours
d) Total cost of direct labor
Answer: c) Number of machine hours
Explanation: In activity-based costing, machine hours are commonly used as a cost driver to allocate manufacturing overhead to products that use more machine time.
Question 45
What is the difference between variable and fixed costs?
a) Variable costs remain constant per unit, while fixed costs change
b) Fixed costs vary with production, while variable costs remain constant
c) Fixed costs are constant in total, while variable costs change with production
d) Variable costs are constant in total, while fixed costs change per unit
Answer: c) Fixed costs are constant in total, while variable costs change with production
Explanation: Fixed costs remain constant in total regardless of production levels, while variable costs change in total based on production activity.
Question 46
What is the purpose of cost-volume-profit (CVP) analysis?
a) To analyze the impact of changes in costs and volume on profits
b) To track the total manufacturing costs of products
c) To determine the break-even point in units
d) To allocate overhead costs to products
Answer: a) To analyze the impact of changes in costs and volume on profits
Explanation: Cost-volume-profit (CVP) analysis helps managers understand how changes in costs, sales volume, and price affect profits, allowing for better decision-making.
Question 47
What is the purpose of calculating equivalent units of production in process costing?
a) To measure the cost of goods sold
b) To determine the number of units completed
c) To account for partially completed units
d) To assign costs to direct materials
Answer: c) To account for partially completed units
Explanation: Equivalent units of production allow companies to calculate the cost of partially completed units and assign a proportionate amount of costs to them.
Question 48
What is the break-even point in dollars?
a) Total fixed costs divided by the contribution margin per unit
b) Total fixed costs divided by the contribution margin ratio
c) Total sales revenue minus total variable costs
d) Total variable costs divided by the contribution margin rati
Answer: b) Total fixed costs divided by the contribution margin ratio
Explanation: The break-even point in dollars is calculated by dividing total fixed costs by the contribution margin ratio, which shows how much of each sales dollar contributes to covering fixed costs.
Question 49
What is the main difference between process costing and job order costing?
a) Process costing accumulates costs by job, while job order costing accumulates costs by process
b) Process costing is used for unique products, while job order costing is used for mass production
c) Process costing is used for mass production, while job order costing is used for unique products
d) Process costing tracks direct labor, while job order costing tracks overhead costs
Answer: c) Process costing is used for mass production, while job order costing is used for unique products
Explanation: Process costing is typically used for industries with continuous, mass production of similar products, while job order costing is used for industries that produce unique, custom products.
Question 50
How is underapplied manufacturing overhead closed at the end of the period?
a) It is debited to cost of goods sold
b) It is credited to cost of goods sold
c) It is debited to work-in-process inventory
d) It is debited to finished goods inventory
Answer: a) It is debited to cost of goods sold
Explanation: Underapplied overhead occurs when the actual overhead is greater than the applied overhead. To close it, the difference is debited to cost of goods sold, increasing the expense.
