1. The following data pertains to activity and utility cost for two recent periods:

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1 Student ID: Exam: RR - Cost Concepts and Types of Costing When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam. Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer. 1. The following data pertains to activity and utility cost for two recent periods: Activity level (units) 8,000 5,000 Utility cost $8,000 $6,500 Utility cost is a mixed cost with both fixed and variable components. Using the high-low method, what would be the cost formula for utility cost? A. Y = $1.25 X B. Y = $4,000 + $0.50 X C. Y = $1,500 + $1.25 X D. Y = $1.00 X 2. The following table presents information about units processed and processing costs incurred during a recent month in the Refining Department of a manufacturing company. The beginning work in process inventory included $11,000 of conversion cost. During the month, the Department incurred an additional $290,000 in conversion costs. Assuming that the company uses the weighted-average cost method, what is the cost per equivalent unit for conversion costs for the month in the Blending Department? Round to the nearest cent. A. $2.53 B. $2.55 C. $2.44 D. $ The management of Chaloux Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The Corporation's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours.

2 If the Corporation bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied? A. $9,792 Underapplied B. $1,344 Underapplied C. $9,792 Overapplied D. $1,344 Overapplied 4. Which of the following costs, if expressed on a per unit basis, would be expected to decrease as the level of production and sales increases? A. Direct materials B. Sales commissions C. Variable manufacturing overhead D. Fixed manufacturing overhead 5. Which of the following costs is classified as a prime cost? A. Indirect materials B. Direct materials C. Both direct materials and indirect materials D. Neither direct materials nor indirect materials 6. Under the FIFO method, unit costs would A. result from costs in the beginning inventory being added in with current period costs. B. not contain some elements of cost from the prior period. C. not include costs incurred to complete beginning inventory. D. contain some element of cost from the prior period. 7. The following accounts are from last year's books at Sharp Manufacturing:

3 9. Trapp Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 3,000 units that were 70% complete with respect to materials and 60% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $10,000. During the period, 9,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $2.00 for material and $3.00 for conversion costs. What was the cost of units transferred out during the month? Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of cost of goods manufactured for the year? A. $226,000 B. $255,000 C. $223,000 D. $251, Laurie Corporation uses the FIFO method in its process costing system. Department A is the first stage of Laurie Corporation's production process. The following information is available for conversion costs for the month of May for Department A: How many are the equivalent units of production for conversion costs for the month? A. 36,000 units B. 44,000 units C. 38,000 units D. 42,000 units

4 A. $35,400 B. $45,000 C. $45,400 D. $39, The management of Digges Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The Corporation's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 51,000 machine-hours. In addition, capacity is 63,000 machine-hours and the actual level of activity for the year is 53,300 machine-hours. All of the manufacturing overhead is fixed and is $1,702,890 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. If the Corporation bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied? A. $262,191 Underapplied B. $76,797 Underapplied C. $76,797 Overapplied D. $262,191 Overapplied 11. What does contribution margin represent? A. What remains from total sales after deducting all variable expenses B. What remains from total sales after deducting cost of goods sold C. What remains from total sales after deducting fixed expenses D. The sum of cost of goods sold and variable expenses 12. Tarten Corporation uses the FIFO method in its process costing system. Operating data for the Curing Department for the month of March appear below: According to the company's records, the conversion cost in beginning work in process inventory was $7,470 at the beginning of March. The cost per equivalent unit for conversion costs for March was $8.20. How much conversion cost would be assigned to the units completed and transferred out of the department during March? A. $592,040 B. $533,000 C. $533,090 D. $525, During May at Shatswell Corporation, $57,000 of raw materials was requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect

5 materials totaled $7,000. The journal entry to record this requisition would include a debit to Manufacturing Overhead of A. $57,000. B. $0. C. $50,000. D. $7, Adams Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 900 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for next period is $67,522. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools Activity 1, Activity 2, and General Factory with estimated overhead costs and expected activity as follows: (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.) The predetermined overhead rate (i.e., activity rate) for Activity 1 under the activity-based costing system is closest to which value? A. $13.83 B. $ C. $34.58 D. $ Dubey Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Telecommunications and Administration, and two operating departments, Surgery and Recovery. Telecommunications Department costs are allocated on the basis of the number of telecommunications ports in departments and Administration Department costs are allocated on the basis of employees. The total Surgery Department cost after service department allocations is closest to which value? A. $481,336 B. $484,059 C. $473,169 D. $478,133

6 16. Gabat Inc. is a merchandising company. Last month the company's merchandise purchases totaled $67,000. The company's beginning merchandise inventory was $19,000 and its ending merchandise inventory was $22,000. What was the company's cost of goods sold for the month? A. $108,000 B. $67,000 C. $70,000 D. $64, Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations. Using the high-low method of analysis, what is the estimated variable cost per labor hour for maintenance closest to? A. $0.83 B. $1.14 C. $1.30 D. $ Adams Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 900 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for next period is $67,522. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools Activity 1, Activity 2, and General Factory with estimated overhead costs and expected activity as follows: (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.) The overhead cost per unit of Product A under the traditional costing system is closest to which value? A. $41.55 B. $21.94 C. $5.53 D. $3.56

7 19. Which of the following companies would have the highest proportion of variable costs in its cost structure? A. Airline B. Public utility C. Architectural firm D. Fast food outlet 20. Inventoriable costs are also known as A. fixed costs. B. product costs. C. variable costs. D. conversion costs. End of exam