ACCT 2302 - Practice Exam 1 (Chapters 1, 2, & 4) 6e

Student: ___________________________________________________________________________
1. The wages of factory maintenance personnel would usually be considered to be:


A. Option A
B. Option B
C. Option C
D. Option D

2. Manufacturing overhead consists of:
A. all manufacturing costs.
B. indirect materials but not indirect labor.
C. all manufacturing costs, except direct materials and direct labor.
D. indirect labor but not indirect materials.

3. Each of the following would be a period cost except:
A. the salary of the company president's secretary.
B. the cost of a general accounting office.
C. depreciation of a machine used in manufacturing.
D. sales commissions.

4. Conversion costs do NOT include:
A. depreciation.
B. direct materials.
C. indirect labor.
D. indirect materials.

5. Within the relevant range, variable cost per unit will:
A. increase as the level of activity increases.
B. remain constant.
C. decrease as the level of activity increases.
D. none of these.

6. In describing the cost formula equation Y = a + bX, which of the following statements is correct?
A. "X" is the dependent variable.
B. "a" is the fixed component.
C. In the high-low method, "b" equals change in activity divided by change in costs.
D. As "X" increases "Y" decreases.

7. Which of the following costs is often important in decision making, but is omitted from conventional
accounting records?
A. Fixed cost.
B. Sunk cost.
C. Opportunity cost.
D. Indirect cost.

8. The following costs were incurred in September:



Prime costs during the month totaled:
A. $79,000
B. $120,000
C. $62,000
D. $40,000

9. Supply costs at Lattea Corporation's chain of gyms are listed below:



Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method
to estimate the variable and fixed components of this cost, those estimates would be closest to:
A. $2.44 per client-visit; $28,623 per month
B. $1.33 per client-visit; $12,768 per month
C. $0.79 per client-visit; $19,321 per month
D. $0.75 per client-visit; $19,826 per month

10. A partial listing of costs incurred during December at Gagnier Corporation appears below:



The total of the period costs listed above for December is:
A. $89,000
B. $310,000
C. $325,000
D. $399,000

11. Holzhauer Corporation, a merchandising company, reported the following results for March:



Cost of goods sold is a variable cost in this company.

The contribution margin for March is:
A. $922,600
B. $1,120,000
C. $1,962,600
D. $1,360,000

12. Which of the following is the correct formula to compute the predetermined overhead rate?
A. Estimated total units in the allocation base divided by estimated total manufacturing overhead costs.
B. Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.
C. Actual total manufacturing overhead costs divided by estimated total units in the allocation base.
D. Estimated total manufacturing overhead costs divided by actual total units in the allocation base.

13. Overapplied manufacturing overhead occurs when:
A. applied overhead exceeds actual overhead.
B. applied overhead exceeds estimated overhead.
C. actual overhead exceeds estimated overhead.
D. budgeted overhead exceeds actual overhead.

14. Yista Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing
overhead to jobs. The company estimated manufacturing overhead at $510,000 for the year and direct
labor-hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totaled $540,000.
Actual direct labor-hours were 105,000. What was the overapplied or underapplied overhead for the year?
A. $30,000 overapplied
B. $30,000 underapplied
C. $4,500 overapplied
D. $4,500 underapplied

15. The following data have been recorded for recently completed Job 674 on its job cost sheet. Direct materials
cost was $2,039. A total of 32 direct labor-hours and 175 machine-hours were worked on the job. The direct
labor wage rate is $14 per labor-hour. The company applies manufacturing overhead on the basis of
machine-hours. The predetermined overhead rate is $15 per machine-hour. The total cost for the job on its job
cost sheet would be:
A. $2,967
B. $2,487
C. $2,068
D. $5,112

16. The operations of the Kerry Company resulted in underapplied overhead of $5,000. The entry to close out
this balance to Cost of Goods Sold and the effect of the underapplied overhead on Cost of Goods Sold would
be:


A. Option A
B. Option B
C. Option C
D. Option D

17. Entin Corporation reported the following data for the month of January:



The cost of goods manufactured for January is:
A. $202,000
B. $214,000
C. $217,000
D. $199,000

18. Entin Corporation reported the following data for the month of January:



The adjusted cost of goods sold that appears on the income statement for January is:
A. $197,000
B. $200,000
C. $201,000
D. $199,000

19. Heller Corporation uses the weighted-average method in its process costing system. Data concerning the
first processing department for the most recent month are listed below:



Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer
that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least
three decimal places.

What are the equivalent units for conversion costs for the month in the first processing department?
A. 8,650
B. 9,700
C. 8,300
D. 350

20. Heller Corporation uses the weighted-average method in its process costing system. Data concerning the
first processing department for the most recent month are listed below:



Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer
that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least
three decimal places.

The cost per equivalent unit for materials for the month in the first processing department is closest to:
A. $10.51
B. $10.12
C. $9.91
D. $9.54

21. Heller Corporation uses the weighted-average method in its process costing system. Data concerning the
first processing department for the most recent month are listed below:



Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer
that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least
three decimal places.

The cost of ending work in process inventory in the first processing department according to the company's cost
system is closest to:
A. $14,930
B. $23,466
C. $9,778
D. $39,110


ACCT 2302 - Practice Exam 1 (Chapters 1, 2, & 4) 6e Key

1. The wages of factory maintenance personnel would usually be considered to be:


A. Option A
B. Option B
C. Option C
D. Option D


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Understand
Brewer - Chapter 01 #32
Difficulty: 2 Medium
Learning Objective: 01-01 Identify and give examples of each of the three basic manufacturing cost categories.
Learning Objective: 01-06 Understand the differences between direct and indirect costs.
Topic: Cost Classifications for Assigning Costs to Cost Objects
Topic: General Cost Classifications

2. Manufacturing overhead consists of:
A. all manufacturing costs.
B. indirect materials but not indirect labor.
C. all manufacturing costs, except direct materials and direct labor.
D. indirect labor but not indirect materials.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Understand
Brewer - Chapter 01 #33
Difficulty: 2 Medium
Learning Objective: 01-01 Identify and give examples of each of the three basic manufacturing cost categories.
Topic: General Cost Classifications

3. Each of the following would be a period cost except:
A. the salary of the company president's secretary.
B. the cost of a general accounting office.
C. depreciation of a machine used in manufacturing.
D. sales commissions.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Remember
Brewer - Chapter 01 #38
Difficulty: 1 Easy
Learning Objective: 01-02 Distinguish between product costs and period costs and give examples of each.
Topic: Product Costs versus Period Costs

4. Conversion costs do NOT include:
A. depreciation.
B. direct materials.
C. indirect labor.
D. indirect materials.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Understand
Brewer - Chapter 01 #43
Difficulty: 2 Medium
Learning Objective: 01-02 Distinguish between product costs and period costs and give examples of each.
Source: CMA, adapted
Topic: Product Costs versus Period Costs

5. Within the relevant range, variable cost per unit will:
A. increase as the level of activity increases.
B. remain constant.
C. decrease as the level of activity increases.
D. none of these.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Understand
Brewer - Chapter 01 #48
Difficulty: 1 Easy
Learning Objective: 01-03 Understand cost behavior patterns including variable costs; fixed costs; and mixed costs.
Topic: Cost Classifications for Predicting Cost Behavior

6. In describing the cost formula equation Y = a + bX, which of the following statements is correct?
A. "X" is the dependent variable.
B. "a" is the fixed component.
C. In the high-low method, "b" equals change in activity divided by change in costs.
D. As "X" increases "Y" decreases.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Understand
Brewer - Chapter 01 #51
Difficulty: 3 Hard
Learning Objective: 01-03 Understand cost behavior patterns including variable costs; fixed costs; and mixed costs.
Topic: Cost Classifications for Predicting Cost Behavior

7. Which of the following costs is often important in decision making, but is omitted from conventional
accounting records?
A. Fixed cost.
B. Sunk cost.
C. Opportunity cost.
D. Indirect cost.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Decision Making
Blooms: Remember
Brewer - Chapter 01 #54
Difficulty: 1 Easy
Learning Objective: 01-07 Understand cost classifications used in making decisions: differential costs; opportunity costs; and sunk costs.
Topic: Cost Classifications for Decision Making

8. The following costs were incurred in September:



Prime costs during the month totaled:
A. $79,000
B. $120,000
C. $62,000
D. $40,000
Prime cost = Direct materials + Direct labor
= $39,000 + $23,000 = $62,000


AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 01 #57
Difficulty: 2 Medium
Learning Objective: 01-01 Identify and give examples of each of the three basic manufacturing cost categories.
Learning Objective: 01-02 Distinguish between product costs and period costs and give examples of each.
Topic: General Cost Classifications
Topic: Product Costs versus Period Costs

9. Supply costs at Lattea Corporation's chain of gyms are listed below:



Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method
to estimate the variable and fixed components of this cost, those estimates would be closest to:
A. $2.44 per client-visit; $28,623 per month
B. $1.33 per client-visit; $12,768 per month
C. $0.79 per client-visit; $19,321 per month
D. $0.75 per client-visit; $19,826 per month




Variable cost per unit = Change in cost Change in activity
= $671 895 client-visits
= $0.75 per client-visit

Fixed cost = Total cost - Variable cost element
= $28,892 - ($0.75 per unit 12,088 client-visits)
= $28,892 - $9,066
= $19,826


AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 01 #82
Difficulty: 1 Easy
Learning Objective: 01-04 Analyze a mixed cost using a scattergraph plot and the high-low method.
Topic: The Analysis of Mixed Costs

10. A partial listing of costs incurred during December at Gagnier Corporation appears below:



The total of the period costs listed above for December is:
A. $89,000
B. $310,000
C. $325,000
D. $399,000
Period costs = Administrative wages and salaries + Sales staff salaries + Corporate headquarters building rent +
Marketing
= $105,000 + $68,000 + $34,000 + $103,000
= $310,000


AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 01 #91
Difficulty: 2 Medium
Learning Objective: 01-02 Distinguish between product costs and period costs and give examples of each.
Topic: Product Costs versus Period Costs

11. Holzhauer Corporation, a merchandising company, reported the following results for March:



Cost of goods sold is a variable cost in this company.

The contribution margin for March is:
A. $922,600
B. $1,120,000
C. $1,962,600
D. $1,360,000



AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 01 #136
Difficulty: 2 Medium
Learning Objective: 01-05 Prepare income statements for a merchandising company using the traditional and contribution formats.
Topic: Traditional and Contribution Format Income Statements

12. Which of the following is the correct formula to compute the predetermined overhead rate?
A. Estimated total units in the allocation base divided by estimated total manufacturing overhead costs.
B. Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.
C. Actual total manufacturing overhead costs divided by estimated total units in the allocation base.
D. Estimated total manufacturing overhead costs divided by actual total units in the allocation base.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Remember
Brewer - Chapter 02 #15
Difficulty: 1 Easy
Learning Objective: 02-01 Compute a predetermined overhead rate.
Topic: Job-Order Costing

13. Overapplied manufacturing overhead occurs when:
A. applied overhead exceeds actual overhead.
B. applied overhead exceeds estimated overhead.
C. actual overhead exceeds estimated overhead.
D. budgeted overhead exceeds actual overhead.


AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Remember
Brewer - Chapter 02 #27
Difficulty: 1 Easy
Learning Objective: 02-07 Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in Manufacturing Overhead to the
appropriate accounts.
Topic: Underapplied and Overapplied Overhead

14. Yista Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing
overhead to jobs. The company estimated manufacturing overhead at $510,000 for the year and direct
labor-hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totaled $540,000.
Actual direct labor-hours were 105,000. What was the overapplied or underapplied overhead for the year?
A. $30,000 overapplied
B. $30,000 underapplied
C. $4,500 overapplied
D. $4,500 underapplied
Predetermined overhead rate = Estimated total manufacturing overhead Estimated total amount of the
allocation base
= $510,000 100,000 direct labor-hours
= $5.10 per direct labor-hour

Applied overhead = Predetermined overhead rate Actual direct labor-hours
= $5.10 per direct labor-hour 105,000 direct labor-hours
= $535,500

Overapplied/underapplied manufacturing overhead = Actual manufacturing overhead - Applied overhead
= $540,000 - $535,500
= $4,500 Underapplied


AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 02 #33
Difficulty: 2 Medium
Learning Objective: 02-01 Compute a predetermined overhead rate.
Learning Objective: 02-02 Apply overhead cost to jobs using a predetermined overhead rate.
Learning Objective: 02-07 Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in Manufacturing Overhead to the
appropriate accounts.
Topic: Job-Order Costing
Topic: Underapplied and Overapplied Overhead

15. The following data have been recorded for recently completed Job 674 on its job cost sheet. Direct materials
cost was $2,039. A total of 32 direct labor-hours and 175 machine-hours were worked on the job. The direct
labor wage rate is $14 per labor-hour. The company applies manufacturing overhead on the basis of
machine-hours. The predetermined overhead rate is $15 per machine-hour. The total cost for the job on its job
cost sheet would be:
A. $2,967
B. $2,487
C. $2,068
D. $5,112





AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 02 #44
Difficulty: 1 Easy
Learning Objective: 02-02 Apply overhead cost to jobs using a predetermined overhead rate.
Learning Objective: 02-03 Compute the total cost and average cost per unit of a job.
Topic: Job-Order Costing

16. The operations of the Kerry Company resulted in underapplied overhead of $5,000. The entry to close out
this balance to Cost of Goods Sold and the effect of the underapplied overhead on Cost of Goods Sold would
be:


A. Option A
B. Option B
C. Option C
D. Option D




AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 02 #46
Difficulty: 2 Medium
Learning Objective: 02-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record costs.
Learning Objective: 02-06 Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement.
Learning Objective: 02-07 Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in Manufacturing Overhead to the
appropriate accounts.
Topic: Job-Order CostingThe Flow of Costs
Topic: Schedules of Cost of Goods Manufactured and Cost of Goods Sold
Topic: Underapplied and Overapplied Overhead

17. Entin Corporation reported the following data for the month of January:



The cost of goods manufactured for January is:
A. $202,000
B. $214,000
C. $217,000
D. $199,000




AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 02 #107
Difficulty: 3 Hard
Learning Objective: 02-06 Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement.
Topic: Schedules of Cost of Goods Manufactured and Cost of Goods Sold

18. Entin Corporation reported the following data for the month of January:



The adjusted cost of goods sold that appears on the income statement for January is:
A. $197,000
B. $200,000
C. $201,000
D. $199,000




AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 02 #108
Difficulty: 3 Hard
Learning Objective: 02-06 Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement.
Learning Objective: 02-07 Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in Manufacturing Overhead to the
appropriate accounts.
Topic: Schedules of Cost of Goods Manufactured and Cost of Goods Sold
Topic: Underapplied and Overapplied Overhead

19. Heller Corporation uses the weighted-average method in its process costing system. Data concerning the
first processing department for the most recent month are listed below:



Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer
that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least
three decimal places.

What are the equivalent units for conversion costs for the month in the first processing department?
A. 8,650
B. 9,700
C. 8,300
D. 350



AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 04 #69
Difficulty: 3 Hard
Learning Objective: 04-02 Compute the equivalent units of production using the weighted-average method.
Topic: Equivalent Units of Production

20. Heller Corporation uses the weighted-average method in its process costing system. Data concerning the
first processing department for the most recent month are listed below:



Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer
that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least
three decimal places.

The cost per equivalent unit for materials for the month in the first processing department is closest to:
A. $10.51
B. $10.12
C. $9.91
D. $9.54





AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 04 #70
Difficulty: 3 Hard
Learning Objective: 04-03 Compute the cost per equivalent unit using the weighted-average method.
Topic: Compute and Apply Costs

21. Heller Corporation uses the weighted-average method in its process costing system. Data concerning the
first processing department for the most recent month are listed below:



Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer
that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least
three decimal places.

The cost of ending work in process inventory in the first processing department according to the company's cost
system is closest to:
A. $14,930
B. $23,466
C. $9,778
D. $39,110







AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Brewer - Chapter 04 #73
Difficulty: 3 Hard
Learning Objective: 04-04 Assign costs to units using the weighted-average method.
Topic: Compute and Apply Costs