Cost Accounting

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Cost Accounting Questions and Answers

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Why is it critical for a manufacturing company to separate its costs between period costs and product costs?
What are the primary records in the operations of a job cost system?
How do you determine what method a company used to calculate cost?
Are standard costing systems just for manufacturing companies?
What is the formula to calculate the standard fixed overhead rate?
Why is it important to sort costs into product costs and period costs?
Explain why knowledge of cost behavior is useful in product performance evaluation.
How to calculate standard variable overhead cost allowed?
What is the difference between the cost of construction and construction in progress?
How is advertisement reported on the financial statements?
Using Percentage-of-Completion and Completed Contract Methods Halsey Building Company signed a contract to build an office building for $40,000,000. The scheduled construction costs follow. Year C...
Suppose Mr. Lin would like to some insurance for his property. The value of property is one $100,000. The probability of having fire is 0.01, which may totally destroy the value. Mr. Lin can hire a...
What happens if you misclassify a period cost as a product cost?
What are the three major types of product costs in a manufacturing company?
Your small remodeling business has two work vehicles. One is a small passenger car used for job-site visits and for other general business purposes. The other is a heavy truck used to haul equipmen...
You are entrusted with deciding whether to make or buy software. The make decision has a setup cost of $15,000 and a monthly maintenance cost of $1,200. A vendor will sell the software for an initi...
S'Round Sound, Inc. reported the following results from the sale of 24,000 units of IT-54: Sales $528,000 Variable manufacturing costs 288,000 Fixed manufacturing costs 120,000 Variable selling...
Snyder, Inc., which has excess capacity, received a special order for 4,000 units at a price of $15 per unit. Currently, production and sales are anticipated to be 10,000 units without considering...
Which of the following items would be reported directly on the income statement as a period cost? A. Selling and administrative salaries. B. Cost of lubricant for oiling machinery. C. Wages pai...
In Cost Accounting, in general, when can formulas be combined to form a single cost formula?
The Albright Company uses standard costing and has established the following standards for its single product: Direct Materials: 2 liters at $3 per liter Direct Labor: 0.5 hours at $8 per hour Vari...
Period costs include all selling and administrative costs, both variable and fixed. (i) True (ii) False
Freight costs incurred in shipping products to customers is properly referred to as a product rather than the period cost of the selling company. (i) True (ii) False
Bally Company has three product lines: A, B and C. The following annual information is available: Product A Product B Product C Sales $60,000 $90,000 $24,000 Variable costs 36,000 48,000...
Circuit Boards R Us (CBRU) uses regression analysis to estimate the monthly cost of producing circuit boards. A regression analysis using number of circuit boards produced as the cost driver has th...
Gengler Company acquired three pieces of equipment for $1,600,000. Equipment #1 is appraised at $730,000, equipment #2 is appraised at $370,000 and equipment #3 is appraised for $800,000. The cost...
Identify each of the following as either a direct or indirect cost. (i) Material used in production. (ii) Salary of manufacturing supervisor. (iii) Wages of a manufacturing worker. (iv) Telephone...
An article estimated that the cost of materials in Apple's iPhone 7 was 32 gigabytes of memory was $225. Apple was selling the iPhone 7 for $649 Can we conclude from this information that Apple is...
Which of the following statements is true of costs and pricing decisions? a. Companies get profit from selling products only when they are the price makers. b. Companies supply products as long as...
Helmer Sporting Goods Company manufactured 100,000 units in 20x3 and reported the following costs: Sandpaper $ 32,000 Leasing costs - plant $ 384,000 Materials handling 320,000 Depreciation - equi...
Anticipated unit sales are January, 5,000; February, 4,000; and March 8,000. Finished goods are consistently maintained at 80% of the following month's sales. If units cost $10 each to produce, how...
On the schedule of cost of goods manufactured: a. beginning work-in-process plus direct materials used equals manufacturing costs. b. cost of goods manufactured is the same thing as total manufac...
A direct cost of going to college is: A. tuition, while an indirect cost (opportunity cost) is books and other supplies. B. forgone income while in college, while an indirect cost (opportunity cost...
Li Ming Yuan and Tiffany Shaden are the department heads for the accounting department and human resources department respectively at a Montreal textile firm. They have just returned from an execut...
Cost is a big issue with every company, and changing the technology is the biggest cost for most companies, how can companies cope with this problem and maintain the level of profit in a very compe...
During FY 2016 Bravo Manufacturing had total manufacturing costs are $520,000. Their cost of goods manufactured for the year was $495,000. The January 1, 2017 balance of Work-in-Process Inventory i...
Assume that Al Muray reports the following costs to make 10.5-oz. bottles for its Apple Juice: Total Cost for 1,000,000 Bottles Cost per Bottle Direct materials 80,000 $0.08 Direct labor 30,000 0....
Distinguish between explicit and implicit costs, giving examples of each. What are some explicit and implicit costs of attending college?
Casper Company owns a machine with a cost of $358,000 and accumulated depreciation of $56,500 that can be sold for $276,500, less a 3% sales commission. Alternatively, the machine can be leased by...
Assume a company has equipment with a book value of $60,000. The Company can sell the equipment through a broker for $90,000 less a 4% commission fee. Alternatively, the Company could lease the equ...
On Company Off Company Materials inventory, December 1 $87,980 $120,530 Materials inventory, December 31 (a) 136,200 Materials purchased 223,470 271,190 Cost of direct materials used in production...
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $5.90 per unit to manufacture. The unit...
Partland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are: Direct materials $0.60 Direct manufacturing labor 3.00 Variable manuf...
The following information is available for Aikman Company. January 1, 2017 2017 December 31, 2017 Raw materials inventory $22,040 $35,020 Work in process inventory 13,820 20,680 Finished goods i...
Green Thumb Garden Tools Inc. produces and sells home and garden tools and equipment. A lawnmower has a total cost of $230 per unit, of which $160 is product cost and $70 is selling and administrat...
A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue $15,000 $9,500 $24,500 Variable cost (9,000) (9,800) (18,8...
Factory overhead: a. Can be a variable cost or a fixed cost. b. Is a prime cost. c. Can only be a fixed cost. d. Includes all factory labor.
Warner Company purchases $54,900 of raw materials on account, and it incurs $63,300 of factory labor costs. Supporting records show that (a) the Assembly Department used $30,600 of raw materials an...
How does a job order cost sheet help managers make decisions?
True or False: 1. In many cases, GAAP is irrelevant to the decision making needs of management. 2. For manufacturers, cost objects may be products, departments, territories, or activities. 3. No...
DC Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $62,000 annually and one salaried estimator who is paid $36,...
Product costs include direct labor, direct material, and factory overhead. True False
Period costs are reported as expenses when incurred. True False
Compare and contrast variable costing with absorption costing, highlighting the differences between operating income.
Miller Company's total sales are 120,000. The company's direct labor is 15,000 which represents 30% of its total conversion cost and 40% of its total prime cost. Its total admin and selling expense...
Identify a company that you believe would use job order costing and another company that you believe would use process costing. Identify a third company that uses activity-based costing allocations...
Your controller has told you that the marginal profit of DRG209 for a Medicare patient exceeds the marginal profit for an average charge patient. Why might this occur? A) high fixed cost of treatm...
Sharon company reported the following year-end information: Beginning work-in-process inventory 1,080,000 Beginning raw materials inventory 300,000 Ending work-in-process inventory 900,000 Ending...
Taking the Great Pyramid of Giza as an example, describe how modern cost management accounting could be applied to a current attempt to recreate this structure.
Why might two companies in the same industry have different cost systems?
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