Question

1. Factory overhead costs do not include which of the following:

   a. insurance b. heating c. taxes d, hourly wages

   2. The most common method used when assuming how inventory flows through the manufacturing process is:

   a. LIFO b. FIFO c. LILO d. FILO

   3. Activity-based activities include all of the following, except:

   a. direct material b. fabrication c. assembly d. selling and administration

   4. Wages of a company’s janitors or cleaning crew would be considered:

   a. direct labor b. direct input c. factory overhead d. offset expenses

   5. Cost of production reports can be used to compare materials output quantity to materials input quantity is known as ____________ of a process.

   a. equivalency b. yield c. subtotal units d. indirect material

   6. Businesses like attorneys, accountants, and hospitals use _________ systems.

   a. process cost b. period costs c. department allocation d. job order costs

   7. ________ costs include direct labor and factory overhead.

   a. prime b. product c. conversion d. period

   8. When is a cost of production report prepared for each processing department?

   a. periodic intervals b. random intervals c. Specific intervals d. Unspecified intervals

   9. Which of the following would use job order cost systems?

   a. paper producers b. oil refineries c. food processors. d. apparel manufacturers

   10. Which type of cost systems is best when trying to determine how to charge customers for their services?

   a. product cost systems b. activity-based pricing systems c. job cost systems d. multiple department cost systems

Answer 1

Question 1:

Option C. Taxes

Taxes are administrative expense but not a factory overhead.

Hourly wages can be a factory overhead if used for the entire factory

Question 2 :

Option A. LIFO

LIFO is the most common method as it is a practical method of selling old stock firstly.

Question 3 :

Option A. Direct Material

Direct material is not an activity it is a seperate direct cost. Activity costing works for indirect costs and activities.

Question 4:

Option C. Factory overhead

As the wages of such people are not attributable directly to production they are considered as factory overhead.

Question 5:

Option B. Yield.

An yield is the measure for input and output of materials.

Question 6:

Option D. Job order costs

They will be billing based on the hours spent on the job and resource cost allocated to the job.

Question 7 :

Option A. Prime cost

Prime cost = direct materials + direct labor + factory overhead

Question 8 :

Option A. Periodical intervals

Cost of production report prepared periodically for decision making and monitoring periodically.

Question 9:

Option B. Oil refineries

Job order cost is suitable for oil refineries in the suitable options. As the other options will use process costing.

Question 10 :

Option B. Activity based pricing

Activity based costing determines the cost for each activity. So, the activities involved for each activity can be calculated and charged to customers.