3: Chapter Product Costing and Cost Accumulation in a Batch Production Environment MULTIPLE CHOICE QUESTIONS
1. Product costing in a manufacturing firm is the process of: A. accumulating the company's period costs. B. allocating costs among the firm's departments. C. placing a value on the company's fixed assets. D. assigning costs to the firm's inventory. E. assigning costs to the company's managers. Answer: D LO: 1 Type: RC
2. Which of the following statements is true? A. Service firms have little need for determining the cost of their services. B. The concept of product costing is relevant only for manufacturing firms. C. The cost of year-end inventory appears on the balance sheet as an expense. D. Service companies use cost information for planning and control purposes. E. Mining and petroleum companies have no inventoriable costs. Answer: D LO: 1 Type: RC
3. Which of the following manufacturers would most likely use job-order costing? A. Chemical manufacturers. B. Microchip processors. C. Custom-furniture manufacturers. D. Gasoline refiners. E. Fertilizer manufacturers. Answer: C LO: 3 Type: RC
4. A custom-home builder would likely utilize: A. job-order costing. B. process costing. C. mass customization. D. process budgeting. E. joint costing. Answer: A LO: 3 Type: RC
5. Which of the following types of companies would most likely use process costing? A. Aircraft manufacturers. B. Textile manufacturers. C. Textbook publishers. D. Custom-machining firms. E. Shipbuilders. Answer: B LO: 3 Type: RC Managerial Accounting, Seventh Edition 48
6. A manufacturing firm produces goods in accordance with customer specifications, commencing production upon receipt of a purchase order. To accumulate the cost of each order, the company would use a: A. job-cost record. B. cost allocation matrix. C. production log. D. overhead sheet. E. manufacturing cost record. Answer: A LO: 3 Type: RC
7. A typical job-cost record would provide information about all of the following items related to an order except: A. the cost of direct materials used. B. administrative costs. C. direct labor costs incurred. D. applied manufacturing overhead. E. direct labor hours worked. Answer: B LO: 3 Type: RC 8. Which of the following statements about material requisitions is false? A. Material requisitions are often computerized. B. Material requisitions are a common example of source documents. C. Material requisitions contain information that is useful to the cost accounting department. D. Material requisitions authorize the transfer of materials from the production floor to the raw materials warehouse. E. Material requisitions are routinely linked to a bill of materials that lists all of the materials needed to complete a job. Answer: D LO: 3 Type: RC 9. Pruitt Company has developed an integrated system that coordinates the flow of all goods, services, and information into and out of the organization, working with raw material vendors as well as customers to improve service and reduce costs. The firm is said to be using: A. participative management. B. top-down management. C. strategic cost management. D. supply chain management. E. management by objectives (MBO). Answer: D LO: 3 Type: RC 49 Hilton, Managerial Accounting, Seventh Edition 10. The assignment of direct labor cost to individual jobs is based on: A. an estimate of the total time spent on the job. B. actual total payroll cost divided equally among all jobs in process. C. estimated total payroll cost divided equally among all jobs in process. D. the actual time spent on each job...