Accoounting

Which of the following statements about product costs is true?

• • Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets.

• • Product costs are deducted from revenue when the production process is completed.

• • Product costs appear on financial statements only when products are sold.

• • Product costs are deducted from revenue as expenditures are made.

Depreciation on a personal computer used in the marketing department of a manufacturing company would be classified as:

• • a product cost that is variable with respect to the company’s output.

• • a period cost that is fixed with respect to the company’s output.

• • a period cost that is variable with respect to the company’s output.

• • a product cost that is fixed with respect to the company’s output.

The cost of direct materials is classified as a:

• • Choice D

• • Choice B

• • Choice C

• • Choice A

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

• • The amount paid to the individual who stains a chair.

• • The workman’s compensation insurance of the supervisor who oversees production.

• • The cost of the glue in a chair.

• • The factory utilities of the department in which production takes place.

The costs of direct materials are classified as:

• • Choice A

• • Choice C

• • Choice B

• • Choice D

Which of the following statements concerning direct and indirect costs is NOT true?

• • A direct cost is one that can be easily traced to the particular cost object.

• • A particular cost may be direct or indirect, depending on the cost object.

• • Whether a particular cost is classified as direct or indirect does not depend on the cost object.

• • The factory manager’s salary would be classified as an indirect cost of producing one unit of product.

Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data:

The total job cost for Job K913 is closest to:

Note: Round your intermediate calculations to 2 decimal places.

• • $5,355

• • $6,060

• • $2,115

• • $6,765

Assigning manufacturing overhead to a specific job is complicated by all of the below except:

• • Manufacturing overhead is incurred only to support some jobs.

• • Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job.

• • Manufacturing overhead consists of both variable and fixed costs.

• • The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period.

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

• • The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.

• • It is often overly simplistic and incorrect to assume that direct labor-hours is a company’s only manufacturing overhead cost driver.

• • Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.

• • Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs.

Which of the following statements is not correct concerning multiple overhead rate systems?

• • A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate.

• • In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

• • A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate.

• • A company may choose to create a separate overhead rate for each of its production departments.