ACTY 2110 EXAM 1 QUESTIONS WITH VERIFIED
ACCURATE ANSWERS
What are the primary differences between Managerial Accounting and Financial
Accounting? - Answers -Managerial) Internal, reports are more for the company to
make decisions from
Financial) More for the public and have stricter regulations on how it has to be done
In Job Order Costing system, what is the purpose of the following documents?
A) Job Cost Sheet
B) Materials requisition Form
C) Labor Time Ticket - Answers -A) Maintain record of each job, subsidiary ledger,
Record of DL, DM, and OH assigned
B) Lists the items to be picked from itinerary and used in the production process
C) Measure the DL cost, time spent on each job
What is the primary difference between a system which uses a single, volume-based
cost driver and an ABC system? - Answers -ABC) Activity-based costing (ABC) is a
costing method that identifies activities in an organization and assigns the cost of each
activity to all products and services according to the actual consumption by each. This
model assigns more indirect costs (overhead) into direct costs compared to
conventional costing
Volume-Based) a product costing system when an entity allocates factory overhead
costs to a single cost pool (e.g., factory overhead) and then uses volume-based cost
drivers to allocate factory overhead costs to individual products or services. The entity
uses volume-based cost drivers that depend on the number of units manufactured. Cost
bases (or drivers) often used include labor hours, machine hours and labor costs
What are Product Costs? Period Costs? - Answers -Period) A period cost is any cost
that cannot be capitalized into prepaid expenses, inventory, or fixed assets. A period
cost is more closely associated with the passage of time than with a transactional event.
... Instead, it is typically included within the selling and administrative expenses section
of the income statement
Product) Product cost refers to the costs incurred to create a product. These costs
include direct labor, direct materials, consumable production supplies, and factory
overhead. Product cost can also be considered the cost of the labor required to deliver
a service to a customer.
, How are Product costs and period costs reported on the balance sheet? How are they
reported on the income statement? - Answers -Balance) Both period and product cost
are inventoried on the balance sheet, if unsold
Income) Product costs, if sold, are removed from inventory and will be included in the
income statement as cost of goods sold. Period costs are expensed in the period that
they incur.
Which type of businesses are most likely to use process costing? Job Order costing? -
Answers -Job Order Costing) Service jobs, custom jobs, building houses
Process Costing) Mass production jobs (markers, toys, cups...)
Given the following information, what is the amount of Gross Profit and Net Income?
Cost of goods sold........$50,000
Sales......................................$190,000
Selling Expenses.............$12,000
Admin. Expenses............$31,000 - Answers -GP) $190,000 - $50,000 = $140,000
NI) $140,000 - $12,000 - $31,000 = $97,000
Given the following information, what is Total Manufacturing cost? Total manufacturing
overhead?
Direct Materials Used................$24,000
Indirect Materials.........................$10,000
Direct Labor....................................$36,800
Sales Salaries.................................$19,200
Indirect Labor................................$4,800
CEO Salary......................................$100,000
Production MNG Salary...........$9,600
Maintenance Supplies...............$4,500
Advertising Expense..................$14,400
Factory Rent...................................$6,400 - Answers -Total Manufacturing Cost)
$96,100
Total Manufacturing OH) $35,300
In a job order costing system, what are the journal entries for the following:
A)Issuance of direct materials from inventory
B)Payment of labor traceable directly to jobs
C)Applying overhead to jobs
D)Payment of actual manufacturing overhead costs regardless of what type of overhead
costs they are
E)Disposing of over/under applied overhead at the end of the period
ACCURATE ANSWERS
What are the primary differences between Managerial Accounting and Financial
Accounting? - Answers -Managerial) Internal, reports are more for the company to
make decisions from
Financial) More for the public and have stricter regulations on how it has to be done
In Job Order Costing system, what is the purpose of the following documents?
A) Job Cost Sheet
B) Materials requisition Form
C) Labor Time Ticket - Answers -A) Maintain record of each job, subsidiary ledger,
Record of DL, DM, and OH assigned
B) Lists the items to be picked from itinerary and used in the production process
C) Measure the DL cost, time spent on each job
What is the primary difference between a system which uses a single, volume-based
cost driver and an ABC system? - Answers -ABC) Activity-based costing (ABC) is a
costing method that identifies activities in an organization and assigns the cost of each
activity to all products and services according to the actual consumption by each. This
model assigns more indirect costs (overhead) into direct costs compared to
conventional costing
Volume-Based) a product costing system when an entity allocates factory overhead
costs to a single cost pool (e.g., factory overhead) and then uses volume-based cost
drivers to allocate factory overhead costs to individual products or services. The entity
uses volume-based cost drivers that depend on the number of units manufactured. Cost
bases (or drivers) often used include labor hours, machine hours and labor costs
What are Product Costs? Period Costs? - Answers -Period) A period cost is any cost
that cannot be capitalized into prepaid expenses, inventory, or fixed assets. A period
cost is more closely associated with the passage of time than with a transactional event.
... Instead, it is typically included within the selling and administrative expenses section
of the income statement
Product) Product cost refers to the costs incurred to create a product. These costs
include direct labor, direct materials, consumable production supplies, and factory
overhead. Product cost can also be considered the cost of the labor required to deliver
a service to a customer.
, How are Product costs and period costs reported on the balance sheet? How are they
reported on the income statement? - Answers -Balance) Both period and product cost
are inventoried on the balance sheet, if unsold
Income) Product costs, if sold, are removed from inventory and will be included in the
income statement as cost of goods sold. Period costs are expensed in the period that
they incur.
Which type of businesses are most likely to use process costing? Job Order costing? -
Answers -Job Order Costing) Service jobs, custom jobs, building houses
Process Costing) Mass production jobs (markers, toys, cups...)
Given the following information, what is the amount of Gross Profit and Net Income?
Cost of goods sold........$50,000
Sales......................................$190,000
Selling Expenses.............$12,000
Admin. Expenses............$31,000 - Answers -GP) $190,000 - $50,000 = $140,000
NI) $140,000 - $12,000 - $31,000 = $97,000
Given the following information, what is Total Manufacturing cost? Total manufacturing
overhead?
Direct Materials Used................$24,000
Indirect Materials.........................$10,000
Direct Labor....................................$36,800
Sales Salaries.................................$19,200
Indirect Labor................................$4,800
CEO Salary......................................$100,000
Production MNG Salary...........$9,600
Maintenance Supplies...............$4,500
Advertising Expense..................$14,400
Factory Rent...................................$6,400 - Answers -Total Manufacturing Cost)
$96,100
Total Manufacturing OH) $35,300
In a job order costing system, what are the journal entries for the following:
A)Issuance of direct materials from inventory
B)Payment of labor traceable directly to jobs
C)Applying overhead to jobs
D)Payment of actual manufacturing overhead costs regardless of what type of overhead
costs they are
E)Disposing of over/under applied overhead at the end of the period
