ACG 2071 Exam 2 Questions with Correct Answers
Question 1:
job order costing, process costing, or both?
Used by companies that manufacture identical items through a series of uniform production
steps or processes
Answer:
process costing
Question 2:
job order costing, process costing, or both?
Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods
Sold
Answer:
both
job order costing, process costing, or both
Used by companies that manufacture unique products or provide specialized services Job order
costing
job order costing, process costing, or both job order costing, process costing, or both
Question 3:
Which characteristic is the same in both job order costing systems and process costing systems?
Method of record keeping
Flow of costs through the accounts
Number of Work-in-Process Inventory accounts Types of product costs
Answer:
D. Types of product costs
Question 4:
Conversion costs
Answer:
The cost to convert direct materials (DM) into finished goods direct labor (DL) + manufacturing
overhead (MOH)
Question 5:
In process costing, production costs are
Answer:
by process accumulated
,Question 6:
(Process Costing) At the end of the period, the total production costs incurred must be split
between the following:
Answer:
The units that have been completed in that process and transferred to the next process (or to
Finished Goods Inventory if it is the last process).
The units not completed and remaining in Work-in-Process Inventory for that department.
Question 7:
equivalent units of production (EUP)
Answer:
Used to measure the direct materials, direct labor, and manufacturing overhead incurred on
partially completed units and expressed in terms of fully completed units.
allows businesses to measure the amount of materials added to or work done on a partially
finished group of units during a period and to express it in terms of fully complete units of
output.
Question 8:
Predetermined overhead allocation rate
Answer:
Estimated overhead cost per unit of the allocation base, calculated at the beginning of the
accounting period. Total estimated overhead costs / Total estimated quantity of the overhead
allocation base.
Question 9:
FIFO method (process costing)
Answer:
Determines the cost of equivalent units of production by accounting for beginning inventory
costs separately from current period costs. It assumes the first units started in the production
process are the first units completed and sold.
Question 10:
Mixed cost
Answer:
A cost that has both fixed and variable components.
, Question 11:
Internal failure costs
Answer:
Costs incurred when the company *corrects* poor-quality goods or services before delivery to
customers.
Question 12:
Activity-based costing (ABC)
Answer:
Focuses on the costs of activities as the building blocks for allocating indirect costs to products
and services.
Question 13:
Sensitivity Analysis
Answer:
A "what if " technique that estimates profit or loss results if sales price, costs, volume, or
underlying assumptions change.
Question 14:
Cost structure
Answer:
the proportion of fixed costs to variable costs
Question 15:
Prevention costs
Answer:
costs incurred to *avoid* poor-quality goods or services
Question 16:
Cost pool
Answer:
An accumulation of individual costs.
Question 17:
appraisal costs
Answer:
costs incurred to *detect* poor-quality goods or services
Question 1:
job order costing, process costing, or both?
Used by companies that manufacture identical items through a series of uniform production
steps or processes
Answer:
process costing
Question 2:
job order costing, process costing, or both?
Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods
Sold
Answer:
both
job order costing, process costing, or both
Used by companies that manufacture unique products or provide specialized services Job order
costing
job order costing, process costing, or both job order costing, process costing, or both
Question 3:
Which characteristic is the same in both job order costing systems and process costing systems?
Method of record keeping
Flow of costs through the accounts
Number of Work-in-Process Inventory accounts Types of product costs
Answer:
D. Types of product costs
Question 4:
Conversion costs
Answer:
The cost to convert direct materials (DM) into finished goods direct labor (DL) + manufacturing
overhead (MOH)
Question 5:
In process costing, production costs are
Answer:
by process accumulated
,Question 6:
(Process Costing) At the end of the period, the total production costs incurred must be split
between the following:
Answer:
The units that have been completed in that process and transferred to the next process (or to
Finished Goods Inventory if it is the last process).
The units not completed and remaining in Work-in-Process Inventory for that department.
Question 7:
equivalent units of production (EUP)
Answer:
Used to measure the direct materials, direct labor, and manufacturing overhead incurred on
partially completed units and expressed in terms of fully completed units.
allows businesses to measure the amount of materials added to or work done on a partially
finished group of units during a period and to express it in terms of fully complete units of
output.
Question 8:
Predetermined overhead allocation rate
Answer:
Estimated overhead cost per unit of the allocation base, calculated at the beginning of the
accounting period. Total estimated overhead costs / Total estimated quantity of the overhead
allocation base.
Question 9:
FIFO method (process costing)
Answer:
Determines the cost of equivalent units of production by accounting for beginning inventory
costs separately from current period costs. It assumes the first units started in the production
process are the first units completed and sold.
Question 10:
Mixed cost
Answer:
A cost that has both fixed and variable components.
, Question 11:
Internal failure costs
Answer:
Costs incurred when the company *corrects* poor-quality goods or services before delivery to
customers.
Question 12:
Activity-based costing (ABC)
Answer:
Focuses on the costs of activities as the building blocks for allocating indirect costs to products
and services.
Question 13:
Sensitivity Analysis
Answer:
A "what if " technique that estimates profit or loss results if sales price, costs, volume, or
underlying assumptions change.
Question 14:
Cost structure
Answer:
the proportion of fixed costs to variable costs
Question 15:
Prevention costs
Answer:
costs incurred to *avoid* poor-quality goods or services
Question 16:
Cost pool
Answer:
An accumulation of individual costs.
Question 17:
appraisal costs
Answer:
costs incurred to *detect* poor-quality goods or services
