Bus 215 Cal poly || Questions with complete solutions.
Work of Management correct answers planning, controlling, decision making
Types of Cost classifications correct answers Financial reporting, predicting cost behavior,
assigning costs to cost objects, making business decisions
Direct Costs correct answers Costs that can be easily and conveniently traced to a unit of
product or other cost object
EX. Direct Costs correct answers Direct material, direct labor
radio on a car, wages to assembly
Indirect costs correct answers costs that cant easily be traced back to unit of production
ex indirect correct answers manufacturing overhead
common costs correct answers indirect costs incurred to support a number of cost objects,
cannot be traced back
Manufacturing Costs correct answers direct materials, direct labor and manufacturing
overhead
Manufacturing Overhead correct answers costs that cannot be easily traced back to product,
indirect labor/materials
lubricants in plant, security guards
nonmanufacturing costs correct answers selling costs: costs necessary to secure the order and
deliver the product
Administrative costs: Executive, organizational and clerical costs
DIRECT OR INDIRECT
Product Costs correct answers Direct materials, direct labor and manufacturing overhead
Period Costs correct answers Selling and Administrative
Prime Cost correct answers Direct Material and Direct labor
Conversion Cost correct answers Direct LAbor and Manufacturing overhead
Activity Base (Cost Driver) correct answers Units produced, machine hours, miles driven,
labor hours
Quality Costs correct answers prevention costs, appraisal costs, internal failure costs, external
failure costs
, Job Order Costing correct answers Used when many different products are produced in a
period
when products are manufactured to order
Job requires essentially a unique cost structure for each record
Predetermined Overhead Rate correct answers Estimated Total Manufacturing Overhead Cost
for the Coming Period/
Estimated total units in the allocation base for the coming period
Used because Mfg. Overhead is a mixed cost that varies year to year
How to calculate PDOR correct answers estimate amount of units
estimate fixed costs and variable costs per unit
calculate overhead rate
Raw Materials correct answers Any materials that go into the final product
Work in Process correct answers Units that are only partially complete and will require
further work before they are ready for sale to customers
Finished Goods correct answers completed units of products that have not been sold to
customers
Costs of Goods Manufactured correct answers Manufacturing costs associated with goods of
that period
Issue of raw materials correct answers credit: raw materials (direct/indirect)
Debit: Work in Process (DM) Mfg. Overhead (IDM)
Recording of Labor Costs correct answers Credit: Salaries and Wages payable
(direct/indirecct)
Debit:WIP (direct mat.)
mfg. Overhead (indirect mat.)
Applying Manufacturing Overhead correct answers Credit: Mfg. Overhead
Debit: WIP
Transferring Completed Units correct answers Credit: Costs of goods manufactured
Debit: Finished Goods
Transferring Units Sold correct answers Debit: Costs of Goods Sold
Credit: Finished Goods
Work of Management correct answers planning, controlling, decision making
Types of Cost classifications correct answers Financial reporting, predicting cost behavior,
assigning costs to cost objects, making business decisions
Direct Costs correct answers Costs that can be easily and conveniently traced to a unit of
product or other cost object
EX. Direct Costs correct answers Direct material, direct labor
radio on a car, wages to assembly
Indirect costs correct answers costs that cant easily be traced back to unit of production
ex indirect correct answers manufacturing overhead
common costs correct answers indirect costs incurred to support a number of cost objects,
cannot be traced back
Manufacturing Costs correct answers direct materials, direct labor and manufacturing
overhead
Manufacturing Overhead correct answers costs that cannot be easily traced back to product,
indirect labor/materials
lubricants in plant, security guards
nonmanufacturing costs correct answers selling costs: costs necessary to secure the order and
deliver the product
Administrative costs: Executive, organizational and clerical costs
DIRECT OR INDIRECT
Product Costs correct answers Direct materials, direct labor and manufacturing overhead
Period Costs correct answers Selling and Administrative
Prime Cost correct answers Direct Material and Direct labor
Conversion Cost correct answers Direct LAbor and Manufacturing overhead
Activity Base (Cost Driver) correct answers Units produced, machine hours, miles driven,
labor hours
Quality Costs correct answers prevention costs, appraisal costs, internal failure costs, external
failure costs
, Job Order Costing correct answers Used when many different products are produced in a
period
when products are manufactured to order
Job requires essentially a unique cost structure for each record
Predetermined Overhead Rate correct answers Estimated Total Manufacturing Overhead Cost
for the Coming Period/
Estimated total units in the allocation base for the coming period
Used because Mfg. Overhead is a mixed cost that varies year to year
How to calculate PDOR correct answers estimate amount of units
estimate fixed costs and variable costs per unit
calculate overhead rate
Raw Materials correct answers Any materials that go into the final product
Work in Process correct answers Units that are only partially complete and will require
further work before they are ready for sale to customers
Finished Goods correct answers completed units of products that have not been sold to
customers
Costs of Goods Manufactured correct answers Manufacturing costs associated with goods of
that period
Issue of raw materials correct answers credit: raw materials (direct/indirect)
Debit: Work in Process (DM) Mfg. Overhead (IDM)
Recording of Labor Costs correct answers Credit: Salaries and Wages payable
(direct/indirecct)
Debit:WIP (direct mat.)
mfg. Overhead (indirect mat.)
Applying Manufacturing Overhead correct answers Credit: Mfg. Overhead
Debit: WIP
Transferring Completed Units correct answers Credit: Costs of goods manufactured
Debit: Finished Goods
Transferring Units Sold correct answers Debit: Costs of Goods Sold
Credit: Finished Goods
