Exam 2

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________ is the process of distributing indirect costs to products.
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________ costing is used by a business to price unique products for different jobs.
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When calculating indirect cost rates, the longer the time period, the greater the
influence of seasonal patterns on the amount of costs.
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The actual indirect-cost rate is calculated by:
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A job that shows low profitability may be the result of:

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inefficient direct manufacturing labor.

underpricing the job.

wasting direct materials.

all of the above.

Process costing should be used to assign costs to products when the:

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calculation of unit costs requires the averaging of unit costs over all units produced.

units produced are dissimilar.

units produced are similar.

Either A or C are correct.

Which of the following manufactured products would not use process costing?

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747 jet aircraft

46-inch television sets

Construction of a commercial office building

Both A and C are correct

The purpose of the equivalent-unit computation is to:

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convert completed units into the amount of partially completed output units that could be made with that quantity of input.

convert partially completed units into the amount of completed output units that could be made with that quantity of input.

assist the business in determining the cost assigned to ending inventory and work-in-process inventory.

Both B and C are correct.

When a Bakery transfers goods from the Mixing Department to the Baking Department, the accounting entry is:
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Answer the following questions using the information below:
The Lumbar Chair Company manufacturers a standard recliner. During February, the firm’s Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Lumbar.How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle.

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The weighted-average process-costing method calculates the equivalent units by:
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The use of a single indirect-cost rate is more likely to:

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undercost high-volume simple products.

undercost lower-priced products.

undercost low-volume complex products.

Both B and C are correct.

Overcosting a particular product may result in:
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Product lines that produce different variations (models, styles, or colors. often require specialized manufacturing activities that translate into:
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ABC systems create:
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Answer the following questions using the information below:
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:

Production and sales volume
60,000 units
35,000 units
Selling price
Direct material
$ 2.00
$ 5.00
Direct labor
$ 4.50
$ 7.20
Manufacturing overhead
$ 2.00
$ 3.00
Gross profit
$ 7.50
Selling and administrative
$ 4.00
$ 7.00
Operating profit
$ 3.50
$ 6.80

What is projected operating income if direct materials costs of T-Shirts increase to $4.00 per unit and direct labor costs of Sweatshirts increase to $8.20 per unit? Under the revised ABC system, the activity-cost driver rate for the supervision activity is:

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ABC assumes all costs are ________ because over the long run management can adjust the amount of resources employed.
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The primary costs of an ABC system are the measurements necessary to implement the system.
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Which of the following is a sign that an ABC system may be useful?
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Activity-based management (ABM) includes decisions about all except:
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