MCQ1

Student ID: 21993147

Exam: 061570RR - Materials, Labor, and Factory Overhead

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Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.

1. Meger Manufacturing uses the direct labor cost method for applying factory overhead to production. The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively. During the year, the company started and completed Job 352A, which had direct material and labor costs of $32,000 and $45,000, respectively. What was the cost of Job 352A? A. $102,600

B. $113,000

C. $77,000

D. $81,000

2. Jay Vato works at Batwing Industries from midnight until 8:00 A.M. His normal wage rate is $17 per hour. Ben Phillips, who does the same job from 8:00 A.M. until 4:00 P.M., makes $15 per hour. Since Ben and Jay have the same seniority within the plant, the difference in pay is due to a/an A. make-up guarantee.

B. overtime premium.

C. production bonus

D. shift premium.

3. The Benchley Company uses metal grates when assembling appliances. Information as to balances on hand, purchases, and requisitions of the grates is given in the following table.

If a perpetual inventory record of the metal grates is maintained using the FIFO method, the September 6 issue will consist of

Date Transaction Number of Units Unit Price Balance of Units January 1 Beginning balance 150 $2.80 150

January 24 Purchased 450 $3.10 600

February 8 Issued 120 480

March 16 Issued 210 270

June 11 Purchased 225 $3.34 495

August 18 Issued 195 300

September 6 Issued 165 135

October 15 Purchased 225 $3.40 360

December 29 Issued 210 150

A. 165 units at $3.10.

B. 75 units at $3.10 and 90 units at $3.24.

C. 15 units at $2.80, 120 units at $3.10 and 30 units at $3.24.

D. 75 units at $2.80 and 90 units at $3.10.

4. Which of the following statements about just-in-time (JIT) production techniques is true? A. The JIT system requires inventory buffers between work centers.

B. A high degree of cooperation and coordination between supplier and manufacturer is required.

C. The system was first utilized by U.S. manufacturers and later exported to Japan.

D. Goods are produced with the hope that demand for these goods will then be created.

5. The following data were taken from Mansfield Merchandisers on January 31:

What was the cost of goods sold in January?

Merchandise inventory, January 1 $ 90,000

Sales salaries 35,000

Merchandise inventory, January 31 65,000

Purchases 560,000

A. $585,000

B. $620,000

C. $650,000

D. $535,000

6. At the end of the year, Jenkins Corporation had $120,000 in the Factory Overhead account and applied factory overhead of $100,000. The controller has decided that the difference is too large to close to Cost of Goods Sold. Work in process inventories were $30,000, finished goods inventories were $60,000, and cost of goods sold during the year was $210,000. How should the entry to dispose of the difference in overhead incurred and overhead applied affect Cost of Goods Sold? A. 20,000 debit

B. $6,000 credit

C. $14,000 crebit

D. $14,000 dedit

7. Which of the following costs is included in factory overhead in the manufacture of a desk? A. The wages of the workers who assemble the components

B. The cost of the plastic used to form the desktop surface

C. The wages of the operator of the machine that bends the metal legs of the desk into shape

D. The wages of the forklift operator who moves desks from one manufacturing station to the next

8. Examples of service businesses include A. department stores, poster shops, and wholesalers.

B. airlines, architects, and hair stylists.

C. woodworkers, painters, and plumbers.

D. aircraft producers, home builders, and machine tool makers.

9. The Sully Company uses an industrial chemical, XRG, in a manufacturing process. Information as to balances on hand, purchases, and requisitions of XRG is given in the following table.

If a perpetual inventory record of XRG is maintained using the FIFO method, the March 16 issue will consist of

Date Transaction Number of Kilograms Price Per Kilogram Balance of Kilograms January 1 Beginning balance 1,000 $2.00 1,000

January 24 Purchased 2,500 $2.25 3,500

February 8 Issued 700 2,800

March 16 Issued 1,200 1,600

June 11 Purchased 1,500 $2.75 3,100

August 18 Issued 800 2,300

September 6 Issued 1,600 700

October 15 Purchased 2,000 $2.80 2,700

December 29 Issued 600 2,100

A. 1,200 kilograms at $2.25.

B. 1,000 kilograms at $2.00 and 200 kilograms at $2.25.

C. 700 kilograms at $2.00 and 500 kilograms at $2.25.

D. 300 kilograms at $2.00 and 900 kilograms at $2.25.

10. Control is the process of monitoring the company's operations to determine whether the company's objectives are being achieved. Effective control is achieved through all of the following except A. periodically measuring and comparing company results.

B. taking necessary corrective action when variances warrant doing so.

C. assigning responsibility for costs to employees responsible for those costs.

D. monitoring employees to ensure they do exactly as they are told.

11. The business entity that converts purchased raw materials into finished goods by using labor, technology, and facilities is a A. manufacturer.

B. merchandiser.

C. service business.

D. not-for-profit service agency.

12. Which of the following is most likely to be considered an indirect material in the manufacture of a sofa? A. Fabric

B. Foam rubber

C. Lumber

D. Glue

13. The Macke Company's payroll summary showed the following in November:

What is the amount that would be included in direct labor in November?

Sales department salaries $10,000

Supervisor salaries 20,000

Assembly workers' wages 25,000

Machine operators' wages 35,000

Maintenance workers' wages 15,000

Accounting department salaries 5,000

A. $120,000

B. $25,000

C. $60,000

D. $95,000

14. Perry Company's flexible budget for 25,000 units shows $75,000 and $25,000 in variable and fixed costs, respectively. At 30,000 units, the flexible budget would show A. variable costs of $75,000 and fixed costs of $30,000.

B. variable costs of $100,000 and fixed costs of $25,000.

C. variable costs of $90,000 and fixed costs of $25,000.

D. variable costs of $90,000 and fixed costs of $30,000.

15. Under a modified wage plan, an employee earns $1.50 for each finished unit and is guaranteed $18 per hour as a minimum wage. If the daily quota is 96 units, on a particular day when an employee completes 90 units and works 8 hours, what is the amount of the make-up guarantee? A. $12.00

B. $9.00

C. $6.00

D. $27.00

16. Venus Company has developed the following flexible budget formula for annual indirect labor cost: Total annual cost = $12,000 + $.25/unit Operating budgets for the current month are based on 5,000 units. What are the indirect labor costs included in this monthly planning budget? A. $3,200

B. $2,250

C. $1,250

D. $13,250

17. Which of the following is not included on a payroll record? A. The amount of overtime paid to the employees

B. Which jobs should be charged for the employees' time

C. Amounts withheld from the employees' earnings

End of exam

D. The employees' gross earnings

18. To effectively control materials, a business must maintain A. limited access.

B. safety stock.

C. paperwork.

D. combination of duties.

19. Which of the following is not a responsibility of the payroll function? A. Computing deductions and withholdings for each employee

B. Summarizing the period's payroll data

C. Keeping a record of earnings for each employee

D. Reviewing the labor hours on the time record for accuracy

20. At a certain level of operations, per unit costs and selling price are as follows: manufacturing costs, $50; selling and administrative expenses, $10; selling price, $80. Given this information, what is the mark-on percentage to manufacturing cost used to determine selling price? A. 40%

B. 60%

C. 33%

D. 25%