361-Chapter-3-MC-Solutions

Chapter3—PredeterminedOverheadRates,FlexibleBudgets,andAbsorption/VariableCostingMULTIPLECHOICE1.Sinceoverheadcostsareindirectcosts,a.theyrequiresomeprocessofallocation.b.theycanbeeasilytracedtoproduction.c.apredeterminedoverheadrateisnotadvantageous.d.theycannotbeallocated.ANS:APTS:1DIF:EasyOBJ:3-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting2.Costallocationistheassignmentof____coststooneormoreproductsusingareasonablebasis.directindirecta.yesyesb.yesnoc.nonod.noyesANS:DPTS:1DIF:EasyOBJ:3-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting3.Anactualcostsystemdiffersfromanormalcostsysteminthatanactualcostsystema.assignsoverheadasitoccursduringthemanufacturingcycle.b.assignsoverheadattheendofthemanufacturingprocess.c.doesnotassignoverheadatall.d.doesnotuseanOverheadControlaccount.ANS:BPTS:1DIF:EasyOBJ:3-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting4.Inanormalcostsystem,whichofthefollowingisused?ActualdirectmaterialsActualdirectlaborActualoverheada.yesnoyesb.yesyesyesc.yesyesnod.noyesnoANS:CPTS:1DIF:EasyOBJ:3-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter325.Predeterminedoverheadratesarecomputedbasedonestimatedoverheadcostsestimatedlevelofactivitya.yesyesb.yesnoc.noyesd.nonoANS:APTS:1DIF:EasyOBJ:3-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting6.Onereasonannualoverheadapplicationratesareusedisa.becauseofseasonalvariabilityofoverheadcosts.b.tohelpbudgetoverheadcosts.c.tominimizetheoverheadcostassignedtoproducts.d.tomaximizetheoverheadcostassignedtoproducts.ANS:APTS:1DIF:EasyOBJ:3-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting7.Whichofthefollowingisnotareasontousepredeterminedoverheadrates?a.toovercometheproblemsofassigningoverheadtodiversetypesofproductsb.tocompensateforfluctuationsinmonthlyoverheadcostsc.toprovideameansforassigningoverheadduringtheperiodratherthanattheendoftheperiodd.tosmoothouttheamountofoverheadcostassignedtoproductswhenmonthlyproductionactivitydiffersANS:APTS:1DIF:ModerateOBJ:3-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting8.Whenamanufacturingcompanyhasahighlyautomatedmanufacturingplantproducingmanydifferentproducts,whichofthefollowingisthemoreappropriatebasisofapplyingmanufacturingoverheadcoststoworkinprocess?a.directlaborhoursb.directlabordollarsc.machinehoursd.costofmaterialsusedANS:CPTS:1DIF:EasyOBJ:3-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter339.Amixedcosthaswhichofthefollowingcomponents?VariablecomponentFixedcomponenta.yesnob.yesyesc.nonod.noyesANS:BPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting10.Intheformulay=a+bX,yrepresentsa.fixedcosts.b.totalcost.c.variablecosts.d.mixedcosts.ANS:BPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting11.Intheformulay=a+bX,arepresentsa.mixedcost.b.variablecost.c.totalcost.d.fixedcost.ANS:DPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting12.Inrelationshiptochangesinactivity,variableoverheadchangesintotalperunita.nonob.noyesc.yesyesd.yesnoANS:DPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter3413.Inrelationshiptochangesinactivity,fixedoverheadchangesintotalperunita.yesyesb.nonoc.noyesd.yesnoANS:CPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting14.Ifthelevelofactivityincreases,a.variablecostperunitandtotalfixedcostsincrease.b.fixedcostperunitandtotalvariablecostincrease.c.totalcostwillincreaseandfixedcostperunitwilldecrease.d.variablecostperunitandtotalcostincrease.ANS:CPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting15.Weaknessesofthehigh-lowmethodincludeallofthefollowingexcepta.onlytwoobservationsareusedtodevelopthecostfunction.b.thehighandlowactivitylevelsmaynotberepresentative.c.themethoddoesnotdetectifthecostbehaviorisnonlinear.d.themathematicalcalculationsarerelativelycomplex.ANS:DPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting16.Ifthereisnoavalueinalinearcostequation,thisisanindicationthatthecostisa.fixed.b.mixed.c.variable.d.eitherfixedormixed.ANS:CPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting17.Anoutlierisa.somethingthathappensoutsidetheorganizationthatdoesnotaffectproduction.b.alwaysusedinanalyzingamixedcost.c.somethingthathappensinsidetheorganizationthatdoesnotaffectproduction.d.typicallynotusedinanalyzingamixedcost.ANS:DPTS:1DIF:EasyOBJ:3-4NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter3518.Appliedoverheadconsistsofwhichofthefollowing?a.actualactivitytimespredeterminedoverheadrateb.es