Q&A Hero

Q: The expected value with perfect information is A) the maximum EMV for a set of alternatives B) the same as the expected value of perfect information C) valuable in situations involving risk D) the average return obtained when the decision maker knows which state of nature is going to occur before the decision is made E) obtained using conditional probabilities

Q: In a process costing system, direct material costs incurred are recorded: A.Indirectly to a Work in Process Inventory account from Factory Overhead. B.Indirectly to a Finished Goods Inventory account from Factory Overhead. C.Directly to a Work in Process Inventory account. D.Directly to a Finished Goods Inventory account. E.Directly to a Cost of Goods Sold account.

Q: What is the EMV for Option 1 in the following decision table? States of Nature Alternatives S1 S2 p .3 .7 Option 1 15,000 20,000 Option 2 10,000 30,000 A) 15,000 B) 17,000 C) 17,500 D) 18,500 E) 20,000

Q: The highest value for the equally likely criterion is __________; this occurs with alternative __________. States of Nature Alternatives S1 S2 Option 1 $10,000 $30,000 Option 2 $5,000 $45,000 Option 3 $-4,000 $60,000 A) $20,000; Option 1 B) $25,000; Option 2 C) $28,000; Option 3 D) $32,000; Option 3 E) $60,000; Option 3

Q: A decision-maker using the maximin criterion on the problem below would choose Alternative __________ because the maximum of the row minimums is __________. States of Nature 1 2 3 Alternative A 50 55 60 Alternative B 30 50 80 Alternative C 70 80 70 Alternative D -100 -10 140 A) A; 55 B) B; 30 C) C; 70 D) D; 140 E) D; 10

Q: A decision-maker using the maximax criterion on the problem below would choose Alternative __________ because the maximum of the row maximums is __________. States of Nature 1 2 3 Alternative A 50 55 60 Alternative B 30 50 80 Alternative C 70 80 70 Alternative D -100 -10 140 A) A; 60 B) B; 80 C) C; 70 D) D; -100 E) D; 140

Q: A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a: A.General cost accounting system. B.Process costing system. C.Job order cost accounting system. D.Manufacturing cost accounting system. E.Work in Process accounting system.

Q: The expected value of perfect information (EVPI) is the A) payoff for a decision made under perfect information B) payoff under minimum risk C) average expected payoff D) difference between the payoff under perfect information and the payoff under risk E) none of the above

Q: The following data are available for a company's manufacturing activities: Beginning Work in Process inventory 5,000 units, 75% completed as to direct labor Units started and completed . 15,000 Ending Work in Process inventory 6,000 units, 50% completed as to labor If materials are added when the production process begins and direct labor is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labor, respectively using the FIFO method of process costing? A.16,250; 19,250. B.16,250; 21,750. C.21,000; 19,250. D.19,250; 18,750. E.21,000; 22,250.

Q: The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is A) low (near 0%) B) high (near 100%) C) dependent upon the number of alternatives D) dependent upon the number of states of nature E) none of the above

Q: The difference between the expected payoff under perfect information and the maximum expected payoff under risk is A) expected monetary value B) economic order quantity C) expected value of perfect information D) PERT E) expected monetary payoff

Q: Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows. Work in Process, May 1 (50,000 units, 100% complete for direct materials, 40% complete with respect to direct labor and overhead; includes $70,500 of direct material cost; $34,050 of conversion costs). Units started in May 225,000 Units completed in May 200,000 Work in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs). Costs incurred in May Direct materials $342,000 Conversion costs $352,950 If Pitt Enterprises uses the FIFO method of process costing, compute the equivalent units for materials and conversion costs respectively for May. A.225,000; 225,000. B.200,000; 195,000 C.275,000; 200,000 D.225,000; 195,000 E.200,000; 200,000

Q: The expected value with perfect information A) equals EVPI EMV B) requires that each decision alternative have a known probability of occurrence C) is an input into the calculation of the expected value of perfect information D) is the average of the maximax and the maximin E) none of the above

Q: A plant manager wants to know how much he should be willing to pay for perfect market research. Currently there are two states of nature facing his decision to expand or do nothing. Under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions the large plant would lose $50,000 and the small plant would make $0. If the two states of nature are equally likely, how much should he pay for perfect information? A) $0 B) $25,000 C) $50,000 D) $100,000 E) unable to determine

Q: A process cost summary is a managerial accounting report that describes all but which of the following: A. The gross profit earned on the sale of products B.The equivalent units of production by the department. C.How the costs were assigned to the output. D.Physical transfers for a department. E. The costs charged to a department.

Q: A company uses a process costing system. Its Welding Department completed and transferred out 100,000 units during the current period. The ending inventory in the Welding Department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs). Determine the equivalent units of production for the Welding Department for direct materials and conversion costs assuming the weighted average method. A.130,000; 130,000 B.130,000; 112,000 C.107,500; 118,000 D.122,500; 112,000 E. 112,500; 130,000

Q: A company uses a process costing system. Its Weaving Department completed and transferred out 120,000 units during the current period. The ending inventory in the Weaving Department consists of 40,000 units (20% complete with respect to direct materials and 60% complete with respect to conversion costs). Determine the equivalent units of production for the Weaving Department for direct materials and conversion costs assuming the weighted average method. A.120,000; 120,000 B.120,000; 160,000 C.128,000; 120,000 D.128,000; 144,000 E. 128,000; 184,000

Q: Metaline Corp. uses the weighted average method for inventory costs and had the following information available for the year. Equivalent units of production for the year are: Beginning inventory of Work in Process (40% complete, $1,100) 200 units Ending inventory of Work in Process (80% complete)"u00a6"u00a6"u00a6.. 400 units Total units started during the year"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 3,200 units A.3,200 units. B.3,320 units. C.3,240 units. D.3,520 units. E.3,800 units.

Q: The following refers to units processed by a breakfast cereal maker in August. Compute the total equivalent units of production with respect to conversion for July using the weighted-average inventory method. Tons of Product Percent of Conversion Added Beginning Work in Process 230,000 60% Goods started 570,000 100% Goods completed 620,000 100% Ending Work in Process 180,000 70% A. 758,000 B. 800,000 C. 620,000 D. 746,000 E. 884,000

Q: A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 30,000 units, 75% complete with respect to direct labor and overhead. The department completed and transferred out 127,500 units this period. The ending inventory consists of 20,000 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $24,000 and overhead costs of $32,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is: A.$0.14. B.$0.16. C.$0.18. D.$0.30. E.$0.37.

Q: The Fabricating Department started the current month with a beginning Work in Process inventory of $10,000. During the month, it was assigned the following costs: direct materials, $76,000; direct labor, $24,000; and factory overhead, 50% of direct labor cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Work in Process Inventory account for the Fabricating Department is: A.$ 13,000. B.$ 56,000. C.$ 59,000. D.$110,000. E.$165,000.

Q: Using conversion cost per equivalent unit is appropriate for many business that use process costing because: A. Direct materials and direct labor are usually entered into the production process at the same rate. B. All manufacturing costs are entered into the production process in the same period. C. Equivalent cost per unit is not sufficient measurement of production activity. D. The weighted average method of calculating equivalent units requires it. E. Direct labor and factory overhead enter the production process at the same rate.

Q: The combined costs of direct labor and factory overhead per equivalent unit used by many businesses with process operations is called: A. Physical cost per equivalent unit B. Overhead cost per equivalent unit C. Combined cost per equivalent unit D. Conversion cost per equivalent unit E. Finished cost per equivalent unit

Q: A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as: A.Manufacturing overhead. B.Units in process. C.A job cost sheet. D.Equivalent units of production. E.Process cost summary.

Q: Clarksen Company uses a process costing system. The company requisitioned $93,000 of materials for Department A and $67,000 of materials for Department D. The entry to record the use of the direct materials by these two departments is: A. Debit Raw Materials Inventory $160,000; credit Accounts Payable $160,000. B. Debit Work in Process InventoryDept A $93,000; debit Work in Process InventoryDept D $67,000; credit Raw Materials Inventory $160,000. C. Debit Factory overhead $160,000; credit Raw Materials Inventory $160,000. D. Debit Raw Materials InventoryDept A $93,000; debit Raw Materials InventoryDept D $67,000; credit Work in Process Inventory $160,000. E. Debit Work in Process InventoryDept A $93,000; debit Work in Process InventoryDept D $67,000; credit Accounts Payable $160,000.

Q: Yamada Company applies factory overhead to its production departments on the basis of 90% of direct labor costs. In the Assembly Department, Yamada had $125,000 of direct labor cost, and in the Finishing Department, Yamada had $35,000 of direct labor cost. The entry to apply overhead to these production departments is: A.Debit Factory OverheadAssembly $112,500; debit Factory OverheadFinishing $31,500; credit Work in Process Inventory $144,000. B.Debit Factory Overhead $144,000; credit Work in Process InventoryAssembly $112,500; credit Work in ProcessFinishing $31,500. C.Debit Factory Overhead $144,000; credit Factory Payroll $144,000. D.Debit Work in Process InventoryAssembly $112,500; debit Work in Process InventoryFinishing $31,500; credit Factory Overhead $144,000. E.Debit Factory Payroll $144,000; credit Cash $144,000.

Q: Which of the following characteristics does not usually apply to process operations systems? A.Each unit of product is separately identifiable. B.Partially completed products are transferred between processes. C.Different managers are responsible for different processes. D.The output of all processes except the final process is an input to the next process. E.Costs are computed using equivalent units .

Q: Which of the following products is most likely to be produced in a process operations system? A.Airplanes B.Cereal C.Bridges D.Designer bridal gowns E.Custom cabinets

Q: The Finishing Department transferred out completed units with a cost of $74,000. This transfer should be recorded with the following entry: Finished Goods Inventory"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. 74,000 Work in Process Inventory, Finishing Dept. 74,000

Q: The cost of units transferred from Work in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.

Q: The number of equivalent units of production assigned to ending Work in Process inventory should be equal to or less than the number of physical units in ending Work in Process inventory.

Q: A process costing system records all factory overhead costs directly in the Work in Process Inventory accounts.

Q: In process costing, all indirect materials are charged directly to Work in Process Inventory.

Q: If indirect materials costing $37,500 that were not clearly linked with any specific production process or department were used during a reporting period, the following journal entry would be recorded in the process costing system: Factory Overhead 37,500 Raw Materials Inventory"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 37,500

Q: In a process costing system, factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate.

Q: If Department L uses $53,000 of direct labor and Department M uses $21,000 of direct labor, the following journal entry would be recorded using a process costing system: Work in Process Inventory, Department L 53,000 Work in Process Inventory, Department M 21,000 Factory Payroll Payable"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 74,000

Q: In some circumstances, a process costing system can classify wages paid to maintenance workers as direct labor costs instead of factory overhead.

Q: In process costing, direct labor includes only the labor that is applied directly to individual units of product.

Q: If the indirect labor cost in August for clerical and maintenance that help production in all departments was $123,000, the following journal entry would be recorded in a process costing system: Factory Overhead 123,000 Factory Payroll Payable"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 123,000

Q: If Grayson Manufacturing incurred $17,400 for direct labor in the assembly department and $10,300 for direct labor in the painting department, the journal entry to record the labor used is: Work in ProcessAssembly "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6..$17,400 Work in ProcessPainting"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.$10,300 Raw Materials Inventory"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.$27,700

Q: If Department R uses $60,000 of direct materials and Department S uses $15,000 of direct materials, the following journal entry would be recorded by the process costing system: Work in Process Inventory, Department R 60,000 Work in Process Inventory, Department S 15,000 Raw Materials Inventory 75,000

Q: If Department C uses $10,000 of direct materials and Department D uses $15,000 of direct materials, the following journal entry would be recorded by the process costing system: Work in Process Inventory, Department C 10,000 Work in Process Inventory, Department D 15,000 Raw Materials Inventory"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. 25,000

Q: A materials consumption report is used instead of materials requisitions in companies where materials move continuously through the manufacturing process.

Q: In a process costing system, the entry to record cost of materials assigned to a production department requires a debit to the Raw Materials Inventory account and a credit to the Work in Process Inventory account for that department.

Q: In a process costing system, the purchase of raw materials is debited to the Raw Materials Inventory.

Q: In a process costing system, the purchase of raw materials is credited to the Raw Materials Inventory.

Q: Hybrid systems contain features of both process and job order operations.

Q: In process costing, indirect materials are always classified as factory overhead, even if they are linked with a specific production process or department.

Q: When direct labor and overhead enter the production process at different rates, it is appropriate to use a conversion cost per equivalent unit.

Q: Conversion cost per equivalent unit is the combined cost of direct labor and factory overhead per equivalent unit.

Q: In process costing, the classification of materials as direct or indirect depends on whether or not they are clearly linked with a specific process or department.

Q: Process costing systems are commonly used by companies that manufacture standardized products by passing them through a series of manufacturing steps.

Q: Process costing systems are used only by companies that manufacture physical products; companies that provide services do not use process costing.

Q: Process costing systems consider overhead costs to include those costs that cannot be traced to a specific process.

Q: In a process operation, all labor that is used exclusively by a single production department is considered to be direct labor.

Q: Process costing is applied to operations with repetitive production and customized products.

Q: In process costing, the cost object is the process and in job costing, the cost object is a job.

Q: In a process costing system, with the exception of the first department, each department receives output from the prior department as a partially processed product.

Q: The term "process costing system" is used in reference to the number of trained individuals and computers required to process the collected cost information.

Q: Process costing systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

Q: The FIFO method of computing equivalent units includes the beginning inventory costs in computing the cost per equivalent unit for the current period.

Q: The FIFO method of computing equivalent units focuses on production activity in the current period only.

Q: A process cost summary usually does not include the number of equivalent units of production for the period.

Q: Conversion cost per equivalent unit is the combined costs of direct materials and factory overhead.

Q: Equivalent units of production for direct materials and direct labor are usually the same.

Q: In a process costing system, companies typically end each period with only Finished Goods Inventory.

Q: Equivalent units of production refer to the number of units that could have been started and completed given the costs incurred during the period.

Q: In a process costing system costs are measured upon completion of each job.

Q: Manufacturers that utilize process operations produce large quantities of identical products.

Q: The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service.

Q: Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 direct materials and $13,000 indirect materials. What is the ending Raw Materials Inventory balance for March? A. $46,000 B. $11,000 C. $33,000 D. $24,000 E. $9,000

Q: The Marina Corp. has applied overhead to jobs during the period as follows: Jobs finished and sold "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $ 46,000 Jobs started and in process "u00a6"u00a6"u00a6"u00a6. 54,000 Jobs finished and unsold "u00a6"u00a6"u00a6"u00a6"u00a6 100,000 The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account, and this amount is not material. The entry to dispose of this remaining factory overhead balance is: A.Debit Cost of Goods Sold $5,600; credit Factory Overhead $5,600. B.Debit Factory Overhead $5,600; credit Cost of Goods Sold $5,600. C.Debit Factory Overhead $5,600; credit Work in Process Inventory $5,600. D.Debit Work in Process Inventory $5,600; credit Factory Overhead $5,600. E.No entry is needed.

Q: If overapplied or underapplied overhead is material, it should be disposed of by allocating it to: A.Cost of goods sold and finished goods inventory. B.Finished goods inventory and work in process inventory. C.work in process inventory, finished goods inventory, and cost of goods sold. D.work in process inventory. E.Raw materials inventory, work in process inventory, and finished goods inventory.

Q: Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include: A.A debit to Cost of Goods Sold for $600. B.A credit to Factory Overhead for $600. C.A credit to Finished Goods Inventory for $600. D.A debit to Work in Process Inventory for $600. E.A credit to Cost of Goods Sold for $600.

Q: Marshall Enterprises charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, Marshall Enterprise's Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should Marshall make at year-end? A.No entry is needed. B.Debit Factory Overhead $5,000; credit Cost of Goods Sold $5,000. C.Debit Cost of Goods Sold $5,000; credit Factory Overhead $5,000. D.Debit Factory Overhead $5,000; credit Work in Process Inventory $5,000. E.Debit Factory Overhead $5,000; credit Finished Goods Inventory $5,000.

Q: If a company applies overhead to production with a predetermined overhead rate, a credit balance in the Factory Overhead account at the end of the period means that: A.The bookkeeper has made an error because the debits don't equal the credits. B.The balance will be carried forward to the next period as an overhead cost. C.Actual overhead incurred was less than the overhead amount applied to production. D.The overhead was underapplied for the period. E.Actual overhead was greater than the overhead amount applied to production.

Q: If overhead applied is less than actual overhead incurred, it is: A.Fully applied. B.Underapplied. C.Overapplied. D.Expected. E.Normal.

Q: At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Simply should A.Close the $2,500 to Cost of Goods Sold. B.Close the $2,500 to Finished Goods Inventory. C.Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year. D.Carry the $2,500 to the income statement as "Other Expense" E.Carry the $2,500 to the next period.

Q: If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale? A.$8.00. B.$5.50. C.$2.50. D.$1.60. E.$0.90.

Q: Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate? A.$6.00 per direct labor hour. B.$7.50 per direct labor hour. C.$6.67 per direct labor hour. D.$8.33 per direct labor hour. E.$7.08 per direct labor hour.