Managerial Accounting Creating Value in a Dynamic Business Environment 9Th Edition – Test Bank

Managerial Accounting Creating Value in a Dynamic Business Environment 9Th Ed By Hilton – Test Bank

Chapter 03

Product Costing and Cost Accumulation in a Batch Production Environment

True / False Questions

1. Manufacturing overhead is a pool of indirect production costs that must somehow be attached to each unit manufactured.
True    False

2. Electricity costs that were incurred by a company’s production processes should be debited to Utilities Expenses.
True    False

3. The final step in recognizing the completion of production requires a company to debit the Finished-Goods Inventory and credit the Work-in-Process Inventory.
True    False

4. Under- or overapplied manufacturing overhead at year-end is most commonly charged or credited to the Work-in-Process Inventory.
True    False

5. The term “normal costing” refers to the use of job-costing systems.
True    False

Multiple Choice Questions

6. Product costing in a manufacturing firm is the process of:
A. accumulating the company’s period costs.
B. allocating costs among the firm’s departments.
C. placing a value on the company’s fixed assets.
D. assigning costs to the firm’s inventory.
E. assigning costs to the company’s managers.

7. Which of the following statements is true?
A. Service firms have little need for determining the cost of their services.
B. The concept of product costing is relevant only to manufacturing firms.
C. The cost of year-end inventory appears on the balance sheet as an expense.
D. Service companies use cost information for planning and control purposes.
E. Mining and petroleum companies have no inventoriable costs.

8. Which of the following manufacturers would most likely use job-order costing?
A. Chemical manufacturers.
B. Microchip processors.
C. Custom furniture manufacturers.
D. Gasoline refiners.
E. Fertilizer manufacturers.

9. A custom-home builder would likely utilize:
A. job-order costing.
B. process costing.
C. mass customization.
D. process budgeting.
E. joint costing.