Question 1

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The Shelby Company owns a jewelry store. Job 151 involves the creation of a bracelet for
one of his customers. Direct materials for the bracelet amounted to $600, and the direct
labor was $200. It took four machine hours to complete the bracelet.
Two production activities cost pools were identified in the process: machining and
materials handling. The following information was gathered:
Activity Cost Pool Cost Allocation Base Units of
Allocation Base
Materials Handling $50,000 Materials cost $500,000
Machining 90,000 Machine hours 3,000

The total cost of the bracelet in Job 151 is Answer .

(enter ONLY numerical answer up to two decimals wherever applicable. Do NOT write
any prefix or suffix)

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The correct answer is: 960.00

Question 2
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Which of the following statements is NOT false?

Select one:
In an obsolete costing system, products that are difficult to produce show little profit.
In a Functional-based (traditional job costing) product costing system, overhead costs
are traced to activities, then costs are traced to products.
Dividing actual cost by estimated normal activity usage is the method used to calculate a
predetermined overhead rate in a Normal activity capacity costing.
Product costs can be distorted if a unit-based cost driver is used and the consumption
ratios differ between unit-based and non-unit-based input categories.
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Your answer is correct.

The correct answer is: Product costs can be distorted if a unit-based cost driver is used
and the consumption ratios differ between unit-based and non-unit-based input
categories.

Question 3
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The Shelby Company started and completed Job 151 during the year that involved a
direct cost of $34,000. The company has two producing departments: assembly and
finishing. Using a plantwide predetermined overhead rate of $16 per direct labor hour,
the total cost of job 151 was $58,000. The total number of direct labor hours consumed
1500
by job 151 are Answer .
(enter ONLY numerical value without any comma sign, do NOT use any prefix or suffix)

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Overhead Cost Allocated = 58,000 - 34,000 = 24,000

DL Hours = (24,000 / $ Platwide Rate) = ______ DL Hours

The correct answer is: 1500

Question 4
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Which of the following statements is NOT true?

Select one:
If a firm has a highly profitable market niche all to itself then it is possible that its costing
system is outdated.
A symptom of an outdated functional costing system can be if the competitor’s prices
appear unrealistically high.
Product costs can be distorted if a unit-based cost driver is used and non-unit-based
overhead costs are a significant proportion of total overhead.
The rationale for the use of departmental rates rather than plantwide rates is it allocates
overhead more equitably because plantwide rates are average rates and departmental
rates compare resources differently.
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Your answer is incorrect.

The correct answer is: A symptom of an outdated functional costing system can be if the
competitor’s prices appear unrealistically high.

Question 5
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Which of the following statements is NOT true?

Select one:
In a Functional-based (traditional job costing) product costing system, high-volume
products will be under-costed and low-volume products will be over-costed if a
company bases overhead allocation solely on volume.
Actual direct material and direct labor costs are assigned to products, but overhead costs
are assigned using predetermined rates.
Normal activity capacity costing uses average long-term activity to determine the
budgeted overhead rate.
Dividing estimated cost by estimated normal activity usage is the method used to
calculate a predetermined overhead rate in a Normal activity capacity costing.
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Your answer is incorrect.

The correct answer is: In a Functional-based (traditional job costing) product costing
system, high-volume products will be under-costed and low-volume products will be
over-costed if a company bases overhead allocation solely on volume.
Question 6
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Which of the following statements is NOT true?

Select one:
Normal activity capacity costing is preferred over Actual activity capacity costing because
accurate cost information cannot be obtained on a timely basis in Actual activity capacity
costing.
In a functional-based (traditional job costing) product costing system, overhead costs are
traced to departments, then costs are traced to products.
Actual direct materials, actual direct labor and actual overhead cost is assigned to
products.
An activity-based costing system uses both unit-based and non-unit-based cost drivers
that reflect a cause-and-effect relationship.
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Your answer is correct.

The correct answer is: Actual direct materials, actual direct labor and actual overhead
cost is assigned to products.

Question 7
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The Shelby Company has two producing departments: assembly and finishing. The
company has been using a plantwide predetermined overhead rate based on direct labor
hours to compute full costs of jobs. The following estimates were made for the current
year:
Assembly Finishing
Manufacturing overhead $200,000 $100,000
Direct labor hours 65000 35,000
Machine hours 5,000 16,000
The plantwide predetermined overhead cost allocation rate based on direct labor
5.92
hours is Answer
(enter ONLY numerical answer up to two decimals wherever applicable. Do NOT write
any prefix or suffix)

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The correct answer is: 3.00

Question 8
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The Shelby Company owns a jewelry store. The following estimates were made for the
current year:
Amount
Material cost $15,00,000
Direct Labour (at $300 per hour) $12,00,000
Manufacturing Overheads $15,00,000

The company has been using a plantwide predetermined overhead rate based on direct
labor cost.

Job 151 involves the creation of a bracelet for one of his customers. Direct materials for
the bracelet amounted to $700, and the direct labor was $200. It took four machine
hours to complete the bracelet.
Using the plantwide rate to allocate manufacturing overheads to the jobs, the total cost
2400
of the Job 151 is Answer
(enter ONLY numerical answer up to two decimals wherever applicable. Do NOT write
any prefix or suffix)
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The correct answer is: 1150.00

Question 9
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The Shelby Company uses a job-order costing system. The company has been using a
plantwide predetermined overhead rate based on machine hours to allocate
manufacturing overheads.
The following information is provided for the year:

Actual overhead $225,000

Actual machine hours worked 25,000
Budgeted machine hours 23600
Manufacturing Overhead Allocated to jobs in 200,000
the year (applied based on actual hours)

The budgeted manufacturing overhead used to calculate the predetermined rate must
207900
have been $ Answer .
(enter ONLY numerical answer up to two decimals wherever applicable. Do NOT write
any prefix or suffix)

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The correct answer is: 188800.00

Question 10
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The Shelby Company uses a job-order costing system. The molding department allocates
overhead based on machine hours, while the assembly department allocates overhead
based on direct labor hours. The company made the following estimates at the
beginning of the current year:
 Molding Assembly
Manufacturing overhead cost $1,200,000 $800,000
Machine hours 10,000 4,000
Direct labor hours 12,000 16,000

The following information was available for Job151, which was started and completed
during July:
Molding Assembly
Direct materials $7,000 $15,000
Direct labor $18,000 $25,000
Direct labor hours 900 1,250
Machine hours 500 400

The molding departments' overhead costs allocated (applied) to Job 151 is $ Answer
122500

(enter ONLY numerical answer up to two decimals wherever applicable. Do NOT write
any prefix or suffix)

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The correct answer is: 60000.00

Question 11
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The Shelby Company uses a job-order costing system. There are two production
departments: machining and assembly. A predetermined overhead rate is used in each
department. The machining department bases its rate on machine hours, and the
assembly department bases its rate on direct labor hours. The company made the
following estimates at the beginning of the current year:
Machining Assembly
Manufacturing overhead cost $600,000 $250,000
Machine hours 40,000 8,000
Direct labor hours 50,000 20,000
The following information was available for Job 151, which was started and completed
during December:
Machining Assembly
Direct materials $3500 $ 500
Direct labor cost $1,800 $3,000
Direct labor hours 350 80
Machine hours 300 20

14300
The total cost of Job 151 is Answer

(enter ONLY numerical answer up to two decimals wherever applicable. Do NOT write
any prefix or suffix)

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Departmental Rates
Machining overhead rate: $15.00 ($600,000/40,000)
Assembly overhead rate: $12.50 ($250,000/20,000)

Total Cost of the Job

Direct materials--Machining $ MDM
Direct labor--Machining 1,800
Direct materials--Assembly 500
Direct labor--Assembly 3,000
Overhead--Machining
($15 * 300 machine hours) 4,500
Overhead--Assembly
($12.50 * 80 DLH) 1,000
Total $_______

The correct answer is: 14300

Question 12
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The Shelby Company has two producing departments: assembly and finishing. The
following estimates were made for the current year:
Assembly Finishing
Manufacturing overhead $230000 $100,000
Direct labor hours (?) 35,000
Machine hours 5,000 16,000

Shelby uses separate departmental overhead rates based upon direct labor hours for
assembly and upon machine hours for finishing.
Shelby started and completed Job 151 during the year. The job-order cost sheet
indicated the following:
Raw Materials cost $18,000
Direct labor cost $16,000
Direct labor hours:
Assembly 3,400 hours
Finishing 1,300 hours
Machine hours:
Assembly 1,000 hours
Finishing 800 hours

If the total cost of the Job 151 as computed by the existing costing system is $73,000
then the company's total estimated direct labour hours in the Assembly department for
15000
the current year are Answer .
(enter ONLY numerical answer up to two decimals wherever applicable. Do NOT write
any prefix or suffix)

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The correct answer is: 23000.00

Question 13
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Which of the following statements is NOT false?

Select one:
Actual direct labor cost is assigned to products, but direct material and overhead costs
are assigned using predetermined rates.
In a Functional-based (traditional job costing) product costing system, high-volume
products will be over-costed and low-volume products will be under-costed if a
company bases overhead allocation solely on volume.
In a Functional-based (traditional job costing) product costing system, overhead costs
are traced directly to products.
Functional-based (traditional job costing) costing system is effectively able to capture the
differential resource consumption by the products for the purpose of overhead cost
allocation.
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Your answer is correct.

The correct answer is: In a Functional-based (traditional job costing) product costing
system, high-volume products will be over-costed and low-volume products will be
under-costed if a company bases overhead allocation solely on volume.