King Abdulaziz University

Faculty of Economics and

Adminstration
Accounting Department

A
PRINCIPLES OF MANAGERIAL AND COST
ACCOUNTING

ACCT 213

Spring Semester 2022

Mid-term 1

Student Name:
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ID Number:
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Section:
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Final Mark: /25 90 Minutes

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Very Important
1. This exam contains 25 questions @ 1 mark each question
2. Choose and then circle the best answer to each of the following Multiple-Choice
Questions.

1. Managerial accounting reports can be described as

a. general-purpose.
b. macro-reports.
c. special-purpose.
d. classified financial statements.

2. In determining whether planned goals are being met, a manager is performing the function
of
a. planning.
b. follow-up.
c. directing.
d. controlling.

3. Which one of the following is not a cost element in manufacturing a product?

a. Manufacturing overhead
b. Direct materials
c. Office salaries
d. Direct labor

4. Which of the following statement best describes the term “total quality management”
a. a system in which goods are manufactured or purchased just in time for sale
b. allocates overhead based on each product’s use of activities
c. a system to reduce defects in finished products with the goal of zero defects
d. links performance, using both financial and non-financial measures.

5. Benson Inc.'s accounting records reflect the following inventories:

Dec. 31, 2021 Dec. 31, 2022
Finished goods inventory $ 100,000 $ 92,000
Raw materials inventory 80,000 64,000
Work in process inventory 104,000 116,000

During 2022, Benson incurred direct labor costs of $250,000, incurred manufacturing
overhead totaling $160,000 and purchased $1,450,000 of raw materials, (Assume that
all raw materials used were direct materials.) What total manufacturing costs were
incurred during 2022 for Benson?

a. $1,864,000
b. $1,860,000
c. $1,872,000
d. $1,876,000

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6. Edmiston Company reported the following year-end information: beginning work in
process inventory, $80,000; cost of goods manufactured, $750,000; beginning finished
goods inventory, $50,000; ending work in process inventory, $70,000; and ending finished
goods inventory, $40,000. What is Edmiston’s cost of goods sold for the year?

a. $750,000
b. $760,000
c. $740,000
d. $770,000

7. Laflin Company reported the following year-end information:

Direct labor $ 900,000
Manufacturing overhead 720,000
Ending work in process inventory 900,000
Beginning work in process inventory 1,080,000
Raw materials used 780,000
Laflin Company's cost of goods manufactured for the year is

a. $2,780,000.
b. $2,580,000.
c. $2,400,000.
d. $2,480,000.

8. Penner Company reported manufacturing overhead totaling $78,000, direct materials

totaling $96,000, and total manufacturing costs of $450,000, What is the company’s direct
labor cost?

a. $624,000
b. $354,000
c. $276,000
d. Cannot be determined from the information provided.

9. Costas Company has beginning and ending raw materials inventories of $64,000 and
$80,000, respectively. If direct materials used were $310,000, what was the cost of raw
materials purchased?

a. $330,000.
b. $294,000.
c. $326,000.
d. $310,000

10. An important feature of a job order cost system is that each job
a. must be similar to previous jobs completed.
b. has its own distinguishing characteristics.
c. must be completed before a new job is accepted.
d. consists of one unit of output.

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11. Under an effective system of internal control, the authorization for issuing materials is
made
a. orally.
b. on materials requisition slip.
c. by the accounting department.
d. by anyone on the production line.

12. If the entry to assign materials shows only a debit to Work in Process Inventory, then all
materials costs were
a. indirect materials.
b. direct materials.
c. purchased materials.
d. none of the above.

13. When a job is completed and all costs have been accumulated on a job cost sheet, the journal
entry that should be made is
a. Finished Goods Inventory
Direct Materials
Direct Labor
Manufacturing Overhead
b. Work in Process Inventory
Direct Materials
Direct Labor
Manufacturing Overhead
c. Raw Materials Inventory
Work in Process Inventory
d. Finished Goods Inventory
Work in Process Inventory

14. Minton Company provided the following information from its accounting records for 2022:
Estimated production 60,000 labor hours
Actual production 56,000 labor hours
Estimated overhead $1,800,000
Actual overhead $1,740,000
What is the predetermined overhead application rate if Minton Company bases it on
direct labor hours (rounded to the nearest cent)?
a. $30.00 per hour
b. $29.00 per hour
c. $32.14 per hour
d. $31.07 per hour

15. Kinney Company applies overhead on the basis of 150% of direct labor cost. Job No. 176
is charged with $150,000 of direct materials costs and $180,000 of manufacturing
overhead. The total manufacturing costs for Job No. 176 is
a. $430,000.
b. $600,000.
c. $450,000.
d. $405,000.

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16. Barnes Company applies overhead on the basis of machine hours. Given the following data,
what is the overhead applied and the under- or overapplication of overhead for the period?
Estimated annual overhead cost $3,000,000
Actual annual overhead cost $2,970,000
Estimated machine hours 300,000
Actual machine hours 295,000
a. $2,950,000 applied and $20,000 underapplied
b. 2,950,000 applied and $20,000 overapplied
c. $3,000,000 applied and $20,000 overapplied
d. $2,970,000 applied and neither under- nor overapplied

17. The Manufacturing Overhead account shows debits of $30,000, $24,000, and $28,000 and
a credit for $86,000. Based on this information, manufacturing overhead
a. has been overapplied.
b. has been underapplied.
c. has not been applied.
d. shows a zero balance.
18. Which of these best reflects a distinguishing factor between a job order cost system and a
process cost system?

a. The detail at which costs are calculated

b. The time period each covers
c. The number of work in process inventory accounts
d. The manufacturing cost elements included

19. In a process cost system, product costs are summarized

a. on job order cost sheets.
b. on production cost reports.
c. after each unit is produced.
d. when the products are sold.

20. Which of the following is not a necessary step in preparing a production cost report?

a. Compute the equivalent units of production.

b. Compute the physical unit flow.
c. Prepare the job order cost sheet.
d. Prepare a cost reconciliation schedule.

21. A product requires processing in two departments, the Baking Department and then the
Packaging Department. The entry of transferring cost will credit:

a. Finished Goods Inventory.

b. Cost of Goods Sold.
c. Work in Process—Packaging Department.
d. Work in Process— Baking Department.

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22. Department 1 of a two-department production process reports:
i. Units
Beginning Work in Process Inventory 10,000
Ending Work in Process Inventory 50,000
Total units accounted for 180,000

How many units were completed and transferred out to Department 2?

a. 50,000
b. 130,000
c. 180,000
d. 170,000

23. The Assembly Department reports the following information:

i. Units
Beginning Work in Process Inventory 20,000
Ending Work in Process Inventory 65,000
Units Completed and Transferred Out 31,000

What are the total units to be accounted for by the Assembly Department?

a. 96,000
b. 65,000
c. 85,000
d. 76,000

24. Madison Industries has equivalent units of production of 8,000 for materials and for
conversion costs. Total manufacturing costs are $200,000. Total materials costs are
$150,000. What is the conversion cost per unit?
a. $2.50
b. $6.25
c. $25.00
d. $5.00

25. A department adds materials at the beginning of the process and incurs conversion costs
uniformly throughout the process. For the month of July, there was no beginning work in
process inventory; 40,000 units were completed and transferred out; and there were 20,000
units in the ending work in process inventory that were 40% complete as to conversion
costs. During July, $120,000 materials costs and $84,000 conversion costs were charged to
the department.

The unit production costs for materials and conversion costs for July were

Materials Conversion Costs

a. $2.00 $1.75
b. $2.00 $2.19
c. $2.50 $1.75
d. $3.00 $2.66