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Cost related problems MCQs

Q5:Darrow Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the company worked 10,000 direct labor-hours and incurred $80,000 of actual manufacturing overhead cost. If overhead was underapplied by $2,000, the predetermined overhead rate for the company for the year must have been:

a) $7.80
b) $8.20
c) $8.40

Q6: All of the following statements are correct when referring to process costing except:

A) Process costing would be appropriate for a jeweler who makes custom jewelry to order.
B) A process costing system has the same basic purposes as a job-order costing system.
C) Units produced are indistinguishable from each other.
D) Costs are accumulated by department.

Q7 : Colby Company has a process costing system in which the weighted-average method is used. The company adds all materials at the beginning of the process in the Molding Department, which is the first of two stages of its production process. Information concerning the materials used in the Molding Department during March is as follows:

What was the materials cost of the work in process inventory at March 31?

A) $11,220
B) $7,500
C) $7,650

Q8: Roy Company manufactures a product in Departments A and B. Materials are added at the beginning of the process in Department B. Roy uses the weighted-average method in its process costing system. Conversion costs for Department B were 50% complete with respect to the 6,000 units in the beginning work in process and 75% complete with respect to the 8,000 units in the ending work in process. A total of 12,000 units were completed and transferred out of Department B during February. An analysis of the costs in Department B for February follows:

The total cost per equivalent unit during February was closest to:

A) $2.75
B) $2.78
C) $2.82

Q9 : Which costs will change with an increase in activity within the relevant range?

A) Unit fixed cost and total fixed cost
B) Unit variable cost and total variable cost
C) Unit fixed cost and total variable cost
D) Unit fixed cost and unit variable cost

Q10: Which of the following statements is true when referring to the high-low method of cost analysis?

a)The high-low method has no major weaknesses.
b) The high-low method is very hard to apply.
c )In essence, the high-low method draws a straight line through two data points.
d)None of the above is true.

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