Accounting Online Program Cost Accounting

Question 1

Which costing method is most appropriate for mass-production environments where identical units are manufactured continuously?

Accepted Answer

Process costing

Answer

Process costing is used in mass-production industries (e.g., chemicals, oil refining) where homogeneous units are produced continuously and costs are averaged over all units.

Question 2

What are 'equivalent units of production' used for in process costing?

Accepted Answer

Converting partially completed units into a whole-unit equivalent for cost averaging

Answer

Equivalent units convert partially completed work-in-process inventory into a whole-unit equivalent so that costs can be fairly averaged across all production activity.

Question 3

Which of the following is classified as a period cost?

Accepted Answer

Selling and administrative expenses

Answer

Period costs, such as selling and administrative expenses, are expensed in the period incurred and do not flow through inventory accounts.

Question 4

In job-order costing, which document accumulates all costs assigned to a specific job?

Accepted Answer

Job cost sheet

Answer

A job cost sheet records direct materials, direct labor, and applied overhead for each unique job, serving as the subsidiary ledger for work-in-process inventory.

Question 5

Overapplied overhead occurs when:

Accepted Answer

Applied overhead exceeds actual overhead costs incurred

Answer

Overapplied overhead means more overhead was assigned to products (using the predetermined rate) than was actually incurred, requiring an adjustment.

Accounting Online Program Practice Test

Accounting Online Program Practice Test

Accounting Online Program Cost Accounting