Accounting - UW ACCTG 225 (General Questions You Need to Know)
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Course
Business and Management
Institution
Business And Management
Unlock the essential knowledge you need with our comprehensive UW ACCTG 225 Study Quiz! This resource provides a deep dive into key accounting concepts such as cost of unused capacity, Predetermined Overhead Rate (PdOR), and period versus product costs. Each question is meticulously crafted to chal...
ACCOUNTING
UW ACCTG 225
General Questions You Need to Know
Edition: 2024/2025
Compiled By: Simon Mwangi
, Accounting 2 of 5 pages
Circle the letter of the Answer that corresponds to the displayed Question.
1
Question: What's the cost of unused capacity?
a)
b) (amount of allocation base at capacity - actual amount of the allocation base) * PdOR at capacity
c) unit product cost equals total manufacturing costs divided by the number of units.
d) It's a period cost. falling under administrative expenses.
Correct Answer: (amount of allocation base at capacity - actual amount of the allocation base) * PdOR
at capacity
Explanation: The cost of unused capacity is calculated as the difference between the amount of
allocation base at capacity and the actual amount of the allocation base, multiplied by the
Predetermined Overhead Rate (PdOR) at capacity.
2
Question: How is PdOR calculated?
a) ABC, aka absorption costing, assigns all manufacturing costs to products based on the activities
(events that causes consumption of MOH resources) performed to make those products.
b) It's a product cost, falling under manufacturing overhead.
c)
d) Estimated total manufacturing overhead / estimated total amount of the cost driver (or allocation
base)
Correct Answer: Estimated total manufacturing overhead / estimated total amount of the cost driver
(or allocation base)
Explanation: The Predetermined Overhead Rate (PdOR) is calculated by dividing the estimated total
manufacturing overhead by the estimated total amount of the cost driver or allocation base.
3
Question: What's a period cost?
a) It's a period cost. falling under administrative expenses.
b)
c) ABC, aka absorption costing, assigns all manufacturing costs to products based on the activities
(events that causes consumption of MOH resources) performed to make those products.
d) unit product cost equals total manufacturing costs divided by the number of units.
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