Study Question Answers
Study Question Answers
What are the two primary uses of a standard cost?
1 Inventory valuation
2 Calculation of Cost of Goods Sold (COGS)
If you take an item out of finished goods inventory, issue it to WIP, disassemble it, and put the components back into inventory, what are the cost impacts?
1 The value of the items in inventory decreases
2 Any burden absorbed or overhead applied will be lost
3 Labor will be expended for no gain, everything is unfavorable
What are the three cost methods supported by QAD?
1 Standard
2 Average
3 Period
What is a major difference between standard and average costing?
a No variance reporting with average costing.
What are the five cost categories in QAD applications?
1 Material
2 Labor
3 Burden
4 Overhead
5 Subcontract
What are the two default cost set names in QAD applications?
1 GL cost set
2 Current cost set
What is the point of the two cost sets in a standard cost system?
a The standard remains fixed during the plan year while the current is updated with purchase and work order transactions to reflect current costs for labor and material. The differences are reported as variances.
If you want to retain a cost set reflecting the prior years ending cost what module would you use?
a The Cost Management Module to set up an additional cost set.
What are some examples of an indirect fixed cost?
1 Rent
2 Insurance
3 The shop supervisor's salary
Is the maintenance cost of a machine that must be serviced every 5,000 parts, burden or overhead? Fixed or variable?
a It is variable burden
List each of the five elements of the account code structure shown here.
1 Entity Code
2 Account Code
3 Sub-account Code
4 Cost Center Code
5 Project Code
List the three elements of the GL Reference Number.
1 Transaction Type
2 Effective date
3 Sequential transaction number
Product Lines define the default account codes for which of the following?
• Inventory accounts
• Purchasing accounts
• Sales accounts
• Work Order accounts
• None of the above
• All of the above
a All of the above
The debits and credits on a multiple line GL distribution must balance. True or False?
a True
In planning for next year QMI wants to add an allowance for fixed overhead to each finished good item. The production plan calls for 3500 units of production. The annual rent on the production facility is 120,000; the umbrella insurance policy is 25,000; the general maintenance budget is 200,000, management salaries are 300,00. What value should be put in the Overhead cost field of the GL cost set for each finished good item?
1 Total overhead is 120,000+25,000+200,000+300,000=645,000
2 645,000 / 3500 units of product = 184.29 overhead per unit.