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FinishedGoodsInventoryisdebitedwhengoodsaretransferredfromworkinprocesstofinished
goods,notwhenrawmaterialsareissuedforajob.
6. What is unique about the flow of costs in a job order cost system?
Depreciationontestingequipmentwouldbeincludedinmanufacturingoverheadbecauseitis
indirectlyassociatedwiththefinishedproduct.
8) What broad functions do the management of an organization
perform?
A. Planning, directing, and controlling
B. Directing, manufacturing, and controlling
C. Planning, directing, and selling
D. Planning, manufacturing, and controlling
13) Which of the following factors would suggest a switch to activitybased costing?
A. Overhead costs constitute a significant portion of total costs
B. Production managers use data provided by the existing system.
C. Product lines similar in volume and manufacturing complexity
D. The manufacturing process has been stable
16) One of Astro Company's activity cost pools is machine setups, with
estimated overhead of $150,000. Astro produces sparklers (400
setups) and lighters (600 setups). How much of the machine setup
cost pool should be assigned to sparklers?
A. $60,000
B. $90,000
C. $150,000
D. $75,000
15,00
25,000
0
600
400
24,00
26,000
0
800
700
Maxi
B
15,00
25,000
0
600
400
24,00
26,000
0
800
700
19) Seran Company has contacted Truckel Inc. with an offer to sell it
5,000 of the wickets for $18 each. If Truckel makes the wickets,
variable costs are $11 per unit. Fixed costs are $12 per unit; however,
$5 per unit is avoidable. Should Truckel make or buy the wickets?
A. Buy; savings = $10,000
B. Make; savings = $20,000
C. Make; savings = $10,000
D. Buy; savings = $25,000
20) Rosen, Inc. has 10,000 obsolete calculators, which are carried in inventory at a
cost of $20,000. If the calculators are scrapped, they can be sold for $1.10 each (for
parts). If they are repackaged, at a cost of $15,000, they could be sold to toy stores
for $2.50 per unit. What alternative should be chosen, and why?
A. Repackage; revenue is $5,000 greater than cost
B. Scrap; incremental loss is $9,000
C. Repackage; receive profit of $10,000
D. Scrap; profit is $1,000 greater
21) The cost to produce Part A was $10 per unit in 2005. During 2006,
it has increased to $11 per unit. In 2006, Supplier Company has
offered to supply Part A for $9 per unit. For the make-or-buy decision
A. incremental costs are $1 per unit
B. net relevant costs are $1 per unit
C. differential costs are $2 per unit
D. incremental revenues are $2 per unit
22) Hartley, Inc. has one product with a selling price per unit of $200,
the unit variable cost is $75, and the total monthly fixed costs are
$300,000. How much is Hartleys contribution margin ratio?
A. 37.5%
B. 150%
C. 266.6%
D. 62.5%.
26) Which cost is NOT charged to the product under variable costing?
A. Direct labor
B. Direct materials
C. Fixed manufacturing overhead
D. Variable manufacturing overhead
27) Orbach Company sells its product for $40 per unit. During 2005, it
produced 60,000 units and sold 50,000 units (there was no beginning
inventory). Costs per unit are: direct materials $10, direct labor $6,
and variable overhead $2. Fixed costs are: $480,000 manufacturing
overhead, and $60,000 selling and administrative expenses. The per
unit manufacturing cost under absorption costing is
A. $18
B. $16
C. $27
D. $26
31) The per-unit standards for direct materials are 2 gallons at $4 per
gallon. Last month, 11,200 gallons of direct materials that actually
cost $42,400 were used to produce 6,000 units of product. The direct
materials quantity variance for last month was
A. $2,400 favorable
B. $5,600 unfavorable
C. $3,200 unfavorable
D. $3,200 favorable
32) The standard number of hours that should have been worked for
the output attained is 8,000 direct labor hours and the actual number
of direct labor hours worked was 8,400. If the direct labor price
variance was $8,400 unfavorable, and the standard rate of pay was
$18 per direct labor hour, what was the actual rate of pay for direct
labor?
A. $15 per direct labor hour
B. $18 per direct labor hour
C. $19 per direct labor hour
D. $17 per direct labor hour
36) If the standard hours allowed are less than the standard hours at
normal capacity
A. the overhead volume variance will be unfavorable
B. the overhead controllable variance will be favorable
C. variable overhead costs will be overapplied
D. variable overhead costs will be underapplied
37) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200
mugs during April. Each mug requires 2 pounds of resin and a half
hour of direct labor. Resin costs $1 per pound and employees of the
company are paid $12.50 per hour. Manufacturing overhead is applied
at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of
resin in beginning inventory and wants to have 2,400 pounds in
ending inventory. How much is the total amount of budgeted direct
labor for April?
A. $12,500
B. $25,000
C. $27,500
D. $13,750
38) Lewis Hats is planning to sell 600 straw hats. Each hat requires a
half pound of straw and a quarter hour of direct labor. Straw costs
$0.20 per pound and employees of the company are paid $22 per hour.
Lewis has 80 pounds of straw and 40 hats in beginning inventory and
wants to have 50 pounds of straw and 60 hats in ending inventory.
How many units should Lewis Hats produce in April?
A. 600
B. 580
C. 630
D. 620
A. customers
B. largest competitor
C. selling company
D. competitive market
41) A company must price its product to cover its costs and earn a
reasonable profit in
A. all cases
B. its early years
C. the long run
D. the short run
B. assigning manufacturing overhead costs for each activity cost pool to products
C. identifying the activity-cost pools
D. analyzing the activities performed to manufacture a product
51) Ace Company sells office chairs with a selling price of $25 and a
contribution margin per unit of $15. It takes 3 machine hours to
produce one chair. How much is the contribution margin per unit of
limited resource?
A. $3.33
B. $45
C. $10
D. $5
57) The per-unit standards for direct labor are 2 direct labor hours at
$12 per hour. If in producing 2,400 units, the actual direct labor cost
was $51,200 for 4,000 direct labor hours worked, the total direct labor
variance is
A. $6,400 favorable
B. $6,400 unfavorable
C. $1,920 unfavorable
D. $4,000 unfavorable
58) If the standard hours allowed are less than the standard hours at
normal capacity, the volume variance
A. will be favorable
B. will be greater than the controllable variance
C. cannot be calculated
D. will be unfavorable
60) Looker Hats is planning to sell 600 felt hats, and 700 will be
produced during June. Each hat requires a half yard of felt and a
quarter hour of direct labor. Felt costs $3.00 per yard and employees
of the company are paid $20 per hour. How much is the total amount
of budgeted direct labor for June?
A. $48,000
B. $3,500
C. $3,000
D. $2,400
64) Which one of the following is required in order for an activity base
to be useful in cost behavior analysis?
A. The activity should always be based on the number of units produced
B. There should be a correlation between changes in the level of activity and
changes in costs.
C. The activity should always be a fixed amount
D. The activity level should be an approved GAAP activity base
67) The standard rate of pay is $5 per direct labor hour. If the actual
direct labor payroll was $19,600 for 4,000 direct labor hours worked,
the direct labor price (rate) variance is
A. $500 favorable
B. $400 unfavorable
C. $500 unfavorable
D. $400 favorable
68) Wacos Widgets plans to sell 22,000 widgets during May, 19,000
units in June, and 20,000 during July. Waco keeps 10% of the next
months sales as ending inventory. How many units should Waco
produce during June?
A. 19,000
B. 18,900
C. 19,100
D. 21,000
71) Which of the following represents the two basic types of cost
accounting systems?
A. Job order and process cost systems
B. Job order and batch systems
C. Job order and job accumulation systems
D. Process cost and batch systems
76) H55 Company sells two products, beer and wine. Beer has a 10
percent profit margin and wine has a 12 percent profit margin. Beer
has a 27 percent contribution margin and wine has a 25 percent
contribution margin. If other factors are equal, which product should
H55 push to customers?
A. It should sell an equal quantity of both
B. Selling either results in the same additional income for the COMPANY
C. Beer
D. Wine
79) The standards and rules that are recognized as a general guide for
financial reporting are called __________.
A. standards of financial reporting
B. generally accepted accounting principles
C. generally accepted accounting standards
D. operating guidelines
80) Hess, Inc. sells a single product with a contribution margin of $12
per unit and fixed costs of $74,400 and sales for the current year of
$100,000. How much is Hesss break even point?
A. 2,133 units
B. 6,200 units
C. $25,600
D. 4,600 units
of a company's ability to
continue as a going concern is
A. cash flows from operating activities.
B. cash flows from investing activities.
C. cash flows from financing activities.
D. usually different from year to year.
84) Of the items below, the one that appears first on the statement of
cash flows is
A. noncash investing and financing activities.
B. net increase (decrease) in cash.
C. cash at the end of the period.
D. cash at the beginning of the period.
85) Which of the following transactions does not affect cash during a
period?
A. Write-off of an uncollectible account
B. Collection of an accounts receivable
C. Sale of treasury stock
D. Exercise of the call option on bonds payable
86) One of Lara Dole Company's activity cost pools is machine setups,
with estimated overhead of $300,000. Dole produces flares (400
setups) and health packs (600 setups). How much of the machine
setup cost pool should be assigned to flares?
A. $0.
B. $120,000.
C. $150,000.
D. $180,000