Accounting test 1

The East Company manufactures several different products. Unit costs associated with Product ORD105 are as follows: Direct materials $92 Direct manufacturing labor 32 Variable manufacturing overhead 12 Fixed manufacturing overhead 32 Sales commissions (2% of sales) 26 Administrative salaries 6 Total $200 What is the percentage of the total variable costs per unit associated with Product ORD105 with respect to total cost? A. 81% B. 68% C. 71% D. 84%

81

Buildz Manufacturing currently produces 2,000 tables per month. The following per unit data for 2,000 tables apply for sales to regular customers: Direct materials $75 Direct manufacturing labor 20 Variable manufacturing overhead 20 Fixed manufacturing overhead 40 Total manufacturing costs $155 What is the per unit cost when producing 4,000 tables? A. $155.00 B. $135.00 C. $195.00 D. $125.00

B

If each motorcycle requires a belt that costs $20 and 2,000 motorcycles are produced for the month, the total cost for belts is ________. A. considered to be a direct fixed cost B. considered to be a direct variable cost C. considered to be an indirect fixed cost D. considered to be an indirect variable cost

B

Pederson Company reported the following: Manufacturing costs $187,000 Units manufactured 17,000 Units sold 8,500 units sold for $50 per unit Beginning inventory 3,400 units What is the average manufacturing cost per unit? What is the average manufacturing cost per unit? A. $22.40 B. $11.20 C. $22.00 D. $11.00

B

Which of the following would be considered an actual cost of a current period? A. The average of historical material cost data for a chair manufactured in several past accounting B. The $25 of materials in a manufactured chair that is ready to be shipped to the customer C. The expected cost of materials for a chair as a result of engineering specifications D. The $22 of direct material cost per unit assumed in the actual budget of a manufacturer of chairs

B

Financial Planning Partners Inc., employs 12 full-time CPAs and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Actual Indirect costs $300,000 $309,000 Annual salary of each attorney $118,000 $128,000 Annual salary of each paraprofessional $31,500 $32,500 Total professional labor-hours 50,000 dlh 56,000 dlh When using a normal costing system, year-end accounting records will show that indirect costs are ________. A. underallocated B. within budget C. overallocated D. perfectly allocated

C

Which of the following factors affect the direct/indirect classification of a cost? A. the ability to execute an order in the most cost-efficient manner B. the estimation of time required to complete the order C. the design where a particular area is dedicated to a specific cost object D. the level of budgeted profit for the next year

C

ABC systems create ________. A. homogeneous activity-related cost pools B. one large cost pool C. activity-cost pools with a broad focus D. activity-cost pools containing many direct costs

a

Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $68,750. The budgeted number of nozzles to be inserted is 11,000. What is the budgeted indirect cost allocation rate for this activity? A. $6.25 B. $0.32 C. $1.16 D. $0.16

a

Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 18 9 275 Deluxe 32 14 215 Overhead costs $75,000 $87,400 Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model? A. $61,200 B. $81,200 C. $81,900 D. $101,200

a

Expert Manufacturing reported the following: Revenue $450,000 Beginning inventory of direct materials, January 1, 2015 24,000 Purchases of direct materials 151,000 Ending inventory of direct materials, December 31, 2015 18,000 Direct manufacturing labor 27,000 Indirect manufacturing costs 50,000 Beginning inventory of finished goods, January 1, 2015 43,000 Cost of goods manufactured 234,000 Ending inventory of finished goods, December 31, 2015 48,000 Operating costs 152,000 How much of the above would be considered period costs for Expert Manufacturing? a. $152,000 b.$229,000 c.$279,000 d.$284,000

a

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,700 hours 4,200 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 8,000 accounts 6,000 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account inquiry cost will be assigned to Department A A. $54,000 B. $320,000 C. $84,000 D. $160,000

a

First Class, Inc., expects to sell 26,000 pool cues for $14 each. Direct materials costs are $2, direct manufacturing labor is $4, and manufacturing overhead is $0.89 per pool cue. The following inventory levels apply to 2019: Beginning inventory Ending inventory Direct materials 31,000 units 31,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 1,800 units 3,300 units On the 2019 budgeted income statement, what amount will be reported for cost of goods sold? A. $179,140 B.$201,877 C.$168,805 D.$189,475

a

For 2018, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $340,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $450,000 and actual machine hours are 50,000. What is the difference between the budgeted and the actual manufacturing overhead using job costing? (Round interim and the final answer to the nearest cent.) A. $0.50 B. $2.20 C. $2.25 D. $2.75

a

For 2018, Winters Manufacturing uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $2.00 per unit. The selling price of the product is $27.00. The estimated manufacturing overhead costs are $220,000 and estimated 20,000 machine hours. The actual manufacturing overhead costs are $225,000 and actual machine hours are 25,000. What is the profit margin earned if each unit requires two machine-hours? A.25.93% B.45.00% C.90.00% D.50.00%

a

In its first year of operation, the Excellent Publishing Company sells 52,000 units and has 1,700 units in stock at year end. The cost of goods sold are $3,100,000. What are the total manufacturing costs for the year if the average unit cost is $8.50? Question 5 options: A. $3,114,450 B. $3,100,000 C. $3,085,550 D. $14,450

a

Production is the ________. a. acquisition, coordination, and assembly of resources to produce a product or deliver a service B. detailed planning and engineering of products, services, or processes C. processing orders and shipping products or services to customersgeneration of, and experimentation with, ideas related to new products, services, or processes

a

Puritan Apparels is a clothing retailer. Unit costs associated with one of its products, Product DCF 130, are as follows: Direct materials $120 Direct manufacturing labor 40 Variable manufacturing overhead 15 Fixed manufacturing overhead 33 Sales commissions (2% of sales) 5 Administrative salaries 24 Total $237 What are the indirect nonmanufacturing variable costs per unit associated with Product DCF130? A. $5 B.$29 C.$213 D. $160

a

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows: Sales (168,000 units) $1,060,000 Less: Cost of goods sold 620,000 Gross margin 440,000 Operating expenses 390,000 (includes $60,000 of fixed costs) Operating income $50,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 3% per month. What is budgeted gross margin for March 2018? A. $476,642 B. $426,800 C. $466,796 D. $413,996

a

Smith and Jones CPA firm employs 12 accountants and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Actual Indirect costs $290,000 $310,000 Annual salary of each attorney $90,000 $105,000 Annual salary of each paraprofessional $32,000 $33,000 Total professional labor-hours 20,000 dlh 25,000 dlh What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional labor-hour? A. $63.60; $12.40 B. $79.50; $12.40 C. $63.60; $11.60 D. $70.00; $14.50

a

Sparkle Jewelry sells 600 units resulting in $75,000 of sales revenue, $32,000 of variable costs, and $26,000 of fixed costs. Breakeven point in units is ________. (Round to the nearest whole unit.) A.363 units B. 447 units C .810 units D. 684 units

a

The value chain is the sequence of business functions in which ________. A. usefulness is added to the products or services of an organization B. producing and delivering the product or service is of prime importance C. products and services are evaluated with respect to their value to the supply chain D. value is deducted from the products or services of an organization

a

A budget ________. A.promotes production automation B. is an aid for coordinating what needs to be done to execute a plan C. is the qualitative expression of a proposed plan of action by management D. helps in identifying problems and uncertainties

b

Bradford, Inc., expects to sell 11,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $11, and manufacturing overhead is $5 per vase. The following inventory levels apply to 2019: Beginning inventory Ending inventory Direct materials 1,000 units 1,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 100 units 600 units On the 2019 budgeted income statement, what amount will be reported for sales? A. $252,000 B. $241,500 C. $220,500 D. $231,000

b

Global Manufacturing Inc. uses normal costing during the year to allocate manufacturing overhead to jobs in a job costing system. At year end, it uses the adjusted allocation rate approach to account for underallocated or overallocated overhead. During 2018, Global's manufacturing overhead was underallocated by 10%. Job 117 had the following costs: Direct materials $1,600 Direct labor $3,400 Manufacturing overhead allocated $2,000 Which of the following would be the after adjustment cost of Job 117? A. $6,300 B. $7,200 C. $7,700 D. $7,340

b

Managers use management accounting information to ________. A. help external users such as investors, banks, regulators, and suppliers B. communicate, develop, and implement strategies C. communicate a firm's financial position to investors, banks, regulators, and other outside parties D. ensure that financial statements are consistent with the SEC rules

b

Manufacturing overhead costs incurred for the month are: Utilities $45,000 Depreciation on equipment $27,000 Repairs $17,000 Which account is debited assuming utilities and repairs were on account? A. Accumulated Depreciation Control, 27,000 B. Manufacturing Overhead Control, 89,000 C. Utilities Overhead Control, 45,000 D. Accounts Payable Control, 62,000

b

Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,500 units of Prime and 1,500 units of Luxuria in 2019.The following estimates are given for 2019: Prime Luxuria Selling price $200 $500 Direct materials 70 100 Direct labor 60 180 Manufacturing overhead 90 150 Nantucket had an inventory of 200 units of Prime and 105 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 400 units of Prime and 230 units of Luxuria. Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $12. There were 120 units of Crimpson in stock at the end of 2018. The management does not want to have any stock of Crimpson at the end of 2019. What is the total budgeted cost of goods sold for Nantucket Industries in 2019? A. $1,433,000 B. $1,415,000 C.$1,625,000 D. $1,325,000

b

Nile Corp. has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $304,000 Direct labor-hours 760,000 Machine maintenance $153,600 Machine-hours 960,000 Facility rent $165,000 Square feet of area 110,000 Total overhead costs $622,600 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 260 Machine-hours 1,500 Square feet of area 70 Using the three cost pools to allocate overhead costs, what is the total amount of overhead costs to be allocated to the Mossman Job? A. $428.60 B. $449.00 C. $10,071.67 D. $442.00

b

Puritan Apparels is a clothing manufacturer. Unit costs associated with one of its products, Product FGS1156 are as follows: Direct materials $80 Direct manufacturing labor 40 Variable manufacturing overhead 45 Fixed manufacturing overhead 31 Sales commissions (2% of sales) 7 Administrative salaries 20 Total $223 What are the inventoriable costs per unit associated with Product FGS1156? A.$143 B. $196 C. $178 D. $165

b

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows: Sales (168,000 units) $1,010,000 Less: Cost of goods sold 690,000 Gross margin 320,000 Operating expenses 400,000 (includes $55,000 of fixed costs) Operating income -$80,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. What is the budgeted operating income for March 2018? A. $396,550 B. $59,403 C. $18,100 D. $683,100

b

Sky High sells helicopters. During the current year, 130 helicopters were sold resulting in $840,000 of sales revenue, $260,000 of variable costs, and $350,000 of fixed costs. The number of helicopters that must be sold to achieve $320,000 of operating income is ________. A.130 units B.79 units C.151 units D. 104 units

b

Violet Sales Corp, reports the year-end information from 2019 as follows: Sales (35,500 units) $284,000 Cost of goods sold 105,000 Gross margin 179,000 Operating expenses 152,000 Operating income $27,000 Violet is developing the 2019 budget. In 2019 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 14%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. What is budgeted sales for 2019? (Round interim calculations to the nearest cent and the final answer to the nearest dollar.) A. $335,092 B. $252,788 C. $293,940 D. $284,001

b

Which of the following deals with management accounting? A.preparing the income statement B. developing budgets C. preparing the statement of cash flows D. identifying the costs of acquiring the resources of the company

b

Which of the following is true of master budgets? A.They must be administered rigidly after they are committed to. B. Includes both financial and nonfinancial aspects of management's plans C. They include only financial aspects of a plan and exclude nonfinancial aspects D. They aid in quantifying the expectations of all stakeholders

b

Aqua Company produces two products-Alpha and Beta. Alpha has a high market share and is produced in bulk. Production of Beta is based on customer orders and is custom designed. Also, 55% of Beta's cost is shared between design and setup costs, while Alpha's major portions of costs are direct costs. Alpha is using a single cost pool to allocate indirect costs. Which of the following statements is true of Aqua? A. Aqua will overcost Beta's indirect costs because beta has high indirect costs B. Aqua will undercost Alpha's indirect costs because alpha has high direct costs. C. Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs D. Aqua will overcost Beta's direct costs as it is using a single cost pool to allocate indirect costs

c

Candle Corp. applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $80 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order include: Direct materials of $44,000; 300 direct manufacturing labor-hours at $25 per hour; and a 20% markup rate on total manufacturing costs. The bid price for this special order is ________. A. $81,600 B. $60,500 C. $90,600 D. $61,800

c

Elite Stationary Inc. employs 20 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2018: Budget Actual Indirect costs $300,000 $400,000 Annual salary of each employee $200,000 $210,000 Annual salary of each trainee $35,000 $40,000 Total professional labor-hours 20,000 dlh 40,000 dlh What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour? (Round the final answers to the nearest cent.) A.$135.00; $10.00 B.$200.00; $16.75 C.$217.50; $15.00 D.$115.00; $10.00

c

For 2018, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $6.00 per unit. The selling price of the product is $21.00. The estimated manufacturing overhead costs are $275,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $350,000 and actual machine hours are 50,000. Using job costing, the 2018 actual indirect-cost rate is ________. A. $5.50 per machine-hour B. $8.75 per machine-hour C. $7.00 per machine-hour D. $8.50 per machine-hour

c

For last year, Watson Limited reported revenues of $420,000, cost of goods sold of $118,000, cost of goods manufactured of $105,000, and total operating costs of $60,000. Operating income for that year was ________. A. $302,000 B. $315,000 C. $242,000 D. $255,000

c

Job costing is ________. A. used to calculate the percentage of work completed B. used to calculate equivalent units C. used by businesses to price unique products for different jobs D. used by businesses to price identical products

c

Place the five steps in the decision-making process in the correct order: A = Obtain information B = Make decisions by choosing among alternatives C = Identify the problem and uncertainties D = Implement the decision, evaluate performance, and learn E = Make predictions about the future Question 2 options: A. A E B D C B. E D A B C C. C A E B D D. C D B E A

c

SaleCo sells 11,000 units resulting in $110,000 of sales revenue, $50,000 of variable costs, and $45,000 of fixed costs. To achieve $150,000 in operating income, sales must total ________. (Round intermediate calculations to two decimal places and the final answer to the nearest dollar.) A. $253,846 B. $160,000 C. $357,500 D. $245,000

c

Tally Corp. sells software during the recruiting seasons. During the current year, 10,000 software packages were sold resulting in $470,000 of sales revenue, $130,000 of variable costs, and $48,000 of fixed costs. If sales increase by $80,000, operating income will increase by ________. (Round interim calculations to two decimal places and the final answer to the nearest whole dollar.) A.$48,000 B.$30,588 C.$57,872 D.$32,000

c

Tony Manufacturing produces a single product that sells for $100. Variable costs per unit equal $45. The company expects total fixed costs to be $78,000 for the next month at the projected sales level of 3,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. Suppose management believes that a $85,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by ________ to justify this additional expenditure? A. 1,412 units B. 1,419 units C. 1,546 units D. 850 units

c

Which of the following differentiates cost accounting and financial accounting? A. Cost accounting deals with product design, production, and marketing strategies, whereas financial accounting deals mainly with pricing of the products B. The primary users of cost accounting are the investors, whereas the primary users of financial accounting are the managers C. Cost accounting measures information related to the costs of acquiring or using resources in an organization, whereas financial accounting measures a financial position of a company to investors, banks, and external parties. D. Cost accounting measures only the financial information related to the costs of acquiring fixed assets in an organization, whereas financial accounting measures financial and non-financial information of a company's business transactions

c

Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system? A. facility-sustaining level, output unit-level, batch-level, product-sustaining level B. batch-level, output unit-level, product-sustaining level, and facility-sustaining level C. output unit-level, batch-level, product-sustaining level, and facility-sustaining level D. batch-level, output unit-level, facility-sustaining levels, product-sustaining levels

c

Which of the following statements concerning an organization's strategy is true? A. Businesses usually follow one of two broad strategies: offering a quality product at a high price, or offering a unique product or service priced lower than the competition B. Cost accountants formulate strategy in an organization since they have more inputs about costs C. Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives D. A good strategy will always overcome poor implementation.

c

Which of the following statements refers to management accounting information? A. The audience tends to be stockholders, creditors, and tax authorities B. The reports are generally delayed and historical C. There are no regulations governing the reports D. It primarily measures manager's compensation on reported financial results

c

In which order are the following developed? First to last: A = Production budget B = Direct materials costs budget C = Budgeted income statement D = Revenues budget A. ABDC B. DCAB C. CABD D. DABC

d

Lights Manufacturing produces a single product that sells for $130. Variable costs per unit equal $55. The company expects total fixed costs to be $100,000 for the next month at the projected sales level of 1,300 units. What is the current breakeven point in terms of number of units? A. 541 units B. 1,819 units C. 770 units D. 1,334 units

d

Orange Corporation has budgeted sales of 23,000 units, targeted ending finished goods inventory of 9,000 units, and beginning finished goods inventory of 6,000 units. How many units should be produced next year? A. 23,000 units B. 32,000 units C. 38,000 units D. 26,000 units

d

Orion Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $23 Variable costs per unit: Direct material $4 Direct manufacturing labor $1.70 Manufacturing overhead $0.40 Selling costs $2 Annual fixed costs $100,000 The company sells 12,000 units at the end of the year. If direct labor and direct material costs increase by $1 each, contribution margin ________. A. increases by $12,000 B. decreases by $12,000 C. increases by $24,000 D. decreases by $24,000

d

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows: Sales (168,000 units) $1,080,000 Less: Cost of goods sold 650,000 Gross margin 430,000 Operating expenses 330,000 (includes $60,000 of fixed costs) Operating income $100,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. What is budgeted cost of goods sold for March 2018? A. $650,000 B. $643,500 C. $656,500 D. $637,065

d

Slickware sells porcelain cups. The breakeven point is 5,000 units. The variable cost per unit is $12 and the fixed costs are $20,000. What is the selling price? A.$20 B. $24 C.$28 D. $16

d

Sparkle Jewelry sells 800 units resulting in $9,000 of sales revenue, $3,000 of variable costs, and $1,500 of fixed costs. Contribution margin per unit is ________. (Round the final answer to the nearest cent.) A.$5.00 B.$11.25 C.$13.75 D.$7.50

d

The contribution margin per unit equals A. selling price - fixed costs per unit B. fixed cost - contribution margin ratio C. selling price - costs of goods sold D. selling price - variable costs per unit

d

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 192,000 units 24,000 units Selling price $17.00 $29.00 Direct material $1.70 $ 5.00 Direct labor $4.30 $ 7.20 Manufacturing overhead $3.50 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $4.10 $ 7.00 Operating profit $3.40 $ 6.80 Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity-cost driver Supervision $123,480 Direct labor hours (DLH) Inspection $104,800 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.25 DLH/unit 1.50 DLH/unit 48,000 DLHs 36,000 DLHs 50,000 inspections 15,500 inspections Under the revised ABC system, supervision costs allocated to Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.) A. $104,800 B. None of these answers are correct C. $123,480 D. $52,920

d

Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $1,500,000 for an annual production capacity of 10 million pages. For 2018 Velshi Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis: Cost pool Manufacturing overhead costs Activity level Design changes $100,000 400 design changes Setups 1,300,000 3,000 setups Inspections 100,000 10,000 inspections Total manufacturing overhead costs $1,500,000 During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Money Managers Hospital Systems Pages 90,000 106,000 Design changes 13 0 Setups 18 8 Inspections 30 38 What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 10 million pages of production capacity? A. $0.13 per page B. $0.14 per page C.$0.01 per page D.$0.15 per page

d

Which of the following statements about customer value is true? A. Customer value is lost with increase in costs of the product B. Customer value is shown in a corporation's balance sheet C. Customer value is the only focus that helps managers to formulate strategies D. Creating value for customers is an important part of planning and implementing strategy

d