ACCT302 Final MCQ

Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20X3, the following estimates were provided for the coming year: Machining Assembly Direct labor-hours 30,000 60,000 Machine-hours 80,000 20,000 Direct labor cost $500,000 $900,000 Manufacturing oh costs $420,000 $240,000 The accounting records of the company show the following data for Job #316: Machining Assembly Direct labor-hours 120 70 Machine-hours 60 5 Direct material cost $300 $200 Direct labor cost $100 $400 What amount of manufacturing overhead costs will be allocated to Job #316? a) $595 b) $439 c) $532 d) $502

a) $595

The Rest-a-Lot Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production on 75,000 chairs. During the month, the firm completed 85,000 chairs and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Rest-a-Lot. How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle. a) 20,000 chairs b) 15,000 chairs c) 10,000 chairs d) 25,000 chairs

a) 20,000 chairs

Assume the following cost information for Fernandez Company: - Selling price: $120/unit - Variable costs: $80/unit - Total fixed costs: $80,000 - Tax rate: 40% What is the number of units that must be sold to earn an after-tax net income of $42,000? a) 3,750 units b) 4,625 units c) 1,875 units d) 3,050 units

a) 3,750 units

The Rest-a-Lot Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production on 75,000 chairs. During the month, the firm completed 85,000 chairs and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Rest-a-Lot. What were the equivalent units for materials for February? a) 95,000 b) 80,000 c) 85,000 d) 75,000

a) 95,000

Stephans Corporations currently manufactures a subassembly for its main product. The costs per unit are as follows: - DM= $1.00 - DL= 10.00 - Variable OH= 5.00 - Fixed OH= 8.00 Bill Company has contacted Stephans with an offer to sell them 5,000 of the subassemblies for $22 each. Stephans will eliminate $25,000 of fixed overhead if it accepts the proposal. Should Stephans make or buy subassemblies? What is the difference between the two alternatives? a) Make; savings = $5,000 b) Buy; savings = $20,000 c) Make; savings= $60,000 d) Buy; savings= $50,000

a) Make; savings = $5,000

Logical cost allocation bases include: a) cubic feet of packages moved to measure distribution activity b) direct manufacturing labor hours to measure designing activity c) machine hours to measure setup activity d) All of these answers are correct

a) cubic feet of packages moved to measure distribution activity

Wages paid to machine operators on an assembly line are classified as a: a) direct manufacturing labor cost b) period cost c) direct material cost d) manufacturing overhead cost

a) direct manufacturing labor cost

Qualitative factors: a) include customer satisfaction b) are generally irrelevant for decision making c) generally are easily measured in quantitative terms d) may include either financial or nonfinancial information

a) include customer satisfaction

Cost-volume-profit analysis assumes all of the following EXCEPT: a) total variable costs remain the same over the relevant range b) all costs are variable or fixed c) units manufactured equal units sold d) total fixed costs remain the same over the relevant range

a) total variable costs remain the same over the relevant range

What is the cost per statue if throughput costing is used? a) $19 b) $10 c) $22 d) $15

b) $10

Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs. If sales increase by $25,000, operating income will increase by: a) $10,000 b) $15,000 c) $22,500 d) None of these answers are correct

b) $15,000

Nichols, Inc., manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers: Activities Cost driver Allocation Rate Material handling # of parts $2/part Assembly Labor hrs $20/hr Inspection Time at inspection station $3/min The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labor hours, and 2.5 min of inspection time. a) $327.50 per remote control b) $6.55 per remote control c) $4.00 per remote control d) $24.00 per remote control

b) $6.55 per remote control

Argon Manufacturing Company processes direct materials up to the splitoff point where two products (U and V) are obtained and sold. The following information was collected for last quarter of the calendar year: Direct materials processed: 10,000 gallows (10,000 gallons yield 9,500 gallons of good product and 500 gallons of shrinkage) Production: U - 5,000 gal, V - 4,500 gal Sales: U - 4,750 at $150 per gal, V - 4,000 at $100 per gal The cost of purchasing 10,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 9,500 gal of good products was $975,000. Beginning inventories totaled 50 gallons for U, and 25 gallons for V. Ending inventory amounts reflected 300 gallons of Product U and 525 gallons of Product V. October costs per unit were the same as November. What are the physical-volume proportions for products U and V, respectively? a) 55% and 45% b) 52.63% and 47.37% c) 47.37% and 53.63% d) 54% and 46%

b) 52.63% and 47.37%

The Rest-a-Lot Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production on 75,000 chairs. During the month, the firm completed 85,000 chairs and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Rest-a-Lot. What were the equivalent units for conversion costs for February if the beginning inventory was 70% complete as to conversion costs and the ending inventory was 40% complete as to conversion costs? a) 75,000 b) 89,000 c) 85,000 d) 95,000

b) 89,000

The breakeven point in CVP analysis is defined as: a) revenues less variable costs equal operating income b) fixed costs divided by the contribution margin per unit c) when the contribution margin percentage equals total revenues divided by variable costs d) when fixed costs equal total revenues

b) fixed costs divided by the contribution margin per unit

Work-in-Process inventory would normally include: a) direct materials in stock and awaiting use in the manufacturing process b) goods partially worked on but not yet fully completed c) goods fully completed but not yet sold d) products in their original form intended to be sold without changing their basic form

b) goods partially worked on but not yet fully completed

The learning-curve models presented in the text examine: a) how quality increases over time b) how efficiency increases as more units are produced c) how setup costs decline as more workers are added d) the change in variable costs when quantity discounts are available

b) how efficiency increases as more units are produced

In a normal costing system, the Manufacturing Overhead Control account: a) is increased by allocated manufacturing overhead b) is debited with actual overhead costs c) is decreased by allocated manufacturing overhead d) is credited with amounts transferred to Work-in-Process

b) is debited with actual overhead costs

A single indirect-cost rate may distort product costs because: a) it recognized specific activities that are required to produce a product b) there is an assumption that all support activities affect all products c) costs are not consistently recorded d) it fails to measure the correct amount of total costs

b) there is an assumption that all support activities affect all products

Nichols, Inc., manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers: Activities Cost driver Allocation Rate Material handling # of parts $2/part Assembly Labor hrs $20/hr Inspection Time at inspection station $3/min The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 500 parts, 10 direct manufacturing labor hours, and 5 min of inspection time. a) $1215 per remote control b) $24.30 per remote control c) $12.15 per remote control d) $48.60 per remote control

c) $12.15 per remote control

For last year, Wampum Enterprises reported revenues of $420,000, COGS of $108,000, COGM of $101,000, and total operating costs of $70,000. Gross margin for last year was: a) $319,000 b) $249,000 c) $312,000 d) $242,000

c) $312,000

The Gangwere Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Gangwere Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Month Cost Hours January 40,000 3,500 February 24,400 2,000 March 31,280 2,450 April 36,400 3,000 May 44,160 3,900 June 42,400 3,740 What is the estimated total cost at an operating level of 2,850 hours? a) $32,016 b) $25,692 c) $33,240 d) $34,736

c) $33,240

When a bakery transfers goods from the Baking Department to the Decorating Department, the accounting entry is: a) WIP - Baking Department / WIP - Decorating Department b) WIP - Decorating Department / Accounts Payable c) WIP - Decorating Department / WIP - Baking Department d) WIP - Baking Department / Accounts Payable

c) WIP - Decorating Department / WIP - Baking Department

LeBlanc Lighting manufactures small flashlights and is considering raising the price by 50 cents a unit for the coming year. With a 50-cent price increase, demand is expected to fall by 3,000 units. Currently Projected Demand 20,000 units 17,000 units Selling price $4.50 $5 Incremental cost/unit $3 $3 If the price increase is implemented, operating profit is projected to: a) increase by $6,000 b) increase by $4,000 c) decrease by $4,500 d) decrease by $4,000

c) decrease by $4,500

The basic source document for direct manufacturing labor is the: a) job-cost record b) materials-requisition record c) labor-time record d) All of these answers are correct

c) labor-time record

Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified? a) variable b) a variable cost within a relevant range c) mixed d) a fixed cost within a relevant range

c) mixed

In evaluating different alternatives, it is useful to concentrate on: a) fixed costs b) variable costs c) relevant costs d) total costs

c) relevant costs

All costs incurred beyond the splitoff point that are assignable to one or more individual products are called: a) joint costs b) main costs c) separable costs d) byproduct costs

c) separable costs

Inventoriable costs are expensed on the income statement: a) after the products are manufactured b) not at any particular time, it varies c) when the products are sold d) when direct materials for the product are purchased

c) when the products are sold

Stober Company produces a specialty item. Management has provided the following information: - Actual sales: 60,000 units - Budgeted production: 50,000 units - Selling price: $40/unit - DM costs: $10/unit - Variable manufacturing overhead: $3/unit - Variable administrative costs: $5/unit - Fixed manufacturing overhead: $4/unit What is the total throughput contribution? a) $1,380,000 b) $1,500,000 c) $1,620,000 d) $1,800,000

d) $1,800,000

Craig's Cola was to manufacture 1,000 cases of cola next week. The accountant provided the following analysis of total manufacturing costs. Variable Coefficient Standard Error t-value Constant 100 71.94 1.39 Indep. variable 200 91.74 2.18 What is the estimated cost of producing the 1,000 cases of cola? a) $100,200 b) $9,000 c) $142,071 d) $200,100

d) $200,100

Welch Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Welch Manufacturing has excess capacity. The following per unit data apply for sales to regular customers: VC: - DM = 40 - DL = 20 - Manufacturing support = 35 - Marketing costs = 15 FC: - Manufacturing support = 45 - Marketing costs = 15 Total costs = 170 Markup (50%) = 85 Targeted selling price = 255 What is the change in operating profits if the one-time-only special order for 1,000 units is accepted for $180 a unit by Welch? a) $10,000 increase in operating profits b) $75,000 decrease in operating profits c) $10,000 decrease in operating profits d) $70,000 increase in operating profits

d) $70,000 increase in operating profits

Ms. Andrea Chadwick, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 20X5 is as follows: - Total fixed manufacturing overhead: $180,000 - Total fixed marketing and selling expenses: $200,000 - Total variable manufacturing expenses: $120,000 - Total variable marketing and selling expenses: $120,000 - Units produced: 30,000 units - Budgeted production: 30,000 units - Units sold: 25,000 units - Selling price: $40 What are breakeven sales in units using variable costing? a) 5,769 units b) 5,625 units c) 12,180 units d) 11,875 units

d) 11,875 units

Mount Carmel Company sells only two products, Product A and Product B. - Selling Price: A= $40, B=$50 - Variable cost per unit: A= $24, B=$40 - Total: $840,000 Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel faces a tax rate of 30%. Mount Carmel desires a net after-tax income of $73,500. The required units would be: a) 43,500 units of Product A and 21,750 units of Product B b) 22,500 units of Product A and 45,000 units of Product B c) 21,750 units of Product A and 43,500 units of Product B d) 45,000 units of Product A and 22,500 units of Product B

d) 45,000 units of Product A and 22,500 units of Product B

Ms. Andrea Chadwick, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 20X5 is as follows: - Total fixed manufacturing overhead: $180,000 - Total fixed marketing and selling expenses: $200,000 - Total variable manufacturing expenses: $120,000 - Total variable marketing and selling expenses: $120,000 - Units produced: 30,000 units - Budgeted production: 30,000 units - Units sold: 25,000 units - Selling price: $40 What are breakeven sales in units using absorption costing? a) 6,667 units b) 5,625 units c) 8,000 units d) 7,692 units

d) 7,692 units

Which of the following methods of allocating costs use market-based data? a) the constant gross-percentage method b) Sales value at splitoff method c) Estimated net realizable value method d) All of these answers are correct

d) All of these answers are correct

Manufacturing overhead costs incurred for the month are: Utilities: $15,000 Depreciation on equipment: $25,000 Repairs: $10,000 Which is the correct journal entry assuming utilities and repairs were on account? a) Manufacturing Overhead Control 50,000 / Accounts Payable Control 50,000 b) Manufacturing Overhead Control 50,000/ Accumulated Depreciation 50,000 c) Accumulated Depreciation 25,000, Accounts Payable Control 25,000 / Manufacturing Overhead Control 50,000 d) Manufacturing Overhead Control 50,000 / Accounts Payable 25,000, Accumulated Depreciation Control 25,000

d) Manufacturing Overhead Control 50,000 / Accounts Payable 25,000, Accumulated Depreciation Control 25,000

The focus on joint costing is on allocating costs to individual products: a) before the splitoff point b) after the splitoff point c) at the end of production d) at the splitoff point

d) at the splitoff point

If a company has a degree of operating leverage of 2.0 and sales increase by 25%, then: a) profit will increase by 20% b) total variable costs will increase by 50% c) total variable costs will not change d) profit will increase by 50%

d) profit will increase by 50%