ACG 203 Final Exam Multiple Choice
*Palmerton Corp. is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for December. a.) $10,500 F b.) $10,500 U c.) $1,000 F d.) $1,000 U
$1,000 U
Bolka Corporation, a merchandising company, reported the following results for October: Sales $ 4,096,400 Cost of goods sold (all variable) $ 2,194,500 Total variable selling expense $ 238,700 Total fixed selling expense $ 144,700 Total variable administrative expense $ 238,700 Total fixed administrative expense $ 282,900 The contribution margin for October is: a.) $1,424,500 b.) $3,191,400 c.) $1,901,900 d.) $996,900
$1,424,500 sales - cost of goods sold = gross margin; (gross margin - variable expenses
Bolka Corporation, a merchandising company, reported the following results for October: Sales $ 4,096,400 Cost of goods sold (all variable) $ 2,194,500 Total variable selling expense $ 238,700 Total fixed selling expense $ 144,700 Total variable administrative expense $ 238,700 Total fixed administrative expense $ 282,900 The gross margin for October is: a.) $1,424,500 b.) $1,901,900 c.) $996,900 d.) $3,668,800
$1,901,900 sales - cost of goods sold
Mullee Corp. produces a single product and has the following cost structure: # of units produced each year 7,000 Variable costs per unit: Direct materials $ 51 Direct labor $ 12 Variable manufacturing OH $ 2 Variable selling and admin exp $ 5 Fixed costs per year: Fixed manufacturing overhead $ 441,000 Fixed selling and admin exp $ 112,000 The absorption costing unit product cost is: a.) $149 per unit b.) $65 per unit c.) $63 per unit d.) $128 per unit
$128 per unit
Thach corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its performance overhead rate for the current year on total fixed manufacturing cost of $665,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. Recently, Job T321 was completed with the following characteristics: Number of units in the job 30 Total machine-hours 90 Direct materials $ 630 Direct labor cost $ 2,880 The unit product cost for Job T321 is closest to: a.) $117.00 b.) $58.50 c.) $154.50 d.) $51.50
$154.50
Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The corporation has provided the following estimated costs for the next year: Direct materials $ 6,000 Direct labor $ 20,000 Rent on building $ 15,000 Sales salaries $ 25,000 Depreciation on factory equip $ 8,000 Indirect labor $ 12,000 Production supervisor's salary $ 15,000 Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be: a.) $2.50 per direct labor-hour b.) $2.79 per direct labor-hour c.) $3.00 per direct labor-hour d.) $4.00 per direct labor-hour
$2.50 per direct labor-hour
Kelchner Corp. has provided the following contribution format income statement. Sales (3,000 units) $ 180,000 Variable expenses 108,000 Contribution margin 72,000 Fixed expenses 62,400 Net operating income 9,600 The contribution margin ratio is closest to: a.) 67% b.) 40% c.) 33% d.) 60%
40%
Brothern Corp. bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: Estimates made at the beg. of the year: Estimated machine-hours 39,000 Estimated variable MOH $ 6.76 per machine/hr Estimated total fixed MOH $794,430 Actual machine-hours for the year 42,700 The predetermined overhead rate for the recently completed year was closest to: a.) $25.37 per machine-hour b.) $27.13 per machine-hour c.) $6.76 per machine-hour d.) $20.37 per machine-hour
$27.13 per machine-hour
Petrus Framing's cost formula for its supplies cost is $2,300 per month plus $6 per frame. For the month of March, the company planned for activity of 861 frames, but the actual level of activity was 856 frames. The actual supplies cost for the month was $7,790. The activity variance for supplies cost in March would be closest to: a.) $324 U b.) $30 F c.) $324 F d.) $30 U
$30 F
Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated machine-hours 36,000 Estimated variable MOH $ 3.01 per machine-hour Estimated total fixed MOH $ 1,058,040 The predetermined overhead rate for the recently completed year was closest to: a.) $29.39 per machine-hour b.) $32.40 per machine-hour c.) $32.81 per machine-hour d.) $3.01 per machine-hour
$32.40 per machine-hour
*Dreckman Corp. is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for August. When the company prepared its planning budget at the beginning of August, it assumed that 36 customers would have been served. However, 31 customers were actually served during August. The "Other expenses" in the flexible budget for August would have been closest to: a.) $33,500 b.) $38,903 c.) $28,847 d.) $33,100
$33,100
*The standard cost card for one unit of a finished product shows the following: If the total standard variable cost for one unit of finished product is $78, then the standard price per foot for direct materials is: a.) $2 b.) $3 c.) $4 d.) $5
$4
The following costs were incurred in May: Direct materials $ 33,000 Direct labor $ 13,000 Manufacturing overhead $ 23,000 Selling expenses $ 16,000 Administrative expense $ 34,000 Prime costs during the month totaled: a.) $36,000 b.) $119,000 c.) $69,000 d.) $46,000
$46,000 Direct materials + Direct labor
Sedita Inc. is working on its cash budget for July. The budgeted beginning cash balance is $46,000. Budgeted cash receipts total $175,000 and budgeted cash disbursements total $174,000. The desired ending cash balance is $50,000. The excess (deficiency) of cash available over disbursements for July will be: a.) $47,000 b.) $221,000 c.) $45,000 d.) $1,000
$47,000
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Units in beginning inv. 0 Units produced 8,900 Units sold 8,500 Units in ending inv. 400 Variable costs per unit: Direct materials $ 26 Direct labor $ 25 Variable manu overhead $ 4 Variable selling and admin exp $ 4 Fixed costs: Fixed manu overhead $ 249,200 Fixed selling and admin exp $17,000 What is the variable costing unit product cost for the month? a.) $59 per unit b.) $83 per unit c.) $87 per unit d.) $55 per unit
$55 per unit
The following costs were incurred in May: Direct materials $ 41,000 Direct labor $ 13,000 Manufacturing overhead $ 46,000 Selling expenses $ 18,000 Administrative expenses $ 15,000 Conversion costs during the month totaled: a.) $54,000 b.) $133,000 c.) $59,000 d.) $87,000
$59,000 Direct labor + Manufacturing overhead
Hamlter Framing's cost formula for its supplies cost is $1,640 per month plus $9 per frame. For the month of August, the company planned for activity of 572 frames, but the actual level of activity was 573 frames. The actual supplies cost for the month was $7,080. The supplies cost in the planning budget for August would be closest to: a.) $7,080 b.) $7,068 c.) $6,788 d.) $6,797
$6,788
Haack Inc. is a merchandising company. Last month the company's cost of goods sold was $84,000. The company's beginning merchandise inventory was $20,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's merchandise purchases for the month? a.) $86,000 b.) $82,000 c.) $84,000 d.) $122,000
$82,000
*Sathre Corp. is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of December, it assumed that 34 wells would have been serviced. However, 32 wells were actually serviced during December. The "Employee salaries and wages" in the flexible budget for December would have been closest to: a.) $87,000 b.) $84,600 c.) $85,200 d.) $89,888
$85,200
Bear Publishing sells a nature guide. The following info was reported for a typical month: Total Per Unit Sales $ 17,600 $ 16.00 Variable expenses 9,680 Contribution margin 7,920 Fixed expenses 3,600 Net operating income $ 4,320 What is Bear's current break-even point in unit and dollars? a.) 1,100 units and $17,600 b.) 1,100 units and $8,000 c.) 8,000 units and $500 d.) 500 units and $8,000
500 units and $8,000
The following labor standards have been established for a particular product: Standard labor-hr per unit of output 8.7 hours Standard labor rate $ 18.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 3,800 hours Actual total labor cost $ 67,640 Actual output 500 units What is the labor efficiency variance for the month? a.) $9,790 F b.) $11,095 U c.) $9,955 F d.) $11,095 F
$9,955 F
Pace Corp. uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. Units % Comp. with respect to conversion Beginning WIP Inventory 5,100 70% Transferred in from the prior department during January 59,000 Completed and transferred to the next department during January 56,800 Ending WIP inventory 7,300 40% The accounting records indicate that the conversion cost that had been assigned to beginning WIP inventory was $34,558 and a total of $559,254 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to: a.) $9.479 b.) $9.943 c.) $9.680 d.) $8.435
$9.943
To obtain the dollar sales volume necessary to attain a given target profit, which of the following formulas should be used? a.) (Fixed expenses + Target net profit) / Total sales b.) (Fixed expenses + Target net profit) / Contribution margin ratio c.) Fixed expenses / Contribution margin per unit d.) Target net profit / Contribution margin ratio
(Fixed expenses + Target net profit) / Contribution margin ratio
Leete Inc. reported the following results from last year's operation: Sales $ 14,000,000 Variable exp 9,660,000 Cont. Margin 4,340,000 Fixed exp. 2,940,000 NOI $ 1,400,000 Last year's margin was closest to: a.) 79.0% b.) 31.0% c.) 20.0% d.) 10.0%
10.0%
The Silver Corporation uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the Corporation made the following estimates: Dept. A Dept. B Direct labor cost $ 60,000 $ 40,000 Manufacturing overhead $ 90,000 $ 45,000 Direct labor-hours 6,000 9,000 Machine-hours 2,000 15,000 What predetermined overhead rates would be used in Dept. A and Dept. B, respectively? a.) 67% and $3.00 b.) 150% and $5.00 c.) 150% and $3.00 d.) 67% and $5.00
150% and $3.00 Dept. A = $90,000/$60,000 Dept. B = $45,000/15,000
Nasser Inc. reported the following from last year's operation: Sales $ 12,600,000 Var. exp. 7,760,000 Cont. margin 4,840,000 Fixed exp. 3,706,000 NOI $ 1,134,000 Avg. Op. Assets $6,000,000 Last year's return on investment was closest to: a.) 9.0% b.) 47.6% c.) 18.9% d.) 80.7%
18.9%
Runyon Inc. reported the following results from last year's operations: Sales $ 16,800,000 Variable exp. 12,230,000 Cont. margin 4,570,000 Fixed exp. 3,394,000 NOI $ 1,176,000 The company's average operating assets were $7,000,000. Last year's turnover was closest to: a.) 0.42 b.) 14.29 c.) 0.07 d.) 2.40
2.40
Which of the following may appear on a flexible budget performance report? a.) An unfavorable activity variance b.) A favorable revenue variance c.) An unfavorable spending variance d.) All of the above may appear on a flexible budget performance report
All of the above may appear on a flexible budget performance report
The cost of electricity for running production equipment is classified as: Conversion cost Period cost a.) Yes No b.) Yes Yes c.) No Yes d.) No No
Choice A
Which of the following statements is not correct concerning multiple overhead rate systems? a.) A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate b.) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate c.) A company may choose to create a separate overhead rate for each of its production departments d.) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours
In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours
Which of the following statements about using a plantwide overhead rate based on direct labor is correct? a.) Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs b.) Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs c.) It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver d.) The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs
It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver
In a job-order costing system, indirect labor cost is usually recorded as a debit to: a.) Manufacturing Overhead b.) Finished Goods c.) Work in Process d.) Cost of Goods Sold
Manufacturing Overhead
In a job-order costing system that is based on machine-hours, which of the following formulas is correct? a.) Predetermined overhead rate = Actual manufacturing overhead / Actual machine-hours b.) Predetermined overhead rate = Actual manufacturing overhead / Estimated machine-hours c.) Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine-hours d.) Predetermined overhead rate = Estimated manufacturing overhead / Actual machine-hours
Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine-hours
In process costing, a separate work in process amount is kept for each: a.) Individual order b.) Equivalent unit c.) Processing department d.) Cost category (i.e., materials, conversion cost)
Processing department
Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory? a.) The cost of the glue in a chair. b.) The amount paid to the individual who stains a chair. c.) The workman's compensation insurance of the supervisor who oversees production. d.) The factory utilities of the department in which production takes place.
The amount paid to the individual who stains a chair
If the contribution margin is not sufficient to cover fixed expenses: a.) total profit equals total expenses b.) contribution margin is negative c.) a loss occurs d.) variable expenses equal contribution margin
a loss occurs
A segment of a business responsible for both revenues and expenses would be called: a.) a cost center b.) an investment center c.) a profit center d.) residual income
a profit center
An unfavorable materials quantity variance indicates that: a.) actual usage of material exceeds the standard material allowed for output b.) standard material allowed for output exceeds the actual usage of material c.) actual material price exceeds standard price d.) standard material price exceeds actual price
actual usage of material exceeds the standard material allowed for output
Manufacturing overhead includes: a.) all direct material, direct labor and administrative costs. b.) all manufacturing costs expect direct labor. c.) all manufacturing costs except direct labor and direct materials. d.) all selling and administrative costs.
all manufacturing costs except direct labor and direct materials
Generally speaking, net operating income under variable and absorption costing will: a.) always be equal b.) never be equal c.) be equal only when production and sales are equal d.) be equal only when production exceeds sales
be equal only when production and sales are equal
Under a job-order costing system, the dollar amount transferred from Work in Process to Finished Goods is the sum of the costs charged to all jobs: a.) started in process during the period b.) in process during the period c.) completed and sold during the period d.) completed during the period
completed during the period
Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be: a.) favorable b.) unfavorable c.) zero d.) either favorable or unfavorable
favorable
A budget that is based on the actual activity of a period is known as a: a.) continuous budget b.) flexible budget c.) static budget d.) master budget
flexible budget
A process costing system is employed in those situation where: a.) many different products, jobs, or batches of production are being produced each period. b.) manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis. c.) a service is performed such as in a law firm or an accounting firm. d.) full or absorption cost approach is not employed
manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis
A cost incurred in the past that is not relevant to any current decision is classified as a(n): a.) period cost b.) opportunity cost c.) sunk cost d.) differential cost
sunk cost
In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by: a.) the direct labor-hours required by the product b.) the machine-hours required by the product c.) the total activity for the activity cost pool d.) the total direct labor-hours for the activity cost pool
the total activity for the activity cost pool
The costing method that treats all fixed costs as period costs is: a.) absorption costing b.) job-order costing c.) variable costing d.) process costing
variable costing
