Managerial ACC Final

Which element of the value chain would a technical support hotline for customers be considered? A) Design B) Customer service C) Distribution D) Marketing

B) Customer service

Direct labor is a part of prime cost, but not conversion cost.

False

If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 50%.

False

The sales budget must be prepared after every other component of the operating budget.

False

Depreciation on manufacturing equipment is a product cost.

True

Each manufacturing process will have a WIP Inventory account.

True

1. The costing system used by a company making computer chips would be A) process costing. B) job costing. C) equivalent units costing. D) conversion cost costing.

process costing

12. The ________ budget is a component in an operating budget. A) capital expenditure B) budgeted balance sheet C) production D) cash

production

A company manufactures wallets. Last month's costs were: Direct materials $247,000 Direct labor 149,000 Manufacturing Overhead 70,000 What were the conversion costs for the month? A) $247,000 B) $396,000 C) $219,000 D) $466,000

A) $219,000

Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $50 per machine hour, while the Sanding Department uses a departmental overhead rate of $25 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments: Actual results Assembly Department Sanding Department Direct labor hours used 7 5 Machine hours used 11 6 The cost for direct labor is $25 per direct labor hour and the cost of the direct materials used by Job 603 is $1600. How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates? A) $675 B) $575 C) $700 D) $300

A) $675

16. Whistle Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget: MOH Costs $1.25 per unit Variable MOH Costs produced Fixed MOH Costs $225,000 Other Info: Units produced in 2016 42,000 How much is total budgeted MOH costs for the year ended 2016? A) $103,125 B) $225,000 C) $275,625 D) $277,500

) $277,500

9. At Trapeze Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: Units completed and transferred out 109,700 units WIP ending (60% for conversion) 34,000 units Beginning WIP conversion costs $31,500 Costs of conversion added $264,125 3 What is the cost per equivalent unit for conversion costs? A) $2.44 B) $2.03 C) $2.06 D) $2.27

$2.27 Explanation: D) Conversion costs $31,500 + 264,125 = 295,625/130,100 units = 2.27 Units completed 109,700 WIP 34,000 × 60% 20,400 Total 130,100

The following information describes a company's usage of direct labor in a recent period: Actual direct labor hours used 30,000 Actual rate per hour $20.00 Standard rate per hour $11.50 Standard hours for units produced 26,500 How much is the direct labor efficiency variance? A) $40,250 favorable B) $40,250 unfavorable C) $70,000 unfavorable D) $70,000 favorable

$40,250 unfavorable

Beaver Company manufactures coffee tables and uses an activity-based costing system. Each coffee table consists of 30 separate parts totaling $210 in direct materials, and requires 6.0 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials Handling Number of parts $3.00 per part Machining Machine hours $3.50 per machine hour Assembling Number of parts $1.00 per part Packaging Number of finished parts $6.00 per finished part What is the allocated MOH cost of materials handling per coffee table? A) $90 B) $30 C) $13 D) $12

A) $90

7. At Trapeze Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: Units completed and transferred out 110,700 units WIP ending (60% for conversion) 41,000 units What are the total equivalent units for conversion costs? A) 123,300 B) 151,700 C) 131,200 D) 135,300

A) 135,300

6. Assume that 9200 units were in beginning WIP Inventory, 35,500 were started, 35,000 were completed, and 9700 were in ending WIP Inventory. Direct materials are added at the beginning of the process. What are the total equivalent units for direct materials? A) 44,700 B) 45,200 C) 44,200

A) 44,700

14. Dallas Corporation had beginning inventory of 18,700 units and expects sales of 80,000 units during the year. Desired ending inventory is 19,500 units. How many units should Dallas Corporation produce? A) 80,800 units B) 41,800 units C) 79,200 units D) 118,200 units

A) 80,800 units

1. Which of the following is not one of the primary responsibilities of management? A) Adhering to GAAP B) Planning C) Directing D) Controlling

A) Adhering to GAAP

Which of the following are classified as manufacturing overhead? A) Indirect labor and indirect materials B) Direct materials and direct labor C) All materials D) Factory rent and direct labor

A) Indirect labor and indirect materials

Which of the following positions is primarily responsible for raising capital and investing funds? A) The treasurer B) The COO C) The CFO D) The CEO

A) The treasurer

Before the year began, Butler Manufacturing estimated that manufacturing overhead for the year would be $176,100 and that 13,700 direct labor hours would be worked. Actual results for the year included the following: Actual manufacturing overhead cost $184,500 Actual direct labor hours 15,100 The amount of manufacturing overhead allocated for the year based on direct labor hours would have been (Round intermediary calculations to the nearest cent.) A) $167,394. B) $194,035. C) $176,100. D) $184,500.

B) $194,035

. Hushovd Iron Works has collected the following data for its Thunderbolt line of products: Direct materials standard 5 pounds per unit Direct materials standard cost $0.55 per pound Actual Direct Materials Used (AQU) 20,000 pounds Actual finished goods purchased 5,000 units What is the direct materials quantity variance? A) $2,750 unfavorable 6 B) $2,750 favorable C) $6,250 unfavorable D) $6,250 favorable

B) $2,750 favorable

4. For which of the following do we prepare calculations for equivalent units? 5. A) Both direct labor and Manufacturing Overhead B) Both direct materials and conversion costs C) Both direct labor and direct materials D) Neither direct materials nor conversion costs

B) Both direct materials and conversion costs

Which of the following statements is TRUE regarding managerial accounting information? A) Managerial accounting information is audited by CPAs. B) Managerial accounting information emphasizes relevance. C) Managerial accounting information is prepared annually and quarterly. D) Managerial accounting information must be prepared in conformity with Generally Accepted Accounting Principles (GAAP).

B) Managerial accounting information emphasizes relevance.

. Creating budgets are part of which primary management responsibility? A) Controlling B) Planning C) Managerial accounting D) Directing

B) Planning

Which of the following positions typically manages the company on a daily basis? A) The controller B) The CEO C) The board of directors D) The stockholders

B) The CEO

All of the following are period costs EXCEPT A) distribution expenses. B) direct labor costs. C) marketing expenses. D) research and development expenses.

B) direct labor costs.

Traves Corporation incurred $69,000 of actual Manufacturing Overhead costs during October. During the same period, the Manufacturing Overhead allocated to Work in Process was $68,000. The journal entry to record the allocation of Manufacturing Overhead to Work in Process would include a: A. debit to Manufacturing Overhead of $68,000 B. credit to Manufacturing Overhead of $68,000 C. debit to Work in Process of $69,000 D. credit to Work in Process of $69,000

B. credit to Manufacturing Overhead of $68,000

During February at Iniquez Corporation, $79,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,000. The journal entry to record the requisition from the storeroom would include a: A. debit to Work in Process of $79,000 B. debit to Work in Process of $75,000 C. credit to Manufacturing Overhead of $4,000 D. debit to Raw Materials of $79,000

B. debit to Work in Process of $75,000

Before the year began, Butler Manufacturing estimated that manufacturing overhead for the year would be $176,400 and that 13,800 direct labor hours would be worked. Actual results for the year included the following: Actual manufacturing overhead cost $185,000 Actual direct labor hours 14,600 The predetermined manufacturing overhead rate per direct labor hour is closest to A) $12.08. B) $12.67. C) $12.78. D) $13.41.

C) $12.78

17. Distribution Corporation collects 35% of a month's sales in the month of sale, 45% in the month following sale, and 20% in the second month following sale. Budgeted sales for the upcoming four months are: 5 April budgeted sales $120,000 May budgeted sales $150,000 June budgeted sales $230,000 July budgeted sales $170,000 The amount of cash that will be collected in July is budgeted to be A) $59,500 B) $133,500 C) $193,000 D) $190,000

C) $193,000

4. What are the ending inventory equivalent units for conversion costs if 15,600 units are completed and transferred out and 4800 remain in ending WIP at 35% complete? A) 3780 B) 4800 C) 1680 D) 5460

C) 1680 Explanation: C) 35% x 4800

Which of the following industries would be most likely to use a job costing system? A) Soup manufacturer B) Toothpaste manufacturer C) Commercial plumbing contractor D) An oil refinery

C) Commercial plumbing contractor

1. Which of the following product costing systems is normally used to assign costs to goods that are mass-produced goods? A) Fixed costing B) Job costing C) Process costing D) LIFO costing

C) Process costing

Which of the following is an example of manufacturing overhead expense in a factory? A) Wages of machine operators B) Wages of administrators in the corporate office C) Wages of factory maintenance personnel D) Salaries of salespersons

C) Wages of factory maintenance personnel

How would Chevrolet classify its partially completed vehicles? A) Finished goods inventory B) Raw materials inventory C) Work in process inventory D) Supplies inventory

C) Work in process inventory

8. At Trapeze Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: Units completed and transferred out 110,700 units WIP ending (60% for conversion) 43,000 units Beginning WIP direct materials $34,000 Costs of materials added $390,100 What is the cost per equivalent unit for direct materials? A) $2.54 B) $2.76 C) $3.11 D) $3.10

$2.76

.Victoria Corporation manufactures quality vases. Budgeted sales and production data for the vases are as follows: Month 1 budgeted unit production 2700 Month 2 budgeted unit production 4000 Raw material required for each finished unit (in pounds) 1 Each vase requires one pound of clay in its manufacture. Victoria Corporation has a policy that the inventory of clay at the end of each month needs to be equal to 10% of the production needs for the following month. At the beginning of Month 1, 270 pounds of clay were in inventory. How many pounds of clay would Victoria Corporation need to purchase in Month 1? A) 2430 B) 2340 C) 4130 D) 2830

) 2830

10. Flying High Manufacturing produces frisbees using a three-step sequential process that includes molding, coloring and finishing. When the frisbees and associated costs are transferred out of the coloring process and into the finishing process, the journal entry would include a A) debit to WIP Inventory-Coloring and a credit to WIP Inventory-Finishing. B) debit to Finished Goods Inventory and a credit to WIP Inventory-Coloring. C) debit to WIP Inventory-Finishing and a credit to WIP Inventory-Coloring. D) debit to WIP Inventory-Coloring and a credit to Finished Goods Inventory.

C) debit to WIP Inventory-Finishing and a credit to WIP Inventory-Coloring.

Average variable costs A) remain the same as production decreases. B) remain the same as production increases. C) remain the same no matter if production increases or decreases. D) go down as production decreases.

C) remain the same no matter if production increases or decreases

. Oliver Enterprises has collected the following data for one of its products: Direct materials standard (4 pounds per unit @ $0.41/lb.) $1.64 per finished good Actual direct materials purchased $32,000 pounds Actual Direct Materials Used (AQU) 29,000 pounds Actual Price (AP) paid per pound $0.50 How much is the direct materials price variance? A) $2610 favorable B) $2610 unfavorable C) $2880 favorable D) $2880 unfavorable

D) $2880 unfavorable

19. Einstein Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $10,000. Budgeted cash receipts are $85,000, while budgeted cash disbursements are $66,000. Einstein Company wants to have an ending cash balance of $25,000. The excess (deficiency) of cash available over disbursements for the month would be A) $161,000 B) $(29,000). C) $91,000 D) $29,000

D) $29,000 Explanation: D) Beginning Cash $10,000 Cash Receipts + 85,000 Cash Disbursements - 66,000 Cash Available $29,000

The following information describes a company's usage of direct labor in a recent period: Actual direct labor hours used 34,000 Actual rate per hour $22.00 Standard rate per hour $12.25 Standard hours for units produced 26,000 How much is the direct labor rate variance? A) $253,500 favorable B) $331,500 favorable C) $253,500 unfavorable D) $331,500 unfavorable

D) $331,500 unfavorable

12. Which of the following alternatives reflects the proper order of preparing components of the master budget? 1. Production budget 2. Sales budget 3. Direct materials budget A) 2, 3, 1 B) 1, 3, 2 C) 3, 1, 2 D) 2, 1, 3

D) 2, 1, 3

17. A combined cash budget includes all of the following except A) projected cash balance at the end of the month. B) projected cash collections and cash payments. C) projected borrowings and repayments. D) All of the above are shown on the combined cash budget.

D) All of the above are shown on the combined cash budget.

3. How often should managerial accounting reports be prepared? A) Annually B) Quarterly C) Monthly D) As often as necessary

D) As often as necessary

. In addition to cost of goods manufactured, which of the following is needed to compute the cost of goods sold for a manufacturer? A) Beginning work in process inventory less ending work in process inventory B) Ending work in process inventory less beginning work in process inventory C) Ending finished goods D) Beginning finished goods inventory less ending finished goods inventory

D) Beginning finished goods inventory less ending finished goods inventory

Which of the following would NOT be considered a product cost of a manufacturer? A) Direct labor B) Direct materials C) Manufacturing overhead D) Freight out

D) Freight out

Wages of assembly- line workers Wages of a factory supervisor A) No No B) Yes Yes C) No Yes D) Yes No

D) Yes No

Chapter 7 in class practice

E7-38A

Companies that use automated production processes often condense the three manufacturing costs into two categories: Direct labor and Conversion costs.

False

Costs that can be traced directly to a cost object are called indirect costs.

False

Ideal standards allow for a normal amount of waste and inefficiency

False

In process costing, there is only one Work In Process Inventory account for all of the individual processing departments

False

Inspection of incoming raw materials and production loss caused by downtime are examples of prevention costs.

False

Process costing is typically used for businesses that make unique goods in relatively small amounts.

False

Raising capital and investing funds are the direct responsibilities of the controller.

False

The capital expenditures budget is a component of the operating budget.

False

The first component of the operating budget is the production budget.

False

The primary users of the managerial accounting information are external (i.e., creditors, investors).

False

When a job is completed, the goods are transferred from the production department to the finished goods warehouse and the journal entry would include a debit to Work in Process

False

When overhead is allocated to every product using the same manufacturing overhead rate, this rate is called the departmental overhead rate.

False

A budget is a quantitative expression of a plan that helps managers coordinate and implement the plan.

True

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

True

If conversion costs are added evenly throughout the production process, and the units have made it 50% of the way through the production process, then the percentage completion for conversion costs is 50%.

True

If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost allocated, then manufacturing overhead would be considered to be underallocated

True

In process costing, the manufacturing costs assigned to the product must always follow the physical movement of the product.

True

Internal audit department reports directly to the audit committee.

True

Period costs include R&D, marketing, distribution, and customer service costs.

True

Rent on a factory building used in the production process would be classified as a period cost.

True

The cash budget is prepared before the budgeted balance sheet is prepared.

True

The cost allocation rate for each activity is equal to the total estimated activity cost pool divided by the total estimated activity allocation base.

True

The cost of training employees would be classified as a prevention cost.

True

The direct labor efficiency variance tells managers how much of the total labor variance is due to using a greater or lesser amount of time than anticipated

True

The direct materials price variance tells managers how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased. (

True

The formula for computing the predetermined MOH rate is: Predetermined MOH rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base

True

The master budget includes both the operating budgets and the financial budgets.

True

The number of partially completed units multiplied by the percentage of process completed equals the number of equivalent units.

True

When manufacturing companies sell their finished products, the costs of these finished products are removed from inventory and expensed as Cost of Goods Sold.

True

Wong completed 24,000 units and had another 6,000 units 45% complete. The total equivalent units for the period are 26,700

True

10. A rolling budget is a budget that A) extends 5-10 years into the future. B) is continuously updated, so that the next 12 months of operations are always budgeted. C) begins with zero for each expense, and then amounts are added in. D) is executed by upper management.

is continuously updated, so that the next 12 months of operations are always budgeted.