Managerial Cost Accounting Final Exam

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Swan Textiles Inc. produces and sells a decorative pillow for $102.00 per unit. In the first month of operation, 2,000 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs $23.00 per unit Variable marketing costs $6.00 per unit Fixed manufacturing costs $13.00 per unit Administrative expenses, all fixed $21.00 per unit Ending inventories: Direct materials −0− WIP −0− Finished goods 200 units What is the operating income using variable costing? A. $70,200 B. $63,400 C. $108,000 D. $131,400

Tally Corp. sells software during the recruiting seasons. During the current year, 11,000 software packages were sold resulting in $440,000 of sales revenue, $130,000 of variable costs, and $48,000 of fixed costs. If sales increase by $100,000, operating income will increase by ________. (Round interim calculations to two decimal places and the final answer to the nearest whole dollar.) A. $41,945 B. $70,450 C. $48,000 D. $52,000

The Japanese use the term kaizen when referring to________. A. the sales forecast B. continuous improvement C. scarce resources D. pro forma financial statements

The business functions in the value chain include: A. Manufacturing, Packaging, and Distribution. B. Research and development, Design of products and processes, Production, Marketing, Distribution, and Customer service. C. Research and development, Making decisions by choosing among alternatives, Production, Distribution, and Customer service. D. Identifying the problem and uncertainties, Obtaining information, Making predictions about the future, Making decisions by choosing among alternatives, and Implementing the decision.

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

For 2018, Rest−Well Bedding uses machine−hours as the only overhead cost−allocation base. The direct cost rate is $4.00 per unit. The selling price of the product is $30.00. The estimated manufacturing overhead costs are $260,000 and estimated 25,000 machine hours. The actual manufacturing overhead costs are $320,000 and actual machine hours are 40,000. Using job costing, the 2018 actual indirect−cost rate is ________. A. $9.50 per machine−hour B. $12.80 per machine−hour C. $8.00 per machine−hour D. $6.50 per machine−hour

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019: Month Sales January 22,000 February 40,800 March 32,600 April 45,200 Finished goods inventory at the end of December is 7,500 units. Target ending finished goods inventory is 10% of the next month's sales. How many mattresses should be produced in the first quarter of 2019? A. 96,940 mattresses B. 58,560 mattresses C. 92,420 mattresses D. 73,840 mattresses

Glossier Images Inc., produces decorative statues. Management has provided the following information: Actual sales 34,000 statues Budgeted production 53,000 statues Selling price $46.00 per statue Direct material costs $7.40 per statue Variable manufacturing costs $3.60 per statue Variable administrative costs $5.85 per statue Fixed manufacturing overhead $4.70 per statue What is the cost per statue if throughput costing is used? A.$21.55 B.$11.00 C.$7.40 D.$16.85

In ________, fixed manufacturing costs are included as inventoriable costs. A. activity-based costing B. throughput costing C. absorption costing D. variable costing

Kaizen budgeting involves ________. A. management directed improvements B. continual small revenue increases C. continual small cost reductions D. large cost reductions

A company purchases $650,000 of materials on credit. The standard cost for the materials is $675,000. Which of the following would be the correct journal entries to record the purchase under a standard costing system? A. Direct Materials Control $675,000 Direct Materials Price Variance $25,000 Accounts Payable Control $650,000 B. WIP Control $675,000 Direct Materials Price Variance $25,000 Accounts Payable Control $650,000 C. Accounts Payable Control $650,000 Direct Materials Price Variance $25,000 WIP Control $675,000 D. Accounts Payable Control $650,000 Direct Materials Price Variance $25,000 Direct Materials Control $675,000

A cost is considered direct if it can be traced to a particular cost object in a cost effective way which means it can be A. traced in an economically feasible way. B. traced easily with the aid of technology. C. traced in a manner that is accurate. D. possibly traced accurately with an investment in hardware and software.

A favorable efficiency variance for direct manufacturing labor indicates that ________. A. less direct manufacturing labor−hours were used during production than planned for actual output B. more direct manufacturing labor−hours were used during production than planned for actual output C. a lower wage rate than planned was paid for direct labor D. a higher wage rate than planned was paid for direct labor

A flexible−budget variance is $600 favorable for unit−related costs. This indicates that costs were ________. A. $600 less than standard for the achieved level of activity B. $600 more than the master budget C. $600 less than for the planned level of activity D. $600 more than standard for the achieved level of activity

A step cost functions indicates that there are A. costs that remain the same over various ranges of activity but increases by discrete amounts as the level of activity increases B. greater proportions of fixed costs than variable costs at lower levels of activities C. strong relationships between fixed costs and variable costs D. increases in the number of units produced during the each month of the period

AAA Manufacturing Inc, makes a product with the following costs per unit: Direct materials $190 Direct labor $30 Manufacturing overhead (variable) $50 Manufacturing overhead (fixed) $160 Marketing costs $45 What would be the inventoriable cost per unit under variable costing and what would it be under absorption costing? A.$270 for variable costing and $430 under absorption costing B. $190 for variable costing and $315 under absorption costing C. $220 for variable costing and $315 under absorption costing D.$270 for variable costing and $315 under absorption costing

AAA Manufacturing Inc, makes a product with the following costs per unit: Direct materials $180 Direct labor $20 Manufacturing overhead (variable) $30 Manufacturing overhead (fixed) $130 Marketing costs $75 What would be the inventoriable cost per unit under variable costing and what would it be under absorption costing? A.$230 for variable costing and $360 under absorption costing B.$180 for variable costing and $305 under absorption costing C.$200 for variable costing and $305 under absorption costing D.$230 for variable costing and $305 under absorption costing

All of the following are factors affecting direct versus indirect cost classification except: A. cost accuracy B. information technology's ability to trace costs in an economically feasible way C. design of operations D. materiality of the cost

An unfavorable sales−volume variance could result from ________. A. competitors taking market share B. a decrease in actual selling price compared to anticipated selling price C. an inappropriate assignment of labor or machines to specific jobs D. an inefficiency of a purchasing manager in bargaining with suppliers

Assume a manufacturing company that has started production in the current year. Which of the following would result in the highest profit being reported if the company has 1,000 units of ending inventory? A. absorption costing B. variable costing C. standard costing D. throughput costing

At breakeven point, ________. A. operating income is equal to zero B. contribution margin minus fixed costs is equal to profits earned C. revenues equal fixed costs minus variable costs D. breakeven revenues equal fixed costs divided by the variable cost per unit

At the Spring Valley Company, the cost of the personnel department has always been charged to production departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs. Total personnel department costs are $292,000. Department Number of employees A90 B295 C230 Number of new hires A20 B15 C11 If the number of employees is considered the cost driver, what amount of personnel costs will be allocated to Department A? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.) A.$43,800 B.$8,835 C.$48,593 D.$140,065

At the Spring Valley Company, the cost of the personnel department has always been charged to production departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs. Total personnel department costs are $298,000. Department A B C Number of employees 50 285 200 Number of new hires 30 13 12 Which cost estimation method is being used by Spring Valley Company? A.the conference method B.the account analysis method C.the marginal costing method D.the simple regression method

A $5,000 unfavorable flexible-budget variance indicates that ________. A. the actual variable manufacturing overhead exceeded the flexible-budget amount by $5,000 B. the flexible-budget amount exceeded standard variable manufacturing overhead by $5,000 C. the flexible-budget amount exceeded actual variable manufacturing overhead by $5,000 D. the standard variable manufacturing overhead exceeded the flexible-budget amount by $5,000

Daniels Corporation used the following data to evaluate their current operating system. The company sells items for $19 each and had used a budgeted selling price of $20 per unit.unit. Actual Budgeted Units sold 280,000 units 279,000 units Variable costs $980,000 $881,000 Fixed costs $58,000 $45,000 What is the static−budget variance of revenues? A. $260,000 unfavorable B. $260,000 favorable C. $299,000 unfavorable D. $299,000 favorable

South Coast Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. Sales (6,000 microwave ovens) $6,000,000 Cost of goods sold 870,000 Store manager's salary per year 192,000 Operating costs per year 305,000 Advertising and promotion per year 40,000 Commissions (4.1% of sales) 246,000 Which cost estimation method is being used by South Coast Appliance Store? A.the account analysis method B.the cost−volume−profit analysis method C.the marginal costing method D.the operating costing method

Sparkle Jewelry sells 500 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. $12.00 B. $22.00 C. $18.00 D. $8.00

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. 810 units C. 684 units D. 447 units

Standard cost per output unit for each variable direct cost input is calculated by multiplying ________. A. standard input allowed for one output unit by standard price per input unit B. standard input allowed for one output unit by actual price per input unit C. actual input allowed for one output unit by actual price per input unit D. actual input allowed for one output unit by standard price per input unit

Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,500, variable costs are $400, and fixed costs are $120,000. How many dresses must the Bridal Shoppe sell to yield after−tax net income of $21,000, assuming the tax rate is 40%? A. 141 dresses B. 110 dresses C. 129 dresses D. 214 dresses

Swansea Finishing produces and sells a decorative pillow for $104.00 per unit. In the first month of operation, 2,400 units were produced and 1,900 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs $23.00 per unit Variable marketing costs $4.00 per unit Fixed manufacturing costs $14.00 per unit Administrative expenses, all fixed $22.00 per unit Ending inventories: Direct materials −0− WIP −0− Finished goods 500 units What is cost of goods sold per unit using variable costing? A. $23.00 B. $63.00 C. $27.00 D. $41.00

Which of the following could be a reason for a favorable material price variance? A. the purchasing manager bargaining effectively with suppliers B. the purchasing manager giving orders for small quantity to reduce storage cost C. the personnel manager hiring underskilled workers D. the purchasing manager accepting a bid from the highest−priced supplier to ensure the quality of material

Which of the following departments is most likely to be a cost center? A. maintenance department of a luxury resort B. call center of a company that serves customers and cross−sells other products C. sales department of a company selling industrial tools D. research department of a company providing consultancy services

Which of the following is a component of operating budgets? A. production budget B. budgeted balance sheet C.budgeted statement of cash flows D. capital expenditures budget

Which of the following is a reason why budgets in multinational companies are not used to evaluate the firm's performance relative to its budgets? A. Evaluations based on budgets can be meaningless due to factors such as exchange rate risk and other volatility. B. Evaluations based on budgets are harder when managers use sophisticated techniques to minimize foreign currency exposure. C. Evaluations based on relative regional performance are considered more meaningful as compared to evaluations against budgets. D. Evaluations based on budgets are not possible because of cultural differences in the budgeting approach.

Which of the following is the correct mathematical expression to calculate the fixed overhead production-volume variance? A. budgeted fixed overhead − fixed overhead allocated for actual output B. actual costs incurred − fixed overhead allocated for actual output C. flexible-budget amount − actual costs incurred D. static-budget amount − flexible-budget amount

Which of the following is true of the Work-in-Process Control account? A. Its balance is the sum of amounts from all in-process individual job-cost records. B. It is an expense account. C. It tracks all direct material purchases. D. It tracks overhead costs in-process from beginning through completion.

Which of the following is true with activity based cost accounting ? A. Chances of product−cost cross−subsidization are higher in activity−based costing compared to traditional costing systems. B. Activity−based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. C. Activity−based costing ignores the allocation of marketing and distribution costs. D. The focus is on activities that account for a sizable fraction of indirect costs .

Which of the following journal entries is used to record fixed overhead costs allocated? A. Work-in-Process Control Fixed Overhead Allocated B. Fixed Overhead Allocated Work-in-Process Control C. Fixed Overhead Allocated Fixed Overhead Control D. Fixed Overhead Control Work-in-Process Control

________ are the costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced. A. Product−sustaining costs B. Unit−level costs C. Batch−level costs D. Facility−sustaining costs

________ is considered while choosing a cost allocation base for activity costs in ABC costing. A. Availability of reliable data and measures B. Product price level C. Marketing strategy and material price level D. Market share of a product

________ is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs. A. Absorption costing B. Variable costing C. Mixed costing D. Standard costing

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs. A. Variable costing B. Absorption costing C. Mixed costing D. Fixed costing

Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $104,000. The budgeted number of nozzles to be inserted is 26,000. What is the budgeted indirect cost allocation rate for this activity? A. $1.25 B. $4.00 C. $0.25 D. $0.50

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. $0.32 B. $6.25 C. $0.16 D. $1.16

Demand for refinements to the costing system has accelerated due to ________. A. increase in direct costs B. competition in product markets C. decrease in indirect costs D. decrease in product diversity

Effective planning of variable overhead costs means that managers must A. identify the product advertising requirements and factor those into the variable overhead budget B. focus on activities that add value for the customer and eliminate nonvalue-added activities C. increase the linearity between total costs and volume of production D. increase the expenditures in the variable overhead budgets

A company budgets 10,000 units of sales based on a projected selling price of $13.00. The actual units sold were 15,000 at a price of $10. What is the flexible budget for sales? A. $195,000 B. $150,000 C. $100,000 D. $130,000

Which of the following costs is inventoried when using variable costing? A. rent on factory building B. sales commission paid on each sale C. electricity consumed in manufacturing process D. advertising costs incurred for the product

Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect−cost rate of $18 per direct labor−hour. The following data are obtained from the accounting records for October 2018: Direct materials $470,000 Direct labor (3,500 hours @ $15/hour) 52,500 Indirect labor 17,000 Plant facility rent 51,000 Depreciation on plant machinery and equipment 40,000 Sales commissions 14,000 Administrative expenses 34,000 The actual amount of manufacturing overhead costs incurred in October 2018 totals ________. A. $156,000 B. $271,500 C. $125,000 D. $108,000

Budgeted production equals ________. A. targeted ending finished goods inventory + beginning finished goods inventory − budgeted unit sales B. beginning finished goods inventory + budgeted unit sales − targeted ending finished goods inventory C. budgeted unit sales + targeted ending finished goods inventory + beginning finished goods inventory D. budgeted unit sales + targeted ending finished goods inventory − beginning finished goods inventory

Compared to variable overhead costs planning, fixed overhead cost planning has an additional strategic issue beyond undertaking only essential activities and efficient operations. That additional requirement is best described as: A. identifying essential value-adding activities B. focusing on the highest possible quality C. increasing the linearity between total costs and volume of production D. choosing the appropriate level of capacity that will benefit the company in the long-run

Distinguish direct costs from indirect costs. A. Direct costs are those that change in total in proportion to changes in the related level of total activity or volume while indirect costs are those that remain unchanged in total for a given time period, despite wide changes in the related level of total activity or volume. B. Direct costs include the acquisition costs of all materials that eventually become part of the cost object and can be traced to the cost object in an economically feasible way while indirect costs include compensation of all manufacturing labor that can be traced to the cost object in an economically feasible way. C.Direct costs are historical or past costs incurred while indirect costs are predicted or forecasted costs. D.Direct costs are related to the particular cost object and can be traced to that cost object in a cost-effective way while indirect costs are related to the particular cost object but cannot be traced to that cost object in a cost-effective way.

Effective planning of fixed overhead costs includes ________. A. planning day-to-day operational decisions B. determining which products are to be produced C. eliminating value-added costs D. choosing the appropriate level of investment in productive assets

Extracts from cost information of Hebar Corp.: Simple L3 Pack Complex L7 Pack Total Setup cost allocated using direct labor−hours $19,900 $10,100 $30,000 Setup cost allocated using setup−hours $13,800 $16,200 $30,000 Assuming that setup−hours is considered a more effective cost drive for allocating setup costs than direct labor−hours. Which of the following statements is true of Hebar's setup costs under traditional costing? A. L3 pack is undercosted by $6,100 B. L7 pack is undercosted by $6,000 C. L7 pack is overcosted by $6,100 D. L3 pack is overcosted by

The ending balance in the Work-in-Process Control account represents the costs of all jobs that ________. A. are reported on the income statement B. have been completed and sold to customers C. have been completed but not sold D. have not been completed

The flexible−budget variance for direct cost inputs can be further subdivided into a ________. A. static−budget variance and a sales−volume variance B. static−budget variance and a price variance C. sales−volume variance and an efficiency variance D. price variance and an efficiency variance

The formula for the predetermined indirect cost rate is: A. Actual annual indirect costs divided by actual annual quantity of cost-allocation base B. Actual annual indirect costs divided by budgeted annual quantity of cost-allocation base C. Budgeted annual indirect costs divided by actual quantity of cost-allocation base D. Budgeted annual indirect costs divided by budgeted annual quantity of cost-allocation base

The spreading of underallocated or overallocated overhead among ending work-in-process, finished goods, and cost of goods sold is called ________. A. the adjusted allocation rate approach B. the weighted-average cost approach C. the write-off of cost of goods sold approach D. the proration approach

Time Again LLC produces and sells a mantel clock for $140.00per unit. In 2017, 42,125 clocks were produced and 36,000 were sold. Other information for the year includes: Direct materials $44.00 per unit Direct manufacturing labor $6.00 per unit Variable manufacturing costs $4.50 per unit Sales commissions $14.50 per part Fixed manufacturing costs $63.00 per unit Administrative expenses, all fixed $39.50 per unit What is the inventoriable cost per unit using absorption costing? A. $54.50 B. $108.50 C. $50.00 D. $117.50

Tom Magic Company manufactures various kinds of toys for different age groups. The company's flagship product is Rx. The company currently requires 8.50 labor hours to manufacture per unit of Rx. The company believes that because of numerous small improvements in the process, it will require 0.10 labor−hours less and hence will only 8.40 labor−hours in the next quarter. It will require 8.35 and 8.25 labor−hours in third and fourth quarter. The company has adopted ________. A. zero−based budgeting B. cost−based budgeting C. activity based budgeting D. kaizen budgeting

What should Gilpin do if Myers gives her a direct order to reclassify the costs? A. Gilpin should reclassify the costs and then include a note in the financial statements describing how the company classifies costs. B. Gilpin should resign immediately. C. Gilpin should reclassify the costs, otherwise she'll be in jeopardy of losing her job. D. Gilpin should discuss her concerns with Myers and consider consulting the IMA for ethical guidance. If Myers persists, the incident should be reported to the corporate controller.

When costs can be traced to a particular cost object in an economically feasible way, the cost is a: A. indirect cost B. budgeted cost C. allocated cost D. direct cost

When $10,0000 direct materials are requisitioned, which of the following would be the correct journal entry? A. Manufacturing Overhead Control $10,000 Materials Control $10,000 B. Materials Control $10,000 Work-in-Process Control $10,000 C. Accounts Payable Control $10,000 Materials Control $10,000 D. Work-in-Process Control $10,000 Materials Control $10,000

Which of the following best defines standard costing? A. It is the same as actual costing but done in real time. B. It is a system that allocates overhead costs on the basis of standard overhead cost rates times the actual quantities of the allocation based used. C. It is a system that traces direct cost to output by multiplying actual process or rates by actual quantities of inputs + allocates overhead by on the basis of actual quantities of the allocation base used. D. It is a system that traces direct costs to output produced by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced.

Which of the following companies will use a process costing system? A. a manufacturer of ships B. a custom kitchen cabinet company C. an advertising firm D. an oil refining company

Which of the following departments is most likely to be a profit center? A. the sales department of a company whose objective is to maximize the revenues B. the accounting department of a company that also assists in budgeting process C. the research and development department of a company D. the consulting department of a law firm

Which of the following is a disadvantage of using the standards developed by a firm itself to develop a budget? A. The expected future changes are not included in the standards. B. A firm's inefficiencies will be part of the data. C. The flexible−budget amounts are difficult to determine. D. They are not based on realized benchmarks and can be unrealistic

Which of the following is a reason for companies to use absorption costing for internal accounting? A. It does not take into account fixed manufacturing overhead while valuing inventory and hence is more suited for decision making. B. It measures the cost of all resources, whether manufacturing or nonmanufacturing, necessary to produce inventory. C. It is the required inventory method for internal accounting as per GAAP. D. It can help prevent managers from taking actions that make their performance measure look good but that hurt the income they report to shareholders.

Which of the following is not a primary function of the management accountant? A. Provides input into an entity's production and marketing decisions. B. Aids in the decision making to help an organization meet its goals. C. Uses information to develop and implement business strategy. D. Communicates financial results and position to external parties.

Which of the following is the basic formula of the direct materials usage budget? A. Ending inventory of direct materials + direct materials purchased and used during the period = direct materials to be used this period B. units used in production + target ending inventory − beginning inventory = purchases to be made for the budget period C. units used in production + target beginning inventory − ending inventory = purchases to be made for the budget period D. Beginning inventory of direct materials + direct materials purchased and used during the period = direct materials to be used this period

Which of the following is true about the assumptions underlying basic CVP analysis? A. Selling price varies with demand and supply of the product. B. Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant. C. Only selling price and variable cost per unit are known and constant. D. Only selling price, variable cost per unit, and total fixed costs are known and constant.

Which of the following is true of budgets when they are administered thoughtfully? A. They eliminate subjectivity in performance evaluation. B. They are a substitute the planning and coordination functions of management. C. They can eliminate the uncertainty faced by a company. D. They promote coordination within the subunits of a company.

Which of the following items will be same for a flexible budget and a master budget? A. total contribution margin B. total variable cost C. total expected revenues D. total expected fixed costs

Which of the following statements is true of activity−based costing? A. Activity based costing broadly averages or spreads the cost of resources uniformly to cost objects such as products or services. B. In activity−based costing, direct labor−hours is always the best allocation base to allocate all non−manufacturing indirect costs. C. The main advantage of activity−based costing over peanut−butter costing is the accurate distribution of all direct costs to the products. D. Activity based costing is more suited to companies with high product diversity than companies with single product line.

he budgeted fixed manufacturing cost rate is the lowest for ________. A. master-budget capacity utilization B. practical capacity C. normal capacity utilization D. theoretical capacity

________ is the level of capacity based on producing at full efficiency all the time. A.Normal capacity B.Practical capacity C.Demand capacity D.Theoretical capacity

________ reduces theoretical capacity for unavoidable operating interruptions. A. Normal capacity utilization B. Theoretical capacity C. Master-budget capacity utilization D. Practical capacity

Kennywood Inc., a manufacturing firm, is able to produce 1,500 pairs of pants per hour, at maximum efficiency. There are three eight−hour shifts each day. Due to unavoidable operating interruptions, production averages 875 units per hour. The plant actually operates only 28 days per month. Based on the current budget, Kennywood estimates that it will be able to sell only 504,000 units due to the entry of a competitor with aggressive marketing capabilities. But the demand is unlikely to be affected in future and will be around 515,000. Assume the month has 30 days. What is the practical capacity for the month? A.1,080,000 units B.1,008,000 units C. 588,000 units D.236,250 units

Management by exception is a practice whereby managers focus more closely on ________. A. variances in the larger departments B. unfavorable variances C. areas not operating as anticipated and less closely on areas that are operating as anticipated D. activity−based budgeting

Managers use cost−volume−profit (CVP) analysis to ________. A. analyse a firm's profitability and help to decide wealth distribution among its stakeholders B.forecast the cost of capital for a given period of time C. to study the behavior of and relationship among the elements such as total revenues, total costs, and income D. estimate the risks associated with a given job

Many companies have switched from absorption costing to variable costing for internal reporting ________. A.to comply with external reporting requirements as required by GAAP B.so the denominator level is more accurate C. to reduce the undesirable incentive to build up inventories that would show higher operating income D. to increase bonuses for managers

Product−cost cross−subsidization means that: A. when a company undercosts more than one of its products, it will overcost more than one of its other products B. when one product is overcosted it results in all other products being overcosted C. when a company undercosts one of its products, it will overcost at least one of its other products D. when one product is overcosted, it results in more than one other product being overcosted

Quantitative analysis methods estimate cost functions ________. A. using the time-and-motion studies B. based on analysis and opinions gathered from various departments C. using a formal mathematical method to fit cost functions to past data observations D. using the pooling of knowledge from each value chain function

Quantum Company uses the high−low method to estimate the cost function. The information for 2017 is provided below: Machine−hours Labor Costs Highest observation of cost driver 600 $36,000 Lowest observation of cost driver 400 $26,000 What is the constant for the estimated cost equation? A.$36,000 B.$30,000 C.$6,000 D.$26,000

Recognizing ABC information is not always perfect because ________. A. it never measures how the resources of an organization are used B. it lacks the simplicity that traditional systems used to have to allocate overhead costs C. it balances the need for better information against the costs of creating a complex system D. it mostly uses far too many indirect cost pools than what is actually required

SaleCo sells 8,400 units resulting in $120,000 of sales revenue, $35,000 of variable costs, and $45,000 of fixed costs. The contribution margin percentage is ________. A. 33.33% B. 62.5% C. 70.83% D. 29.17%

Schooner Corporation used the following data to evaluate its current operating system. The company sells items for $21 each and used a budgeted selling price of $21 per unit. Actual Budgeted Units sold 173,000 units 188,000 units Variable costs $1,083,000 $1,295,000 Fixed costs $803,000 $773,000 What is the static−budget variance of revenues? A. $15,000 favorable B. $15,000 unfavorable C. $315,000 unfavorable D. $315,000 favorable

Schooner Corporation used the following data to evaluate its current operating system. The company sells items for $29 each and used a budgeted selling price of $29 per unit. Actual Budgeted Units sold 175,000 units 190,000 units Variable costs $1,081,000 $1,293,000 Fixed costs $809,000 $774,000 What is the static−budget variance of variable costs? A. $35,000 favorable B. $35,000 unfavorable C. $212,000 favorable D. $212,000 unfavorable

Sensitivity analysis is _______. A. a way of seeing how employees will be affected by changes B. a way of determining how customers will react to new products C. a way of determining what will happen if assumptions change D. a way of seeing how far from budget actual results are

Sparkle Jewelry sells 600 units resulting in $80,000 of sales revenue, $31,000 of variable costs, and $22,000 of fixed costs. Breakeven point in units is ________. (Round to the nearest whole unit.) A. 711 units B. 649 units C.270 units D. 380 units

Standard material cost per kg of raw material is $5.25. Standard material allowed per unit is 7 Kg. Actual material used per unit is 7.25 Kg. Actual cost per kg is $4.50. What is the standard cost per output unit? A. $32.63 B. $31.50 C. $36.75 D. $38.06

Teddy Company uses a standard cost system. In May, $234,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $240,000. Which of the following variable manufacturing overhead entries would have been recorded for May? A. Work-in-Process Control 234,000 Accounts Payable Control and other accounts 234,000 B. Accounts Payable Control and other accounts 234,000 Variable Manufacturing Overhead Control 234,000 C. Work-in-Process Control 240,000 Variable Manufacturing Overhead Allocated 240,000 D. Accounts Payable Control and other accounts 240,000 Work-in-Process Control 240,000

The account analysis method estimates cost functions ________. A. using time-and-motion studies B. in a manner that cannot be usefully combined with any other cost estimation methods C. by classifying cost accounts as variable, fixed, or mixed based on qualitative analysis D. at a high cost, which renders it seldom used

The adjusted allocation approach yields the benefits of ________. A. allocating budgeted manufacturing overhead costs at the end of the year B. the proration approach C. timeliness and convenience of normal costing D. write-off to the cost of goods sold approach

The budgeted indirect-cost rate is calculated ________. A. at the end of the year B. during the year C. at the beginning of the year D. at the end of each quarter

The contribution margin income statement ________. A. reports gross margin B. categorizes costs as either direct or indirect C. can be used to predict operating income at different levels of activity D. is allowed for external reporting to shareholders

The cost to be predicted and managed is referred to as the ________. A. cost driver B. independent variable C. dependent variable D. regression

Benchmarking is a process ________. A. in which overhead costs are absorbed into units of output, or 'jobs' B. which is based on calculating the breakeven point and analyzing the consequences of changes in various factors calculating the breakeven point C. in which the underlying processes of an organization is optimized using a systematic approach to achieve more efficient goals D. in which a firm's performance levels are compared against the best levels of performance in competing companies or in companies having similar processes

Which of the following statements is true of absorption costing? A.Absorption costing allocates fixed manufacturing overhead to actual units produced during the period. B.Absorption costing carries over nonmanufacturing costs to the future periods. C.Absorption costing shows the same level of profit as variable costing irrespective of the level of inventories. D.Absorption costing allocates total manufacturing cost using the budgeted level of production for a particular year.

Which of the following steps can a management take to reduce the undesirable effects of absorption costing? A.It can encourage using nonfinancial measures such as units in ending inventory compared to units in sales. B.It can evaluate managers on quarterly basis rather than the usual yearly period thereby mitigating the undesirable effects of absorption costing. C.It can empower managers to decide the timings of maintenance of plants thereby ensuring that the production is not affected. D.It can delegate powers to managers to decide which orders they want to accept so that any order which will lead to inventory build-up can be rejected.

Why do managers consider direct costs to be more accurate than indirect costs? A. Allocating indirect costs is more subjective and generally more difficult to assign to a cost object than are direct costs. Therefore, direct costs are deemed by managers to be more accurate costs than indirect costs. B. When costs are allocated, managers are less certain whether the cost allocation base accurately measures the resources demanded by a cost object, and therefore, direct costs are considered to be more accurate. C. Cost tracing, which is used when assigning direct costs to a particular cost object, is more accurate than cost allocation, which is used to assign indirect costs to the same cost object. D. All of the above.

Which of the following is not true about the cause-and-effect criterion when estimating a cost function? A.Knowledge of operations can help managers discover cause-and-effect relationships. B.Correlation of variables proves cause-and-effect. C.Managers must be careful not to equate high correlation between two variables to mean that either variable causes the other. D.Contractual arrangements may show a direct cause and effect between two variables.

Which of the following is true of variance? A. Managers' performance must be evaluated solely on single variance. B. Managers should not simply interpret a favorable variance as good but should understand why the variance occurred. C. A small variance or zero variance definitively reveals efficient performance. D. Managers should interpret a favorable variance as "good news".

Which of the following statements is true about responsibility accounting statements? A. Responsibility accounting excludes fixed costs and variable costs. B. Responsibility accounting segregates uncontrollable costs from controllable costs. C. Responsibility accounting excludes controllable costs. D. Responsibility accounting segregates fixed costs and variable costs.

While−You−Train is a not−for−profit organization that aids the unemployed by supplementing their incomes by $7,000 annually, while they seek new employment skills. The organization has fixed costs of $200,000 and the budgeted appropriation for the year totals $750,000. How many individuals can receive financial assistance this year? A. 29 people B. 79 people C. 136 people D. 108 people

__________ demands that Gilpin perform her professional duties in accordance with relevant laws, regulations, and technical standards and provide decision support information that is accurate. A. Integrity B. Competence C. Credibility D. Stupidity

________ is based on the level of capacity utilization that satisfies average customer demand over periods generally longer than one year. A. Master-budget capacity utilization B. Normal capacity utilization C. Practical capacity D. Theoretical capacity

A cost system determines the cost of a cost object by ________. A. accumulating costs B. assigning costs C. accumulating and then assigning costs D. assigning and then accumulating costs

If the total cost function is y = 5,700 + 10X, calculate the variable cost for 4,300 units. A.$5,700 B.$48,700 C.$43,000 D.$57,000

Crimson Services, Inc., employs 8 individuals. They are all paid $16.50 per hour. How would total costs of personnel be classified? A. fixed cost B. variable cost C. irrelevant cost D. mixed cost

Define cost object and give three examples. A. A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, and a customer. B. A cost object is a resource sacrificed or forgone to achieve a specific objective. Examples include direct materials, direct labor, and advertising. C. A cost object is a cost incurred (historical or past cost), as distinguished from a budgeted cost, which is a predicted or forecasted cost (a future cost). Examples include materials, labor, and overhead. D. A cost object is the collection of cost data in some organized way by means of an accounting system. Examples include accumulated costs, overhead, and direct labor.

Describe the overtime-premium and idle-time categories of indirect labor. A.Overtime premium is the wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates. Idle time is a subclassification of indirect labor that represents wages paid for unproductive time caused by lack of orders, machine breakdowns, poor scheduling, etc. B. Overtime premium is calculated by multiplying the total overtime hours worked by the workers' straight-time wage rates. Idle time costs are calculated by multiplying the number of unproductive hours by the overtime premium wage rate. C. Idle time is the wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates. Overtime premium is a subclassification of indirect labor that represents wages paid for unproductive time caused by lack of orders, machine breakdowns, poor scheduling, etc. D. Both A. and B.

Effective planning of variable overhead costs includes ________. A. redesigning products or processes to use fewer resources B. eliminating value-added costs C. choosing the appropriate level of investment D. reorganizing management structure

Elite Stationary 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 $250,000 $350,000 Annual salary of each employee $150,000 $170,000 Annual salary of each trainee $30,000 $35,000 Total professional labor−hours 40,000 dlh 50,000 dlh When a normal costing system is used, clients using proportionately more full−time employees than trainees will ________. A. be under billed for actual resources used B. result in an under allocation of direct costs C. be over billed for actual resources used D. be billed accurately for actual resources used

Factors affecting the classification of a cost as direct or indirect include A. materiality of the cost, available information-gathering technology, and design of operations. B. materials, labor, and factory overhead. C. unit costs, inventory production stage, and contractual agreements. D. cost behavior patterns, cost drivers, and relevant ranges.

Fixed costs equal $16,000, unit contribution margin equals $35, and the number of units sold equal 1,300. Operating income is ________. A. $29,500 B. $45,500 C. $16,000 D. $61,500

Garfield Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory $240,000 Fixed manufacturing overhead in production 850,000 Ending fixed manufacturing overhead in inventory 70,000 Beginning variable manufacturing overhead in inventory $20,000 Variable manufacturing overhead in production 100,000 Ending variable manufacturing overhead in inventory 30,000 What is the difference between operating incomes under absorption costing and variable costing? A. $170,000 B. $120,000 C. $100,000 D. $40,000

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30−gallon heavy−duty plastic container. Budgeted quantity Budgeted price Direct materials 0.40 pounds $20 per pound Direct labor 0.80 hours $15 per hour During July, GII produced and sold 4,000 containers using 1,700 pounds of direct materials at an average cost per pound of $15 and 3,225 direct manufacturing labor hours at an average wage of $15.25 per hour. The direct material price variance during July is ________. A. $8,500 favorable B. $8,500 unfavorable C. $2,000 unfavorable D. $20,000 unfavorable

Goodness-of-fit measures how well the predicted values in a cost estimating equation ________. A. match the actual cost observations B. determine the level of activity C. rely on the independent variable D. match the cost driver

Gregory Enterprises 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 $320,000 Direct labor−hours 800,000 Machine maintenance $120,000 Machine−hours 960,000 Facility rent $200,000 Square feet of area 100,000 Total overhead costs $640,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor−hours 200 Machine−hours 1,600 Square feet of area 50 Which method of allocation probably best estimates actual overhead costs used? Why? A. Three activity−cost drivers because they best reflect the relative consumption of resources. B. Single direct labor−hours cost driver because it is best to allocate total costs uniformly to individual jobs. C. Single direct labor−hours cost driver because it is easiest to analyze and interpret. D. Three activity−cost drivers because product costs can be significantly cross−subsidized.

Harland Corporation currently produces cardboard boxes in an automated process. Expected production per month is 21,000 units, direct material costs are $2.00 per unit, and manufacturing overhead costs are $6,000 per month. Manufacturing overhead is all fixed costs. What are the flexible budget for 7,000 and 21,000 units, respectively? A. $20,000; $48,000 B. $7,000; $48,000 C. $20,000; $34,000 D. $7,000; $34,000

Sky High Company has two departments, X and Y. The following estimates are for the coming year: X Y Direct manufacturing labor-hours 20,000 30,000 Machine-hours 30,000 20,000 Manufacturing overhead $300,000 $330,000 A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is ________. A. $12.60 per direct labor-hour B. $27.50 per direct labor-hour C. $25.00 per direct labor-hour D. $16.50 per direct labor-hour

High Tech Manufacturing Inc., incurred total indirect manufacturing labor costs of $480,000. The company is labor intensive. Total labor hours during the period were 4,200. Using qualitative analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver−labor−hours. They separated the total indirect manufacturing labor costs into costs that are fixed ($130,000 based on 8,100 hours of labor) and costs that are variable ($350,000) based on the number of labor−hours used. The company has estimated 7,600 labor hours during the next period. Which of the following represents the correct linear cost function? A. y = $130,000 + $83.33X B. y = $350,000 + $59.26X C. y = $130,000 + $114.29X D. y = $350,000 + $43.21X

In a costing system, ________. A. a cost-allocation base can be either financial or nonfinancial B. cost allocation assigns direct costs C. a cost object should be a product and not a department or a geographic territory D. cost tracing allocates indirect costs

Jean Peck's Furniture manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $500.00 after negotiations. In the month of January, it manufactures 3,200 tables and sells 2,250 tables. Actual fixed costs are the same as the amount of fixed costs budgeted for the month. The following information is provided for the month of January: Variable manufacturing costs $160.00 per unit Fixed manufacturing costs $105,000 per month Fixed Administrative expenses $28,000 per month At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 950 units. The company also incurs a sales commission of $10.00 per unit. What is the cost of goods sold per unit when using absorption costing? A.$192.81 B.$127.19 C.$202.81 D.$160.00

Jean Peck's Furniture manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $600.00 after negotiations. In the month of January, it manufactures 3,000 tables and sells 2,600 tables. Actual fixed costs are the same as the amount of fixed costs budgeted for the month. The following information is provided for the month of January: Variable manufacturing costs $140.00 per unit Fixed manufacturing costs $95,000 per month Fixed Administrative expenses $26,000 per month At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 400 units. The company also incurs a sales commission of $14.00 per unit. What is the gross margin when using absorption costing? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.) A.$1,113,658 B.$1,154,000 C.$1,044,990 D.$1,402,600

Job costing is likely to be used by________. A. advertising agencies B. breakfast cereal producers C. mortgage payment processors D. oil refining companies

Johnson Superior Products Inc. produces hospital equipment and the setup requirements vary from product to product. Johnson produces its products based on customer orders and uses ABC costing. In one of its indirect cost pools, setup costs and distribution costs are pooled together. Costs in this pool are allocated using number of customer orders for the easiness of costing operations. Based on the information provided, which of the following arguments is valid? A. Johnson has failed to use the correct cost driver as the cost−allocation base for setup costs. B. Johnson has unnecessarily wasted resources by classifying setup and distribution costs as they could have been considered as direct costs. C. All costs in a homogeneous cost pool have the same or a similar cause−and−effect relationship with the single cost driver that is used as the cost−allocation base for Johnson. D. Johnson has clearly failed to identify as many direct costs as is economically feasible.

Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $13 each and used a budgeted selling price of $13 per unit. Actual Budgeted Units sold 46,000 units 31,000 units Variable costs $167,000 $154,000 Fixed costs $45,000 $52,000 What is the static−budget variance of variable costs? A. $13,000 unfavorable B. $15,000 favorable C. $7,000 favorable D. $6,000 unfavorable

Milan Company 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 $685,000 Direct labor−hours 940,000 Machine maintenance $132,000 Machine−hours 960,000 Facility rent $217,000 Square feet of area 110,000 Total overhead costs $1,034,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor−hours 230 Machine−hours 1,500 Square feet of area 70 Under activity−based costing, what is the amount of machine maintenance costs allocated to the Mossman Job? (Do not round any intermediary calculations.) A. $206.25 B. $216.50 C. $1,615.63 D. $1,650.00

Name the four areas in which standards of ethical conduct exist for management accountants in the United States. What organization sets forth these standards? A. (1) Competence, (2) Confidentiality, (3) Integrity, and (4) Credibility. These standards are set by the Institute of Management Accountants (IMA). B. (1) Honesty, (2) Fairness, (3) Objectivity, and (4) Responsibility. These standards are set by the Institute of Management Accountants (IMA). C. (1) Competence, (2) Confidentiality, (3) Honesty, and (4) Fairness. These standards are set by Generally Accepted Auditing Standards (GAAS). D. (1) Honesty, (2) Fairness, (3) Integrity, and (4) Objectivity. These standards are set by the Council of Management Accountants (CMA).

Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs: A. Identify indirect costs B. Compute the total cost of the job C. Select cost-allocation bases D. Compute the indirect cost rate A. CADB B. DCAB C. BACD D. ACDB

Sensitivity analysis is a simple approach to recognizing uncertainty. A. True B. False

Service companies and not−for−profit organizations ________. A. can use CVP by focusing on measuring the organization's output B. cannout use CVP because there is no way to distinguish fixed and variable costs C. cannout use CVP because they don't manufacture a product D. can use CVP by treating all costs as variable

Which cost estimation method would involve analyzing direct labor subsidiary accounts and classifying costs as as variable, fixed, or mixed to derive cost estimation formulas? A. the account analysis method B. the marginal costing method C. the incremental costing method D. the conference method

The actual information pertains to the third quarter. As part of the budgeting process, the controller for Foley Manufacturing had developed the following static budget for the third quarter. The company is in the process of preparing the flexible budget and understanding the results.results. Actual Results Flexible Budget Static Budget Sales volume (in units) 11,000 ________ 10,000 Sales revenues $238,000 $ $230,000 Variable costs 150,000 $ ________ 180,000 Contribution margin $88,000 $ $50,000 Fixed costs 36,000 $ ________ 35,000 Operating profit $52,000 $ ________ $15,000 The primary reason for high actual operating profits was ________. A. the variable−cost variance B. lower sales volume than planned C. flexible budget variance for revenues D. increased fixed costs

The breakeven point is the activity level where ________. A. revenues equal the sum of variable and fixed costs B. revenues equal fixed costs C. revenues equal variable costs D. contribution margin equals total costs

The collection of cost data in an organized way, such as in various categories such as materials, labor, and manufacturing overhead, is called: A. cost accumulation B. cost application C. cost reporting D. cost assignment

The conference method estimates cost functions ________. A.based on analysis and opinions gathered from various departments B.using quantitative methods that can be very time consuming and costly C.using time-and-motion studies D.by mathematically analyzing the relationship between inputs and outputs in physical terms

The flexible budget contains ________. A. budgeted amounts for actual output B. actual costs for planned output C. actual costs for actual output D. static budget amounts for planned output

The margin of safety is the difference between ________. A. budgeted revenues and breakeven revenues B. actual sales margin and budgeted sales margin C. budgeted expenses and breakeven expenses D. actual operating income and budgeted operating income

The revenues budget reveals A. the expected level of unit sales multiplied by expected unit selling prices for company products B. expected cash flows for each product C. the variance of sales from actual for each product D. actual unit sales from last year multiplied by the budget period's expected selling prices for each product

The selling price per unit less the variable cost per unit is the ________. A. contribution margin per unit B. fixed cost per unit C. gross margin D. margin of safety

The variable overhead flexible-budget variance can be further explained by calculating the: A. spending variance and the efficiency variance B. price variance and the efficiency variance C. static-budget variance and sales-volume variance D. sales-volume variance and the spending variance

Throughput contribution equals ________. A.revenues minus all direct material cost of goods sold B.variable costs minus fixed costs C.revenues minus manufacturing overhead D.revenues minus all direct labor costs

Time Again LLC produces and sells a mantel clock for $100per unit. In 2017, 41,000 clocks were produced and 37,000 were sold. Other information for the year includes: Direct materials $42 per unit Direct manufacturing labor $7 per unit Variable manufacturing costs $4.00 per unit Sales commissions $14.50 per part Fixed manufacturing costs $64.00 per unit Administrative expenses, all fixed $38.50 per unit What is the inventoriable cost per unit using absorption costing? A.$117.00 B.$53.00 C.$106.00 D.$49.00

Time Again, LLC produces and sells a mantel clock for $100 per unit. In 2017, 42,125 clocks were produced and 37,958 were sold. Other information for the year includes: Direct materials $43 per unit Direct manufacturing labor $5 per unit Variable manufacturing costs $3.50 per unit Sales commissions $14.50 per part Fixed manufacturing costs $65.00 per unit Administrative expenses, all fixed $37.50 per unit What is the inventoriable cost per unit using variable costing? A.$51.50 B.$48.00 C.$66.00 D.$103.50

Using the _________ standard, Gilpin should carry out duties ethically and communicate unfavorable as well as favorable information and professional judgments or opinions. A. Integrity B. Competence C. Credibility D. Stupidity

What are three different types of inventory that manufacturing companies hold? A. Direct materials, work-in-process, and finished goods B. Direct materials, direct labor, and overhead C. Production, retail, and merchandising D. Variable, fixed, and overhead

When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase, the most likely result would be to report a(n) ________. A. unfavorable fixed overhead flexible-budget variance B. unfavorable variable overhead spending variance C. favorable production-volume variance D. favorable variable overhead efficiency variance

Where does the management accounting function fit into an organization's structure? A. The controller is the chief management accounting executive. The corporate controller reports to the chief financial officer, a staff function. Companies also have business unit controllers who support business unit managers or regional controllers who support regional managers in major geographic regions. B. The internal auditor is the chief management accounting executive. The internal auditor reports to the external auditor, a staff function. Companies also have business unit auditors or regional auditors who support regional managers in major geographic regions. C. The internal auditor is the chief management accounting executive. The internal auditor is the highest position within an organization. The internal auditor does not report to anyone. D. The external auditor is the chief management accounting executive. The external auditor reports to the internal auditor, a staff function. Companies also have business unit auditors or regional auditors who support regional managers in major geographic regions.

Which cost estimation method uses time-and-motion studies to reveal that to make a high quality men's suit jacket, it takes 3 hours of direct labor effort per jacket and 5 minutes of a salaried manager to perform quality control? A. the industrial engineering method B. the cash accounting method C. the high-low method D. the accrual accounting method

Describe the overtime-premium and idle-time categories of indirect labor. A. Overtime premium is the wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates. Idle time is a subclassification of indirect labor that represents wages paid for unproductive time caused by lack of orders, machine breakdowns, poor scheduling, etc. B. Overtime premium is calculated by multiplying the total overtime hours worked by the workers' straight-time wage rates. Idle time costs are calculated by multiplying the number of unproductive hours by the overtime premium wage rate. C. Idle time is the wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates. Overtime premium is a subclassification of indirect labor that represents wages paid for unproductive time caused by lack of orders, machine breakdowns, poor scheduling, etc. D. Both A. and B.

A cost driver should be measurable and have an economically plausible relationship with the dependent variable which means: A. that the relationship is based on correlation B. that the relationship is based on a cause-and-effect criterion and makes economic sense to management C. that the cost driver can be identified in an economically feasible way D. that the relationship must be based on a physical relationship

A favorable variance indicates that ________. A. budgeted costs are less than actual costs B. actual revenues exceed budgeted revenues C. budgeted contribution margin is more than the actual amount D. actual operating income is less than the budgeted amount

A quality control manager of a golf ball maker is most likely to be responsible for a(n) ________. A. revenue center B. cost center C. investment center D. profit center

A revenue driver is defined as ________. A. the only factor that can influence a change in selling price B. any factor that affects revenues C. the only factor that can influence a change in demand D. any factor that affects costs and revenues

A stretch budget is a budget that ________. A. is impossible to implement in a cost center B. represents a challenging, but achievable level of performance C. crosses more than one responsibility center D. is designed to include the effects of exchange rate fluctuations

Advanced Manufacturing Company reported: Actual fixed overhead $460,000 Fixed manufacturing overhead spending variance $13,000 favorable Fixed manufacturing production−volume variance $18,000 unfavorable To isolate these variances at the end of the accounting period, John would debit Fixed Manufacturing Overhead Allocated for ________. A. $447,000 B. $455,000 C. $465,000 D. $460,000

An efficiency variance reflects the difference between ________. A. an actual input quantity used in a company and its main competitors B. an actual input quantity and a budgeted input quantity C. a standard input quantity in a company and its main competitors D. actual input quantities used last period and current period

An experience curve ________. A.is a narrower application of the learning curve B.measures the decline in cost per unit as production decreases for various value-chain functions such as marketing as production increases C.only measures the decline in labor-hours per unit as units produced increases D.measures the increase in cost per unit as productivity increases

At the Wild Cat Group Company, the cost of the library and information center has always been charged to the various departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information center costs. Total library and information center costs are $205,000. Department Number of employees A165 B520 C165 Number of engineers A0 B60 C20 If the number of engineers is considered the cost driver, what amount of library and information center costs will be allocated to Department A? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.) A. $125,412 B.$0 C.$36,371 D. $39,794

A ________ is a grouping of individual indirect cost items. A. cost-allocation base B. cost pool C. cost assignment D. job-costing system

A ________ is anything for which a measurement of costs is desired. A. cost pool B. cost object C. cost-application base D. cost-allocation base

Bennet Company employs 20 individuals. Eighteen employees are paid $18 per hour and the rest are salaried employees paid $3,000 a month. Which of the following is the total cost function of personnel? A. y = a B. y = a + bX C. y = bX D. y = b

Better Products Inc. planned to use $35 of material per unit but actually used $30 of material per unit, and planned to make 1,520 units but actually made 1,330 units. The sales−volume variance for materials is ________. A. $5,700 favorable B. $6,650 favorable C. $6,650 unfavorable D. $5,700 unfavorable

Budgets should ________. A. be administered rigidly B. not be so rigid that if conditions change, adjustments in spending can be made C. only be developed for short periods of time such as quarters D. include only variable costs

Coast to Coast Bus Lines acquired the following data about the operating cost of three of its top competitors. Operating cost per seat per mile Competitor A $.11 Competitor B $.15 Competitor C $.16 Management decides to use the average operating cost per seat per mile as a mark. Coast to Coast per seat is 12.5 cents per mile. A. It is equal to the mark B. It compares favorably C. It compares favorably to the best performing competitor D. It compares unfavorably

Cost variances should be investigated ________. A. when they are considered within the "in−control" range as determined by management B. when the variance is more than a certain percentage of budgeted costs, as determined by management C. when the variance is less than a certain percentage of budgeted costs, as determined by management D. even though the cost of investigation exceeds the benefit as determined by management

Explain the term supply chain and its importance to cost management. A. Supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers within an individual organization. Cost management is most effective when it integrates and coordinates activities across each business function in an individual company's value chain. B. Supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same organization or in other organizations. Cost management is most effective when it integrates and coordinates activities across all companies in the supply chain as well as across each business function in an individual company's value chain. C. Supply chain describes the sequence of business functions in which customer usefulness is added to products or services. Cost management is most effective when it integrates and coordinates activities across all companies in the supply chain as well as across each business function in an individual company's value chain. D. Supply chain describes the sequence of business functions in which customer usefulness is added to products or services. Cost management is most effective when it integrates and coordinates activities across each business function in an individual company's value chain.

Explain why unit costs must often be interpreted with caution. A. Unit costs include overtime premium and idle time charges. It can be erroneous, then, to multiply the unit cost by activity or volume change to predict changes in total costs at different levels of production efficiencies. B. Unit costs are computed by dividing some amount of total costs by the related number of units. In many cases, the total costs include a fixed cost that will not change despite changes in the number of units. Therefore, it can be misleading to multiply the unit cost by activity or volume change to predict changes in total costs at different activity or volume levels. C. Units costs are related to a particular cost object, but cannot be traced to it in an economically feasible way. The assignment of units costs is much more subjective than the assignment of direct costs, and therefore, unit cost information should be interpreted with caution. D. Unit costs often fall outside of the relevant range of predicting total cost for an activity at different levels of activity or volume. When costs fall outside of the relevant range, the predictive nature of estimating the total cost may be impaired, and thus unit costs must be interpreted with caution.

Extracts from cost information of Hebar Corp.: Simple L3 Pack Complex L7 Pack Total Setup cost allocated using direct labor−hours $19,250 $5,750 $25,000 Setup cost allocated using setup−hours $13,400 $11,600 $25,000 Assuming that setup−hours is considered a more effective cost drive for allocating setup costs than direct labor−hours. Which of the following statements is true of Hebar's setup costs under traditional costing? A. L7 pack is undercosted by $5,750 B. L3 pack is overcosted by $5,850 C. L3 pack is undercosted by $5,850 D. L7 pack is overcosted by $5,850

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity−cost drivers Account inquiry $100,000 10,000 hours Account billing $275,000 5,000,000 lines Account verification accounts $91,000 40,000 accounts Correspondence letters $40,500 6,000 letters Total costs $506,500 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 800,000 lines 650,000 lines Account verification accounts 6,000 accounts 4,000 accounts Correspondence letters 1,500 letters 1,900 letters How much of the account inquiry cost will be assigned to Department A? A. $100,000 B. $27,000 C. $50,000 D. $42,000

First Class, Inc., expects to sell 23,000 pool cues for $13.00 each. Direct materials costs are $2.00, direct manufacturing labor is $6.00, and manufacturing overhead is $0.84 per pool cue. The following inventory levels apply to 2019: Beginning inventory Ending inventory Direct materials 33,000 units 33,000 units Work−in−process inventory 0 units 0 units Finished goods inventory 1,000 units 3,100 units On the 2019 budgeted income statement, what amount will be reported for cost of goods sold? A. $230,724 B. $203,320 C. $184,756 D. $221,884

Fixed overhead costs include ________. A. indirect materials B. leasing of machinery used in a factory C. energy costs D. the cost of sales commissions

For fixed manufacturing overhead, there is no ________. A. production-volume variance B. efficiency variance C. flexible-budget variance D. spending variance

Goodard Inc. planned to use $152 of material per unit but actually used $143 of material per unit, and planned to make 1,140 units but actually made 990 units. The flexible−budget amount for materials is ________. A. $163,020 B. $150,480 C. $141,570 D. $173,280

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10−gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.9 pounds $90 per pound Direct labor 0.2 hours $30 per hour During June, Heavy Products produced and sold 18,000 containers using 25,000 pounds of direct materials at an average cost per pound of $93 and 16,200 direct manufacturing labor−hours at an average wage of $30.75 per hour. June's direct material flexible−budget variance is ________. A. $54,000 unfavorable B. $867,000 unfavorable C. $12,150 favorable D. $75,000 favorable

Helping Hands is a nonprofit organization that supplies electric fans during summer for individuals in need. Fixed costs are $260,000. The fans cost $26 each. The organization has a budgeted appropriation of $690,000. How many people can receive a fan during summer? A. 36,539 people B. 16,539 people C. 26,539 people D. 10,000 people

Sensitivity analysis helps managers evaluate risks ________. A. by identifying inconsistencies in underlying assumptions and actual conditions B. by showing the effects of changes to the original data or an underlying assumption C. by identifying gaps in the production process using information on setups needed to manufacture products D. by removing the effects of foreign currency exposure and other uncontrollable factors

________ is the level of capacity utilization that managers expect for the current budget period, which is typically one year. A. Practical capacity B. Normal capacity utilization C. Master-budget capacity utilization D. Theoretical capacity

How does management accounting differ from financial accounting? A. Management accounting measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization. Financial accounting measures, analyzes, and reports financial and nonfinancial information relating to the costs of acquiring or using resources in an organization. B. Management accounting measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization. Financial accounting measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP). C. Management accounting measures, analyzes, and reports financial and nonfinancial information relating to the costs of acquiring or using resources in an organization. Financial accounting measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP). D. Management accounting measures, analyzes, and reports financial and nonfinancial information relating to the costs of acquiring or using resources in an organization. Financial accounting measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization.

If a sales−volume variance was caused by poor−quality products, then the ________ would be in the best position to explain the variance. A. sales supervisor B. production manager C. logistic manager D. financial supervisor

In a company with low operating leverage, ________. A. fixed costs are more than the contribution margin B. less risk is assumed than in a highly leveraged firm C. there is a higher possibility of net loss than a higher−leveraged firm D. contribution margin and operating income are inversely related

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

Jupiter Corporation incurred fixed manufacturing costs of $19,000 during 2017. Other information for 2017 includes: The budgeted denominator level is 2,300 units. Units produced total 2,600 units. Units sold total 1,800 units. Variable cost per unit is $5.00 Beginning inventory is zero. The fixed manufacturing cost rate is based on the budgeted denominator level. Under absorption costing, total manufacturing costs expensed on the income statement (excluding adjustments for variances) total ________. (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.) A.$14,868 B.$23,868 C.$27,868 D.$34,476

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials $60,000 $2,400 Direct labor $15,000 $600 Manufacturing overhead costs $50,000 Machine-hours 100,000 mh 1,000 mh For Lancelot Manufacturing, what is the annual manufacturing overhead cost-allocation rate? A. $1.25 B. $0.50 C. $50.00 D. $0.75

Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. Actual Budgeted Units sold 49,000 units 33,000 units Variable costs $166,000 $157,000 Fixed costs $38,000 $57,000 What is the static−budget variance of operating income? A. $170,000 unfavorable B. $170,000 favorable C. $151,000 favorable D. $151,000 unfavorable

Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $19 each and used a budgeted selling price of $19 per unit. Actual Budgeted Units sold 48,000 units 39,000 units Variable costs $167,000 $152,000 Fixed costs $41,000 $50,000 What is the static−budget variance of revenues? A. $6,000 favorable B. $171,000 favorable C. $9,000 unfavorable D. $171,000 unfavorable

Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 28,475 units Budgeted machine−hours 17,085 hours Budgeted variable manufacturing overhead costs for 28,475 units $375,870 Actual output units produced 31,475 units Actual machine−hours used 14,500 hours Actual variable manufacturing overhead costs $408,431 What is the flexible−budget amount for variable manufacturing overhead? A. $408,431 B. $415,470 C. $369,502 D. $375,870

Nonfinancial performance measures ________. A. are often the sole basis of a manager's performance evaluations B. are usually used in combination with financial measures for control purposes C. allow managers to make informed tradeoffs D. are rarely used to evaluate overall efficiency

Pacific Company sells only one product for $15 per unit, variable production costs are $5 per unit, and selling and administrative costs are $1.50 per unit. Fixed costs for 12,000 units are $5,000. The operating income is ________ when 12,000 units are sold. A.$6.50 per unit B. $8.08 per unit C. $9.58 per unit D. $8.50 per unit

Put the following steps in order for using the high-low method of estimating a cost function: A = Identify the cost function B = Calculate the constant C = Calculate the slope coefficient D = Identify the highest and lowest observed values A. D C B A B. A D C B C. C D A B D. D C A B

Sales of Blistre Autos are 380,000, variable cost is 250,000, fixed cost is 80,000 tax rate is 30%. Calculate the operating leverage of the company. A. 1.6 times B. 2.6 times C. 1.92 times D. 3.71 times

The following information pertains to Monroe Company: Month Sales Purchases January $60,000 $32,000 February $83,000 $47,000 March $105,000 $62,000 • Cash is collected from customers in the following manner: Month of sale 35% Month following the sale 65% • 45% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. • Labor costs are 30% of sales. Other operating costs are $38,000 per month (including $9,000 of depreciation). Both of these are paid in the month incurred. • The cash balance on March 1 is $10,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. How much cash will be collected from customers in March? A. $97,300 B. $90,700 C. $119,750 D. $105,000

The method that restates all overhead entries in the general ledger and subsidiary ledgers using actual cost rates rather than budgeted cost rates is called ________. A. the proration approach B. the adjusted allocation rate approach C. the write-off of cost of goods sold approach D. the weighted-average cost approach

The order to follow when preparing the operating budget is ________. A. cash expenditures budget, revenues budget, and production budget B. revenues budget, production budget, direct manufacturing labor costs budget , and cost of goods sold C. revenues budget, manufacturing overhead costs budget, and production budget D. revenues costs of goods sold budget, production budget, and cash budget

The practice of developing reasonably challenging budgets tend to help: A. set unrealistic expectations and are perceived as overly ambitious and unachievable B. motivate improved performance as employees work more intensely to avoid failure C. discourage out−of−the−box and creative thinking as there is very little room for error D. increase anxiety without motivation not meeting them is viewed as a failure

The sales−volume variance is sometimes due to ________. A. the difference between selling price and budgeted selling price B. quality problems leading to customer dissatisfaction C. unexpected increase in manufacturing labor time D. unexpected increase in the use of quantities of inputs of raw material

The contribution-margin format is used for ________. A.job order costing income statement B.variable costing income statement C.absorption costing income statement D.mixed costing income statement

Under absorption costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________. A. not affecting the manager's bonus B. greater operating income and therefore increasing the manager's bonus C. less operating income and therefore decreasing the manager's bonus D. being unable to determine the manager's bonus using only the above information

Where does the management accounting function fit into an organization's structure? A. The external auditor is the chief management accounting executive. The external auditor reports to the internal auditor, a staff function. Companies also have business unit auditors or regional auditors who support regional managers in major geographic regions. B. The controller is the chief management accounting executive. The corporate controller reports to the chief financial officer, a staff function. Companies also have business unit controllers who support business unit managers or regional controllers who support regional managers in major geographic regions. C. The internal auditor is the chief management accounting executive. The internal auditor is the highest position within an organization. The internal auditor does not report to anyone. D. The internal auditor is the chief management accounting executive. The internal auditor reports to the external auditor, a staff function. Companies also have business unit auditors or regional auditors who support regional managers in major geographic regions.

Which of the following best describes a rolling budget? A. It is a budget that continually outlines the amount required to roll over debt in a future period. B. It is created continually by adding a month, quarter, or year to the period just ended C. It is a budget that outlines budgeted expenses while utilizing a moving average D. It is a budget that is submitted to a bank at the beginning of every month as per a loan covenant.

Which of the following can be a reason for a favorable price variance for direct materials? A. workers taking less time to produce the products B. a decrease in the price of materials due to an oversupply of materials C. less amount of material used during production than planned for actual output D. an unexpected increase in the price of materials

Which of the following increases (are debited to) the Work-in-Process Control account? A. customer services costs B. direct manufacturing labor costs C. actual plant insurance costs D. marketing expenses

Which of the following is a financial budget? A. cash receivables budget B. budgeted balance sheet C. cost of goods sold budget D. production budget

Which of the following is a sign that an ABC system may be useful for an organization? A. Many indirect costs are described as batch−level costs, product−sustaining costs, or facility−sustaining costs. B. Operations staff disagrees with accountants about the costs of manufacturing and marketing products and services. C. Products make similar demands on resources because of similarities in volume, process steps, batch size, or complexity. D. Significant amounts of indirect costs are allocated using multiple cost pools.

Corporation, a manufacturing company, is analyzing its cost structure in a project to achieve some cost savings. Which of the following statements is/are correct? I. The cost of the direct materials in Applewhite's products is considered a variable cost. II. The cost of the depreciation of Applewhite's plant machinery is considered a variable cost because Applewhite uses an accelerated depreciation method for both book and income tax purposes. III. The cost of electricity for Applewhite's manufacturing facility is considered a fixed cost, even if the cost of the electricity has both variable and fixed components. A. I, II, and III are correct. B. I only is correct. C. II and III only are correct. D. None of the listed choices is correct.

________ is used to record and accumulate all the costs assigned to a specific job. A. Labor-requisition record B. Job-cost record C. Cost-allocation base D. Materials-requisition record

"Knowledge of technical issues such as computer technology is a necessary but not sufficient condition to becoming a successful management accountant." Do you agree? Why? A. Agree. A successful management accountant requires a CMA certificate and a CFA certificate in addition to proficient technical skills. B. Disagree. Virtually all of the management accountant's role is technical-based. Thus, knowledge of technical issues such as computer technology is a necessary and sufficient condition to becoming a successful management accountant. C. Agree. A successful management accountant requires general business skills and people skills as well as technical skills. D. Agree. A successful management accountant requires a CMA term-57certificate as well as technical skills.

A controllable cost is any cost that can be ________ by a responsibility center manager for a period of time. A. excluded B. segregated C. influenced D. controlled

A flexible budget ________. A. is based on the budgeted level of output B. provides favorable operating results C. is developed at the end of the period D. is another name for management by exception

A learning curve is a function ________. A. that is linear B. that increases at a greater rate as workers become more familiar with their tasks C. that measures the decline in labor-hours per unit due to workers becoming better at a job D. where unit costs increase as productivity increases

A master budget ________. A. is only prepared for manufacturers as they are the only type of company with material purchases and work−in−process accounts. B. improves companies' market capitalization and evolves from both the investing and financing decisions C. is the initial plan of what the company intends to accomplish in the period and evolves from both the operating and financing decisions D. is another name given to the financial budget

A plot of data that results in one extreme observation most likely indicates that ________. A.the cost-allocation base has been incorrectly identified B.individual cost items do not have the same cost driver C.an unusual event such as a plant shutdown occurred during that month D.more than one cost pool should be used

A single indirect−cost rate distorts product costs because ________. A. competitive pricing is ignored B. it assumes all costs are product costs C. there is an assumption that all support activities affect all products in a uniform way D. it recognizes specific activities that are required to produce a product

A variance is ________. A. the standard units of inputs for one output B. the difference between actual fixed cost per unit and standard variable cost per unit C. the difference between an actual result and a budgeted performance D. the difference between actual variable cost per unit and standard fixed cost per unit

Activity−based budgeting ________. A. classifies costs by functional area within the value chain B. uses only output−based cost drivers such as units sold C. focuses on activities necessary to produce and sell products and services D. uses one cost driver such as direct labor−hours

Activity−based costing (ABC) can eliminate cost distortions because ABC systems ________. A. never consider interactions between different departments in assigning support costs B. use a broad average to allocate all overhead costs C. establish a cause−and−effect relationship with the activities performed D. use single cost pool for all overhead costs, thereby enabling simplicity

Advocates of throughput costing argue that ________. A. direct materials costs are a cost of the period and therefore should not be included in inventoriable costs B. direct manufacturing labor is relatively fixed and therefore should not be included in inventory costs C. including only direct materials as inventoriable costs provides less incentive than absorption costing to produce a build-up of inventory merely to increase profits D. fixed manufacturing costs must be included as inventoriable costs and provide less incentive than absorption costing to build-up inventory to increase profits

All else being equal, a reduction in selling price will ________. A. increase variable costs B. increase contribution margin C. reduce operating income D. reduce fixed costs

As a new controller, reply to this comment by a plant manager: "As I see it, our accountants may be needed to keep records for shareholders and Uncle Sam, but I don't want them sticking their noses in my day-to-day operations. I do the best I know how. No bean counter knows enough about my responsibilities to be of any use to me." A. Reply by suggesting that the plant manager review the plant controllers resume and explain about the success with assisting of budgets and making sure plant managers do not exceed their budgets. B. Reply by emphasizing that the plant manager cannot make accurate decisions without a controller to provide the proper guidance. C. Respond by demonstrating to the plant manager a good knowledge of the technical aspects of the plant and spend some time on the plant floor speaking to plant personnel to get a better understanding of the facility. D. Reply by explaining to the plant manager the importance of keeping tabs on production personnel to be sure they are following all the generally accepted accounting principles.

Budgeted costs are ________. A. the costs incurred last year B. competitor's costs C. planned or expected costs D. the costs incurred this year

Budgets incorporate managements goals and A. are both a short range and long range profit plan B. are a strategic long range plan C. express management's operating and financial plan for a specified period − usually a fiscal year D. includes only financial aspects of an operation as those are the only items that can be quantified in a profit plan

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts, what would be the best allocation base for human resource adminstration costs? A. electricity costs B. machine hours C. direct labor hours D. number of parts purchased

The approach often used when dealing with small amounts of underallocated or overallocated overhead is the ________. A. adjusted allocation-rate approach B. adjusted write-off approach C. proration approach D. write-off to cost of goods sold approach

Canton Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period: Cost Pool Overhead Costs Activity−cost driver Materials handling $46,000 97,000 orders Machine maintenance $360,000 19,000 maintenance hours Setups $258,780 45,400 setups Inspections $149,800 21,400 inspections Total support costs $814,580 Production Estimates Production units: Regular = 12,000,000 units Jumbo = 24,000,000 units Machine−hours = 400,000 mh Labor−hours = 800,000 dlh Expected direct costs amounts to $927,000 for the period. Support cost requirements of both products are substantially different from one another. Zitriks uses an ABC costing system. Which of the following is true of Canton's overhead costing? A. Single cost pool is appropriate for Canton's because of diverse support costs. B. Single cost pool is appropriate for Canton's because of high direct costs. C. Multiple cost pools are appropriate for Canton's because of diverse support costs. D. Multiple cost pools are appropriate for Canton's because of high direct costs.

Choose the correct description of variable and fixed costs. A. A variable cost is considered to be a unit cost, such as the per-attendee-cost of hiring a musical group to perform at an event. A fixed cost is considered to be a total cost, such as the total fee paid to the musical group for performing at the event. B. A variable cost is related to a particular cost object and can be traced to it in an economically feasible way, such as the cost of steel in the manufacturing of a luxury car. A fixed cost is related to a particular cost object but cannot be traced to it in an economically feasible way, such as the salary of a plant manager who oversees production of many different types of luxury cars produced at the same plant. C. A variable cost changes in total in proportion to changes in the related level of total activity or volume, such as a sales commission that is a percentage of each sales revenue dollar. A fixed cost remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume, such as a fixed annual leasing cost of a machine. D. All of the above.

Comprehensive Care Nursing Home is required by statute and regulation to maintain a minimum 3 to 1 ratio of direct service staff to residents to maintain the licensure associated with the Nursing Home beds. The salary expense associated with direct service staff for the Comprehensive Care Nursing Home would most likely be classified as: A. Variable cost. B. Inventoriable costs. C.Fixed cost. D. Overhead costs.

Cost assignment ________. A. includes future and arbitrary costs B. is the difference between budgeted and actual costs C. associates accumulated costs with certain cost objects D. is the same as cost accumulation

Define product cost. Describe three different purposes for computing product costs. A. A product cost is the sum of all manufacturing costs other than direct materials assigned to a product. Purposes for computing a product cost include (1) analyzing fluctuations in the non-material costs of a product, (2) product pricing decisions, and (3) preparing financial statements for internal reporting purposes. B. A product cost is the sum of all indirect costs assigned to a product. Purposes for computing a product cost include (1) valuing inventory, (2) product mix decisions, and (3) analyzing production efficiencies. C. A product cost is the sum of the costs assigned to a product for a specific purpose. Purposes for computing a product cost include (1) pricing and product mix decisions, (2) contracting with government agencies, and (3) preparing financial statements for external reporting under GAAP. D. A product cost is the sum of all direct material costs and direct labor costs assigned to a product. Purposes for computing a product cost include (1) choosing a supplier with competitive prices, (2) employee wage-rate analysis, and (3) analyzing fluctuations in material and labor costs.

Distinguish between inventoriable costs and period costs. A. Inventoriable costs include material costs and are capitalized as assets to the company until the items are sold. Period costs include labor and overhead costs and are expensed as incurred. Period costs are reported in the income statement within the cost of goods sold account. B. Inventoriable costs are all costs of goods purchased that are resold in a subsequent period. Period costs are all costs of goods purchased that are resold within the same period. C. Inventoriable costs are all costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold when the product is sold. Period costs are all costs in the income statement other than cost of goods sold. Period costs are treated as expenses of the accounting period in which they are incurred because they are expected to not benefit future periods. D. Inventoriable costs include direct manufacturing materials and direct manufacturing labor costs that are capitalized into inventory and remain on the balance sheet until sold. Period costs include indirect manufacturing (or manufacturing overhead) costs and are expensed as incurred through the cost of goods sold account.

Distinguish planning decisions from control decisions. A. Planning decisions focus on examining past performance and systemically exploring alternative ways to make better-informed decisions and plans in the future. Control decisions focus on taking actions that implement the planning decisions, deciding how to evaluate performance, and what related feedback to provide that will help future decision making. B. Planning decisions focus on organizational goals without consideration of past performance. Control decisions focus on predicting results under various alternative ways of achieving those goals, deciding how to attain the desired goals, and deciding how to evaluate performance. C. Planning decisions focus on selecting organization goals, predicting results under various alternative ways of achieving those goals, deciding how to attain the desired goals, and communicating the goals and how to attain them to the entire organization.Control decisions focus on taking actions that implement the planning decisions, deciding how to evaluate performance, and what related feedback to provide that will help future decision making. D. Planning decisions are budget oriented, where control decisions focus on financial reporting.

Facility−sustaining costs are the costs of activities ________. A. undertaken to support individual products or services regardless of the number of units or batches in which the units are produced B. performed on each individual unit of a product or service such as the cost of energy, machine depreciation, and repair C. that managers cannot trace to individual products or services but that support the organization as a whole D. related to a group of units of a product or services, rather than each individual unit of product or service

The ethical standards related to Gilpin's ethical dilemma are: A. (1) Honesty, (2) Integrity, and (3) Responsibility. These standards are summarized in the IMA's "Standards of Ethical Conduct for Management Accountants". B. (1) Competence, (2) Confidentiality, and (3) Fairness. These standards are summarized in the CMA's "Standards of Ethical Conduct for Management Accountants". C. (1) Competence, (2) Integrity, and (3) Credibility. These standards are summarized in the IMA's "Standards of Ethical Conduct for Management Accountants". D. (1) Honesty, (2) Fairness, and (3) Integrity. These standards are summarized in the CMA's "Standards of Ethical Conduct for Management Accountants".

To apply CVP analysis in a not−for profit organization ________. A. managers need to focus on measuring their input, which is different from the tangible units consumed by manufacturing and merchandising companies B. managers need to focus on the customer base rather than the cost drivers C. managers need to focus on measuring their output, which is different from the tangible units sold by manufacturing and merchandising companies D. managers need to focus on measuring their output, which is the same as tangible units sold by manufacturing and merchandising companies

Variable cost per labor−hour is $0.95 Fixed cost is $19,500. Machine hours during the period are 90. Calculate the total cost for 440 labor hours. A.$20,004 B.$504 C.$19,918 D.$19,586

What is the relevant range? What role does the relevant-range concept play in explaining how costs behave? A. The relevant range is the band of normal activity level or volume in which there is no relationship between the level of activity or volume and the cost in question. Costs are described as relevant or irrelevant with respect to a particular relevant range. B. The relevant range is the band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the related fixed costs. Costs are described as direct or indirect with respect to a particular relevant range. C. The relevant range is the band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question. Costs are described as variable or fixed with respect to a particular relevant range. D. The relevant range is the band of normal activity level or volume in which there is an abnormal relationship between the level of activity or volume and the variable cost per unit. Costs are described as relevant or irrelevant with respect to a particular relevant range.

Which of the following best describes practical capacity? A. It is the level of capacity utilization that managers expect for the current budget period, which is typically one year. B. It is the level of capacity based on producing at full efficiency all the time. C. It is the level of capacity that reduces theoretical capacity by considering unavoidable operating interruptions, such as scheduled maintenance time and shutdowns for holidays. D. It is the level of capacity utilization that satisfies average customer demand over a period that includes seasonal, cyclical, and trend factors.

Which of the following costs will be treated as period costs under absorption costing? A. raw materials used in the production B. rent for factory building C. sales commission paid on sale of product D. depreciation on factory equipment

Which of the following is not one of the reasons why absorption costing might also be used for internal reporting? A.It can help prevent managers from making decisions that make their performance look good to the detriment of income reported to shareholders. B.For long-term decision making both variable and fixed costs must be considered for inventory related decisions C.It is more useful for managerial decision making than variable costing D.It is cost effective and less confusing for managers to use one common method for both internal and external reporting

Which of the following statements is true of a peanut−butter costing system? A. A peanut−butter costing system assumes that all costs are variable. B. A peanut−butter costing system typically has more−homogeneous indirect cost pools. C. A peanut−butter costing system broadly averages or spreads the cost of resources uniformly to cost objects. D. In a peanut−butter costing system, costs of activities are used to assign costs to other cost objects such as products or services based on the activities the products or services consume.

Which of the following statements is true? A. Managers can lower operating risk by changing variable costs to fixed costs in the long−term. B. Managers can lower operating risk by increasing the selling price and reducing volume. C. Managers can lower operating risk by changing fixed costs to variable costs in the long−term. D. Managers can lower operating risk by reducing the selling price and increasing volume.

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

Zebra Corporation currently produces baseball caps in an automated process. Expected production per month is 17,000 units, direct material costs are $4.00 per unit, and manufacturing overhead costs are $90,000 per month. Manufacturing overhead is entirely fixed costs. What is the flexible budget for 13,000 and 17,000 units, respectively? A. $90,000; $158,000 B. $90,000; $106,000 C. $142,000; $158,000 D. $142,000; $106,000

Zitrik Corporation manufactured 110,000 buckets during February. The variable overhead cost−allocation base is $5.50 per machine−hour. The following variable overhead data pertain to February: Actual Budgeted Production 110,000 units 110,000 units Machine−hours 9,700 hours 9,000 hours Variable overhead cost per machine−hour $5.70 $5.50 What is the variable overhead efficiency variance? A. $3,850 favorable B. $3,990 unfavorable. C. $3,850 unfavorable D. $3,990 favorable

__________ requires that Gilpin report information fairly and objectively and disclose deficiencies in internal controls in conformance with organizational policy and/or applicable law. A. Integrity B. Competence C. Credibility D. Fraud

The cost function y = 13,000 + 6X ________. A. is a curved line B. has a slope coefficient of 13,000 C. will intersect the y−axis at 6 D. represents a mixed cost

What is a cost driver? Give one example. A. A cost driver is a cost that is related to a particular cost object but cannot be traced to it in an economically feasible way, such as the salary of a plant manager who oversees production of many different types of luxury cars produced at the same plant. B.A cost driver is a factor affecting direct or indirect cost classifications. For example, the availability of information-gathering technology is a driver as to whether certain low-cost materials used in the manufacturing process is considered a direct or indirect cost of producing a motor-vehicle. C. A cost driver is a variable, such as the level of activity or volume, which causally affects total costs over a given time span. A change in the cost driver results in a change in the level of total costs. For example, the number of vehicles assembled is a driver of the costs of steering wheels on a motor-vehicle assembly line. D. A cost driver is a cost that changes in total in proportion to changes in the related level of total activity or volume. For example, the tons of steel needed to produce a vehicle is a driver of the total cost for that vehicle.

A company is using a standard cost system and receives its electricity bill. Electricity is considered a variable cost of operations for this company. The bill is for $15,000 and will be paid next month. Which of the following entries would be the correct recording of the electricity bill? A. Work-in-Process Control $15,000 Variable Overhead Allocated $15,000 B. Work-in-Process Control $15,000 Accounts Payable $15,000 C. Variable Overhead Control $15,000 Variable Overhead Allocated $15,000 D. Variable Overhead Control $15,000 Accounts Payable $15,000

A cost function is a ________. A.is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs B.process of allocating costs to cost centers or cost objects C.process of calculating present value of projected cash flows D.mathematical description of how a cost changes with changes in the level of an activity relating to that cost

A favorable efficiency variance for direct labor might indicate that ________. A. lower−quality materials were purchased B. management hired underskilled workers C. there is an unexpected increase in direct labor rates D. work is scheduled efficiently

A manufacturer utilizes three separate indirect cost pools. Which of the following is true? A. Each indirect cost pool utilizes the same cost-allocation rate for all costs incurred B. Each indirect cost pool is a subset of total direct costs C. Each indirect cost pool relates to multiple cost centers D. Each indirect cost pool utilizes a separate cost-allocation rate

A master budget is ________. A. a type of flexible budget once actual results are known B. a budget which starts from a zero base C. developed at the end of a period D. based on the level of expected output at the start of the budget period

A regional manager of a restaurant chain in charge of finding additional locations for expansion is most likely responsible for a(n) ________. A. profit center B. revenue center C. cost center D. investment center

Activity−based costing is most likely to yield benefits for companies ________. A. with operations that remain fairly consistent across product lines B. in a monopolistic market C. having nominal percentage of indirect costs D. with complex product design processes that vary significantly from product to product

Advanced Technology Products produces 10 different fastners. Each time a type of fastener is produced, the equipment must be stopped and items such as filters and drill bits must be changed, oil must be added to the equipment and some parts need lubrication. This work must be done before the products can be produced, the costs related to this activity would be part of which cost pool? A. Output−level costs B. Service−sustaining costs C. Product−sustaining costs D. Batch−level costs

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 undercost Alpha's indirect costs because alpha has high direct costs. B. Aqua will overcost Beta's direct costs as it is using a single cost pool to allocate indirect costs. C. Aqua will overcost Beta's indirect costs because beta has high indirect costs. D. Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs.

The district director of 5 mortgage origination offices staffed by bank associates who cold call potential customers in an attempt to gain home mortgage and home equity loan business is most likely responsible for a(n) ________. A. profit center B. investment center C. cost center D. revenue center

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity−cost drivers Account inquiry $260,000 13,000 hours Account billing $90,000 6,000,000 lines Account verification accounts $145,250 70,000 accounts Correspondence letters $17,250 3,000 letters Total costs $512,500 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,400 hours 3,900 hours Account billing lines 600,000 lines 450,000 lines Account verification accounts 12,000 accounts 10,000 accounts Correspondence letters 1,500 letters 1,900 letters How much of the account billing cost will be assigned to Department B? A. $45,000 B. $9,000 C. $90,000 D. $6,750

Family Furniture sells a table for $850. Its fixed costs are $2,500, while its variable costs are $700 per table. It currently plans to sell 180 tables this month. What is the budgeted operating income for the month assuming that Family Furniture sells 180 tables? A. $153,000 B. $150,500 C. $27,000 D. $24,500

Fast Track Auto produces and sells an auto part for $70 per unit. In 2017, 130,000 parts were produced and 80,000 units were sold. Other information for the year includes: Direct materials $23 per unit Direct manufacturing labor $4 per unit Variable manufacturing costs $1 per unit Sales commissions $7 per part Fixed manufacturing costs $800,000 per year Administrative expenses, all fixed $290,000 per year What is the inventoriable cost per unit using variable costing? A. $23 B. $27 C. $35 D. $28

Financing decisions primarily deal with ________. A. the use of scarce resources B. preparing financial statements for stockholders C. acquiring equipment and buildings D. how to obtain funds to acquire resources

First Class, Inc., expects to sell 24,000 pool cues for $13.00 each. Direct materials costs are $4.00, direct manufacturing labor is $5.00, and manufacturing overhead is $0.80 per pool cue. The following inventory levels apply to 2019: Beginning inventory Ending inventory Direct materials 34,000 units 34,000 units Work−in−process inventory 0 units 0 units Finished goods inventory 1,000 units 3,000 units On the 2019 budgeted income statement, what amount will be reported for sales? A. $338,000 B. $442,000 C. $468,000 D. $312,000

For a company with diverse products, undercosting overhead of a product will lead to product−cross −subsidization which means that: A. direct material costs of the product are misallocated B. direct costs of another product are misallocated C. direct labor costs of the product are misallocated D. indirect costs of another product are misallocated

For February, the cost components of a picture frame include $0.41 for the glass, $0.73 for the wooden frame, and $0.92 for assembly. The assembly desk and tools cost $500. Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these costs? A. y = 2.06 + 500X B. y = 500 + 1.14X C. y = 1.14 + 500X D. y = 500 + 2.06X

For February, the cost components of a picture frame include $0.40 for the glass, $0.67 for the wooden frame, and $0.83 for assembly. The assembly desk and tools cost $570. Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these costs? A. y = 570 + 1.07X B. y = 1.07 + 570X C. y = 1.90 + 570X D. y = 570 + 1.90X

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30−gallon heavy−duty plastic container. Budgeted quantity Budgeted price Direct materials 0.5 pounds $10 per pound Direct labor 0.6 hours $16 per hour During July, GII produced and sold 4,000 containers using 2,200 pounds of direct materials at an average cost per pound of $5 and 2,425 direct manufacturing labor hours at an average wage of $16.30 per hour. The direct manufacturing labor efficiency variance during July is ________. A. $408 unfavorable B. $728 favorable C. $1,128 favorable D. $400 unfavorable

Goodard Inc. planned to use $155 of material per unit but actually used $147 of material per unit, and planned to make 1,110 units but actually made 1,000 units. The sales−volume variance for materials is ________. A. $8,000 favorable B. $16,170 unfavorable C. $8,000 unfavorable D. $17,050 favorable

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Flexible Variances Budget Price Efficiency Material A $42,000 $1,100F $3,700U Material B 70,000 300U 1,300F Direct manufacturing labor 90,000 400U 2,500F The most likely explanation of the above direct manufacturing labor variances is that ________. A. the average wage rate paid to employees was less than expected B. management may have a problem with budget slack and might be using lax standards for both labor−wage rates and expected efficiency C. employees did not work as efficiently as expected to accomplish the job D. the company may have assigned more experienced employees this month than originally planned

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10−gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.2 pounds $100 per pound Direct labor 0.05 hours $15 per hour During June, Heavy Products produced and sold 25,000 containers using 2,100 pounds of direct materials at an average cost per pound of $105 and 5,000 direct manufacturing labor−hours at an average wage of $15.75 per hour. The direct manufacturing labor price variance during June is ________. A. $3,750 favorable B. $10,500 unfavorable C. $279,500 unfavorable D. $3,750 unfavorable

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10−gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.6 pounds $70 per pound Direct labor 0.15 hours $30 per hour During June, Heavy Products produced and sold 21,000 containers using 1,400 pounds of direct materials at an average cost per pound of $73 and 3,150 direct manufacturing labor−hours at an average wage of $70.75 per hour. The direct manufacturing labor efficiency variance during June is ________. A. $128,363 favorable B. $855,750 unfavorable C. $33,429 unfavorable D. $0

How can management accountants help improve quality and achieve timely product deliveries? A. Management accountants can help improve quality and achieve timely product deliveries by focusing on reporting to external parties such as investors, government agencies, banks, and suppliers. B. Management accountants can help improve quality and achieve timely product deliveries by analyzing and evaluating the costs of only financial information, to correct any irregularities and provide faster customer service. C. Management accountants can improve quality by only reporting an organization's current quality controls and correct any irregularities. D. Management accountants can help improve quality and achieve timely product deliveries by recording and reporting an organization's current quality and timeliness levels and by analyzing and evaluating the costs and benefits of both financial and non-financial information, to suggest new quality initiatives such as TQM or providing faster customer service.

Identify how manufacturing-, merchandising-, and service-sector companies differ from each other. A. Manufacturing-sector companies purchase and then sell tangible products without changing their basic form, for example retail stores and distribution companies. Merchandising-sector companies provide services or intangible products to their customers, for example legal advice or audits. Service-sector companies purchase materials and components and convert them into various finished goods, for example automotive companies and textile companies. B. Manufacturing-sector companies provide services or intangible products to their customers, for example legal advice or audits. Merchandising-sector companies purchase and then sell tangible products without changing their basic form, for example retail stores and distribution companies. Service-sector companies purchase materials and components and convert them into various finished goods, for example automotive companies and textile companies. C. Manufacturing-sector companies purchase materials and components and convert them into various finished goods, for example legal advice or audits. Merchandising-sector companies purchase and then sell tangible products without changing their basic form, for example automotive companies and textile companies. Service-sector companies provide services or intangible products to their customers, for example retail stores and distribution companies. D. Manufacturing-sector companies purchase materials and components and convert them into various finished goods, for example automotive companies and textile companies. Merchandising-sector companies purchase and then sell tangible products without changing their basic form, for example retail stores and distribution companies. Service-sector companies provide services or intangible products to their customers, for example legal advice or audits.

In the service sector ________. A. direct labor costs are always easy to trace to jobs B. overhead is generally applied using an actual cost-allocation rate C. normal costing may not be used D. a budgeted direct-labor cost rate may be used to apply direct labor to jobs

J.C Coats Inc. carefully develops standards for its coat making operation. Its specifications call for 2 square yards of wool per coat. The budgeted price of wool is $38 per square yard. The actual price for the wool was $32 and the usage was only 1.5 yards of wool per coat. What would be the standard cost per output for the wool? A. $48.00 per coat B. $57.00 per coat C. $64.00 per coat D. $76.00 per coat

Milan Manufacturing Company 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 $436,000 Direct labor−hours 920,000 Machine maintenance $132,000 Machine−hours 960,000 Facility rent $214,000 Square feet of area 140,000 Total overhead costs $782,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor−hours 280 Machine−hours 1,500 Square feet of area 50 If direct labor−hours are considered the only overhead cost driver, what is the single cost driver rate for Milan? A. $2.11 per direct labor−hour B. $0.47 per direct labor−hour C. $1.18 per direct labor−hour D. $0.85 per direct labor−hour

Process costing is ________. A. used to enhance employees' job satisfaction B. used by businesses to price unique products or identical products produced in batches C. used by businesses when manufacturing goods above normal capacity D. used by businesses to price identical products

Quantum Company uses the high−low method to estimate the cost function. The information for 2017 is provided below: Machine−hours Labor Costs Highest observation of cost driver 700 $28,000 Lowest observation of cost driver 300 $15,000 What is the estimated cost function for the above data? A.y = 22,750 + 50X B.y = 28,000 + 40X C.y = 15,000 + 43X D.y = 5,250 + 32.5X

Really Great Corporation manufactures industrial−sized landscaping trailers and uses budgeted machine−hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: Budgeted output units 42,000 units Budgeted machine−hours 10,500 hours Budgeted variable manufacturing overhead costs for 42,000 units $399,000 Actual output units produced 28,200 units Actual machine−hours used 14,100 hours Actual variable manufacturing overhead costs $338,400 What is the budgeted variable overhead cost rate per output unit? A. $19.00 B. $12.00 C. $38.00 D. $9.50

Regression analysis ________. A. measures the variability or dispersion in a set of data points B. estimates the cost functions using the time-and-motion studies C. calculates the slope coefficient using only two observed values within the relevant range and their respective costs D. measures the average amount of change in the dependent variable associated with a unit change in one or more independent variables

Smith Office Equipment Company's budgeted manufacturing overhead is $4,200,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 40,000. What is the manufacturing overhead rate? A. $42.00 B. $8.75 C. $113.75 D. $105.00

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 $320,000 $330,000 Annual salary of each attorney $120,000 $130,000 Annual salary of each paraprofessional $35,000 $36,000 Total professional labor−hours 40,000 dlh 50,000 dlh What are the actual direct−cost rate and the actual indirect−cost rate, respectively, per professional labor−hour? A. $44.75; $8.00 B. $48.00; $6.60 C. $38.40; $6.40 D. $38.40; $6.60

Standard labor rate is $8.60 per hour. Standard labor allowed per unit is 0.7 hours. Actual cost per labor hour is $8.00 and actual labour hour per unit is 0.9 hours. What is the standard labor cost per output unit? A. $7.74 B. $5.60 C. $7.20 D. $6.02

Tally Corp. sells softwares during the recruiting seasons. During the current year, 13,000 software packages were sold resulting in $450,000 of sales revenue, $130,000 of variable costs, and $50,000 of fixed costs. Contribution margin per software is ________. A. $10.00 B. $30.77 C. $34.62 D. $24.62

The actual indirect-cost rate is calculated by ________. A. multiplying the actual total quantity of the cost allocation base by actual total indirect costs B. multiplying actual total indirect costs by the actual total quantity of the cost-allocation base C. dividing the actual total quantity of the cost allocation base by actual total indirect costs D. dividing actual total indirect costs by the actual total quantity of the cost-allocation base

What steps should a management accountant take if established written policies provide insufficient guidance on how to handle an ethical conflict? A. The management accountant need not take any further action if established written policies provide insufficient guidance on how to handle an ethical conflict. B. (a) Discuss the problem with any manager. (b) Clarify relevant ethical issues by public discussions with the board of directors. (c) Consult local law enforcement officials. C. Discuss the problem only with the immediate superior. The management accountant need not take any further action if the supervisor does not take appropriate action. D. (a) Discuss the problem with the immediate superior (except when it appears that the superior is involved). (b) Clarify relevant ethical issues by confidential discussion with an IMA Ethics Counselor or other impartial advisor. (c) Consult your own attorney as to legal obligations and rights concerning the ethical conflicts.

Managerial Cost Accounting Final Exam

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