accounting final
In the manufacture of 8,000 units of a product, direct materials cost incurred was $154,600, direct labor cost incurred was $84,00, and applied factory overhead was $45,500. The total conversion cost is
$129,500
In the manufacture of 8,000 units of a product, direct materials cost incurred was $154,600, direct labor cost incurred was $84,000, and applied factory overhead was $45,500. The total conversion cost is
$129,500
The net cash flows from operating activities using the indirect method is
$156,000
Given the following info, determine the activity rate for setups
$18.00
If fixed costs are $850,000 and variable costs are 60% of sales, the break-even point (dollars) is
$2,125,000
With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. Such an analysis is called
"what if" or sensitivity analysis
If fixed costs are $750,000 and variable costs are 60% of sales, the break-even point in sales dollars is
$1,875,000
Using the FIFO method, the cost per equivalent unit for materials used during July was
$10.33
The assembly department's factory overhead rate is
$10.50 per direct labor hour
The _____ method of analyzing capital investment proposals divides the estimated average annual income by the average investment
average rate of return
Which of the following provisions of the internal Revenue Code can be used to reduce the amount of the income tax expense arising form capital investment projects?
depreciation deduction
Another name for variable costing is
direct costing
The two categories of cost comprising conversion costs are
direct labor and factory overhead
Common allocation bases for factory overhead costs are
direct labor dollars, direct labor hours, and machine hours
Under absorption costing, which of the following costs would be included in finished goods inventory?
direct labor, direct materials, and all factory overhead costs
For a supervisor of a manufacturing department, which of the following costs are controllable?
direct materials
Which of the following is omitted form conversions costs
direct materials
Which of the following types of inventories does a manufacturing business report on the balance sheet?
direct materials inventory, work in process inventory, and finished goods inventory
A disadvantage of static budgets is that they
do not allow for possible changes in activity levels
Measure of the work done during a production period, expressed in terms of fully completed units of output, is called
equivalent units
Another term fro factory overhead is
factory burden
Indirect labor and indirect materials are classified as
factory overhead and product costs
Cash received from the issuance of a mortgage not payable would be classified as a(n)
financing activity
Which of the following would be omitted from the "Current Assets" section of the balance sheet?
finished goods inventory
which of the following would be missing in the accounting system of a service provider?
finished goods ledger
Costs that remain constant in total dollar amount as the level of activity changes are called _______ costs.
fixed
Periods in time that experience increasing price levels are known as periods of
inflation
Which of the following would be classified as a mixed cost for a T-shirt manufacturer?
maintenance costs with sewing machine company contracted at $2,000 per year plus $0.001 for each machine hour of use
A cost that has characteristics of both a variable cost and a fixed cost is called a
mixed cost
Process costing would be appropriate for a
natural gas refinery
Which of the following are present value methods of analyzing capital investment proposals?
net present value an internal rate of return
The revenue that is forgone form an alternative use of an asset, such as cash, is called
opportunity cost
Support department costs are applied to products as a part of
overhead
Costs that are incurred in generating revenues during the period, but not involved in the manufacturing process, are referred to as
period costs
Which of the following can be used to place capital investment proposals involving different amounts of investments on a comparable basis for purposes of net present value analysis?
present value index
Which of the following is an accounting report that present predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period?
pro forma balance sheet
The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis is
process costing
Electricity used to operate factory machinery would be classified as a
product cost - factory overhead
Costs that are treated as asset until the product is sold are
product costs
Which of the following is the type of work done in a production department as opposed to a support department?
putting together the final product on an assembly line
Which of the following is the most difficult but most accurate of the commonly used methods for allocating support department costs to production departments?
reciprocal services method
The materials requisition is used to
release materials from the storeroom to the factory
Which of the following is an example of a mixed cost?
rental costs of $10,000 per month plus $0.30 per machine hour of use
Which of the following are measures that management can use in evaluating and controlling investment center performance?
residual income, return on investment (ROI), and operating income
The contribution margin is the
same as the profit volume ratio
The point in the production process where joint products become separable is called the
split off point
The principle of exceptions allows managers to focus on correcting variances between
standard costs and actual costs
The graph of a variable cost when plotted against its related activity base appears as a
straight line
Which of the following terms is used to describe the process of developing the organizations long term objectives?
strategic planning
Budgeting affects which of the following management process functions?
strategic planning, measurement, evaluation, and control
which of the following would most likely use job order costing
swimming pool installer
If the actual direct labor hours spent producing a commodity differ from the standard hours, the variance is a ______ variance.
time
In job order costing, the amount of time spent by an employee on an individual job is recorded as an
time ticket
An unfavorable factory overhead controllable variance may be due to which of the following factors?
unexpected increases in the cost of utilities
On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is
variable selling and administrative expenses
A cake factory would classify which of the following as both a prime cost and a conversion cost?
wages of the baker
The process of developing budget estimates by requiring managers to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as _______ budgeting.
zero-based
Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to desk lamp production if actual direct labor hours for the period for desk lamps is 118,000 would be
$188,800
If fixed costs are $500,00, the unit selling price is $55, and the unit variable costs are $30, the break-even sales (units) if fixed costs are increased by $80,000 is
23,200 units
Connor Company has fixed costs of $400,000, the unit selling price is $25, and the unit variable costs are $15. The break-even sales (units) if the variable costs are increased by $2 is
50,000 units
A market segment has sales of $70,000, variable cost of goods sold of $10,000, variable selling expenses of $11,000, and total fixed expenses of $13,000. What is the segment's contribution margin ratio?
70%
Which of the following represents a favorable cost variance?
Actual Cost < Standard cost at actual Volumes
Which of the following represents an unfavorable cost variance?
Actual Cost > Standard cost at actual volumes
The formula for determining the present value factor for an annuity of $1 is
Amount to be Invested / EqualAnnual Net Cash Flows
Which of the following i a disadvantage of decentralization?
Each decentralized operation purchases its own assets and pays for operating costs.
Which of the following statements is best describes a decentralized company?
Each of many units is responsible for its own operations and decision making.
Which of the following statements is true about the direct method of allocating support department costs to production departments?
The direct method allocates all support department costs directly to production departments thus ignoring the possibility that some support departments may also serve other support departments.
The present value index is computed using which of the following formulas?
Total Present Value of Net Cash Flows / Amount to be Invested
Discontinuing a product or segment is a huge decision that must be carefully analyzed. Which of the following would be a valid reason to continue an operation?
Variable costs are more than revenues
Income tax expense was $175,000 for the year. Income taxes payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income taxes reported on the statement of cash flows using the direct method are
$165,000
Planning for capital expenditures is necessary for which of the following reasons?
all of these choices
which of the following increases cash?
borrowing money by issuing a 6-month note
An accounting device used to plan and control the financial resources of a company is called a
budget
Which of the following should be shown on a statement of cash flows in the financing activities section?
payment of cash to retire a long-term note
Support department costs are simply combined with all other overhead costs and total overhead is applied using one cost driver. This process describes which method of applying overhead
single plant-wide rate
Which of the following are actual factory overhead allocation methods?
single plantwide rate, multiple production department rates, and activity-based costing methods
When a single manufacturing process generates multiple outputs, it is called a(n)
joint manufacturing process
Which of the following is a cost pool used with the activity-based costing methods?
production setups
The process of developing budget estimates by requiring managers to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as _________ budgeting.
zero-based
The ratio of sales to invested assets, which is also a factory in the DUPoint Formula for determining the return on investment (ROI), is called
investment turnover
Which of the following would not be classified as an operating activity?
payment of dividends
The contribution margin ratio is the
same as the profit-volume ratio
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem?
setting goals too loosely, creating a budgetary slack
For which of the following businesses would process costing be appropriate?
shampoo manufacturer
Cash paid for equipment would be reported on the statement of cash flows in
the investing activities section
Cash paid to purchase long-term investments would be reported in
the investing activities section of the statement of cash flows
Which of the following describes how to support department costs are related to production
they are indirectly related to production
All direct materials are placed in the process at the beginning of the process, and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unity for May is
$2.92
Firefly Inc. sold land for $225,000 cash. The land had been purchased five years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?
$225,000
Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first out method inventory costing is used, the materials and conversion cost per unit (rounded to the nearest cent) resepctively,
$9,84 and $9.58
Which of the following costs incurred by a tool manufacturer would be omitted from conversion costs?
raw steel
Using multiple department factory overhead rates instead of a single plant-wide factory overhead rate
results in more accurate product costs
The first budget customarily prepared as part of an entity's master budget is the
sales
The relative distribution of sales among the various products sold by a business is the
sales mix
Accounting designed to meet the needs of decision makers inside the business is
managerial accounting
The document authorizing the issuance of materials from the storeroom is a
materials requisition
Which of the following is considered non-value-added lead time?
moving form process to process
Cost incurred in a previous process that are carried forward as part of the products cost when it moves to the next department are called
transferred-in cost
The net realizable method of allocating joint costs is most suitable for processes where
some products can be processed beyond the split off point and sold for much higher prices
A favorable cost variance occurs when
standard costs are more than actual costs
which of the following is an example of a cost that stays the same in total as the number of units produced changes?
straight line depreciation on factory equipment
Which of the following combines market-based pricing with a cost-reduction emphasis?
target costing
Contribution margin is
the excess of sales revenue over variable cost
When using the product cost method of applying cost-plus approach to product pricing, which of the following is included in the markup?
total costs plus desired profit
Which of the following activity bases would be the most appropriate fro gasoline costs of a delivery service?
total miles driven
using multiple department factory overhead rates instead of a single plantwide factory overhead rate
results in more accurate product costs
Which of the following begins by estimating the quantity of sales?
sales budget
Which of the following should be deducted from net income in determining net cash flows from operating activities using the indirect method?
a decrease in accounts payable
Using the FIFO method, the number of equivalent units for conversion costs was
14,380
The number of equivalent units of production for the period for conversion, if the first-in, first-out method is used to cost inventories, was
15,865
The four steps necessary to complete a cost of production report in process costing are as follows:
2,4,3,1
Which of the following would not be on the statement of cash flows?
cash flows from (used for) contingent activities
On the statement of cash flows, the "Cash flows (used for) financing activities" section would include
cash received from issuing common stock
On the statement of cash flows, the investing activities section would include
cash received from the sale of equipment
The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of
equivalent units
The three categories of manufacturing costs comprising the total cost of work in process are direct labor, direct materials, and
factory overhead
Cash paid for preferred stock dividends should be shown on the statement of cash flows as a(n)
financing activity
Which of the following is an integrated set of operating and financial budgets for a period of time?
master budget
which of the following is an integrated set of operating and financial budgets for a period of time?
master budget
When weight factors are used in the weighted average method, they are
multiplied by the actual physical units to arrive at weighted physical units
Which of the following methods allocates joint costs based on measures estimated after the final products are fully processed and are ready to be sold?
net realizable value method
Which of the following would be classified as a fixed cost for a T-shirt manufacturer?
none of these choices
Under which inventory costing method could increases or decreases in operating income be misinterpreted to be the result of operating efficiencies or inefficiencies?
only absorption costing
The purchase of stock of another company as an investment would appear on the statement of cash flows as an
outflow of cash in the investing activities section
In process costing, the costs of direct materials and direct labor are charged directly to
processing department
Which of the following estimates the number of units to be manufactured to meet budgeted sales and desired inventory levels?
production budget
Heidi Company is considering the acquisition of a machine that costs $420,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $120,000, and annual operating income of $83,721. What is the estimated cash payback period for the machine?
3.5 years
From the provided schedule of activity costs, determine the total activity cost
$241,000
The cost of goods sold for Michaels Manufacturing in the current year was $233,000. The January 1 finished goods inventory balance was $31,600, and the December 31 finished goods inventory balance was $24,200. Cost of goods manufactured during the period was
$255,600
Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to small table lamp production if actual direct labor hours for the period for small table lamp production is 285,00 would be
$456,000
Which of the following is the correct formula for the direct labor time variance in a service business?
(Actual Staff Hours - Standard Staff Hours) x Standard Rate per Hour
The investment turnover for Mason Corporation is
1.08
The average rate of return (rounded to one decimal place) for this investment is
10.5%
Using FIFO method, the number of equivalent units for conversion costs was
14,380
The management of Indiana Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at a compound interest of 10% for 1 through 5 years are ...... In addition to the foregoing information, use the following data to determine the acceptability of this investment. The average rate of return is:
21%
The cash payback period for this investment is
4 years
Tom's Tool Factory is an investment center and is responsible for all of its net income and the use of its assets. This year, the invested assets totaled $475,000, and net income was $275,000. What is the rate of return on assets?
57.9%
ShadyPalms Hotel has 100 rooms. During the month of February, it had 500 guests, each staying 5 nights, and 10 guests, each staying 2 nights. The occupancy rate for ShadyPalms Hotel for the month of February was
90%
The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best average rate of return. Round the average rate of return to one decimal place.
Machine B
Under the net realizable value method of allocating joint costs, which of the following equations is used to compute the value of products processed beyond the split off point?
Net Realizable Value= (Final selling price x Quantity) - Additional Processing Costs
An unfavorable staff time variance may be the result of
all of these choices
How are the objectives of lean manufacturing achieved?
all of these choices
Managers use managerial accounting information for which of the following purposes?
all of these choices
Understanding how costs behave is useful to management for
all of these choices
Which of the following is a measure of performance for the manager of an investment center?
all of these choices
Which of the following is a method commonly used in applying the cost-plus approach to product pricing?
all of these choices
Which of the following is an example of a non-financial measure of performance used in lean manufacturing?
all of these choices
Which of the following would be classified as a fixed cost for a T-shirt manufacturer?
all of these choices
Joint costs are inseparable
before the split-off point
The budget that summarizes future plans for the acquisition of fixed assets in the ______ budget.
capital expenditures
Which of the following can be determined by dividing the initial cost by the annual net cash inflow of an investment?
cash payback period
Cost behavior refers to the manner in which a cost
changes as the related activity changes
The contribution margin ratio is computed as
contribution margin divided by sales
Costs that can be influenced by management at a specific level of management are called
controllable cost
Which of the following terms refers to the cost of changing direct materials into a finished manufactured product?
conversion cost
Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is $12,500, and the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $5,300. The value of this transaction in the investing section of the statement of cash flows is
$5,300
Under the net realizable value method of allocating joint costs, which of the following equations is used to compute the value of products processed beyond the split-off point?
Net Realizable Value= (Final Selling Price x Quantity) - Additional Processing Costs
Which of the following is uncharacteristic of process costing?
Process costing measures cost for each completed job
Which of the following is a plan that shows the expected cash receipts (inflows) and payments (outflows) during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans?
cash budget
As production increases, the fixed cost per unit
decreases
Overhead costs are first directly traced or distributed to support and production activities, then support activity costs are allocated to production activities based on the amount of support activity used by each production activity; production activity costs are applied to the products using cost drivers for each production activity. This process describes which method of applying overhead?
activity-based costing
A decrease in inventory would appear on the statement of cash flows as a(n)
addition to net income in the operating activities section using the indirect method
Which of the following are the three commonly used methods for allocating support department costs to production departments?
direct method, sequential method, and and reciprocal services method
Activity rates are determined by
dividing the cost budgeted for each activity pool by the estimated activity base for that pool.
Which of the following terms is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?
absorption costing
Which of the following is a use of the cost of production report?
all of these choice
An increase in the accounts receivable balance would appear on the statement of cash flows as a(n)
deduction from net income in the operating activities section using the indirect method
Which of the following terms is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?
variable costing
The production budget is used to prepare which of the following budgets?
direct materials purchases, direct labor cost, and factory overhead cost
Which of the following is a period cost?
Salary of telephone receptionist in the sales office
In process costing, the amount of work in process inventory is valued by
allocating departmental costs between completed and partially completed units
Which of the following should be added to net income in determining the net cash flows from operating activities using the indirect method?
an increase in accrued expenses
Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?
assembly laborer's wages
A point in the manufacturing process where the demand for the company's product exceeds the ability to produce the product is called
both a production bottleneck and a constraint
A widely used activity base for developing factory overhead rates in highly automated settings is
machine hours
A variant of fiscal-year budgeting whereby a twelve-month projection into the future is maintained at all times is termed
continuous
In the variable costing income statement, deduction of variable selling and administrative expenses form manufacturing margin yields
contribution margin
the contribution margin ratio is computed as
contribution margin divided by sales
A report prepared periodically by a processing department, summarizing (1) the units for which the department is accountable and the disposition of those units and (2) the costs incurred by the department and the allocation of those costs between completed and incomplete production.
cost production report
If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a
debit balance and be underapplied
In process costing, the cost of completed production in Department A is transferred to Department B by which of the following journal entries?
debt Work in Process - Dep B and credit Work in Process - Dep A
Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be
decentralized
which of the following is a disadvantage of decentralization?
decisions made by one manager may negatively affect the profitability
Which of the following methods allocates joint costs based on physical units that are weighted and then multiplied by actual physical units?
weighted average method
Goods that are partially completed by a manufacturer are
work in process inventory
which of the following budgets allows for adjustments in activity levels?
flexible budgets
The amortization of intangible assets would appear on the statement of cash flows as a(n)
addition to net income in the operating activities section using the indirect method
Budgeting involves which of the following activities?
all of these choices
Contribution margin reporting can be beneficial for analyzing which of the following?
all of these choices
Principal components of a master budget include
all of these choices
Which of the following budgets is directly associated with the production budget?
all of these choices
Which of the following measures would help managers to control and improve operations?
all of these choices
budgeting involves which of the following activities
all of these choices
During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production order and $25,000 for general factory use. Factory overhead applied to production was $32,000. The journal entry for the actual factory overhead costs incurred is
Factory Overhead 25,000 Wages Payable. 25,000
The average rate of return is a measure of profitability computed by dividing the average annual cash inflows form an asset by the average amount invested in the asset.
False
Starling Co. is considering disposing of a machine with a book value of $12,500 and estimated remaining life of five years. The old machine can be sold for $1,500. A new high-speed machine can be purchased at a cost of $25,000. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $26,000 to $23,500 if the new machine is purchased. The total net differential increase or decrease in cost for the new equipment for the entire five years is
decrease of $11,000
Under variable costing, which of the following costs would be included in finished goods inventory?
direct materials, direct labor, and variable factory overhead costs
If the total revenue variance is favorable and the revenue price variance is unfavorable, then the revenue volume variance must
exceed the revenue price variance and be favorable
Costs taht remain constant in total dollar amount in total dollar amount as the level of activity changes are called ______ costs.
fixed
The three most common cost behavior classifications are
fixed costs, variable costs, and mixed costs
Which of the following is an example of a cost that stays the same in total as the number of units produced changes?
insurance premiums on factory building
Lean manufacturing philosophy reduces which of the following?
inventory, setup time, and lead time
Which of the following would most likely use process costing
lumber mill
Which of the following are two main types of costing systems for manufacturing operations?
job order costing and process costing
Which of the following statements is true about joint manufacturing processes?
joint costs are by definition inseparable
Which of the following transfer price approaches is used when the transfer price is set at the amount sold to outside buyers?
market price
Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the
market price approach
Which of the following methods for evaluating capital investment proposals reduces the expected future net cash flows originating form the proposals to their present values and computes a net present value?
net present value
Which of the following is often referred to as the discounted cash flow method?
net present value method
Activity based costing can be beneficial in allocating selling and administrative expenses to various products for managerial decision making. Which of the following would be the best allocation base for help desk costs?
number of calls
Which of the following would be the most appropriate cost driver allocating the service department costs of the Information Systems Department?
number of computers
Management will most likely use absorption costing over variable costing in which of the following activities?
production planning in the long term
Costs incurred in a previous process that are carried forwards as part of the product's cost when it movies to the next department are called
transferred-in costs