Acct 1b
Which of the graphs in Figure 1 illustrated the nature of a mixed cost?
Graph 2 |/ |_____
Which of the graphs in Figure 1 illustrated the behavior of a total variable cost? Graph 3 |/___ total units produced
Graph 3
A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n) _____ center. a. cost b. profit c. investment d. volume
profit
Responsibility accounting reports for profit centers will include a. revenues, expenses, and operating income or loss b. revenues only c. costs only d. expenses and fixed assets
revenues, expenses, and operating income or loss
Which of the following are the three common types of responsibility centers? a. cost center, profit center, and investment center b. investment center, revenue center, and cost center c. revenue center, profit center, and cost center d. profit center, investment center, and revenue center
cost center, profit center, and investment center
Most manufacturing plants are considered cost centers because they have control over a. costs only b. sales and costs c. fixed assets and sales d. fixed assets and costs
costs only
The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured a. exceed units sold b. are less than units sold c. are equal to or greater than units sold d. equal units sold
equal units sold
The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured a. are equal to or greater than units sold b. exceed units sold c. are less than units sold d. equal units sold
exceed units sold
A series of budgets for varying levels of activity is termed a(n) _____ budget. a. activity b. variable c. master d. flexible
flexible
When a manager seeks to achieve personal departmental objectives that may work to the detriment of the overall firm's objectives and goals, the manager is experiencing a. padding b. budgetary slack c. cushions d. goal conflict
goal conflict
Which of the following is an example of a cost that stays the same in total as the number of units produced changes? a. electricity per KWH to operate factory equipment b. direct materials cost c. insurance premiums on factory building d. wages of assembly worker
insurance premiums on factory building
Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit? a. investment center b. cost center c. profit center d. production center
investment center
A cost that has characteristics of both a variable cost and a fixed cost is called a a. discretionary cost b. variable/fixed cost c. mixed cost d. sunk cost
mixed cost
Standards that represent levels of operation that can be attained with reasonable effort are called _____ standards. a. normal b. variable c. theoretical d. ideal
normal
Question Content Area If the price paid per unit differs from the standard price per unit for direct materials, the variance is a _____ variance. a. volume b. price c. variable d. controllable
price
Question Content Area If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a _____ variance. a. volume b. variable c. rate d. quantity
rate
Most operating decisions of management focus on a narrow range of activity called the _________ of production. a. relevant range b. optimal level c. tactical operating level d. strategic level
relevant range
Which of the following is an example of a mixed cost? a. salary of a factory supervisor b. rental costs of $10,000 per month plus $0.30 per machine hour of use c. electricity costs of $3 per kilowatt-hour d. straight-line depreciation on factory equipment
rental costs of $10,000 per month plus $0.30 per machine hour of use
Standard costs are divided into which of the following components? a. standard price and standard quantity b. materials standard and labor standard c. variance standard and quantity standard d. standard quality and standard quantity
standard price and standard quantity
In evaluating the profit center manager, the operating income should be compared a. to the competitor's net income b. to a budget c. across profit centers d. to the total company earnings per share
to a budget
Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service? a. number of packages picked up b. number of truck drivers c. number of trucks in service d. total miles driven
total miles driven
Costs that vary in total in direct proportion to changes in an activity level are called ____________ costs. a. fixed b. sunk c. variable d. differential
variable
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? a. standard costing b. absorption costing c. differential costing d. variable costing
variable costing
Which of the following statements best describes a decentralized company? a. For a major company, operating decisions are made by top management. b. Each of many units is responsible for its own operations and decision making. c. One owner prepares plans and makes decisions for the entire company. d. None of these choices
Each of many units is responsible for its own operations and decision making
Which of the following describes the behavior of a variable cost per unit? a. It varies in direct proportion with the activity level. b. It varies in increasing proportion with changes in the activity level. c. It remains constant with changes in the activity level. d. It varies in decreasing proportion with changes in the activity level.
It remains constant with changes in the activity level.
The production budget is used to prepare which of the following budgets? a. sales in units b. sales in dollars c. direct materials purchases, direct labor cost, and factory overhead cost d. operating expenses
direct materials purchases, direct labor cost, and factory overhead cost
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following situations will likely lead to human behavior problems? a. setting goals that are reasonable and attainable b. allowing employees the opportunity to be a part of the budget process c. setting goals too loosely, creating a budgetary slack d. setting goals that are consistent across the firm
setting goals too loosely, creating a budgetary slack
Jaxson Corporation has the following data related to direct labor costs for September: actual costs for 10,200 hours at $15.75 per hour and standard costs for 10,800 hours at $15.50 per hour. The direct labor time variance is a. $9,450 favorable b. $9,450 unfavorable c. $9,300 favorable d. $9,300 unfavorable
$9,300 favorable Direct Labor Time Variance = (Actual Direct Labor Hours - Standard Direct Labor Hours) × Standard Rate per Hour = (10,200 hours - 10,800 hours) × $15.50 = (600) hours × $15.50 = $(9,300) Favorable Variance
Blaser Corporation had $1,056,000 in invested assets, sales of $1,241,000, operating income amounting to $232,000 , and a desired minimum return on investment of 12%. The return on investment (rounded to one decimal place) for Blaser Corporation is a. 26.4% b. 22.0% c. 18.7% d. 15.0%
22.0% Return on Investment (ROI) = Operating Income ÷ Invested Assets = $232,000 / $1,056,000 = 22.0%
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? a. marginal costing b. standard costing c. absorption costing d. variable costing
absorption costing
The direct labor rate variance is the difference between the a. actual costs and the actual hours at the standard rate b. actual costs and the standard costs c. actual hours at the standard rate and the standard costs d. actual rate and the standard rate
actual costs and the actual hours at the standard rate
The direct materials price variance is the difference between the a. actual price and the standard price b. actual costs and the standard costs c. actual quantity at the standard price and the standard costs d. actual costs and the actual quantity at the standard price
actual costs and the actual quantity at the standard price
The direct labor time variance is the difference between the a. actual costs and the actual hours at the standard rate b. actual labor rate and the standard labor rate c. actual hours at the standard rate and the standard costs d. actual costs and the standard costs
actual hours at the standard rate and the standard costs
The direct materials quantity variance is the difference between the a. actual costs and the standard price at the standard quantity b. standard quantity and the actual quantity c. actual costs and the standard costs d. actual quantity at the standard price and the standard costs
actual quantity at the standard price and the standard costs
In a profit center, the department manager has responsibility for and the authority to make decisions that affect a. the assets invested in the center, but not costs and revenues b. both costs and revenues for the department or division c. not only costs and revenues, but also assets invested in the center d. costs and assets invested in the center, but not revenues
both costs and revenues for the department or division
Cost behavior refers to the manner in which a cost a. is estimated b. changes as a related activity changes c. is allocated to products d. is used in setting selling prices
changes as a related activity changes
In the variable costing income statement, deduction of variable selling and administrative expenses from manufacturing margin yields a. marginal expenses b. gross profit c. differential margin d. contribution margin
contribution margin
A manager is responsible for costs but not revenues in a(n) _____ center. a. cost b. volume c. profit d. investment
cost
The total manufacturing cost variance consists of a. direct materials cost variance, direct labor cost variance, and factory overhead cost variance b. direct materials cost variance, direct labor cost variance, and variable factory overhead controllable variance c. direct materials cost variance, direct labor rate variance, and factory overhead cost variance d. direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance
direct materials cost variance, direct labor cost variance, and factory overhead cost variance
A disadvantage of static budgets is that they a. are dependent on the previous year's actual results b. cannot be used by service companies c. show the expected results of a responsibility center for several levels of activity d. do not allow for possible changes in activity levels
do not allow for possible changes in activity levels