Acct 251

The formula to determine the cost of goods manufactures is:

Beginning work in process inventory + total manufacturing costs - ending work in process inventory

The source of information for assigning costs to job cost sheets are:

Materials requisition slips, time tickets, and the predetermined overhead rate

Siegel industries is considering two capital budgeting projects. Project A requires an initial investment of $48,000. It is expected to produce net annual cash flows of $7,000. Project B requires an initial investment of $75,000 and is expected to produce net annual cash flows of $12,000. Using the cash payback technique to evaluate the two projects, Siegel should accept:

Project B because it has a shorter cash payback period payback period = investment / NACF

In producing product ZZ, 14,800 direct labor hours were used at a rate of $8.20 per hour. The standard was 15,000 hours at $8.00 per hour. Based on these data, the direct labor:

Quantity variance is $1,600 favorable

In accumulating raw materials costs, companies debit the cost of raw materials purchased in a perpetual system to:

Raw materials inventory

Variable costs are costs that:

a) vary in total directly and proportionately with changes in the activity level b) remain the same per unit at every activity level

Which of the following costs are classified as a period cost?

a) wages paid on factory custodian b) wages paid to a production department supervisor c) wages paid to a cost accounting department supervisor d) wages paid to an assembly worker ANSWER: C

Total overhead variance

actual overhead - overhead applied

Responsibility centers include:

cost centers profit centers investment centers

A company is more likely to use a job order cost system if:

it manufactures products with unique characteristics

Conversion costs are the sum of:

labor costs and overhead costs

Indirect labor is a:

product cost

Direct materials are a:

product cost only

Marshall company had actual sales of $600,000 when break-even sales were $420,000. What is the margin of safety ratio?

30% (Margin of safety in dollars / actual sales) (180,000/600,000)

In a decision to retain or replace equipment, the book value of the old equipment is a

Sunk cost

Labor Variances:

TLV: (AH X AR) - (SH X SR) LPV: (AH X AR) - (AH X SR) LQV: (AH X SR) - (SH X SR)

Cost of goods available for sale is a step in the calculation of cost of goods sold of:

a merchandising company and a manufacturing company

Kendra Corporation's total utility costs during the past year were $1,200 during its highest month and $600 during its lowest month. These costs corresponded with 10,000 units of production during the high month and 2,000 units during th slow month. What are the fixed and variable components of its utility costs using the High-low method?

$0.075 Variable and $450 fixed $0.075 (1,200-600) / (10,000 - 2,000) $450 (1,200 - (0.075 x 10,000)

KLM Company uses the FIFO method to compute equivalent units. It has no beginning work in process; 9,000 units are started and completed and 3,000 units in Ending work in process are 1/3 completed. All material is added at the beginning of the process. If total materials cost is $60,000, the unit materials cost is:

$5.00 [60,000 / (9,000 + 3,000)]

The Mixing Department's output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending work in process 60% complete as to materials and conversion costs. Beginning inventory is 1,000 units, 40% complete as to materials and conversion costs. The equivalent units of production are:

23,000 units EQ Units of Production = (units compl transf out + eq units of Ending WIP) 20,000 + (5,000 x 60%)

Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion?

Activity-based costing

In producing product AA, 6,300 pounds of direct materials were used at a cost of $1.10 per pound. The standard was 6,000 pounds at $1.00 per pound. The direct materials quantity variance is:

$300 unfavorable (6,300 x $1.00) - (6,000 x 1.00) = $300

For the year, Redder Company has a cost of good manufactured of $600,000, beginning finished goods inventory of $200,000, and ending finished goods inventory of $250,000, The cost of goods sold is:

$550,000

After passage of the Sarbanes-Oxley Act:

CEOs and CFOs must certify that financial statements give a fair presentation of the company's operating results

Corporate social responsibility refers to:

Efforts by companies to employ sustainable business practices with regard to employees and the environment

Managerial accounting:

Managerial accounting emphasizes special-purpose information

Indicate which of the following statements is NOT correct

Manufacturing costs are assigned the same way in a job order and in a process cost system

Cost accounting involves the measuring, recording, and report of:

Product costs

A cost of good manufactures schedule shoes beginning and ending inventories for:

Raw materials and work in process only

Materials Variances:

TMV: (AQ X AP) - (SQ X SP) MPV: (AQ X AP) - (AQ X SP) MQV: (AQ X SP) - (SQ X SP)

The budgeted income statement is:

The end-product of the operating budgets

Raw materials are assigned to a job when:

The materials are issued by the materials storeroom

Which of the following items is NOT characteristic of a process cost system?

The products produced are heterogeneous in nature

In a production cost report, units to be accounted for are calculated as:

Units started into production + units in beginning work in process

The entry when direct factory labor is assigned to jobs is a debit to:

Work in process Inventory and a credit to Factory Labor

Manufacturing overhead is under-applied if:

actual overhead is greater than applied

Margin of safety is computed as:

actual sales - break-even sales

The format of a cash budget is:

beginning cash balance + cash receipts - cash disbursements +/- financing = ending cash balance

Myna Company completes Job No. 26 at a cost of $4,500 and later sells it for $7,000 cash. A CORRECT entry is:

debit finished good inventory for $4,500 credit Work in process inventory $4,500

Which of the following costs would a computer manufacturer include in manufacturing overhead?

depreciation on testing equipment

The formula for the production budget is budgeted sales in units plus:

desired ending finished goods units less beginning finished goods units

Responsibility reports for cost centers:

include only controllable costs

In a process cost system, manufacturing overhead:

is assigned to a work in process account for each production department on the basis of predetermined overhead rate

Contribution margin

is revenue remaining after deducting variable costs may be expressed as unit contribution margin

what is a weakness of the cash payback approach?

it ignores the time value of money it ignores the useful life of alternative projects

A sales budget is:

management's best estimate of sales revenue for the year

In make or buy decisions, relevant costs are:

manufacturing costs that will be saves the purchase price of the units the opportunity cost

In making journal entires to assign raw materials costs, a company using process costing:

often debits two or more work in process accounts

The management of an organization performs several broad functions. They are:

planning, directing, and controlling are the broad functions performed by the management of an organization

Which the following is NOT an element of manufacturing overhead?

sales manager's salary

A production cost report:

shows both the production quantity and cost data related to a department

The relevant range is:

the range over which the company expects to operate during a year

The mathematical equation for computing required sales to obtain target net income is Required sales = _________?

variable costs + fixed costs + target net income

Mixed costs consists of a:

variable-cost element and a fixed-cost element

In a process cost system, the flow of costs is:

work in process, finished goods, cost of goods sold