ACG3341

If Bel Air Realtor plans an operating income of $210,000 and the tax rate is 30%, then Bel Air's planned net income should be: a. $147,000 b. $63,000 c. $273,000 d. $357,000

a. $147,000

Amber Manufacturing provided the following information for last month: Sales $20,000 Variable costs 6,000 Fixed costs 9,000 Operating income $5,000 If sales double next month, what is the projected operating income? a. $19,000 b. $10,000 c. $12,000 d. $25,000

a. $19,000

Answer the following questions using the information below: For 2010, Jake's Dog Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accounting records contain the following information: Estimated Actual Manufacturing overhead costs $200,000 $240,000 Machine-hours 40,000 50,000 Using actual costing, the amount of manufacturing overhead costs allocated to jobs during 2010 is: a. $240,000. b. $300,000 c. $250,000 d. $200,000

a. $240,000.

Answer the following questions using the information below: Gibson 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 Winfield High School band jacket job. Company Winfield High School Job Direct materials $40,000 $1,000 Direct labor $10,000 $200 Manufacturing overhead costs $30,000 Machine-hours 100,000 mh 900 mh What amount of manufacturing overhead costs will be allocated to this job? a. $270 b. $30,000 c. $450 d. $720

a. $270

Answer the following questions using the information below: Gibson 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 Winfield High School band jacket job. Company Winfield High School Job Direct materials $40,000 $1,000 Direct labor $10,000 $200 Manufacturing overhead costs $30,000 Machine-hours 100,000 mh 900 mh What amount of manufacturing overhead costs will be allocated to this job? a. $270 b. $720 c. $30,000 d. $450

a. $270

Answer the following questions using the information below: Philadelphia Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2010: Direct materials $140,000 Direct labor (3,500 hours @ $11/hour) $ 38,500 Indirect labor $ 10,000 Plant facility rent $ 30,000 Depreciation on plant machinery and equipment $ 15,000 Sales commissions $ 20,000 Administrative expenses $ 25,000 The amount of manufacturing overhead allocated to all jobs during June 2010 totals: a. $52,500 b. $55,000 c. $100,000 d. $38,500

a. $52,500

Answer the following questions using the information below: Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue, $2,800 of variable costs, and $1,200 of fixed costs. Contribution margin per unit is: a. $6.00 b. None of these answers are correct. c. $4.29 d. $4.00

a. $6.00

O'Reilly Enterprises manufactures digital video equipment. For each unit $2,950 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labor hour. Calculate the cost of each unit. a. $8,450 b. $4,950 c. $9,950 d. $11,950

a. $8,450

Answer the following questions using the information below: Ruben intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $150 each. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,000 in advertising costs. How many ticket packages will Ruben need to sell in order to achieve $60,000 of operating income? a. 1,300 packages b. 1,100 packages c. 367 packages d. 434 packages

a. 1,300 packages

Managers use management accounting information to ________ strategy. a. All of these answers are correct. b. implement c. communicate d. choose

a. All of these answers are correct.

Job-costing may only be used by: a. All of these may use job-costing. b. service companies c. merchandising companies d. manufacturing companies

a. All of these may use job-costing.

The person most likely to use ONLY financial accounting information is a: a. current shareholder b. department manager c. vice president of operations d. factory shift supervisor

a. current shareholder

Financial accounting provides the primary source of information for: a. preparing the income statement for shareholders b. improving customer service c. decision making in the finishing department d. planning next year's operating budget

a. preparing the income statement for shareholders

Cost allocation is: a. the assignment of indirect costs to the chosen cost object b. the process of determining the actual cost of the cost object c. the process of tracking both direct and indirect costs associated with a cost object. d. a function of cost tracing

a. the assignment of indirect costs to the chosen cost object

When a greater proportion of costs are fixed costs, then: a. when demand is low the risk of loss is high b. when demand is high the breakeven point is increased c. a decrease in sales reduces the cost per unit d. a small increase in sales results in a small decrease in operating income

a. when demand is low the risk of loss is high

Bassman Company operates on a contribution margin of 30% and currently has fixed costs of $400,000. Next year, sales are projected to be $2,000,000. An advertising campaign is being evaluated that costs an additional $60,000. How much would sales have to increase to justify the additional expenditure? a. $600,000 b. $200,000 c. $120,000 d. $180,000

b. $200,000

Answer the following questions using the information below: Roiann and Dennett Law Office employs 12 full-time attorneys 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 20X3: Budget Actual Indirect costs $270,000 $300,000 Annual salary of each attorney $100,000 $110,000 Annual salary of each paraprofessional $ 29,000 $ 30,000 Total professional labor-hours 50,000 dlh 60,000 dlh What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional labor-hour? a. $29.80; $5.40 b. $27.00; $5.00 c. $32.40; $5.00 d. $27.00; $4.17

b. $27.00; $5.00

________ is the after-sale support provided to customers. a. Marketing b. Customer service c. Distribution d. Production

b. Customer service

Answer the following questions using the information below: Southwestern College is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet: OPTION 1: Crestview Country Club a. Fixed rental cost of $1,000 b. $12 per person for food OPTION 2: Tallgrass Country Club a. Fixed rental cost of $3,000 b. A caterer who charges $8.00 per person for food Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event. Which option has the lowest breakeven point? a. Option two b. Option one c. Both options have the same breakeven point. d. The lowest breakeven point cannot be determined.

b. Option one

_______ is the generation of, and experimentation with, ideas related to new products, services, or processes. a. Design of products, services, or processes b. Research and development c. Production d. Marketing

b. Research and development

XIAN Manufacturing produces a unique valve, and has the capacity to produce 50,000 valves annually. Currently XIAN produces 40,000 valves and is thinking about increasing production to 45,000 valves next year. What is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change? a. Total manufacturing costs will stay the same and unit manufacturing costs will decrease. b. Total manufacturing costs will increase and unit manufacturing costs will decrease. c. Total manufacturing costs will increase and unit manufacturing costs will stay the same. d. Total manufacturing costs will stay the same and unit manufacturing costs will stay the same.

b. Total manufacturing costs will increase and unit manufacturing costs will decrease.

For a given job the direct costs associated with the job are: a. direct manufacturing labor b. Two of these answers are correct. c. direct material d. actual overhead

b. Two of these answers are correct.

Which of the following items is NOT an assumption of CVP analysis? a. Costs may be separated into separate fixed and variable components. b. Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. c. Total revenues and total costs are linear in relation to output units. d. Proportion of different products will remain constant when multiple products are sold.

b. Unit selling price, unit variable costs, and unit fixed costs are known and remain constant.

Staff management includes: a. distribution managers b. human-resource managers c. purchasing managers d. manufacturing managers

b. human-resource managers

Planning includes all of the following EXCEPT a. making predictions about the future. b. providing feedback to help with future decision making. c. obtaining information. d. identifying the problem and uncertainties.

b. providing feedback to help with future decision making.

Answer the following questions using the information below: Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue, $20,000 of variable costs, and $10,000 of fixed costs. If a change is made in one parameter of CVP analysis, it is an example of: a. multiple cost drivers b. sensitivity analysis c. operating leverage d. incremental budgeting

b. sensitivity analysis

Which of the following would be LEAST likely to be a cost driver for a company's human resource costs? a. the square footage of the office space used by the human resource department b. the number of units sold c. the number of employees in the human resource department d. the number of job applications processed

b. the number of units sold

Manufacturing overhead costs incurred for the month are: Utilities $30,000 Depreciation on equipment $25,000 Repairs $20,000 Which is the correct journal entry assuming utilities and repairs were on account? a.Manufacturing Overhead Control 75,000 Accumulated Depreciation Control 75,000 b.Manufacturing Overhead Control 75,000 Accounts Payable Control 50,000 Accumulated Depreciation Control 25,000 c. Accumulated Depreciation Control 25,000 Accounts Payable Control 50,000 Manufacturing Overhead Control 75,000 d. Manufacturing Overhead Control 75,000 Accounts Payable Control 75,000

b.Manufacturing Overhead Control 75,000 Accounts Payable Control 50,000 Accumulated Depreciation Control 25,000

Answer the following questions using the information below: Gibson 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 Winfield High School band jacket job. Company Winfield High School Job Direct materials $40,000 $1,000 Direct labor $10,000 $200 Manufacturing overhead costs $30,000 Machine-hours 100,000 mh 900 mh For Gibson Manufacturing, what is the annual manufacturing overhead cost-allocation rate? a. $33.33 b. $0.80 c. $0.30 d. $0.50

c. $0.30

Kenefic Company sells its only product for $9 per unit, variable production costs are $3 per unit, and selling and administrative costs are $1.50 per unit. Fixed costs for 10,000 units are $5,000. The contribution margin is: a. $4 per unit b. $6 per unit c. $4.50 per unit d. $5.50 per unit

c. $4.50 per unit

Answer the following questions using the information below: Philadelphia Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2010: Direct materials $140,000 Direct labor (3,500 hours @ $11/hour) $ 38,500 Indirect labor $ 10,000 Plant facility rent $ 30,000 Depreciation on plant machinery and equipment $ 15,000 Sales commissions $ 20,000 Administrative expenses $ 25,000 The actual amount of manufacturing overhead costs incurred in June 2010 totals: a. $40,000 b. $278,500 c. $55,000 d. $100,000

c. $55,000

Answer the following questions using the information below: The Singer Company manufactures several different products. Unit costs associated with Product ICT101 are as follows: Direct materials $ 60 Direct manufacturing labor 10 Variable manufacturing overhead 18 Fixed manufacturing overhead 32 Sales commissions (2% of sales) 4 Administrative salaries 16 Total $140 What are the variable costs per unit associated with Product ICT101? a. $22 b. $18 c. $92 d. $88

c. $92

Answer the following questions using the information below: Bush Manufacturing produces a single product that sells for $100. Variable costs per unit equal $25. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. Suppose that management believes that a $24,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to justify this additional expenditure? a. 240 units b. None of these answers are correct. c. 320 units d. 1,120 units

c. 320 units

The law firm of Smith & Jones has a staff of 30 lawyers and administrative staff. Budgeted total costs of the firm total $4,000,000 of which $2,500,000 is direct-labor costs. Assuming that the remaining costs are indirect and direct-labor cost is the allocation base, calculate the budgeted indirect cost rate. a. 63% of direct-labor cost b. 38 of direct-labor cost c. 60% of direct-labor cost d. 160% of direct-labor cost

c. 60% of direct-labor cost

Modern cost accounting plays a role in: a. planning new products b. evaluating operational processes c. All of these answers are correct. d. controlling costs

c. All of these answers are correct.

Which of the following are reasons for using longer periods, such as a year, to calculate indirect cost rates. a. Numerator reason b. Denominator reason c. Both A and B d. Neither A nor B

c. Both A and B

Which of the following statements about normal costing is true? a. Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate. b. Direct costs and indirect costs are traced using budgeted rates. c. Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate. d. Direct costs and indirect costs are traced using an actual rate.

c. Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.

Which of the following is NOT one of the questions management accountants might attempt to help answer in the formulation of strategy? a. What substitute products exist in the marketplace? b. Who are our most important customers? c. Does the strategy comply with GAAP (Generally Accepted Accounting Principles)? d. Will adequate cash be available to implement the strategy?

c. Does the strategy comply with GAAP (Generally Accepted Accounting Principles)?

Which of the following statements about the direct/indirect cost classification is NOT true? a. The design of operations affects the direct/indirect classification. b. The direct/indirect classification depends on the choice of cost object. c. Indirect costs are always traced. d. Indirect costs are always allocated.

c. Indirect costs are always traced.

Which of the following statements concerning performance reports is NOT correct? a. The performance report shows actual performance as compared to the budget. b. The performance report often leads to more investigations and action. c. The performance report contains no actual results due to confidentiality. d. The performance report is a feedback tool.

c. The performance report contains no actual results due to confidentiality.

When a job is complete: a. the cost of the job is transferred to Manufacturing Overhead Control b. Finished Goods Control is credited c. actual direct materials, actual direct manufacturing labor, and allocated manufacturing overhead will comprise the total cost of the job d. Work-in-Process Control is debited

c. actual direct materials, actual direct manufacturing labor, and allocated manufacturing overhead will comprise the total cost of the job

The Standards of Ethical Conduct for management accountants include concepts related to: a. competence, performance, integrity, and reporting b. None of these answers are correct. c. competence, confidentiality, integrity, and credibility d. experience, integrity, reporting, and objectivity

c. competence, confidentiality, integrity, and credibility

In a normal costing system, the Manufacturing Overhead Control account: a. is increased by allocated manufacturing overhead b. is decreased by allocated manufacturing overhead c. is debited with actual overhead costs d. is credited with amounts transferred to Work-in-Process

c. is debited with actual overhead costs

In designing strategy, a company must match the opportunities and threats in the marketplace with: a. branding opportunities b. capabilities of current suppliers c. its resources and capabilities d. those of the CFO (Chief Financial Officer)

c. its resources and capabilities

Within the relevant range, if there is a change in the level of the cost driver, then: a. total fixed costs will change and total variable costs will remain the same b. total fixed costs and total variable costs will change c. total fixed costs will remain the same and total variable costs will change d. total fixed costs and total variable costs will remain the same

c. total fixed costs will remain the same and total variable costs will change

Answer the following questions using the information below: The following information pertains to Alleigh's Mannequins: Manufacturing costs $1,500,000 Units manufactured 30,000 Units sold 29,500 units sold for $85 per unit Beginning inventory 0 units What is the amount of gross margin? a. $2,507,500 b. $1,500,000 c. $1,475,000 d. $1,032,500

d. $1,032,500

Answer the following questions using the information below: Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20X3, the following estimates were provided for the coming year: Machining Assembly Direct labor-hours 30,000 60,000 Machine-hours 80,000 20,000 Direct labor cost $500,000 $900,000 Manufacturing overhead costs $420,000 $240,000 The accounting records of the company show the following data for Job #316: Machining Assembly Direct labor-hours 120 70 Machine-hours 60 5 Direct material cost $300 $200 Direct labor cost $100 $400 What are the total manufacturing costs of Job #316? a. $880 b. $715 c. $1,000 d. $1,595

d. $1,595

When fixed costs are $40,000 and variable costs are 20% of the selling price, then breakeven sales are: a. $200,000 b. $40,000 c. indeterminable d. $50,000

d. $50,000

Answer the following questions using the information below: Assume the following cost information for Fernandez Company: Selling price $120 per unit Variable costs $80 per unit Total fixed costs $80,000 Tax rate 40% What is the number of units that must be sold to earn an after-tax net income of $42,000? a. 3,050 units b. 1,875 units c. 4,625 units d. 3,750 units

d. 3,750 units

Answer the following questions using the information below: Bush Manufacturing produces a single product that sells for $100. Variable costs per unit equal $25. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. Suppose that management believes that a $24,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to justify this additional expenditure? a. 1,120 units b. None of these answers are correct. c. 240 units d. 320 units

d. 320 units

Assuming a constant mix of 3 units of Small for every 1 unit of Large. Small Large Total Sales $20 $30 VC 14 18 Total fixed costs $48,000 The breakeven point in units would be: a. 400 units of Small and 1,200 units of Large b. 1,200 units of Small and 400 units of Large c. 1,600 units of Small and 4,800 units of Large d. 4,800 units of Small and 1,600 units of Large

d. 4,800 units of Small and 1,600 units of Large

Which statement is true? a. All fixed costs are indirect costs b. All direct costs are variable costs. c. All variable costs are direct costs. d. Because of a cost-benefit tradeoff, some direct costs may be treated as indirect costs.

d. Because of a cost-benefit tradeoff, some direct costs may be treated as indirect costs.

Answer the following questions using the information below: Because the Abernathy Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) was different from the actual amount incurred ($225,000). Ending balances in the relevant accounts are: Work-in-Process $ 10,000 Finished Goods 20,000 Cost of Goods Sold 170,000 What is the journal entry used to write off the difference between allocated and actual overhead directly to cost of goods sold? a. Manufacturing Overhead Allocated 200,000 Work-in-Process Control 30,000 Cost of Goods Sold 170,000 b. Manufacturing Overhead Control 200,000 Cost of Goods Sold 25,000 Manufacturing Overhead Allocated 225,000 c. Manufacturing Overhead Control 225,000 Work-in-Process Control 55,000 Cost of Goods Sold 170,000 d. Manufacturing Overhead Allocated 200,000 Cost of Goods Sold 25,000 Manufacturing Overhead Control 225,000

d. Manufacturing Overhead Allocated 200,000 Cost of Goods Sold 25,000 Manufacturing Overhead Control 225,000

Answer the following questions using the information below: Roiann and Dennett Law Office employs 12 full-time attorneys 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 20X3: Budget Actual Indirect costs $270,000 $300,000 Annual salary of each attorney $100,000 $110,000 Annual salary of each paraprofessional $ 29,000 $ 30,000 Total professional labor-hours 50,000 dlh 60,000 dlh When a normal costing system is used, clients using proportionately more attorney time than paraprofessional time will: a. result in an underallocation of direct costs b. be overbilled for actual resources used c. be billed accurately for actual resources used d. be underbilled for actual resources used

d. be underbilled for actual resources used

The determination of a cost as either direct or indirect depends upon the: a. allocation system b. cost tracing system c. accounting system d. cost object chosen

d. cost object chosen

In multiproduct situations, when sales mix shifts toward the product with the lowest contribution margin then: a. breakeven quantity will decrease b. total revenues will increase c. total contribution margin will increase d. operating income will decrease

d. operating income will decrease

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is: a. material used to make the soccer balls b. shift supervisor for the soccer line c. labor to shape the leather used to make the soccer ball d. plant supervisor

d. plant supervisor

If a company has a degree of operating leverage of 3.0 and sales increase by 25%, then: a. total variable costs will increase by 75% b. profit will increase by 30% c. total variable costs will not change d. profit will increase by 75%

d. profit will increase by 75%

The breakeven point decreases if: a. the contribution margin per unit decreases b. the variable cost per unit increases c. the selling price per unit decreases d. total fixed costs decrease

d. total fixed costs decrease

When 10,000 units are produced, variable costs are $6 per unit. Therefore, when 20,000 units are produced: a. variable costs will total $60,000 b. variable unit costs will increase to $12 per unit c. variable unit costs will decrease to $3 per unit d. variable costs will total $120,000

d. variable costs will total $120,000

Answer the following questions using the information below: The Singer Company manufactures several different products. Unit costs associated with Product ICT101 are as follows: Direct materials $ 60 Direct manufacturing labor 10 Variable manufacturing overhead 18 Fixed manufacturing overhead 32 Sales commissions (2% of sales) 4 Administrative salaries 16 Total $140 What are the fixed costs per unit associated with Product ICT101? a.$102 b.$52 c.$32 d.$48

d.$48