Acis Practice Exam 2

A. $1,000 F

A. $1,000 F B. $50 F C. $1,550 F D. $550 F

Assume that the cost formula for one of a company's variable expenses is $5.00 per unit. The company's planned level of activity was 2,000 units and its actual level of activity was 2,200 units. The actual amount of this expense was $10,800. The activity variance for this expense is: A. $1,000 U B. $800 U C. $200 U D. $200 F

A. $1,000 U

C. $1,650

A. $1,150 B. $1,575 C. $1,650 D. $1,675

B. $1,500 F

A. $1,500 U B. $1,500 F C. $1,431 U D. $1,431 F

Assume a company's budgeted unit sales and its required production in units for April are 80,000 units and 78,000 units, respectively. The direct labor-house required per unit is 1.25 hours and the direct labor wage rate is $16.50 per hour. What is the budgeted direct labor cost for april A. $1,608,750 B. $1,625,500 C. $1,638,500 D. $1,650,000

A. $1,608,750

B. $2.25

A. $1.75 B. $2.25 C. $1.85 D. $2.15

B. $2.92

A. $1.90 B. $2.92 C. $2.86 D. $1.94

B. $10,000 F

A. $10,000 U B. $10,000 F C. $9,750 U D. $9,750 F

B. $11,000

A. $10,500 B. $11,000 C. $10,000 D. $10,400

Assume a company has a plantwide overhead rate of $20 per machine hour. Recently, the company experimented with an ABC system that broke down its total overhead of $400,000 into various cost pools including one titled "machining" that was assigned to products using machine hours. One product called the "widget" consumed two machine hours and was assigned a total of $10 of overhead from the "machining" cost pool. What is the total amount of overhead cost included in the machining activity-based cost pool A. $100,000 B. $80,000 C. $78,000 D. $112,000

A. $100,000

D. $10.50

A. $11.50 B. $10.25 C. $10.00 D. $10.50

A. $12,500 U

A. $12,500 U B. $12,500F C. $13,000 U D. $13,000 F

Assume a company's sales budget for July estimates 15,000 units sold. The variable selling and administrative expense used for budgeting purposes is $4.00 per unit sold. The total budgeted cash disbursements for selling and administrative expenses in July $125,000. The total fixed selling and administrative expenses included in the selling and administrative expense budget for July $80,000. What is the amount of depreciation included in the selling and administrative expense budget for July? A. $15,000 B. $25,000 C. $20,000 D. $10,000

A. $15,000

B. $16,400 U

A. $16,200 U B. $16,400 U C. $16,800 U D. $16,900 U

assume the following information for a company that produced and sold 10,000 units during its first year of operations: Per unit Per year selling price $200 Direct materials $75 Direct Labor $50 Variable manufacturing overhead $10 fixed manfuacturing overhead $300,000 using absorption costing, what is the company's unit product cost? A. $165 B. $135 C. $155 D. $125

A. $165

C. $66 F

A. $176 U B. $176 F C. $66 F D. $66 U

D. $105,000

A. $2,000 B. $30,000 C. $117,000 D. $105,000

C. $4,000 F

A. $2,000 F B. $2,000 U C. $4,000 F D. $4,000 U

Assume that the amount of one of the company's variable expenses in its flexible budget is $40,000. The actual amount of the expense is $42,000 and the amount in the company's planning budget is $44,000. The spending variance for this expense is A. $2,000 U B. $2,000 F C. $4,000 F D. $4,000 U

A. $2,000 U

D. $22,000 F

A. $20,000 U B. $20,000 F C. $22,000 U D. $22,000 F

B. $227,500

A. $242,500 B. $227,500 C. $233,400 D. $215,000

Assume a company with two divisions (A and B) prepared the following income statement: A B Total Sales: $300,000 $200,000. $500,000 Variable expenses: 120,000 140,000 260,000 Contribution margin: 180,000 60,000 240,000 Traceable Fixed Expenses: 100,000 80,000 180,000 Segment margin: $80,000. $(20,000) 60,000 Common fixed expenses: 50,000 Net operating income: 10,000 Division B's dollar sales to break even is closest to: A. $266,667. B. $114,286. C. $333,333. D. $233,333.

A. $266,667.

Assume a company's unit product cost under absorption costing includes $12 of fixed manufacturing overhead per unit. In its first year of the operations, the company produced 12,500 units and sold 11,500 units and it reported absorption costing net operating income of $40,000. what was the company's variable costing net operating income during it's first year of operations? A. $28,000 B. $32,000 C. $52,000 D. $38,000

A. $28,000

B. $36,400

A. $28,600 B. $36,400 C. $35,600 D. $35,800

C. $3,025

A. $3,125 B. $3,275 C. $3,025 D. $3,175

B. $3,400 U

A. $3,400 F B. $3,400 U C. $3,300 F D. $3,300 U

B. $4,000 F

A. $4,000 U B. $4,000 F C. $4,500 U D. $4,500 F

B. $4,000 F

A. $4,500 U B. $4,000 F C. $2,400 F D. $4,500 F

B. $400 F

A. $400 U B. $400 F C. $200 F D. $200 U

A. $420,000

A. $420,000 B.$30,000 C.$378,000 D.$350,000

D. $68,310

A. $46,310 B. $56,410 C. $66,310 D. $68,310

B. $479,250

A. $474,000 B. $479,250 C. $482,250 D. $486,000

A. $5,000

A. $5,000 B. $10,000 C. $15,000 D. $20,000

B. $3,000

A. $5,000 b. $3,000 c. $2,000 d. $4,000

D. $4,500 F

A. $5,500 U B $5,500 F C. $4,500 U D. $4,500 F

D. $36,500

A. $56,500 B. $28,180 C. $48,180 D. $36,500

Assume that a company's budgeted revenue is per unit is $50. The company's planned level of activity was 2,000 units and its actual level of activity was 2,200 units. Its actual revenue was $104,000. The company's revenue variance is: A. $6,000 U B. $6,000 F C. $4,000 F D. $4,000 U

A. $6,000 U

C. $517,000

A. $637,000 B.$400,000 C.$517,000 D. $117,000

D. $8,000

A. $7,400 B. $7,700 C. $7,900 D. $8,000

C. $8,500 U

A. $8,000 U B. $8,000 F C. $8,500 U D. $8,500 F

A. $8,300

A. $8,300 B. $8,100 C. $8,800 D. $8,500

assume a company has two divisions A and B. The company's overall sales, overall contribution margin ratio, common fixed expenses, and net operating income are $50,000 and $10,000, respectively. Division A has a contribution margin of $180,000. If Division B has traceable fixed expenses of $80,000, then what is Division A's segment margin? A. $80,000 B. $60,000 C.$40,000 D.$20,000

A. $80,000

C. 13,000 units

A. 12,500 units B. 12,000 units C. 13,000 units D. 14,000 units

C. 15,000 units

A. 17,000 units B. 16,000 units C. 15,000 units D. 14,000 units

A. 3,600 units

A. 3,600 units B. 3,300 units C. 4,100 units D. 4,200 units

D. 7,200 hours

A. 5,800 hours B. 6,600 hours C. 6,900 hours D. 7,200 hours

A. 7,800 hours

A. 7,800 hours B. 8,200 hours C. 8,000 hours D. 7,600 hours

which of the following does not describe a difference between activity based costing (ABC) and traditional absorption costing A. ABC usually excludes manufacturing overhead from its calculations whereas traditional absorption costing includes it B. ABC may assign non manufacturing costs to products whereas traditional absorption costing does not assign non manufacturing costs to products C. ABC may exclude some manufacturing costs from it's product costs whereas traditional absorption costing includes all manufacturing costs in its product cost calculations D. ABC uses numerous cost pools to allocate costs to products whereas traditional absorption costing usually uses fewer cost pools

A. ABC usually excludes manufacturing overhead from its calculations whereas traditional absorption costing includes it

Which of the following is an example of a unit level activity A. Assembling products B. Setting up machines C. advertising products D. heating a manufacturing facility

A. Assembling products

A spending variance is calculated by comparing the: A. Flexible budget to the actual results B. planning budget to the flexible budget C. planning budget to the actual results D. static budget to the actual results

A. Flexible budget to the actual results

Which of the following statements is true? A. In absorption costing, Variable manufacturing overhead costs flows through the inventory accounts on the balance sheet before being recorded as part of cost of goods sold on the income statement B. In absorption costing, variable manufacturing overhead costs flows through the inventory accounts on the balance sheet before being recorded as part of selling and administrative expenses on the income statement C. In absorption costing variable manufacturing overhead costs flows through the inventory accounts on the balance sheet before being recorded as sales revenue on the income statement D. In absorption costing, variable manufacturing overhead costs are recorded as period expenses on the income statement as incurred

A. In absorption costing, Variable manufacturing overhead costs flows through the inventory accounts on the balance sheet before being recorded as part of cost of goods sold on the income statement

Which of the following statements is false with respect to a budgeted income statement? A. Its net income should equal the net cash flows from the cash budget B. its net income will impact the ending retained earnings balance shown on the balance sheet C. Its interest expense flows from the financing section of cash budget. D. Its selling and administrative expenses may include depreciation expense

A. Its net income should equal the net cash flows from the cash budget

When the units produced are less than the units sold, which of the following equations explains the difference between absorption costing and variable costing net operating income? A. Number of units released from ending inventory x Fixed manufacturing overhead cost per unit B. Number of units deferred in ending inventory x Fixed manufacturing overhead cost per unit C. Number of units deferred in ending inventory x Variable manufacturing overhead cost per unit D. Number of units released from ending inventory x Variable manufacturing cost per unit

A. Number of units released from ending inventory x Fixed manufacturing overhead cost per unit

Relying exclusively on unit-level overhead allocation is most likely to: A. Overcost High Volume Products B. Overcost Low-volume Products C. Overcost all products D. Undercost all products

A. Overcost High-Volume Products

Which of the following statements is true? A. Planning involves developing goals and preparing various budgets to achieve those goals B. Planning involves gathering feedback that enables organizations to make modifications as circumstances change C. The definition of planning states that managers should be held responsible for those items---and only those items---that the manager can actually control D. Planning is usually done independent from the budgeting process

A. Planning involves developing goals and preparing various budgets to achieve those goals

The standard direct labor cost per unit of finished goods is computed in which of the following ways? A. Standard hours per unit of finished goods x standard rate per hour B. standard hours per unit of finished goods-standard rate per hour C. Standard hours per unit of finished goods/standard rate per hour D. standard hours per unit of finished goods x (standard rate per hour-actual rate per hour)

A. Standard hours per unit of finished goods x standard rate per hour

Which of the following statements is true? A. The activity variance for a fixed expense will equal zero B. the activity variance for a fixed expense will usually be favorable C. the activity variance for a fixed expense will usually be unfavorable D. the activity variance for a fixed expense can be favorable or unfavorable depending on the actual level of activity

A. The activity variance for a fixed expense will equal zero

Which of the following statements is true? A. When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each periods fixed manufacturing overhead on the income statement. B. when the units produced are greater than the units sold absorption costing income will be less than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each periods fixed manufacturing overhead on the income statement C. When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some variable manufacturing overhead cost in ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement D. When the units produced are greater than the units sold absorption costing income will be less than variable costing income because absorption costing defers some variable manufacturing overhead cost in ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement.

A. When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each periods fixed manufacturing overhead on the income statement.

assume the following information for a company that produced and 10,000 units and sold 9,000 units during its first year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 sales commissions $8 Fixed manufacturing overhead $300,000 Using variable costing, what is the company's net operating income? A.$213,000 B.$223,000 C.$233,000 D.$243,000

A.$213,000

A. $256,500

Assume a company manufactures only two products-14,000 units of product A and 6,000 units of Product B. It is considering implementing an activity-based costing (ABC) system that allocates all of it's manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B Using the ABC system, how much total overhead cost would be assigned from all activities to Product A? A. $256,500 B. $236,500 C. $266,500 D. $246,500

B. $344,400

Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product A 's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plant wide overhead rate based on direct labor dollars. It is considering implementing an activity-based costing system (ABC) system that allocates all of it's manufacturing overhead to three costs pools. The following additional information is available for the company as a whole for products A and B Using the company's plant wide approach, the total overhead cost allocated to Product A is closest to: A. $364,400 B. $344,400 C. $314,400 D. $384,400

B. $136

Assume a company's activity based costing system includes three activities with the following activity rates two of the company's many customers include customer A and customer B these two customers consumed the company's activities as follows: If the company earned $1,150 in revenue serving customer B, then what is the customer margin for this customer? A. $176 B. $136 C. $116 D. $156

A. $600

Assume a company's activity-based costing system includes three activities with the following activity rates: two of the company's many customers include customer A and Customer B. These two customers consumed the company's activities as follows: How much cost would be assigned from the Travel Activity to customer A A. $600 B. $150 C. $60 D. $500

A. $794

Assume a service company has implemented an activity-based costing system with five activities as shown below The company serves numerous customers, two of which include Hospital A and Hospital B. The activity demands pertaining to these two customers are as follows How much total activity cost should be assigned to Hospital A for internal management purposes? A. $794 B. $894 C.$954 D.$844

Assume that a company has two cost drivers--number of courses and number of students. The planned number of courses and students were 5 and 100, respectively. the actual number of courses and students were 6 and 110, respectively. One of the company's expenses is influenced by both cost drivers. Its cost formulas are $50 per course ,$5 per student, and 1,000 per period. The activity variance for this expense would be: A. $100 F B. $100 U C. $200 F D. $200 U

B. $100 U

assume the following information for a company that produced and sold 10,000 units during its first year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 fixed manufacturing overhead: $300,000 Using variable costing, what is the company's unit product cost A. $165 B. $135 C. $155 D.$125

B. $135

Assume a company's sales budget for April and May is 30,000 units and 32,000 units, respectively. Its production budget for the same two months is 27,000 and 28,800 units, respectively. Each unit of finished required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following months production needs. Also assume the company pays $2.50 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $130,000. What would be the accounts payable balance at the end of april A. $132,850 B. $136,350 C.$128,350 D. $139,650

B. $136,350

Assume a company's budgeted unit sales and its required production in units for April are 80,000 units and 78,000 units, respectively. The direct labor-hours required per unit is 1.25 hours. The company's total budgeted direct labor cost for April is $1,608,750. What is the budgeted direct labor wage per hour for April? A. $16.79 B. $16.50 C. $16.09 D. $16.00

B. $16.50

assume the following information for a company that produced and 10,000 units and sold 9,000 units during its first year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 sales commissions $8 Fixed manufacturing overhead $300,000 using absorption costing, what is the cost of the company's ending inventory? A. $135,000 B. $165,000 C. $143,000 D. $30,000

B. $165,000

Assume a company with two divisions prepared the following segmented income statement A B Total Sales: ? $200,000. ? Variable expenses: 120,000 140,000 260,000 Contribution margin: ? ? ? Traceable Fixed Expenses: 100,000 80,000 180,000 Segment margin: ? $(20,000) ? Common fixed expenses: 50,000 Net operating income: 10,000 What is Division A's contribution Margin? A. $140,000 B. $180,000 C. $160,000 D. $200,000

B. $180,000

Assume that a company's revenue in it's flexible budget is $76,000. It's actual amount of revenue is $72,000 and the amount of revenue in the company's planning budget is $78,000. The amount of revenue variance is: A. $6,000 U B. $4,000 U C. $4,000 F D. $2,000 U

B. $4,000 U

Assume a merchandising company's estimated sales for January, February, March are $100,000, $120,000, $110,000, respectively. Its cost of goods sold is always 40% of its sales. the company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. What are the required merchandise purchases for January ? A. $44,200 B. $40,800 C. $39,200 D. $48,000

B. $40,800

Assume that a company has two cost drivers--number of courses and number of students. The planned number of courses and students were 5 and 100, respectively. The actual number of courses and students were 6 and 110, respectively. One of the company's expenses is influenced by both cost drivers. It's cost formulas are $50 per course and $5 per student. The total cost included in the planning budget for this expense would be? A. $650 B. $750 C. $850 D. $950

B. $750

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $30,000 and 40,000, it also expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month. A. $89,000 B. $91,500 C. $93,000 D. $24,000

B. $91,500

Which of the following equations is used to prepare a production budget? A. Budgeted unit sales-Desired units of ending finished goods+Units of beginning finished goods inventory=required production in units B. Budgeted unit sales+ Desired units of ending finished goods inventory-units of beginning finished goods inventory=Required production in units C. Budgeted unit sales+desired units of beginning finished goods inventory-units of ending finished goods inventory=required production in units D. Budgeted unit sales-desired units of beginning finished goods inventory+units of ending finished goods inventory=Required production in units

B. Budgeted unit sales+ Desired units of ending finished goods inventory-units of beginning finished goods inventory=Required production in units

Which of the following equations is true? A. Dollar sales for a company to break even=(traceable fixed expenses + common fixed expenses)/ overall segment margin ratio B. Dollar sales for a company to break even=(traceable fixed expenses+common fixed expenses)/overall contribution margin (CM) ration C. Dollar sales for a company to break even=(traceable fixed expenses+common fixed expenses)/ Overall contribution margin (CM) per unit D. Dollar sales for a company to break even=(traceable fixed expenses + common fixed expenses)/overall variable expense ratio

B. Dollar sales for a company to break even=(traceable fixed expenses+common fixed expenses)/overall contribution margin (CM) ration

Assume that a company's planned level of activity is 1000 hours and its actual level of activity is 1100 hours. based on this information, the company's activity variance for revenue will be A. zero B. Favorable C. Unfavorable D. either favorable or unfavorable depending on the cost formula

B. Favorable

Which of the following statements is true with respect to the labor spending variance ? A. it encompasses the labor rate variance, but excludes the labor efficiency variance. B. It encompasses the labor rate and efficiency variances C. It encompasses the labor efficiency variance, but excludes the labor rate variance D. it is separate and independent from the labor rate and efficiency variances

B. It encompasses the labor rate and efficiency variances

Which of the following statements is true with respect to the materials price variance? A. It is computed using the actual quantity of materials used in production B. It is computed using the actual quantity of materials purchased C. it is computed using the standard quantity of materials used in production D. It is computed using the standard quantity of materials purchased

B. It is computed using the actual quantity of materials purchased

Activity-Based-Costing (ABC) is a costing method that provides managers with cost information for A. preparing financial reports for external parties B. Strategic and other decisions that potentially affect capacity and therefore "fixed" as well as variable costs C. Identifying relevant costs when choosing between alternatives D. Identifying the net present value of future cash flows associated with investment opportunities

B. Strategic and other decisions that potentially affect capacity and therefore "fixed" as well as variable costs

Which of the following statements is true? A. The activity variance for revenue will usually equal zero B. The activity variance for revenue will usually be favorable if the actual level of activity is greater than the planned level of activity C. The activity variance for revenue will be favorable if the actual level of activity is less than the planned level of activity D. the activity variance for revenue can be favorable or unfavorable depending on whether the actual revenue earned is greater than or less than the planned revenue

B. The activity variance for revenue will usually be favorable if the actual level of activity is greater than the planned level of activity

which of the following is not one of the sections within a cash budget? A. The financing section B. The investing section C. The cash receipts section D. The cash disbursements section

B. The investing section

which of the following statements is true? A. Traditional cost systems usually allocate too much non-manufacturing costs to products whereas activity based costing systems usually do not allocate enough non-manufacturing costs to products B. Traditional cost systems usually overcast high volume and undercoat low volume products when compared to activity-based costing systems C. Traditional cost systems usually undercoat high volume products and over-cost low volume products when compared to activity based costing systems D. Traditional cost systems may use different allocation bases than activity-based costing systems, but ultimately both approaches results in the same amount of total cost being allocated to each product

B. Traditional cost systems usually overcast high volume and undercoat low volume products when compared to activity-based costing systems

Which of the following statements is false? A. Variable costing treats direct materials as period cost B. Variable costing treats fixed manufacturing overhead as a product cost C. Variable costing treats variable manufacturing overhead as a product cost D. Variable costing treats direct labor as a product cost

B. Variable costing treats fixed manufacturing overhead as a product cost

Which of the following statements is true? A. When the units produced are less than the units sold, absorption costing income will be greater than variable costing income because absorption costing releases some fixed manufacturing overhead costs from ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. B. When the units produced are less than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement C. When the Units produced are less than the units sold, absorption costing income will be greater than variable costing income because absorption costing releases some variable manufacturing overhead cost from ending inventory whereas variable costing expenses each periods variable manufacturing overhead on the income statement D. When the Units produced are less than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some variable manufacturing overhead cost from ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement

B. When the units produced are less than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement

Which of the following can be used to compute a labor rate variance (where AH= actual hours; SH=Standard hours allowed; AR=actual rate; SR=Standard rate)? A. [SH/(AR-SR)] B. [AH x (AR-SR)] C. [AH/(AR-SR)] D. [SH x (AR-SR)]

B. [AH x (AR-SR)]

Assume that a company's planned level of activity is 1100 hours and its actual level of activity is 1000 hours. based on this information, the company's activity variances for its variable expenses will A. all be zero B. all be favorable C. all be unfavorable D. be favorable or unfavorable depending on each expense's cost behavior program.

B. all be favorable

An activity variance is calculated by comparing the: A. planning budget to the actual results B. planning budget to the flexible budget C. Flexible budget to the actual results D. static budget to the actual results

B. planning budget to the flexible budget

Which of the following is an example of a batch-level activity A. Assembling products B. setting up machines C. advertising products D. heating up a manufacturing facility

B. setting up machines

A standard cost card does not explicitly mention which of the following? A. standard direct materials cost per unit B. standard indirect materials cost per unit C. standard direct labor cost per unit D. standard variable manufacturing overhead cost per unit

B. standard indirect materials cost per unit

Which of the following statements is true? A. The activity variance for a variable expense will usually equal zero B. the activity variance for a variable expense will be unfavorable if the actual level of activity is greater than the planned level of activity C. The activity variance for a variable expense will be unfavorable if the actual level of activity is less than the planned level of activity D. The activity variance for a variable expense can be favorable or unfavorable depending on whether the actual expense incurred is greater than or less than the planned expenses

B. the activity variance for a variable expense will be unfavorable if the actual level of activity is greater than the planned level of activity

Assume (1) the quantity of materials purchased equals the quantity used in production, (2) the materials spending variance is $400 unfavorable, and (3) the materials quantity variance is $200 favorable. Given these assumptions, which of the following statements is true? A. the materials price variance must be $600 favorable B. the materials price variance must be $600 unfavorable C. The materials price variance must be $200 favorable D. the materials price variance must be $200 unfavorable

B. the materials price variance must be $600 unfavorable

Assume (1) the quantity of materials purchased equals the quantity used in production, (2) the materials spending variance is unfavorable, and (3) the materials quantity variance is favorable. Given these assumptions, which of the following statements is true? A. the materials price variance must be favorable B. the materials price variance must be unfavorable C. the materials price variance must be equal in amount to the materials quantity variance but unfavorable instead of favorable. D. The materials price variance could be favorable or possibly unfavorable depending on the standard quantity of material allowed for the actual level of output.

B. the materials price variance must be unfavorable

Which of the following statements is true? A. The spending variance for a fixed expense will equal zero when the planned level of activity equals the actual level of activity. B. the spending variance for a fixed expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. C. The spending variance for a fixed expense will be favorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense D. The spending variance for a fixed expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense

B. the spending variance for a fixed expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense.

assume the following information for a company that produced 10,000 units and sold 8,000 units during its first year of operations and produced 8,000 units and sold 10,000 units during its second year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 sales commissions $8 Fixed selling and Administrative expense $110,000 Fixed manufacturing overhead $300,000 using absorption costing, what is net operating income for the second year of operations? A. $120,000 B. $100,000 C.$150,000 D.$130,000

B.$100,000

assume the following information for a company that produced 10,000 units and sold 8,000 units during its first year of operations and produced 8,000 units and sold 10,000 units during its second year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 sales commissions $8 Fixed manufacturing overhead $300,000 using absorption costing, what is the unit product cost for units produced during the second year of operations? A. $165.00 B. $172.50 C. $135.00 D. $143.50

B.$172.50

Assume that a company has two cost drivers--number of courses and number of students. The planned number of courses and students were 5 and 100, respectively. the actual number of courses and students were 6 and 110, respectively. One of the company's expenses is influenced by both cost drivers. Its cost formulas are $50 per course ,$5 per student, and 1,000 per period. The total cost included in the flexible budget for this expense would be. A. $1,750 B. $2,050 C. $1,850 D. $1,950

C. $1,850

Assume the following information for a company that produced and sold 10,000 units during year 1. It also produced 15,000 units and sold 12,000 units during year 2, while producing 12,000 units and selling 15,000 units in year 3 per unit per year Selling price: $240 Direct Materials: $85 Direct Labor: $60 variable manufacturing overhead: $10 Sales commission: $11 Fixed manufacturing overhead: $450,000 Fixed selling and administrative expense: $250,000 Using absorption costing, what is net operating income for year 3 A. $310,000 B. $297,500 C. $320,000 D. $70,000

C. $320,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. the company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What amount of accounts receivable would the company report in its balance sheet at the end of the second month? A. $54,000 B. $24,000 C. $36,000 D. $20,000

C. $36,000

assume that one of a company's variable expenses in its flexible budget is $40,000. The actual amount of the expense is $42,000 and the amount in the company's planning budget is $44,000. The activity variance for this expense is A. $2,000 U B. $2,000 F C. $4,000 F D. $4,000 U

C. $4,000 F

Assume a company has two divisions A and B. The company's overall sales, overall contribution margin ratio, common fixed expenses, and net operating income are $500,000, 48%, $50,000, and $10,000, respectively. If Division B has a segment margin of $(20,000), then what is the segment margin for Division A? A. $100,000 B. $70,000 C. $80,000 D. $40,000

C. $80,000

Assume a company's direct labor budget for July estimates 10,000 labor-hours to meet the month's production requirements. The variable manufacturing overhead rate used for budgeting purposes is $3.00 per direct labor-hour. The budgeted fixed manufacturing overhead for July is $60,000 including $8,000 of depreciation. What is the amount of budgeted cash disbursements for manufacturing overhead for July? A. $98,000 B. $90,000 C. $82,000 D. $88,000

C. $82,000

Assume that a company has two cost drivers--number of courses and number of students. The planned number of courses and students were 5 and 100, respectively. the actual number of courses and students were 6 and 110, respectively. One of the company's expenses is influenced by both cost drivers. Its cost formulas are $50 per course and $5 per student. The total cost included in the flexible budget for this expense would be: A. $650 B. $750 C. $850 D. $950

C. $850

Assume the sales budget for April and May is 30,000 units and 32,000 units, respectively. The production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following month's production needs. How many pounds of raw material need to be purchased in April? A. 111,380 B. 108,780 C. 109,080 D. 110,280

C. 109,080

Assume a company's estimated sales for January, February, and March are 25,000 units, 26,000 units, and 24,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next months unit sales. What is the required production in units for January? A. 25,850 units B. 24,850 units C. 25,150 units D. 28,900 units

C. 25,150 units

Which of the following statements is false? A. absorption costs treats fixed administrative expenses as a period cost B. Absorption costing treats sales commissions as a period cost C. Absorption costing treats fixed manufacturing overhead as a period cost D. Absorption costing treats variable manufacturing overhead as a product cost.

C. Absorption costing treats fixed manufacturing overhead as a period cost

Which of the following statements is false? A. Budgets force managers to think about and plan for the future B. Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance C. Budgets enable each department to function independently from other departments D. Budgets communicate management's plans throughout the organization

C. Budgets enable each department to function independently from other departments

Which of the following is an example of a duration driver A. Number of machine-setups B. Quantity of customer orders received C. Direct-labor hours D. Dollars spent on advertising

C. Direct labor hours

In absorption costing, a complete definition of unit product cost includes: A. Direct materials, direct labor, and variable manufacturing overhead. B. Direct materials, Direct labor, variable manufacturing overhead, and variable selling and administrative expenses C. Direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead D. Direct materials and direct labor

C. Direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead

Which of the following statements is true for a manufacturing company that uses standard costing and allocates its manufacturing overhead to production based on direct labor-hours? A. If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its labor efficiency variance must be favorable B. If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its standard quantity of labor hours allowed must be greater than actual labor hours worked C. If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its variable overhead efficiency variance must be unfavorable D. If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its labor rate variance must be unfavorable.

C. If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its variable overhead efficiency variance must be unfavorable

The flexible budget for direct materials is computed in which of the following ways? A. Actual quantity used (AQ) x standard price (SP) B. Actual quantity used (AQ) X actual price (AP) C. Standard quantity allowed (SQ) x standard price (SP) D. standard quantity allowed (SQ) x actual price

C. Standard quantity allowed (SQ) x standard price (SP)

which of the following estimates is not used in preparing a sales budget including a schedule of expected cash collections? A. The number of units sold B. The selling price per unit C. The percent of next quarters unit sales in ending inventory D. the credit sales collection pattern

C. The percent of next quarters unit sales in ending inventory

Which of the following statements is true? A.When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each periods variable manufacturing overhead on the income statement. B. When the units produced are greater than the units sold, absorption costing income will be less than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. C. When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement D. when the units produced are greater than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement

C. When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement

Which of the following equations can be used to compute a materials price variance (where AQ= actual quantity; SQ=standard quantity allowed; AP= Actual price; SP=standard price)? A. [SQ/(AP-SP)] B. [AQ/(AP-SP)] C. [AQ x (AP-SP)] D. [SQ x (AP-SP)]

C. [AQ x (AP-SP)]

Which of the following statements is true? A. A planning budget is prepared before the period begins and is only valid for the actual level of activity B. A planning budget is prepared after the period ends and is valid for only the planned level of activity C. a Planning budget is prepared before the period begins and is valid for only the planned level of activity D. a planning budget is prepared after the period ends and is only valid for only the actual level of activity.

C. a Planning budget is prepared before the period begins and is valid for only the planned level of activity

Which of the following statements is true? A. A batch level activity cost will decrease as the number of units in the batch increases B. a batch level activity cost will increase as the number of units in the batch increases C. a batch level activity cost is unaffected by the number of units in the batch D. Batch level activity costs are often used in traditional absorption costing systems to allocate batch level costs

C. a batch level activity cost is unaffected by the number of units in the batch

Which of the following is an example of a product level activity ? A. Assembling products B. Setting up machines C. advertising products D. Heating a manufacturing facility

C. advertising products

Assume that a company's planned level of activity is 1000 hours and its actual level of activity is 1100 hours. based on this information, the company's activity variances for its variable expenses will: A. all be zero B. all be favorable C. all be unfavorable D. be favorable or unfavorable depending on each expense's cost behavior pattern

C. all be unfavorable

assume the following information for a company that produced and 10,000 units and sold 9,000 units during its first year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 sales commissions $8 Fixed manufacturing overhead $300,000 Which of the following choices explains the relationship between the absorption costing net operating income and the variable costing net operating income? A. The absorption costing net operating income will be lower than variable costing net operating income by $30,000 B. the absorption costing net operating income will be lower than the variable costing net operating income by $102,000 C. the absorption costing net operating income will be higher than the variable costing net operating income by $30,000 D. the absorption costing net operating income will be higher than the variable costing net operating income by $102,000

C. the absorption costing net operating income will be higher than the variable costing net operating income by $30,000

Which of the following statements is true? A. The activity variance for revenue will usually equal zero B. the activity variance for revenue will be unfavorable if the actual level of activity is greater than the planned level of activity C. the activity variance for revenue will be unfavorable, if the actual level of activity is less than the planned level of activity D. The activity variance for revenue can be favorable or unfavorable depending on whether the actual revenue earned is greater than or less than the planned revenue.

C. the activity variance for revenue will be unfavorable, if the actual level of activity is less than the planned level of activity

Assume that a company has two cost drivers--number of courses and number of students. The planned number of courses and students were 5 and 100, respectively. the actual number of courses and students were 6 and 110, respectively. One of the company's expenses is influenced by both cost drivers. Its cost formulas are $50 per course and $5 per student. The activity variance for this expense would be A. $50 F B. $50 U C. $100 F D. $100 U

D. $100 U

Assume that a company's planned level of activity was 2,000 units and it's actual level of activity was 2,200 units. The spending variance for one of its fixed expenses was $200 favorable. The actual amount of the fixed expense was $10,800. What amount of this expense would be included in the company's planning budget. A. $9,000 B. $12,000 C. $10,000 D. $11,000

D. $11,000

assume the following information for a company that produced and 10,000 units and sold 9,000 units during its first year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 sales commissions $8 Fixed manufacturing overhead $300,000 using absorption costing, what is the company's net operating income? A. $213,000 B. $223,000 C. $233,000 D. $243,000

D. $243,000

Assume a company has four divisions, Division A has sales, variable expenses, and traceable fixed expenses of $200,000, $40,000, and $20,000 respectively. If the company as a whole has common fixed expenses of $50,000, then Division A's dollar sales to break even is closest to: A. $87,500 B. $100,000 C. $ 140,000 D. $25,000

D. $25,000

Assume the sales budget for April and May is 30,000 units and 32,000 units, respectively. The production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following month's production needs. How many pounds of raw material need to be purchased in April? A. $278,450 B. $271,950 C. $275,700 D. $272,700

D. $272,700

Assume that a company produced 10,000 units and sold 8,000 units during it's first year of operations. It has also provided the following information: per unit per year Selling price: $240 Direct Materials: $85 Direct Labor: $60 variable manufacturing overhead: $10 Sales commission: $11 Fixed manufacturing overhead: ? Fixed selling and administrative expense: $250,000 if the company's unit product cost under absorption costing is $203, then what is the amount of fixed manufacturing overhead per year A. $370,000 B. $384,000 C. $230,000 D. $480,000

D. $480,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month A. $54,500 B. $24,000 C. $33,000 D. $51,500

D. $51,500

Assume a company has four divisions, Division A has sales, variable expenses, and traceable fixed expenses of $200,000, $100,000, and $30,000, respectively. If the company as a whole has common fixed expenses of $50,000, what is Division A's segment margin A. $80,000 B. $120,000 C. $20,000 D. $70,000

D. $70,000

A company's production budget indicates the following production requirements: October, 210,000 units; November 175,000 units, and December, 110,000 units. Each unit of finished goods requires 5 pounds of raw materials that cost $1.50 per pound. The company maintains raw materials inventory equal to 25% of the next month's production requirements. The company pays for 30% of its raw material purchases in the month of purchase. The remainder is paid next month. The company's accounts payable balance at the end of the November is closest to A. $778,252 B. $1,034,678 C. $942,914 D. $833,438

D. $833,438

assume that a company's planned level of activity was 3,500 units. The activity variance for one of its mixed expenses was $350 favorable. The variable portion of this mixed cost included in the planning was $2,450. What is the actual level of activity for this period? A. 3,400 units B. 3,200 units C. 3,100 units D. 3,000 units

D. 3,000 units

Assume that a company's planned level of activity was 4,350 units and it's actual revenue was $62,000. The revenue variance was $2,000 favorable and the revenue activity variance was $5,250 unfavorable. What is the company's actual level of activity A. 4,300 units B. 4,200 units C. 4,100 units D. 4,000 units

D. 4,000 units

Assume a company incurs $200,000 of customer service salaries. The employees in the customer service department spend their time performing 4 activities as follows: 40% of their time is spent in "problem resolution," 25% of their time is spent in "new account setup," 20 percent of their time is spent in "Payment Processing" and 15% is spent in "other" activities. In the company's activity-based costing system, how much of the customer service salaries would be allocated to the "New Account Setup" activity? A. $80,000 B. $40,000 C. $130,000 D. $50,000

D. 50,000

Assume a company's activity based costing system contains an activity called Engineering Change Orders (ECOs). This activity cost pool includes a total of $150,000 in it's numerator. One of the company's products was charged $400 from this activity because it required two ECOs during the year. How many ECO's were used to calculate the ECO activity rate? A. 650 B. 500 C. 375 D. 750

D. 750

Which of the following statements is true? A. A flexible budget is a comparison of actual revenues and costs at the actual level of activity to the actual revenues and costs incurred at the planned level of activity. B. A flexible budget is a comparison of actual revenues and costs to what they should have been given the planned level of activity C. A flexible budget is an estimate of what revenues and costs should have been given the planned level of activity for the period D. A flexible budget is an estimate of what revenues and costs should have been given the actual level of activity for the period

D. A flexible budget is an estimate of what revenues and costs should have been given the actual level of activity for the period

Which of the following equations is false with respect to the direct materials budget? A. Units of raw materials to be purchased x unit cost of raw materials=cost of raw materials B. Units of raw materials needed to meet production + desired units of ending raw materials inventory-units of beginning raw materials inventory=units of raw materials to be purchased C. Required production in units of finished goods x units of raw materials needed per unit of finished goods=units of raw materials needed to meet production D. Estimated sales in units of finished goods x units of raw materials needed per unit of finished goods= units of raw materials needed to meet production

D. Estimated sales in units of finished goods x units of raw materials needed per unit of finished goods= units of raw materials needed to meet production

Which of the following is an example of an organization-sustaining activity ? A. Assembling products B. Setting up machines C. advertising products D. Heating a manufacturing facility

D. Heating a manufacturing facility

The flexible budget for variable manufacturing overhead is computed in which of the following ways ? A. Actual hours used (AH) x standard rate (SR) B. Actual hours used (AH) x actual rate (AR) C. Standard hours allowed (SH) x actual rate (AR) D. Standard Hours allowed (SH) x standard rate (SR)

D. Standard Hours allowed (SH) x standard rate (SR)

The flexible budget for direct labor is computed in which of the following ways? A. Actual hours used (AH) x standard rate (SR) B. Actual hours used (AH) x actual rate (AR) C. Standard hours allowed (SH) x actual rate (AR) D. Standard hours allowed (SH) x standard rate (SR)

D. Standard hours allowed (SH) x standard rate (SR)

Which of the following statements is true? A. Variable costing treats direct materials as period costs B. variable costing treats direct labor as a period cost C. Variable costing treats variable manufacturing overhead as a period cost D. Variable costing treats fixed manufacturing overhead as a period cost

D. Variable costing treats fixed manufacturing overhead as a period cost

Which of the following equations can be used to compute a materials quantity variance (where AQ= actual quantity; SQ=standard quantity allowed; AP= Actual price; SP=standard price)? A. [SP/(AQ-SQ)] B. [AP/(AQ-SQ)] C. [AP x (AQ-SQ)] D. [SP x (AQ-SQ)]

D. [SP x (AQ-SQ)]

Which of the following statements is true with respect to the materials quantity variance? A. it is computed using the actual price B. it is computed using the actual quantity of materials purchased C. it is computed using the difference between the actual and standard prices. D. it is computed using the standard price

D. it is computed using the standard price

The standard direct material cost per unit of finished goods is computed in which of the following ways? A. Standard quantity per unit of direct material x standard price per unit of direct material B. standard quantity per unit of finished goods x standard price per unit of finished goods C. standard quantity per unit of direct material x standard price per unit of finished goods D. standard quantity per unit of finished goods x standard price per unit of direct material

D. standard quantity per unit of finished goods x standard price per unit of direct material

Assume the following information for a company that produced 10,000 units during it's first year of operations and sold 8,000 units and then produced 8,000 units and sold 10,000 units during it's second year of operations per unit. Per year Direct materials: $75 Direct Labor: $50 Variable manufacturing Overhead: $10 Fixed Manufacturing overhead: $300,000 if the company's absorption costing net operating income during it's second year of operations was $20,000, what was it's variable costing net operating income or loss during it's second year of operations A. $(40,000) B. $40,000 C. $140,000 D. $80,000

D.$80,000

C. $227,000

How much total cost (including all three expenses) would be allocated to the travel activity A. $247,000 B. $217,000 C. $227,000 D. $197,000

C. $136,300

In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and 17,500 units of product B at a selling price of $40 per unit. Additional information relating to the company's only two products is shown below: The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows The company's abc implementation team also concluded that $50,000 and $100,000 of the company's advertising expenses could be directly traced to Product A and Product B, respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature. If the company uses a traditional cost system that relies on plant wide overhead allocation based on direct labor hours, what is the total gross margin (or product margin) earned by product B A. $53,600 B. $153,600 C. $136,300 D. $36,300

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. the company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What is the expected cash collections from credit sales during the first month? a. $20,000 b. $30,000 c. $24,000 d. $36,000

a. $20,000

C. $56,000

assume a company's activity based costing system included three expenses: Vehicle operating expenses, $300,000; Vehicle depreciation, $140,000; and customer service salaries, $180,000 these costs were consumed by four activites as follows: how much of the company's total costs should not be allocated to customers when analyzing customer profitability A. $46,000 B. $36,000 C. $56,000 D. $76,000

assume the following information for a company that produced and sold 10,000 units during its first year of operations: per unit per year selling price: $200 direct materials: $75 direct labor: $50 variable manufacturing overhead: $10 sales commissions $8 Fixed manufacturing overhead $300,000 Using variable costing and based soley on the information provided, what is the company's contribution margin per unit? A. $35 B. $27 C. $57 D. $65

c. $57