Managerial Acct Exam 1

What is the conversion cost to manufacture insulated travel cups if the costs are: direct materials, $17,000; direct labor, $33,000; and manufacturing overhead, $70,000?

$103,000

Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses takes 45,000 direct labor hours and involves 1,700 parts and 115 inspections. The manufacturing of tinted glasses takes 115,000 direct labor hours and involves 1,400 parts and 450 inspections. The traditional method applies $560,000 of overhead on the basis of direct labor hours. What is the amount of overhead per direct labor hour applied to the clear glass products?

$157,500

A company sells its products for $80 per unit and has per-unit variable costs of $30. What is the contribution margin per unit?

$50

What is the cost of direct labor if the conversion costs are $330,000 and manufacturing overhead is $275,000?

$55,000

A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the company's after-tax income?

$72,000

A company wants to earn an income of $60,000 after-taxes. If the tax rate is 32%, what must be the company's pre-tax income in order to have $60,000 after-taxes?

$88,235

A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit?

$90

What year was the Sarbanes-Oxley Act enacted?

2002

In a process costing system, which account shows the overhead assigned to the department?

WIP inventory

Which is not a step in activity-based costing?

compute a cost rate per production

Which of the following production characteristics is better suited for process costing and not job order costing?

Costs are accumulated by department

Internal users of accounting information would not include ________.

Creditors

Management accounting:

Emphasizes special-purpose information

Which of the following is false regarding strategic planning?

It is the sole responsibility of supervisors.

What is the law that protects investors from fraudulent financial accounting activity?

SOX

Which of the following represents the components of the income statement for a merchandising business?

Sales Revenue - Cost of Goods Sold = gross profit

Which of the following represents the components of the income statement for a service business?

Service revenue - Operating Expenses = operating income

Which of the following product situations is better suited to job order costing than to process costing?

The costs are easily traced to a specific product.

Which of the following is a reason a company would implement activity-based costing?

They want to improve the data on which decisions are made.

A process costing system is most likely used by which of the following?

a paper manufacturing company

A job order costing system is most likely used by which of the following?

an accounting firm specializing in tax returns

Which is not a task typically associated with ABC systems?

applying a single cost rate

Break-even for a multiple product firm ________.

can be calculated by dividing total fixed costs by the contribution margin of a composite unit

The amount of a unit's sales price that helps to cover fixed expenses is its ________.

contribution margin

When sales price increases and all other variables are held constant, the break-even point will ________.

decrease

Which of the following is a conversion cost?

direct labor

Which of the following is a prime cost?

direct labor

Which of the following would not be classified as manufacturing overhead?

direct labor

The activity base for service industries is most likely to be ________.

direct labor hours

Conversion costs include all of the following except:

direct materials purchased

During production, to what are the costs in job order costing applied?

each individual product

Activity-based costing systems:

frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product

Absorption costing is also referred to as:

full costing

Which is not a step in analyzing the cost driver for manufacturing overhead?

identify non-value-added costs

What is the proper order of tasks in an ABC system?

identify the costs drivers, identify the costs pools, calculate the overhead application rate for each cost pool, assign the costs to the products

When sales price decreases and all other variables are held constant, the break-even point will ________.

increase

If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will ________.

increase because the per composite unit contribution margin will decrease

External users of accounting information would include ________.

investors

An inventory system that organizations use to increase efficiency and decrease waste is ________.

just-in-time manufacturing

Product costs under variable costing are typically:

lower than under absorption costing

Which of the following lists contains only conversion costs for an inflatable raft manufacturing corporation?

machine operator, electricity, depreciation, insurance

The managers of an organization are responsible for performing several broad functions. They are ________.

planning, controlling, and evaluating

Which of the following is the primary source of revenue for a service business?

providing intangible goods and services

Fixed costs are expenses that ________.

remain constant as activity changes

When fixed costs increase and all other variables remain unchanged, the contribution margin will ________.

remains unchanged

Which of the following is not considered a product cost?

selling expense

Management accountants help the management of an organization in their planning function through ________.

strategic planning

Which of the following methods of cost estimation relies on only two data points?

the high-low method

Which is not needed to compute equivalent units of production?

the material cost per unit

The stockholders of a company are:

the owners

Which of the following is the primary source of revenue for a manufacturing business?

the production of products from raw materials

Overhead costs are assigned to each product based on ________.

the proportion of that product's use of the cost driver

Which of the following is the primary source of revenue for a merchandising business?

the purchase and resale of finished products

During production, how are the costs in process costing accumulated?

to each individual department