ACC 202 Final Exam Review

Aspen Technologies has the following budget data: Estimated direct labor hours - 15,000 Estimated direct labor dollars - $90,000 Estimated factory overhead costs - $198,000 If factory overhead is to be applied based on direct labor hours the predetermined factory overhead is a. $7.50 b. $13.20 c. $2.20 d. $16.50

b) $13.20

Materials purchased on account during the month totaled $190,000. Materials requisitioned and placed in production totaled $165,000. The journal entry to record the materials purchased on account is a. Materials 165,000 Accounts Payable 165,000 b. Materials 190,000 Accounts Payable 190,000 c. Materials 190,000 Cash 190,000 d. Accounts Payable 190,000 Materials 190,000

b) Materials 190,000 Accounts Payable 190,000

Which of the following is a direct labor cost for a cell phone manufacturer? a. cost of oil lubricants for factory machinery b. cost of wages of assembly worker c. salary of plant supervisor d. cost of phone components

b) cost of wages of assembly worker

The systematic examination of the relationships among selling prices, volumes of sales and production, costs, and profits is terms __________ analysis. a. contribution margin b. cost-volume-profit c. budgetary d. gross profit

b) cost-volume-profit

The two categories of cost compromising conversion costs are a. direct labor and indirect labor b. direct labor and factory overhead c. factory overhead and direct materials d. direct labor and direct materials

b) direct labor and factory overhead

Period costs are? a. found on the balance sheet b. not involved in the production process c. classified as direct labor, direct material, or factory overhead d. found on the job order cost sheets

b) not involved in the production process

Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as a. period costs and expensed when incurred b. product costs and expensed when the goods are sold c. product costs and expensed when incurred d. period costs and expensed when the goods are sold

b) product costs and expensed when the goods are sold

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes? a. direct labor b. salary of a factory supervisor c. units-of-production depreciation on factory equipment d. direct materials

b) salary of a factory supervisor

The controllable variance measures a. operating results at less than normal capacity b. the efficiency of using the variable overhead resources c. operating results at more than normal capacity d. control over fixed overhead costs

b) the efficiency of using the variable overhead resources

It would be acceptable to have the selling price of as product just above the variable costs and expenses of making and selling it in a. the long run b. the short run c. both the short and long run d. neither the short nor the long run

b) the short run

Goods that are partially completed by a manufacturer are a. merchandise inventory b. work in process inventory c. finished goods inventory d. materials inventory

b) work in process inventory

When using the variable cost method of app0lying the cost-plus approach to product pricing, which of the following is included in the markup? a. total costs plus desired profit b. desired profit. c. total selling and administrative expenses plus desired profit d. total fixed manufacturing costs, total fixed selling and administrative expenses, and deserved profit.

c) total selling and administrative expenses plus desired profit

Computer conversion costs given the following data; direct materials $347,500; direct labor $196,300; factory overhead $187,900; and selling expenses $45,920 a. $543, 800 b. $187,900 c. $731,700 d. $384,200

d) $384,200

What do lean manufacturers demand from their vendors? a. high-quality materials b. low cost materials c. on-time deliveries d. all of these choices

d) all of these choices

Which of the following are two methods of analyzing capital investment proposals that both ignore present value? a. internal rate of return and average rate of return b. net present value and average rate of return c. internal rate of return and net present value d. average rate of return and cash payback

d) average rate of return and cash payback

An example of the split-off point in oil, gasoline, and kerosene production is that the point where crude oil is a. drilled b. pumped from the ground c. transported to the refinery d. distilled into gasoline and kerosene

d) distilled into gasoline and kerosene

Actions that transform a traditional manufacturing environment to a lean environment include all of the following except a. form partnerships with reliable suppliers b. reorganize manufacturing around products rather than processes c. train employees to perform various operations d. increase raw materials and finished goods inventories

d) increase raw materials and finished goods inventories

The primary difference between a static budget and a flexible budget is that a static budget a. is suitable in a volatile demand situation while a flexible budget is suitable in a stable demand situation b. is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales c. includes only fixed costs, whereas a flexible budget includes only variable costs d. is a plan for a single level of a activity, whereas a flexible budget adjusts for changes in the activity level.

d) is a plan for a single level of a activity, whereas a flexible budget adjusts for changes in the activity level.

T-Bone Company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $150,000. The present value of the future cash flows is $141,000. Should the company invest in this project? a. yes, because net present value is $9,000 b. yes, because net present value is $(9,000) c. no, because net present value is $9,000 d. no, because net present value is $(9,000)

d) no, because net present value is $(9,000)

Standard costs are divided into which of the following components? a. variance standard and quantity standard b. materials standard and labor standard c. standard quality and standard quantity d. standard price and standard quantity

d) standard price and standard quantity

Where of the following is not a prevention cost? a. preventive maintenance b. operator training c. design engineering d. testing finished products

d) testing finished products

Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130, what is the amount of sales required to realize an operating income of $200,000? a. 14,167 units b. 12,500 units c. 16,000 units d. 11,538 units

a) 14,167 units

Cost behavior refers to the manner in which a cost a. changes as the related activity changes b. is allocated to products c. is used in setting selling prices d. is estimated

a) changes as the related activity changes

Which of the following methods of evaluating capital investment proposals uses present value concepts to compute the rate of return from the net cash flows? a. internal rate of return method b. cash payback method c. net present value method d. average rate of return method

a) internal rate of return method

In a lean environment, process problems are more visible than they are in a traditional environment because a. inventories are maintained at higher levels b. process problems cause production to shut down immediately c. the push manufacturing system leads to increased inventory levels d. the lack of work in process inventory creates problems

a) inventories are maintained at higher levels

The ratio of operating income to sales, which is also a factor in the DuPont formula for determining the return on investment (ROI), is called a. profit margin b. indirect expenses c. investment turnover d. cost

a) profit margin

Traditional manufacturing emphasizes all of the following except a. team-oriented employee involvement b. process oriented layout c. push manufacturing d. cost accumulation by department

a) team-oriented employee involvement

The total manufacturing cost variance is a. the difference between the total actual costs and total standard costs for the units produced b. the flexible budget variance plus the time variance c. the difference between planned costs and standard costs for the units produced d. none of these choices

a) the difference between the total actual costs and total standard costs for the units produced

Managers use managerial information for all of the following purposes EXCEPT a. to evaluate the company's stock performance b. to analyze the performance of a company's operations c. to support long-term planning decisions d. to determine the cost of a manufacturing a product

a) to evaluate the company's stock performance

Which of the following statements is true regarding fixed and variable costs? a. Both costs are constant when considered on a per-unit basis b. Both costs are constant when considered on a total basis c. Fixed costs are constant in total, and variable costs are constant per unit. d. Variable costs are constant in total, and fixed costs vary in total.

c) Fixed costs are constant in total, and variable costs are constant per unit.

Which of the following describes the behavior of a variable cost per unit? a. It varies in increasing proportion with changes in the activity level. b. It varies in decreasing proportion with changes in the activity level. c. It remains constant with changes in the activity level. d. It varies in direct proportion with the activity level.

c) It remains constant with changes in the activity level.

Which of the following statements regarding the cash payback period is true? a. The longer the payback, the longer the estimated life of the asset will be. b. The longer the payback, the sooner the cash spent on the investment will be recovered. c. The shorter the payback, the possibility of obsolescence will be less likely. d. all of these choices

c) The shorter the payback, the possibility of obsolescence will be less likely.

Planning for capital expenditures is necessary for all of the following reasons except a. machinery and other fixed assets wear out b. expansion may be necessary to meet increased demand c. amounts spent for office equipment may be immaterial d. fixed assets may fall below minimum standards of efficiency

c) amounts spent for office equipment may be immaterial

Under a lean environment, employees have the responsibility and authority to a. purchase inventory b. determine output amounts c. make decisions about operations, rather than waiting for management d. make engineering changes

c) make decisions about operations, rather than waiting for management

Which of the following costs incurred by a tool manufacturer would NOT be included in conversion costs? a. factory supervisor's salary b. machine operator wages c. raw steel d. factory maintenance personnel supplies

c) raw steel

The first budget customarily prepared as part of an entity's master budget is the _________ budget a. production b. cash c. sales d. direct materials purchases

c) sales

The relative distribution of sales among the various products sold by a business is the a. business's basket of goods b. contribution margin mix c. sales mix d. product portfolio

c) sales mix

A cost that has been incurred in the past, cannot be recouped, and is not relevant to the future decisions is termed a. period cost b. differential cost c. sunk cost d. replacement cost

c) sunk cost

All of the following are factors that may complicate capital investment analysis except a. possible leasing alternatives b. changes in price levels c. sunk costs d. federal income tax ramifications

c) sunk costs

When using lean principles and activity analyses with service businesses, the "product" is normally a. an employee b. information c. the customer d. the supplies used in providing the service

c) the customer