COST EXAM 2 Ch. 17, 15, 3, 9

Which of the following companies is likely to use a hybrid-costing system? A) Best Fit Corp., which manufactures pharmaceuticals B) Rida Corp., which processes and sells, after import, a single variant of Turkish marble to real estate companies C) Fast run, which sells a limited range of televisions, which go through similar manufacturing process D) Karoline Corp., which manufactures and sells a single model of cap

Fast run, which sells a limited range of televisions, which go through similar manufacturing process s

Dessa Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Finishing Department for March 2015 are: Work in process, beginning inventory, 25% converted 1,000 units Units started during February 1,200 units Work in process, ending inventory 500 units Costs for Finishing department for March 2015 are: Work in process, beginning inventory: Direct materials $200,000 Conversion costs $200,000 Direct materials costs added during February $420,000 Conversion costs added during February $1,400,000 What is the unit cost per equivalent unit of the beginning inventory in the Finishing Department? A) $200 B) $400 C) $800 D) $1,000

$1,000

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. Data for the Assembly Department for June 2015 are: Work in process, beginning inventory 300 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 950 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2015: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $135,000 Direct materials costs added during June $600,000 Conversion costs added during June $400,000 What is the total amount debited to the Work-in-Process account during the month of June? A) $225,000 B) $1,000,000 C) $1,135,000 D) $1,225,000

$1,000,000

What is the total throughput contribution? A) $1,069,500 B) $897,000 C) $1,173,000 D) $759,000

$1,173,000

If a single-rate cost-allocation method is used, what amount of cost will be allocated to the Flashlight Division? Assume actual usage is used to allocate operating costs. A) $1,247,500 B) $1,300,000 C) $1,487,500 D) $1,387,500

$1,387,500

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs (30% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $345,000 Conversion costs $360,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,120,000 What is the conversion cost per equivalent unit in March? A) $1,595.52 B) $1,409.52 C) $1,345.52 D) $1,066.52

$1,409.52

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 500 kgs of tungsten carbide at $60 per kg. It started manufacture of 4,000 vases and completed and transferred 3,200 vases during the month. It has 800 vases in the process at the end of the month. It incurred direct labor charges of $1,000 and other manufacturing costs of $500, which included electricity costs of $200. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. What is the total conversion costs for the month of July? A) $1,700 B) $1,500 C) $1,300 D) $1,000

$1,500

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs (30% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $345,000 Conversion costs $360,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,120,000 What is the total amount debited to the Work-in-Process account during the month of March? A) $2,525,000 B) $2,180,000 C) $1,820,000 D) $700,000

$1,820,000

Illumination Corp operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year: Budgeted costs of operating the plant for 2,000 to 3,000 hours: Fixed operating costs per year $500,000 Variable operating costs $800 per hour Budgeted long-run usage per year: Flashlight Division 2,000 hours Night Light Division 1000 hours Practical capacity 4,000 hours Assume that practical capacity is used to calculate the allocation rates. Actual usage for the year by the Flashlight Division was 1,500 hours and by the Night Light Division was 800 hours. 21) If a single-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Flashlight Division? A) $1,850,000 B) $1,560,000 C) $1,740,000 D) $1,950,000

$1,850,000

The following information is for Alex Corp: Product X: Revenue $15.00 Variable Cost $2.50 Product Y: Revenue $25.00 Variable Cost $10.00 Total fixed costs $50,000 What is the operating income, assuming actual sales total 150,000 units, and the sales mix is two units of Product X and one unit of Product Y? A) $1,950,000 B) $1,850,000 C) $1,750,000 D) $2,150,000

$1,950,000

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs $19,200 Conversion costs $10,800 Manufacturing costs added during the accounting period: Direct materials costs $70,000 Conversion costs $240,000 What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of October? A) $22,727 B) $17,202 C) $7,720 D) $10,500

$10,500

Shine Jewelry sells 400 units resulting in $7,000 of sales revenue, $3,000 of variable costs, and $1,500 of fixed costs. Contribution margin per unit is ________. A) $4.00 B) $11.00 C) $10.00 D) $8.00

$10.00

Craylon Corp sells two products X and Y. X sells for $200 and Y sells for $150. Both X and Y sell for $300 as a bundle. What is the revenue allocated to product Y, if product X is termed as the primary product in the bundle? A) $100 B) $128.50 C) $110 D) $112.85

$100

Serile Pharma places 900 units in production during the month of January. All 900 units are completed during the month. It had no opening inventory. Direct material costs added during January was $81,000 and conversion costs added during January was $9,000.What is the total cost per unit of the product produced during January? A) $100 B) $90 C) $80 D) $10

$100

Vital Industries manufactured 1,200 units of its product Huge in the month of April. It incurred a total cost of $120,000 during the month. Out of this $120,000, $45,000 comprised of direct materials used in the product and the rest was incurred because of the conversion cost involved in the process. Ryan had no opening or closing inventory. What will be the total cost per unit of the product, assuming conversion costs contained $10,000 of indirect labor? A) $100 B) $90 C) $70 D) $30

$100

What is the inventoriable cost per unit using absorption costing? A) $45.00 B) $52.50 C) $115.00 D) $80.00

$115.00

If a single-rate cost-allocation method is used, what amount of copying facility costs will be allocated to the Marketing Department? Assume actual usage is used to allocate copying costs. A) $16,800 B) $18,000 C) $12,000 D) $9,600

$12,000

If the contribution margin ratio is 0.25, targeted operating income is $50,000, and targeted sales volume in dollars is $250,000, then total fixed costs are ________. A) $11,500 B) $15,000 C) $20,000 D) $12,500

$12,500

Northern Star sells several products. Information of average revenue and costs is as follows: Selling price per unit $20.00 Variable costs per unit: Direct material $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 The company sells 12,000 units at the end of the year. ) The contribution margin per unit is ________. A) $11.00 B) $12.00 C) $4.00 D) $14.00

$12.00

The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year: Budgeted costs of operating the materials laboratory for 100,000 to 200,000 technician hours per year: Fixed costs per year $8,000,000 Variable costs $70 per technician hour Budgeted long-run usage in hours per year: Large Plane Department 80,000 technician hours Small Plane Department 70,000 technician hours Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 65,000 technician hours. 15) If a single-rate cost-allocation method is used, what is the allocation rate per hour used? A) $97.33 B) $123.33 C) $146.67 D) $113.33

$123.33

When fixed costs are $50,000 and variable costs are 60% of the selling price, then breakeven sales are ________. A) $115,000 B) $125,000 C) $175,000 D) $275,000

$125,000

What is the contribution margin using variable costing? A) $118,625 B) $125,125 C) $126,425 D) $135,625

$125,125

Fixed costs equal $15,000, unit contribution margin equals $25, and the number of units sold equal 1,150. Operating income is ________. A) $28,750 B) $13,750 C) $15,000 D) $14,750

$13,750

Morgan Clay Products manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Molding Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for August 2015 are: Work in process, beginning inventory: 1,200 units Direct materials (100% complete) Conversion costs (40% complete) Units started during August 675 units Work in process, ending inventory: 450 units Direct materials (100% complete) Conversion costs (60% complete) Costs for August: Standard costs for Assembly: Direct materials $15 per unit Conversion costs $27.50 per unit Work in process, beginning inventory: Direct materials $11,000 Conversion costs $8,250 6) What is the balance in ending work-in-process inventory? A) $25,500 B) $19,250 C) $15,600 D) $14,175

$14,175

) At the breakeven point of 2,000 units, variable costs total $4,000 and fixed costs total $6,000. The 2,001st unit sold will contribute ________ to profits. A) $1 B) $2 C) $3 D) $5

$3

If a dual-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Operations Department? A) $57,000 B) $56,400 C) $60,490 D) $59,890

$57,000

Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 1,500 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. 22) Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total ________. A) $14,400 B) $19,200 C) $24,000 D) 0

$14,400

Heston Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory $190,000 Fixed manufacturing overhead in production 750,000 Ending fixed manufacturing overhead in inventory 50,000 Beginning variable manufacturing overhead in inventory $20,000 Variable manufacturing overhead in production 100,000 Ending variable manufacturing overhead in inventory 30,000 What is the difference between operating incomes under absorption costing and variable costing? A) $140,000 B) $100,000 C) $80,000 D) $10,000

$140,000

Alex Furniture sells a table for $850. His fixed costs are $25,000, while his variable costs are $500 per table. He currently plans to sell 175 tables this month. 24) What is the budgeted revenue for the month assuming that Alex sells 175 tables? A) $145,750 B) $148,750 C) $150,000 D) $142,250

$148,750

The following information pertains to Brian Stone Corporation: Beginning fixed manufacturing overhead in inventory $60,000 Ending fixed manufacturing overhead in inventory 45,000 Beginning variable manufacturing overhead in inventory $30,000 Ending variable manufacturing overhead in inventory 14,250 Fixed selling and administrative costs $724,000 Units produced 5,000 units Units sold 4,800 units What is the difference between operating incomes under absorption costing and variable costing? A) $750 B) $7,500 C) $15,000 D) $30,750

$15,000

Jean Peck's Furniture's manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $300 after negotiations. In the month of January, it manufactures 3,000 tables and sells 2,250 tables. Actual fixed costs are the same as the amount fixed costs budgeted for the month. The following information is provided for the month of January: Variable manufacturing costs $120 per unit Fixed manufacturing costs $90,000 per month Fixed Administrative expenses $25,000 per month At the end of the month Jean Peck's Furniture's has an ending inventory of finished goods of 750 units. The company also incurs a sales commission of $10 per unit. What is the cost of goods sold per unit when using absorption costing? A) $120 B) $128 C) $150 D) $158

$150

Frazer Corp sells several products. Information of average revenue and costs is as follows: Selling price per unit $28.50 Variable costs per unit: Direct material $5.50 Direct manufacturing labor $1.15 Manufacturing overhead $0.85 Selling costs $2.50 Annual fixed costs $125,000 What is the operating income earned if the company sells 15,000 units? A) $162,750 B) $150,000 C) $148,500 D) $152,500

$152,500

Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 2,200 units. Units sold total 1,900 units. Variable cost per unit is $4. Beginning inventory is zero. The fixed manufacturing cost rate is based on the budgeted denominator level. Under variable costing, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total ________. A) $16,000 B) $15,200 C) $14,400 D) 0

$16,000

The Charmatz Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year: Budgeted costs of operating the copying facility for 400,000 to 600,000 copies: Fixed costs per year $60,000 Variable costs 3 cents (.03) per copy Budgeted long-run usage in copies per year: Marketing Department 120,000 copies Operations Department 380,000 copies Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Marketing Department was 80,000 copies and by the Operations Department was 360,000 copies. 11) If a single-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Marketing Department? A) $18,000 B) $3,600 C) $14,400 D) $16,800

$18,000

Bell Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $28.50 Variable costs per unit: Direct material $5.25 Direct manufacturing labor $1.15 Manufacturing overhead $0.25 Selling costs $1.85 Annual fixed costs $110,000 The company sells 10,000 units. 22) The contribution margin per unit is ________. A) $15 B) $20 C) $22 D) $125

$20

Harbor Corp currently leases a corporate suite in an office building for a cost of $280,000 a year. Only 80% of the corporate suite is currently being used. A start-up business has proposed a plan that would use the other 20% of the suite and increase the overall costs of maintaining the space by $20,000. If the incremental method were used, what amount of cost would be allocated to the start-up business? A) $20,000 B) $300,000 C) $60,000 D) $75,000

$20,000

Sales total $400,000 when variable costs total $300,000 and fixed costs total $50,000. The breakeven point in sales dollars is ________. A) $200,000 B) $120,000 C) $170,000 D) $210,000

$200,000

Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 2,200 units. Units sold total 1,900 units. Variable cost per unit is $4. Beginning inventory is zero. The fixed manufacturing cost rate is based on the budgeted denominator level. Under absorption costing, fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total ________. A) $26,400 B) $22,800 C) $24,000 D) $21,818

$22,800

Zahra's Decoratives produces and sells a decorative pillow for $97.50 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs $22.10 per unit Variable marketing costs $ 3.90 per unit Fixed manufacturing costs $13.00 per unit Administrative expenses, all fixed $19.50 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 250 units 7) What is cost of goods sold per unit using variable costing? A) $22.10 B) $26 C) $39 D) $58.50

$22.10

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February? A) $19,000 B) $23,000 C) $25,000 D) $27,000

$23,000

Lobster Liquidators will make $500,000 if the fishing season weather is good, $200,000 if the weather is fair, and would actually lose $50,000 if the weather is poor during the season. If the weather service gives a 40% probability of good weather, a 25% probability of fair weather, and a 35% probability of poor weather, what is the expected monetary value for Lobster Liquidators? A) $500,000 B) $232,500 C) $267,500 D) $200,000

$232,500

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 500 kgs of tungsten carbide at $60 per kg. It started manufacture of 4,000 vases and completed and transferred 3,200 vases during the month. It has 800 vases in the process at the end of the month. It incurred direct labor charges of $1,000 and other manufacturing costs of $500, which included electricity costs of $200. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. What is the cost of tungsten carbide that will be assigned to vases finished and transferred to the finishing department for the month of July? A) $30,000 B) $28,000 C) $26,000 D) $24,000

$24,000

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for May 20X5 are: Work in process, beginning inventory: 70 units Direct materials (100% complete) Conversion costs (25% complete) Units started during May 40 units Work in process, ending inventory: 10 units Direct materials (100% complete) Conversion costs (50% complete) Costs for May: Standard costs for Assembly: Direct materials $8,000 per unit Conversion costs $32,000 per unit Work in process, beginning inventory: Direct materials $280,000 Conversion costs $520,000 What is the balance in ending work-in-process inventory? A) $164,000 B) $240,000 C) $310,000 D) $340,000

$240,000

Stones Manufacturing, sells a marble slab for $1,000. Fixed costs are $30,000, while the variable costs are $400 per slab. The company currently plans to sell 200 slabs this month. What is the margin of safety assuming 75 slabs are budgeted? A) $40,000 B) $38,000 C) $25,000 D) $33,000

$25,000

Unile Auto produces and sells an auto part for $60.00 per unit. In 2015, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: Direct materials $20.00 per unit Direct manufacturing labor $ 4.00 per unit Variable manufacturing costs $ 1.00 per unit Sales commissions $ 6.00 per part Fixed manufacturing costs $750,000 per year Administrative expenses, all fixed $270,000 per year 16) What is the inventoriable cost per unit using variable costing? A) $20.00 B) $24.00 C) $25.00 D) $31.00

$25.00

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs $19,200 Conversion costs $10,800 Manufacturing costs added during the accounting period: Direct materials costs $70,000 Conversion costs $240,000 What is the cost assigned to ending inventory during October? A) $26,678 B) $31,536 C) $36,000 D) $38,000

$26,678

What is the operating income when using absorption costing? A) $337,500 B) $312,500 C) $290,000 D) $260,500

$290,000

Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2015 are: Work in process, beginning inventory, 40% converted 200 units Units started during February 800 units Work in process, ending inventory 100 units Costs for Department A for February 2015 are: Work in process, beginning inventory: Direct materials $150,000 Conversion costs $200,000 Direct materials costs added during February $600,000 Conversion costs added during February $425,000 What is the unit cost per equivalent unit of beginning inventory in Department A? A) $750 B) $1,750 C) $2,800 D) $3,250

$3,250

Daniel Rubber Company produces a specialty item. Management has provided the following information: Actual sales 110,000 units Budgeted production 100,000 units Selling price $40.00 per unit Direct material costs $8.00 per unit Variable manufacturing overhead $3.00 per unit Variable administrative costs $5.00 per unit Fixed manufacturing overhead $4 What is the total throughput contribution? A) $2,640,000 B) $3,190,000 C) $3,520,000 D) $4,070,000

$3,520,000

Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 1,500 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. Fixed manufacturing costs included in ending inventory total ________. A) $4,800 B) $6,000 C) $3,600 D) 0

$3,600

Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 1,500 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. Operating income using absorption costing will be ________ than operating income if using variable costing. A) $9,600 higher B) $4,800 lower C) $3,600 higher D) $14,400 lower

$3,600 higher

Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000. What is the Bridal Shoppe's operating income when 200 dresses are sold? A) $30,000 B) $80,000 C) $200,000 D) $100,000

$30,000

Tally Corp. sells softwares during the recruiting seasons. During the current year, 11,000 softwares were sold resulting in $440,000 of sales revenue, $110,000 of variable costs, and $48,000 of fixed costs. 15) Contribution margin per software is ________. A) $10.00 B) $30.00 C) $40.00 D) $36.00

$30.00

If Beta Corp's net income is $210,000 and the tax rate is 30%, then the company's planned operating income is ________. A) $325,000 B) $300,000 C) $273,000 D) $357,000

$300,000

Winnz sells 8,000 units resulting in $100,000 of sales revenue, $35,000 of variable costs, and $45,000 of fixed costs. To achieve $150,000 in operating income, sales must total ________. A) $440,000 B) $160,000 C) $130,000 D) $300,000

$300,000

What is the inventoriable cost per unit using absorption costing? A) $25.00 B) $31.00 C) $32.50 D) $38.50

$32.50

What is the gross margin when using absorption costing? A) $675,000 B) $527,500 C) $270,000 D) $337,500

$337,500

If the contribution margin ratio is 0.40, targeted operating income is $50,000, and fixed costs are $75,000, then sales volume in dollars is ________. A) $250,000 B) $312,500 C) $275,000 D) $350,000

$350,000

Alex Furniture sells a table for $850. His fixed costs are $25,000, while his variable costs are $500 per table. He currently plans to sell 175 tables this month. ) What is the budgeted operating income for the month assuming that Alex sells 175 tables? A) $45,250 B) $37,000 C) $36,250 D) $36,750

$36,250

If selling price per unit is $40, variable costs per unit are $25, total fixed costs are $20,000, the tax rate is 30%, and the company sells 5,000 units, net income is ________. A) $32,158 B) $26,548 C) $28,500 D) $38,500

$38,500

) What is cost of goods sold using variable costing? A) $38,675 B) $35,000 C) $44,200 D) $52,000

$38,675

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 minimum volume of sales dollars is required to earn an after-tax net income of $30,000? A) $465,000 B) $330,000 C) $390,000 D) $165,000

$390,000

Blistre Company operates on a contribution margin of 20% and currently has fixed costs of $500,000. Next year, sales are projected to be $3,000,000. An advertising campaign is being evaluated that costs an additional $80,000. How much would sales have to increase to justify the additional expenditure? A) $320,000 B) $380,000 C) $400,000 D) $600,000

$400,000

Bovous Stores, Inc., sells several products. Information of average revenue and costs is as follows: Selling price per unit $20.00 Variable costs per unit: Direct material $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 The revenues that the company must earn annually to make a profit of $144,000 are ________. A) $378,000 B) $425,000 C) $400,000 D) $450,000

$400,000

If a dual-rate cost-allocation method is used, what amount of copying facility costs will be allocated to the Operations Department? Assume budgeted usage is used to allocate fixed copying costs and actual usage is used to allocate variable copying costs. A) $60,490 B) $59,890 C) $57,000 D) $56,400

$56,400

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. Data for the Assembly Department for June 2015 are: Work in process, beginning inventory 300 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 950 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2015: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $135,000 Direct materials costs added during June $600,000 Conversion costs added during June $400,000 What is the conversion cost per equivalent unit in June? A) $552.00 B) $541.24 C) $441.24 D) $428.00

$441.24

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 What is the cost of the goods transferred out during February? A) $417,750.5 B) $454,694.8 C) $476,750.6 D) $505,000 .2

$454,694.8

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. Data for the Assembly Department for June 2015 are: Work in process, beginning inventory 300 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 950 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2015: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $135,000 Direct materials costs added during June $600,000 Conversion costs added during June $400,000 What amount of conversion costs is assigned to the ending Work-in-Process account for June? A) $82,800.50 B) $49,639.50 C) $66,186.50 D) $38,256.50

$49,639.50

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. 20) What is the contribution margin per ticket package? A) $50 B) $100 C) $150 D) $200

$50

If the incremental method were used, what amount of cost would be allocated to the start-up business? A) $40,000 B) $50,000 C) $46,000 D) $42,000

$50,000

The following information is for the Jeffries Corporation: Product A: Revenue $16.00 Variable Cost $12.00 Product B: Revenue $24.00 Variable Cost $16.00 Total fixed costs $75,000 What is the operating income of Jeffries Corporation, assuming actual sales total 25,000 units, and the sales mix is three units of Product A and one unit of Product B? A) $50,000 B) $60,000 C) $77,000 D) $66,000

$50,000

Emrald Corp currently uses a manufacturing facility costing $500,000 per year; 90% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 10% of the facility and increase the overall costs of maintaining the space by 5%. 4) If the stand-alone method were used, what amount of cost would be allocated to the start-up business? A) $48,000 B) $50,000 C) $50,500 D) $52,500

$52,500

Frazer Corp sells several products. Information of average revenue and costs is as follows: Selling price per unit $28.50 Variable costs per unit: Direct material $5.50 Direct manufacturing labor $1.15 Manufacturing overhead $0.85 Selling costs $2.50 Annual fixed costs $125,000 If the company decides to lower its selling price by 12.25%, the operating income is reduced by ________. A) $52,500 B) $50,500 C) $55,500 D) $29,500

$52,500

Gloria's Decorating produces and sells a mantel clock for $100 per unit. In 2015, 42,125 clocks were produced and 37,958 were sold. Other information for the year includes: Direct materials $40.00 per unit Direct manufacturing labor $ 5.00 per unit Variable manufacturing costs $ 7.50 per unit Sales commissions $12.50 per part Fixed manufacturing costs $62.50 per unit Administrative expenses, all fixed $37.50 per unit 14) What is the inventoriable cost per unit using variable costing? A) $45.00 B) $52.50 C) $65.00 D) $115.00

$52.50

If targeted operating income is $50,000, then targeted sales revenue is ________. A) $525,052 B) $533,333 C) $498,133 D) $517,072

$525,052

Pearl Lights sells only pearl necklaces. 8,000 units were sold resulting in $240,000 of sales revenue, $60,000 of variable costs, and $40,000 of fixed costs. The breakeven point in total sales dollars is ________. A) $40,000 B) $53,334 C) $100,000 D) $58,334

$53,334

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. Data for the Assembly Department for June 2015 are: Work in process, beginning inventory 300 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 950 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2015: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $135,000 Direct materials costs added during June $600,000 Conversion costs added during June $400,000 What is the direct materials cost per equivalent unit during June? A) $569 B) $560 C) $552 D) $480

$552

Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 1,500 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. The production-volume variance is ________. A) $8,000 B) $6,000 C) $9,600 D) 0

$6,000

Veach Corporation incurred fixed manufacturing costs of $6,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 1,000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total ________. A) $3,600 B) $4,800 C) $6,000 D) 0

$6,000

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. For every $25,000 of ticket packages sold, operating income will increase by ________. A) $6,250 B) $12,500 C) $18,750 D) $15,000

$6,250

Pacific Company sells only one product for $11 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 operating income is ________. A) $6.50 per unit B) $6.00 per unit C) $5.50 per unit D) $5.00 per unit

$6.00 per unit

Tall Statues Inc., produces wood statues. Management has provided the following information: Actual sales 30,000 statues Budgeted production 50,000 statues Selling price $46.00 per statue Direct material costs $6.90 per statue Variable manufacturing costs $3.45 per statue Variable administrative costs $5.75 per statue Fixed manufacturing overhead $4.60 per statue 8) What is the cost per statue if throughput costing is used? A) $20.70 B) $16.10 C) $10.35 D) $6.90

$6.90

Harbor Corp currently leases a corporate suite in an office building for a cost of $280,000 a year. Only 80% of the corporate suite is currently being used. A start-up business has proposed a plan that would use the other 20% of the suite and increase the overall costs of maintaining the space by $20,000. 6) If the stand-alone method were used, what amount of cost would be allocated to the start-up business? A) $70,000 B) $66,000 C) $60,000 D) $74,000

$60,000

Tally Corp. sells softwares during the recruiting seasons. During the current year, 11,000 softwares were sold resulting in $440,000 of sales revenue, $110,000 of variable costs, and $48,000 of fixed costs. If sales increase by $60,000, operating income will increase by ________. A) $10,000 B) $40,000 C) $45,000 D) $60,000

$60,000

What is the operating income using variable costing? A) $125,125 B) $85,125 C) $65,000 D) $60,125

$60,125

Globus Autos 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 variable costs decrease by $1 per unit, the new margin of safety is ________. A) $65,000 B) $73,567 C) $68,235 D) $66,765

$68,235

Shine Jewelry sells 400 units resulting in $7,000 of sales revenue, $3,000 of variable costs, and $1,500 of fixed costs. Calculate the variable cost per unit. A) $11.00 B) $7.00 C) $8.00 D) $7.50

$7.50

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs (30% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $345,000 Conversion costs $360,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,120,000 What amount of conversion costs is assigned to the ending Work-in-Process account for April? A) $140,952 B) $95,000 C) $70,476 D) $247,500

$70,476

If a dual-rate cost-allocation method is used, what amount of cost will be allocated to the Night Light Division? Assume budgeted usage is used to allocate fixed operating costs and actual usage is used to allocate variable operating costs. A) $810,000 B) $765,000 C) $790,000 D) $750,000

$765,000

If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be allocated to the Small Plane Department? Assume budgeted usage is used to allocate materials laboratory costs and actual usage is used to allocate variable materials laboratory costs. A) $8,225,000 B) $8,050,000 C) $8,483,333 D) $8,783,333

$8,050,000

If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be budgeted for the Small Plane Department? A) $10,575,000 B) $9,633,333 C) $8,433,333 D) $8,633,333

$8,633,333

f a single-rate cost-allocation method is used, what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume actual usage is used to allocate copying costs. A) $8,166,666.67 B) $8,766,666.67 C) $8,433,333.33 D) $8,633,333.33

$8,633,333.33

Daniel Rubber Company produces a specialty item. Management has provided the following information: Actual sales 110,000 units Budgeted production 100,000 units Selling price $40.00 per unit Direct material costs $8.00 per unit Variable manufacturing overhead $3.00 per unit Variable administrative costs $5.00 per unit Fixed manufacturing overhead $4.00 per unit 10) What is the cost per statue if throughput costing is used? A) $20.00 B) $17.00 C) $13.00 D) $8.00

$8.00

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. Data for the Assembly Department for June 2015 are: Work in process, beginning inventory 300 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 950 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2015: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $135,000 Direct materials costs added during June $600,000 Conversion costs added during June $400,000 What amount of direct materials costs is assigned to the ending Work-in-Process account for June? A) $82,800 B) $62,100 C) $37,240 D) $30,454

$82,800

If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs. A) $9,133,333 B) $9,166,667 C) $9,466,667 D) $9,666,667

$9,166,667

Veach Corporation incurred fixed manufacturing costs of $6,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 1,000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. Operating income using variable costing will be ________ than operating income if using absorption costing. A) $2,400 higher B) $2,400 lower C) $3,600 higher D) $900 lower

$900 lower

If a dual-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Night Light Division? A) $890,000 B) $900,000 C) $925,000 D) $835,000

$925,000

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs (30% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $345,000 Conversion costs $360,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,120,000 What amount of direct materials costs is assigned to the ending Work-in-Process account for March? A) $31,363 B) $63,636 C) $75,075 D) $95,000

$95,000

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs (30% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $345,000 Conversion costs $360,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,120,000 What is the direct materials cost per equivalent unit during March? A) $995 B) $950 C) $636 D) $313

$950

Veach Corporation incurred fixed manufacturing costs of $6,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 1,000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. Fixed manufacturing costs included in ending inventory total ________. A) $1,200 B) $1,500 C) $900 D) 0

0

Veach Corporation incurred fixed manufacturing costs of $6,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 1,000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. The production-volume variance totals ________. A) $2,000 B) $1,500 C) $2,400 D) 0

0

Jeff Corporation is having trouble selling its inventory because of its ongoing dispute with its logistical partner. The company was not able to sell any inventory in the month of January because of the dispute. It manufactured 8,000 units in January. Jeff had no other fixed costs commitment other than fixed manufacturing costs of $100,000. It follows absorption costing. If actual production in January was equal to the denominator level, what is the amount of sales required to attain breakeven point? A) 1250 units B) 125 units C) 10 units D) 0 units

0 units

Greene Manufacturing incurred the following expenses during 2015: Fixed manufacturing costs $112,500 Fixed nonmanufacturing costs $87,500 Unit selling price $250 Total unit cost $100 Variable manufacturing cost rate $50 Units produced 1,340 units What will be the breakeven point if variable costing is used? A) 1,334 units B) 1,125 units C) 1,000 units D) 563 units

1,000 units

Lights Manufacturing produces a single product that sells for $125. Variable costs per unit equal $50. The company expects total fixed costs to be $75,000 for the next month at the projected sales level of 1,000 units. What is the current breakeven point in terms of number of units? A) 800 units B) 1033 units C) 667 units D) 1,000 units

1,000 units

Mariposa Corporation sells "Bigger", its only product. The following information is available for the current month: Selling price per unit $100 Standard fixed manufacturing costs per unit $50 Variable selling and administrative costs per unit $8 Standard variable manufacturing costs per unit $2 Fixed selling and administrative costs $40,000 Units produced 10,000 units Units sold 9,600 units What is the absorption costing breakeven point in units? A) 917 units B) 1,000 units C) 5,838 units D) 6,000 units

1,000 units

Audrey Auto Accessories manufactures plastic moldings for car seats. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2015 are: Work in process, beginning inventory, 40% converted 200 units Units started during February 800 units Work in process, ending inventory: 100 units 30% complete as to conversion costs 100% complete as to materials Costs for the Department A for February 2015 are: Work in process, beginning inventory: Direct materials $600,000 Conversion costs $150,000 Direct materials costs added during February $4,000,000 Conversion costs added during February $2,250,000 What were the equivalent units of direct materials and conversion costs, respectively, at the end of February? Assume Audrey uses the weighted-average process costing method. A) 1,000; 930 B) 1,000; 1,000 C) 1,000; 900 D) 800; 700

1,000; 930

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs (30% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $345,000 Conversion costs $360,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,120,000 What are the equivalent units for direct materials and conversion costs, respectively, for March? A) 1,100 units; 1,100 units B) 1,050 units; 1,100 units C) 1,100 units; 1,050 units D) 1000 units; 1050 units

1,100 units; 1,050 units

The following information is for Alex Corp: Product X: Revenue $15.00 Variable Cost $2.50 Product Y: Revenue $25.00 Variable Cost $10.00 Total fixed costs $50,000 What is the breakeven point assuming the sales mix consists of two units of Product X and one unit of Product Y? A) 1,000 units of Y and 2,000 units of X B) 1,113 units of Y and 2,025 units of X C) 2,313 units of Y and 4,025 units of X D) 1,250 units of Y and 2,500 units of X

1,250 units of Y and 2,500 units of X

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. Data for the Assembly Department for June 2015 are: Work in process, beginning inventory 300 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 950 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2015: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $135,000 Direct materials costs added during June $600,000 Conversion costs added during June $400,000 What are the equivalent units for direct materials and conversion costs, respectively, for June? A) 1,250 units; 1,210.64 units B) 1,250 units; 1,212.5 units C) 1,100 units; 1,100 units D) 1012 units; 1040 units

1,250 units; 1,212.5 units

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) 367 packages B) 434 packages C) 1,100 packages D) 1,300 packages

1,300 packages

Zealz Manufacturing produces a single product that sells for $80. Variable costs per unit equal $30. The company expects total fixed costs to be $70,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. What is the current breakeven point in terms of number of units? A) 1,400 units B) 2,250 units C) 3,333 units D) 1725 units

1,400 units

Tony Manufacturing produces a single product that sells for $80. Variable costs per unit equal $30. The company expects total fixed costs to be $78,000 for the next month at the projected sales level of 2,500 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.Suppose management believes that a $75,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by ________ to justify this additional expenditure? A) 1,698 units B) 1,500 units C) 1,550 units D) 1,339 units

1,500 units

Dessa Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Finishing Department for March 2015 are: Work in process, beginning inventory, 25% converted 1,000 units Units started during February 1,200 units Work in process, ending inventory 500 units Costs for Finishing department for March 2015 are: Work in process, beginning inventory: Direct materials $200,000 Conversion costs $200,000 Direct materials costs added during February $420,000 Conversion costs added during February $1,400,000 How many units were completed and transferred out of the Finishing Department during March? A) 1,000 units B) 1,200 units C) 1,700 units D) 2,000 units

1,700 units

Sales of Blistre Autos are 350,000, variable cost is 200,000, fixed cost is 75,000, tax rate is 20%. Calculate the operating leverage of the company. A) 1.00 time B) 1.50 times C) 2.50 times D) 2.00 times

1.00 time

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 to break even? A) 34 packages B) 50 packages C) 100 packages D) 150 packages

100 packages

A nonprofit organization aids the unemployed by supplementing their incomes by $5,000 annually, while they seek new employment skills. The organization has fixed costs of $200,000 and the budgeted appropriation for the year totals $700,000. How many individuals can receive financial assistance this year? A) 115 people B) 110 people C) 100 people D) 95 people

100 people

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs $19,200 Conversion costs $10,800 Manufacturing costs added during the accounting period: Direct materials costs $70,000 Conversion costs $240,000 What were the equivalent units for conversion costs during October? A) 10,125 B) 11,375 C) 11,125 D) 9,000

11,125

The following information is for the Jeffries Corporation: Product A: Revenue $16.00 Variable Cost $12.00 Product B: Revenue $24.00 Variable Cost $16.00 Total fixed costs $75,000 hat is the breakeven point, assuming the sales mix consists of three units of Product A and one unit of Product B? A) 10,000 units of A and 5,000 units of B B) 11,250 units of A and 3,750 units of B C) 12,000 units of A and 4,000 units of B D) 4,000 units of A and 12,000 units of B

11,250 units of A and 3,750 units of B

Ms. Janice Meyers, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2011 is as follows: Total fixed manufacturing overhead $180,000 Total other fixed expenses $200,000 Total variable manufacturing expenses $240,000 Total other variable expenses $240,000 Units produced 60,000 units Budgeted production 60,000 units Units sold 50,000 units Selling price $40 What are breakeven sales in units using variable costing? A) 5,625 units B) 5,769 units C) 11,875 units D) 12,180 units

11,875 units

Sky High sells helicopters. During the current year, 100 helicopters were sold resulting in $820,000 of sales revenue, $250,000 of variable costs, and $342,000 of fixed costs. The number of helicopters that must be sold to achieve $300,000 of operating income is ________. A) 113 units B) 102 units C) 96 units D) 100 units

113 units

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 145,000 chairs. During the month, the firm completed 175,000 chairs and transferred them to the Finishing Department. The firm ended the month with 18,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Swivel. Of the 145,000 units Swivel started during February, how many were finished during the month? A) 177,000 B) 197,000 C) 127,000 D) 217,000

127,000

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 $10,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by ________ to justify this additional expenditure. A) 123 units B) 134 units C) 243 units D) 143 units

134 units

Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000. How many dresses are sold when operating income is zero? A) 225 dresses B) 150 dresses C) 100 dresses D) 90 dresses

150 dresses

Helping Hands is a nonprofit organization that supplies electric fans during summer for individuals in need. Fixed costs are $225,000. The fans cost $25.00 each. The organization has a budgeted appropriation of $675,000. How many people can receive a fan during summer? A) 15,000 people B) 18,000 people C) 22,000 people D) 16,000 people

18,000 people

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 145,000 chairs. During the month, the firm completed 175,000 chairs and transferred them to the Finishing Department. The firm ended the month with 18,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Swivel. What were the equivalent units for conversion costs for February if the beginning inventory was 70% complete as to conversion costs and the ending inventory was 40% complete as to conversion costs? A) 182,200 B) 152,200 C) 172,200 D) 162,200

182,200

Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for June 20X5: Work in process, beginning inventory 25,000 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (90% complete) Transferred in during current period 165,000 units Completed and transferred out 185,000 units Work in process, ending inventory 5,000 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (65% complete) How many units must be accounted for during the period? A) 215,000 units B) 190,000 units C) 169,500 units D) 140,000 units

190,000 units

Star Jewelry sells 500 units resulting in $75,000 of sales revenue, $28,000 of variable costs, and $18,000 of fixed costs. 2) Breakeven point in units is ________. A) 196 units B) 203 units C) 185 units D) 192 units

192 units

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 145,000 chairs. During the month, the firm completed 175,000 chairs and transferred them to the Finishing Department. The firm ended the month with 18,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Swivel. What were the equivalent units for materials for February? A) 193,000 chairs B) 173,000 chairs C) 163,000 chairs D) 153,000 chairs

193,000 chairs

Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000. How many dresses must the Bridal Shoppe sell to yield after-tax net income of $18,000, assuming the tax rate is 40%? A) 200 dresses B) 170 dresses C) 150 dresses D) 145 dresses

200 dresses

Assembly department of Zahra Technologies had 100 units as work in process at the beginning of the month. These units were 50% complete. It has 200 units which are 25% complete at the end of the month. During the month, it completed and transferred 500 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the total equivalent units in ending inventory for assignment of direct materials cost? A) 25 units B) 50 units C) 150 units D) 200 units

200 units

What is the breakeven point in units, assuming a product's selling price is $100, fixed costs are $16,000, unit variable costs are $20, and operating income is $5,200? A) 100 units B) 300 units C) 400 units D) 200 units

200 units

Bosely Corporation is in the business of selling computers. The following expenses were incurred in March 2011: Fixed manufacturing costs $75,000 Fixed nonmanufacturing costs $35,000 Unit selling price $1,200 Variable manufacturing cost $700 Units produced 1,500 What will be the breakeven point if variable costing is used? A) 150 units B) 220 units C) 157 units D) 92 units

220 units

Patrick Ross has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are: Option 1: $1,000 fixed fee, or Option 2: $750 fixed fee + 5% of all revenues generated at the fair, or Option 3: 20% of all revenues generated at the fair. The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each. How many actions and events will a decision table contain? A) 1 action and 3 events B) 1 action and 6 events C) 2 actions and 3 events D) 3 actions and 6 events

3 actions and 6 events

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) 3,750 units B) 4,625 units C) 3,050 units D) 1,875 units

3,750 units

If the contribution margin ratio is 0.40, targeted operating income is $80,000, and targeted sales volume in dollars is $500,000, then the degree of operating leverage is ________. A) 1.50 times B) 2.00 times C) 2.50 times D) 3.00 times

3.00 times

Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for August 20X5: Work in process, beginning inventory 150,000 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (90% complete) Transferred in during current period 450,000 units Completed and transferred out 400,000 units Work in process, ending inventory 200,000 units Transferred-in costs (100% complete) Direct materials (0% complete) Conversion costs (65% complete) Calculate equivalent units for conversion costs using the FIFO method. A) 401,500 units B) 350,000 units C) 300,000 units D) 395,000 units

395,000 units

Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1,000. His fixed costs are $20,000, while his variable costs are $500 per procedure. Dr. Hunter currently plans to perform 200 procedures this month.What is the breakeven point for the month assuming that Dr. Hunter plans to perform the procedure 200 times? A) 40 times B) 30 times C) 20 times D) 10 times

40 times

Bell Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $28.50 Variable costs per unit: Direct material $5.25 Direct manufacturing labor $1.15 Manufacturing overhead $0.25 Selling costs $1.85 Annual fixed costs $110,000 The company sells 10,000 units. What is the proportion of variable costs to total costs? A) 45.00% B) 48.56% C) 53.56% D) 43.56%

43.56%

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 145,000 chairs. During the month, the firm completed 175,000 chairs and transferred them to the Finishing Department. The firm ended the month with 18,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Swivel. How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle. A) 8,000 chairs B) 18,000 chairs C) 38,000 chairs D) 48,000 chairs

48,000 chairs

If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be budgeted for the Large Plane Department? A) $9,866,667 B) $8,226,667 C) $9,781,333 D) $9,881,333

9,866,667

How many units would have to be sold to yield a target operating income of $23,000, assuming variable costs are $25 per unit, total fixed costs are $2,000, and the unit selling price is $30? A) 4,800 units B) 4,400 units C) 5,000 units D) 5,200 units

5,000 units

Assembly department of Zahra Technologies had 100 units as work in process at the beginning of the month. These units were 50% complete. It has 200 units which are 25% complete at the end of the month. During the month, it completed and transferred 500 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. Calculate the total equivalent units in ending inventory for assignment of conversion costs? A) 25 units B) 50 units C) 150 units D) 200 units

50 units

Henry Inc., a manufacturing firm, is able to produce 1,000 pairs of sneakers per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units per hour. The plant actually operates only 27 days per month. Based on the current budget, Henry estimates that it will be able to sell only 500,000 units due to the entry of a competitor with aggressive marketing capabilities. But the demand is unlikely to be affected in future and will be around 515,000. Assume the month has 30 days. What is the master-budget capacity utilization level for this budget period? A) 500,000 units B) 515,000 units C) 518,400 units D) 720,000 units

500,000 units

Henry Inc., a manufacturing firm, is able to produce 1,000 pairs of sneakers per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units per hour. The plant actually operates only 27 days per month. Based on the current budget, Henry estimates that it will be able to sell only 500,000 units due to the entry of a competitor with aggressive marketing capabilities. But the demand is unlikely to be affected in future and will be around 515,000. Assume the month has 30 days. What is the practical capacity for the month? A) 1,000,000 units B) 720,000 units C) 518,400 units D) 240,000 units

518,400 units

Greene Manufacturing incurred the following expenses during 2015: Fixed manufacturing costs $112,500 Fixed nonmanufacturing costs $87,500 Unit selling price $250 Total unit cost $100 Variable manufacturing cost rate $50 Units produced 1,340 units What is the breakeven point in units using absorption costing if the units produced are actually 2,250? A) 1,330 units B) 1,000 units C) 887 units D) 584 units

584 units

Mariposa Corporation sells "Bigger", its only product. The following information is available for the current month: Selling price per unit $100 Standard fixed manufacturing costs per unit $50 Variable selling and administrative costs per unit $8 Standard variable manufacturing costs per unit $2 Fixed selling and administrative costs $40,000 Units produced 10,000 units Units sold 9,600 units What is the variable costing breakeven point in units? A) 833 units B) 5,556 units C) 5,838 units D) 6,000 units

6,000 units

Assuming a constant mix of 3 units of X for every 1 unit of Y. X Y Total Sales $25 $40 VC 18 22 Total fixed costs $78,000 The breakeven point in units would be ________. A) 6,000 units of X and 2,000 units of Y B) 12,000 units of X and 4,000 units of Y C) 5,200 units of X and 1,800 units of Y D) 3,600 units of X and 1,200 units of Y

6,000 units of X and 2,000 units of Y

Ms. Janice Meyers, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2011 is as follows: Total fixed manufacturing overhead $180,000 Total other fixed expenses $200,000 Total variable manufacturing expenses $240,000 Total other variable expenses $240,000 Units produced 60,000 units Budgeted production 60,000 units Units sold 50,000 units Selling price $40 What are breakeven sales in units using absorption costing? A) 5,625 units B) 6,667 units C) 6,897 units D) 8,000 units

6,897 units

ky High sells helicopters. During the current year, 100 helicopters were sold resulting in $820,000 of sales revenue, $250,000 of variable costs, and $342,000 of fixed costs. Breakeven point in units is ________. A) 80 units B) 64 units C) 60 units D) 78 units

60 units

Bovous Stores, Inc., sells several products. Information of average revenue and costs is as follows: Selling price per unit $20.00 Variable costs per unit: Direct material $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 What is the contribution margin percentage? A) 60% B) 66% C) 33% D) 55%

60%

Assembly department of Zahra Technologies had 100 units as work in process at the beginning of the month. These units were 50% complete. It has 200 units which are 25% complete at the end of the month. During the month, it completed and transferred 500 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. The number of equivalent units of work done during the month for direct materials is ________. A) 600 units B) 800 units C) 700 units D) 500 units

600 units

The number of units that must be sold to achieve $40,000 of operating income is ________. A) 677 units B) 717 units C) 617 units D) 650 units

617 units

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 How many of the units that were started and completed during February? A) 83,000 B) 78,000 C) 73,000 D) 63,000

63,000

Winnz sells 8,000 units resulting in $100,000 of sales revenue, $35,000 of variable costs, and $45,000 of fixed costs. The contribution margin percentage is ________. A) 66.67% B) 65.0% C) 37.5% D) 75.0%

65.0%

The following information is for High Corp: Selling price $60 per unit Variable costs $40 per unit Total fixed costs $125,000 28) The number of units that High Corp must sell to reach targeted operating income of $25,000 is ________. A) 6,000 units B) 7,500 units C) 3,334 units D) 4,334 units

7,500 units

Ms. Janice Meyers, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2011 is as follows: Total fixed manufacturing overhead $180,000 Total other fixed expenses $200,000 Total variable manufacturing expenses $240,000 Total other variable expenses $240,000 Units produced 60,000 units Budgeted production 60,000 units Units sold 50,000 units Selling price $40 What are breakeven sales in units using absorption costing if the production units are actually 25,000? A) 5,625 units B) 6,667 units C) 7,667 units D) 7,931 units

7,931 units

Henry Inc., a manufacturing firm, is able to produce 1,000 pairs of sneakers per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units per hour. The plant actually operates only 27 days per month. Based on the current budget, Henry estimates that it will be able to sell only 500,000 units due to the entry of a competitor with aggressive marketing capabilities. But the demand is unlikely to be affected in future and will be around 515,000. Assume the month has 30 days. What is the theoretical capacity for the month? A) 1,000,000 units B) 720,000 units C) 518,800 units D) 240,000 units

720,000 units

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs $19,200 Conversion costs $10,800 Manufacturing costs added during the accounting period: Direct materials costs $70,000 Conversion costs $240,000 How many of the units that were started and completed during October? A) 13,500 B) 8,500 C) 9,000 D) 10,000

8,500

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 What were the equivalent units for conversion costs during February? A) 81,500 B) 83,000 C) 73,000 D) 77,500

81,500

Greene Manufacturing incurred the following expenses during 2015: Fixed manufacturing costs $112,500 Fixed nonmanufacturing costs $87,500 Unit selling price $250 Total unit cost $100 Variable manufacturing cost rate $50 Units produced 1,340 units What will be the breakeven point in units if absorption costing is used? A) 1,330 units B) 1,000 units C) 887 units D) 563 units

887 units

Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2015 are: Work in process, beginning inventory, 40% converted 200 units Units started during February 800 units Work in process, ending inventory 100 units Costs for Department A for February 2015 are: Work in process, beginning inventory: Direct materials $150,000 Conversion costs $200,000 Direct materials costs added during February $600,000 Conversion costs added during February $425,000 How many units were completed and transferred out of Department A during February? A) 300 units B) 800 units C) 900 units D) 1,000 units

900 units

________ is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs. A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing

Absorption costing

________ method includes fixed manufacturing overhead costs as inventoriable costs. A) Variable costing B) Absorption costing C) Throughput costing D) Activity-based costing

Absorption costing

Which of the following statements is true of absorption costing? A) Absorption costing allocates fixed manufacturing overhead to actual units produced during the period. B) Absorption costing carries over nonmanufacturing costs to the future periods. C) Absorption costing shows the same level of profit as variable costing irrespective of the level of inventories. D) Absorption costing allocates total manufacturing cost using the budgeted level of production for a particular year.

Absorption costing allocates fixed manufacturing overhead to actual units produced during the period.

At the end of the accounting period, Armstrong Corporation reports operating income of $30,000. Which of the following statements is true, if Armstrong's inventory levels decrease during the accounting period? A) Variable costing will report less operating income than absorption costing. B) Absorption costing will report less operating income than variable costing. C) Variable costing and absorption costing will report the same operating income since the cost of goods sold is the same. D) Variable costing and absorption costing will report the same operating income since the total costs are the same.

Absorption costing will report less operating income than variable costing.

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for May 20X5 are: Work in process, beginning inventory: 70 units Direct materials (100% complete) Conversion costs (25% complete) Units started during May 40 units Work in process, ending inventory: 10 units Direct materials (100% complete) Conversion costs (50% complete) Costs for May: Standard costs for Assembly: Direct materials $8,000 per unit Conversion costs $32,000 per unit Work in process, beginning inventory: Direct materials $280,000 Conversion costs $520,000 Which of the following journal entries records the Assembly Department's conversion costs at actual costs for the month, assuming conversion costs are 20% higher than expected? A) Assembly Department Conversion Cost Control 3,360,000 Various accounts 3,360,000 B) Materials Inventory 3,360,000 Assembly Department Conversion Cost Control 3,360,000 C) Assembly Department Conversion Cost Control 2,800,000 Materials Inventory 2,800,000 D) Materials Inventory 3,360,000 Work in Process — Assembly 3,360,000

Assembly Department Conversion Cost Control 3,360,000 Various accounts 3,360,000

Which of the following journal entries records the total conversion costs variances of the Assembly Department, assuming that conversion costs are 20% higher than expected? A) Work in Process — Assembly 3,360,000 Conversion-Cost Variances 560,000 Assembly Department Conversion Cost Control 2,800,000 B) Assembly Department Conversion Costs Allocated 3,360,000 Direct Materials Variances 560,000 Finishing Department Conversion Cost Control 2,800,000 C) Assembly Department Conversion Costs Allocated 2,800,000 Conversion-Cost Variances 560,000 Assembly Department Conversion Cost Control 3,360,000 D) Work in Process — Assembly 560,000 Assembly Department Conversion Cost Control 560,000

Assembly Department Conversion Costs Allocated 2,800,000 Conversion-Cost Variances 560,000 Assembly Department Conversion Cost Control 3,360,000

Which of the following is true of capacity costs? A) Capacity costs are difficult to estimate. B) Capacity costs don't provide a useful planning tool for nonmanufacturing firms. C) Capacity costs cannot be used with activity-based costing. D) Capacity costs do not arise in the nonmanufacturing parts of the value chain.

Capacity costs are difficult to estimate.

Which of the following is the mathematical expression of contribution margin ratio? A) Contribution margin ratio = Contribution margin percentage × Revenues (in dollars) B) Contribution margin ratio = Contribution margin percentage × Fixed costs (in dollars) C) Contribution margin ratio = Contribution margin percentage × Variable costs (in dollars) D) Contribution margin ratio = Contribution margin percentage × Operating leverage

Contribution margin ratio = Contribution margin percentage × Revenues (in dollars)

Which of the following statements best describes conversion costs? A) Conversion costs are all manufacturing and nonmanufacturing cost. B) Conversion costs are all manufacturing costs other than direct materials costs. C) Conversion costs are all nonmanufacturing costs including marketing costs. D) Conversion costs are all nonmanufacturing costs other than fixed selling and distribution costs.

Conversion costs are all manufacturing costs other than direct materials costs.

________ is subtracted from sales while calculating contribution margin. A) Direct labor in factory B) Rent on factory building C) Rent on the headquarterʹs building D) Sales commission on incremental sales

Direct labor in factory

________ is the continuing reduction in the demand for a company's products that occurs when competitor prices are not met. A) Downward demand spiral B) Competitor pricing pressure C) Continuous step down demand D) Super-variable costing

Downward demand spiral

Which of the following statements is true of conversion costs? A) Estimating the degree of completion is usually easier for direct material costs than for conversion costs. B) The calculation of equivalent units is relatively easy for the textile industry. C) The conversion cost needed for a completed unit and the conversion cost in a partially completed unit can be measured accurately. D) If conversion costs are added evenly during the assembly we can conclude that there are more than one indirect-cost category.

Estimating the degree of completion is usually easier for direct material costs than for conversion costs.

A major advantage of using the FIFO process-costing method is that ________. A) FIFO makes the unit cost calculations simpler B) in contrast with the weighted-average method, FIFO is considered GAAP C) FIFO provides managers with information about changes in the costs per unit from one period to the next D) in the period of rising prices, it leads to lower operating income and lower tax payments, saving the company cash and increasing the company's value

FIFO provides managers with information about changes in the costs per unit from one period to the next

Which of the following statements is true of process costing? A) In the period of rising prices, weighted-average process-costing method will result in higher operating income as compared to FIFO process-costing method. B) The operating income and the tax payments of a company are not affected by the method of process-costing being followed by the company. C) In the period of rising prices, weighted-average process-costing method will result in lower cost of goods sold as compared to FIFO process-costing method. D) In a period of falling prices, weighted-average process-costing method will increase tax payments as compared to FIFO process-costing method.

In a period of falling prices, weighted-average process-costing method will increase tax payments as compared to FIFO process-costing method.

Which of the following statements is true? A) In a job-costing system, average production cost is calculated for all units produced. B) In a process-costing system, each unit uses approximately the same amount of resources. C) In a job-costing system, overheads are allocated to all units equally. D) In a process-costing system, individual jobs use different quantities of production resources.

In a process-costing system, each unit uses approximately the same amount of resources.

Which of the following statements is true of conversion costs? A) In process costing, they include all the factors of production. B) They include all manufacturing costs including direct materials, direct labor, and other direct and indirect manufacturing costs. C) In process costing, they are usually considered to be added evenly throughout the production process. D) They include only direct materials and excludes all other manufacturing and non-manufacturing costs.

In process costing, they are usually considered to be added evenly throughout the production process.

Which of the following is an advantage of a dual-rate method? A) It is the most widely used method in practice. B) It is less costly to implement. C) It avoids the expensive analysis for categorizing costs as either fixed or variable. D) It allocates fixed cost as per the budgeted usage that helps in short and long-run planning.

It allocates fixed cost as per the budgeted usage that helps in short and long-run planning.

Which of the following is a disadvantage of a dual-rate method? A) It allocates fixed costs on the basis of budgeted long-run usage may tempt some managers to underestimate their planned usage. B) It may lead operating department managers to make sub-optimal decisions that are in their own best interest. C) It allocates fixed and variable-cost pool using the same cost-allocation base, which will mislead managers in making decisions. D) It does not guide department managers to make decisions that benefit both the organization as a whole and each department.

It allocates fixed costs on the basis of budgeted long-run usage may tempt some managers to underestimate their planned usage.

Which of the following is an assumption under FIFO process-costing method? A) It assumes some of the higher-cost units are placed in ending work in process. B) It assumes that all the lower-cost units from the previous period in beginning work in process are the first to be completed and transferred out of the process. C) It assumes that unit inputs costs are constant and do not fluctuate in the short run. D) It assumes that the ending work in process consists of only the lower-cost current-period units.

It assumes that the ending work in process consists of only the lower-cost current-period units.

Which of the following is true of weighted-average process-costing? A) It does not represent the average cost of units when inputs prices fluctuates markedly from month to month. B) It facilitates period-to-period comparisons and hence is very useful in analyzing the performances of managers for different periods. C) It arrives at the same unit costs as arrived under FIFO method, but the computations are easier under weighted-average process-costing. D) It calculates the cost per equivalent unit of all work done to date, regardless of the accounting period in which it was done.

It calculates the cost per equivalent unit of all work done to date, regardless of the accounting period in which it was done.

Which of the following steps can a management take to reduce the undesirable effects of absorption costing? A) It can evaluate managers on quarterly basis rather than the usual yearly period thereby mitigating the undesirable effects of absorption costing. B) It can delegate powers to managers to decide which orders they want to accept so that any order which will lead to inventory build-up can be rejected. C) It can empower managers to decide the timings of maintenance of plants thereby ensuring that the production is not affected. D) It can encourage using nonfinancial measures such as units in ending inventory compared to units in sales.

It can encourage using nonfinancial measures such as units in ending inventory compared to units in sales.

Which of the following is a reason for companies to use absorption costing for internal accounting? A) It is the required inventory method for internal accounting as per GAAP. B) It measures the cost of all resources, whether manufacturing or nonmanufacturing, necessary to produce inventory. C) It does not take into account fixed manufacturing overhead while valuing inventory and hence is more suited for decision making. D) It can help prevent managers from taking actions that make their performance measure look good but that hurt the income they report to shareholders.

It can help prevent managers from taking actions that make their performance measure look good but that hurt the income they report to shareholders.

Which of the following is true of normal capacity utilization? A) It will be less than the real capacity available to a company. B) It can result in setting selling prices that are not competitive. C) It results in the lowest cost estimate of the four capacity options when used for product costing. D) It represents the maximum units of production intended for current capacity.

It can result in setting selling prices that are not competitive.

Which of the following statements is true of gross-margin format of the income statement? A) It distinguishes between manufacturing and nonmanufacturing costs. B) It distinguishes variable costs from fixed costs. C) It is used for variable costing. D) It calculates the contribution margin from sales.

It distinguishes between manufacturing and nonmanufacturing costs.

Which of the following is true of absorption costing? A) It enables a manager to decrease margins and operating income by producing more beginning inventory. B) It enables a manager to increase margins and operating income by producing more beginning inventory. C) It enables a manager to decrease margins and operating income by producing more ending inventory. D) It enables a manager to increase margins and operating income by producing more ending inventory.

It enables a manager to increase margins and operating income by producing more ending inventory.

Which of the following is true of master-budget capacity utilization? A) It hides the amount of unused capacity. B) It represents the maximum units of production intended for current capacity. C) It provides the best cost estimate for benchmarking purposes. D) It is an average that provides no meaningful feedback to a firm's marketing manager for a particular year.

It hides the amount of unused capacity.

Which of the following statements is true of contribution-margin format of the income statement? A) It is used for absorption costing. B) It highlights the lump sum of fixed manufacturing costs. C) It distinguishes manufacturing costs from nonmanufacturing costs. D) It calculates gross margin.

It highlights the lump sum of fixed manufacturing costs.

Which of the following is true of absorption costing? A) It expenses marketing costs as cost of goods sold. B) It treats direct manufacturing costs as a period cost. C) It includes fixed manufacturing overhead as an inventoriable cost. D) It treats indirect manufacturing costs as a period cost.

It includes fixed manufacturing overhead as an inventoriable cost.

Which of the following is true of unused capacity? A) It is a definite sign of wasted resources. B) It is intended for future use. C) It is not possible to reduce or eliminate unused capacity costs. D) It does not provide capacity for potential demand surges.

It is intended for future use.

Which of the following is an advantage of the single-rate method? A) It is less costly to implement. B) It classifies costs as fixed and variable costs. C) It gives signals regarding how variable and fixed costs behave differently. D) It helps the managers on short-run and long-run planning due to fixed cost allocation as per budgeted usage.

It is less costly to implement.

Which of the following best describes practical capacity? A) It is the level of capacity that reduces theoretical capacity by considering unavoidable operating interruptions, such as scheduled maintenance time and shutdowns for holidays. B) It is the level of capacity based on producing at full efficiency all the time. C) It is the level of capacity utilization that satisfies average customer demand over a period that includes seasonal, cyclical, and trend factors. D) It is the level of capacity utilization that managers expect for the current budget period, which is typically one year.

It is the level of capacity that reduces theoretical capacity by considering unavoidable operating interruptions, such as scheduled maintenance time and shutdowns for holidays

Which of the following is a disadvantage of single-rate method? A) It is very costly to implement. B) It may lead operating department managers to make sub-optimal decisions that are in their own best interest. C) It does not signal to department managers how variable costs and fixed costs behave differently. D) It requires managers to distinguish variable costs from fixed costs, which is often a challenging task.

It is very costly to implement.

Which of the following is a reason for companies adopting variable costing for internal reporting purposes? A) It is cost-effective to use variable costing for both internal and external reporting. B) It reduces the incentives for undesirable buildup of inventories. C) It measures the cost of all manufacturing resources, whether variable or fixed, necessary to produce inventory. D) It assists in accurate pricing decisions in case of long-run pricing.

It reduces the incentives for undesirable buildup of inventories.

Which of the following is true of theoretical capacity? A) It will be less than the real capacity available to a company. B) It provides the best perspective of actual long-run costs. C) It results in the lowest cost estimate of the four capacity options when used for product costing. D) It replicates the cost of capacity in a competitor's cost structure.

It results in the lowest cost estimate of the four capacity options when used for product costing.

Which of the following is true of variable costing? A) It expenses administrative costs as cost of goods sold. B) It treats direct manufacturing costs as a product cost. C) It includes fixed manufacturing overhead as an inventoriable cost. D) It is required for external reporting to shareholders.

It treats direct manufacturing costs as a product cost.

_______ is the level of capacity utilization that managers expect for the current budget period, which is typically one year. A) Practical capacity B) Master-budget capacity utilization C) Theoretical capacity D) Normal capacity utilization

Master-budget capacity utilization

Which of the following journal entries records the Molding Department's conversion costs for the month, assuming conversion costs are 10% higher than expected? A) Molding Department Conversion Cost Control 3,341.25 Various accounts 3,341.25 B) Materials Inventory 33,412.50 Molding Department Conversion Cost Control 33,412.50 C) Molding Department Conversion Cost Control 36,753.75 Various accounts 36,753.75 D) Materials Inventory 36,753.75 Work in Process — Molding 36,753.75

Molding Department Conversion Cost Control 36,753.75 Various accounts 36,753.75

Which of the following statements about net income (NI) is true? A) NI = operating income plus nonoperating revenue. B) NI = operating income plus operating costs. C) NI = operating income less income taxes. D) NI = operating income less cost of goods sold.

NI = operating income less income taxes.

Which of the following is true of net income? A) Net income is operating income divided by income tax rate. B) Net income is operating income plus operating revenues minus operating costs minus income taxes. C) Net income is operating income plus nonoperating revenues minus nonoperating costs minus income taxes. D) Net income is operating income minus nonoperating revenues minus nonoperating costs minus sales taxes.

Net income is operating income plus nonoperating revenues minus nonoperating costs minus income taxes.

________ is based on the level of capacity utilization that satisfies average customer demand over periods generally longer than one year. A) Practical capacity B) Theoretical capacity C) Master-budget capacity utilization D) Normal capacity utilization

Normal capacity utilization

Which of the following is true about the assumptions underlying basic CVP analysis? A) Selling price varies with demand and supply of the product. B) Only selling price and variable cost per unit are known and constant. C) Only selling price, variable cost per unit, and total fixed costs are known and constant. D) Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant.

Only selling price, variable cost per unit, and total fixed costs are known and constant.

Craylon 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. What is the effect on operating income with the increase of advertising expenses? A) Operating income will decrease by $10,000. B) Operating income will increase by $11,000. C) Operating income will decrease by $18,000. D) Operating income will increase by $17,000.

Operating income will decrease by $10,000.

Patrick Ross has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are: Option 1: $1,000 fixed fee, or Option 2: $750 fixed fee + 5% of all revenues generated at the fair, or Option 3: 20% of all revenues generated at the fair. The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each. Which option should Patrick choose to maximize income assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold? A) Option 1 B) Option 2 C) Option 3 D) All options maximize income equally.

Option 3

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet: OPTION one: Crestview Country Club a. Fixed rental cost of $1,000 b. $12 per person for food OPTION two: 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 one B) Option two C) Both options have the same breakeven point. D) The lowest breakeven point cannot be determined.

Option one

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet: OPTION one: Crestview Country Club a. Fixed rental cost of $1,000 b. $12 per person for food OPTION two: 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 provides the greatest degree of operating leverage if 600 people attend? A) Option one B) Option two C) Both options provide equal degrees of operating leverage. D) Operating leverage is indeterminable.

Option one

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet: OPTION one: Crestview Country Club a. Fixed rental cost of $1,000 b. $12 per person for food OPTION two: 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 provides the greatest operating income if 600 people attend? A) Option one B) Option two C) Operating incomes are identical. D) Both the options have 0 operating income as they are operating at breakeven point.

Option one

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet: OPTION one: Crestview Country Club a. Fixed rental cost of $1,000 b. $12 per person for food OPTION two: 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 provides the least amount of risk? A) Option one B) Option two C) Both options provide the same amount of risk. D) Option one is risk-free

Option one

Option one: Fixed costs of $10,000 and a breakeven point of 500 units. Option two: Fixed costs of $20,000 and a breakeven point of 700 units. Which option should you choose if you are expecting to produce 600 units? A) Option one as sales is higher than breakeven B) Option two as sales is lower than breakeven C) Option two as it would lead to a higher operating income D) Option one as fixed costs is more

Option one as sales is higher than breakeven

________ provides the lowest estimate of denominator-level capacity in case demand of the product is not a limiting factor. A) Practical capacity B) Theoretical capacity C) Master-budget capacity utilization D) Normal capacity utilization

Practical capacity

________ reduces theoretical capacity for unavoidable operating interruptions. A) Practical capacity B) Theoretical capacity C) Master-budget capacity utilization D) Normal capacity utilization

Practical capacity

Which of the following companies is most likely to use process costing? A) Crimpson Color, a company selling customized garments for niche customers B) Effel & Associates, a consulting firm providing various audit and related services C) Red Paste Inc., a company manufacturing and selling toothpaste on a large scale D) Grimpy Corp., a company manufacturing furniture for customers as per their requirements

Red Paste Inc., a company manufacturing and selling toothpaste on a large scale

________ occurs when revenues are related to a particular revenue object but cannot be traced to it in an economically feasible (cost-effective) way. A) Revenue estimation B) Revenue allocation C) Resource allocation D) Revenue optimization

Revenue allocation

Which of the following is true of cost-volume-profit analysis? A) The theory assumes that all costs are variable. B) The theory assumes that units manufactured equal units sold. C) The theory states that total variable costs remain the same over a relevant range. D) The theory states that total costs remain the same over the relevant range.

The theory assumes that units manufactured equal units sold.

________ is the level of capacity based on producing at full efficiency all the time. A) Practical capacity B) Theoretical capacity C) Normal capacity D) Demand capacity

Theoretical capacity

Which of the following best describes transferred-in costs in process costing? A) These costs are incurred in previous departments that are carried forward to subsequent departments. B) These costs are transferred in to the company by an external vendor. C) These costs are incurred in transferring raw materials and labor from the place of availability to the factory. D) These costs cannot be controlled by an organization as they are transferred to the organization from the market participants.

These costs are incurred in previous departments that are carried forward to subsequent departments.

Which of the following is an assumption of CVP analysis? A) Total costs can be divided into a fixed component and a component that is variable with respect to the level of output. B) When graphed, total costs curve upward. C) The unit-selling price is variable as it is subject to demand and supply. D) Total costs can be divided into inventoriable and period costs with respect to the level of output.

Total costs can be divided into a fixed component and a component that is variable with respect to the level of output.

Which of the following is true of CVP analysis? A) Costs may be separated into separate inventoriable and period components with respect to the level of output. B) Total revenues and total costs are linear in relation to output units. C) Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. D) Proportion of different products will vary according to demand and supply when multiple products are sold.

Total revenues and total costs are linear in relation to output units.

_______ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs. A) Fixed costing B) Variable costing C) Absorption costing D) Mixed costing

Variable costing

________ is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded. A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing

Variable costing

______ are subtracted from sales to calculate gross margin. A) Variable manufacturing costs B) Fixed administrative costs C) Variable administrative costs D) Fixed selling costs

Variable manufacturing costs

Which of the following entries is used to record the standard costs of direct materials assigned to units worked on and total direct materials variances? A) Work in Process (at standard costs) Direct Materials Variances Direct Materials Control B) Work in Process (at actual costs) Direct Materials Variances Direct Materials Control C) Direct Materials Variances Direct Materials Control Work in Process (at standard costs) D) Direct Materials Variances Direct Materials Control Work in Process (at actual costs)

Work in Process (at standard costs) Direct Materials Variances Direct Materials Control

Which of the following journal entries records the standard costs of direct materials assigned to units worked on and total direct materials variances assuming that the Assembly Department used 10% less materials than expected? A) Work in Process — Assembly 320,000 Assembly Department Materials Cost Control 320,000 B) Work in Process — Assembly 320,000 Direct Materials Variance 32,000 Assembly Department Materials Cost Control 288,000 C) Work in Process — Assembly 32,000 Assembly Department Materials Cost Control 32,000 D) Work in Process — Assembly 288,000 Direct Materials Variances 32,000 Assembly Department Materials Cost Control 320,000

Work in Process — Assembly 320,000 Direct Materials Variance 32,000 Assembly Department Materials Cost Control 288,000

When a Bakery transfers goods from the Mixing Department to the Baking Department, the accounting entry is ________. A) Work in Process — Mixing Department Work in Process — Baking Department B) Work in Process — Baking Department Accounts Payable C) Work in Process — Baking Department Work in Process — Mixing Department D) Work in Process — Mixing Department Accounts Payable

Work in Process — Baking Department Work in Process — Mixing Department

Which of the following entries is correct to record depreciation expense of Assembly Department? A) Work in Process—Assembly Finished Goods B) Work in Process—Assembly Accumulated Depreciation C) Finished Goods Work in Process—Assembly D) Accumulated Depreciation Work in Process—Assembly

Work in Process—Assembly Accumulated Depreciation

Which of the following entries is used to record direct materials purchased and used in production during a month in the Assembly department, before transferring the goods to Testing department? A) Work in Process—Assembly Wages Payable Control B) Accounts Payable Control Work in Process—Assembly C) Work in Process—Assembly Accounts Payable Control D) Accounts Payable Control Cash

Work in Process—Assembly Accounts Payable Control

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 500 kgs of tungsten carbide at $60 per kg. It started manufacture of 4,000 vases and completed and transferred 3,200 vases during the month. It has 800 vases in the process at the end of the month. It incurred direct labor charges of $1,000 and other manufacturing costs of $500, which included electricity costs of $200. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. The journal entry to record direct labor for July is ________. A) Work in Process—Molding $3,000 Accounts Payable Control $3,000 B) Work in Process—Molding $1,000 Overhead Control $1,000 C) Work in Process—Molding $1,000 Wages Payable Control $1,000 D) Work in Process—Molding $1,000 Work in Process—Finishing $1,000

Work in Process—Molding $1,000 Wages Payable Control $1,000

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 500 kgs of tungsten carbide at $60 per kg. It started manufacture of 4,000 vases and completed and transferred 3,200 vases during the month. It has 800 vases in the process at the end of the month. It incurred direct labor charges of $1,000 and other manufacturing costs of $500, which included electricity costs of $200. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. The journal entry to record tungsten carbide purchased and used in production during July is ________. A) Work in Process—Molding $2,400 Accounts Payable Control $2,400 B) Work in Process—Molding $3,000 Accounts Payable Control $3,000 C) Accounts Payable Control $2,400 Work in Process—Molding $2,400 D) Accounts Payable Control $3,000 Work in Process—Molding $3,000

Work in Process—Molding $3,000 Accounts Payable Control $3,000

Tours Corp offers towing services, auto routing, travel brochures, and other travel services for one annual fee. This is an example of ________. A) revenue tracing B) revenue allocation C) a bundled product D) a business conglomerate

a bundled product

Which of the following companies is most likely to use an operation-costing system? A) a company involved in manufacture of ball bearing on a large scale B) a company that has been awarded a contract to construct a bridge for the government C) a company that makes suits for which the basic design is same, but depending on specifications, each batch of suits varies somewhat from other batches D) a furniture making company which makes furnitures as per the specifications of the customers

a company that makes suits for which the basic design is same, but depending on specifications, each batch of suits varies somewhat from other batches

Transferred-in costs are treated as if they are ________. A) conversion costs added at the beginning of the process B) costs of beginning inventory added at the beginning of the process C) direct labor costs added at the beginning of the process D) a separate direct material added at the beginning of the process

a separate direct material added at the beginning of the process

In ________, fixed manufacturing costs are included as inventoriable costs. A) variable costing B) absorption costing C) throughput costing D) activity-based costing

absorption costing

Which of the following inventory costing methods shown below is most likely to cause undesirable incentives for managers to build up finished goods inventory? A) absorption costing B) variable costing C) throughput costing D) direct costing

absorption costing

Which of the following inventory costing methods shown below is most likely to cause undesirable incentives for managers to build up finished goods inventory? A) absorption costing B) variable costing C) throughput costing D) direct costing

absorption costing

Which of the following inventory costing methods shown below is required by GAAP (Generally Accepted Accounting Principles) for external financial reporting? A) absorption costing B) variable costing C) throughput costing D) direct costing

absorption costing

The gross-margin format is used for ________. A) variable costing income statement B) mixed costing income statement C) absorption costing income statement D) standard costing income statement

absorption costing income statement

When comparing the operating incomes between absorption costing and variable costing, and ending finished inventory exceeds beginning finished inventory, it may be assumed that ________. A) sales decreased during the period B) variable cost per unit is more than fixed cost per unit C) there is a favorable production-volume variance D) absorption costing operating income exceeds variable costing operating income

absorption costing operating income exceeds variable costing operating income

Which of the following departments is a support department for a boat manufacturing company? A) production B) molding C) assembling D) accounting

accounting

To discourage unnecessary use of a support department, management might ________. A) allocate user department costs based upon support department usage B) allocate support department costs based upon user department usage C) allocate a fixed amount of support department costs to each and every department D) allocate a fixed amount of user department costs to each and every department

allocate support department costs based upon user department usage

The direct allocation method ________. A) allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments B) allocates support-department costs to other support departments and to operating departments in a sequential manner that partially recognizes the mutual services provided among all support departments C) allocates each support-department's costs to operating departments only D) requires managers to rank the support departments in the order that the step-down allocation is to proceed

allocates each support-department's costs to operating departments only

The use of theoretical capacity results in an unrealistically low fixed manufacturing cost per unit because it is based on ________. A) real available capacity B) an unattainable level of capacity C) normal capacity utilization D) normal costing

an unattainable level of capacity

A revenue driver is defined as ________. A) any factor that affects costs and revenues B) any factor that affects revenues C) the only factor that can influence a change in selling price D) the only factor that can influence a change in demand

any factor that affects revenues

Fixed costs ________. A) are considered variable costs over the long run B) provide less operating leverage C) reduce the risk of loss D) are graphed as a steeply sloped line

are considered variable costs over the long run

Under absorption costing, fixed manufacturing costs ________. A) are period costs B) are inventoriable costs C) are treated as an expense D) are sunk costs

are inventoriable costs

The purpose of the equivalent-unit computation is to ________. A) convert completed units into the amount of partially completed output units that could be made with that quantity of input B) assist the business in determining the cost assigned to ending inventory and work-in-process inventory C) predict the future production capabilities of the organization D) satisfy the GAAP requirements which requires all partially completed goods to be reported as equivalent-units

assist the business in determining the cost assigned to ending inventory and work-in-process inventory

The margin of safety is the difference between ________. A) budgeted expenses and breakeven expenses B) budgeted revenues and breakeven revenues C) actual operating income and budgeted operating income D) actual sales margin and budgeted sales margin

budgeted revenues and breakeven revenues

When using the dual-rate method, the fixed cost allocation is based on ________. A) indirect usage B) budgeted usage C) incremental cost allocation D) prime cost allocation

budgeted usage

In a process-costing system average unit costs are calculated ________. A) by dividing total costs in a given accounting period by total units produced in that period B) by multiplying total costs in a given accounting period by total units produced in that period C) by dividing total costs in a given accounting period by units started in that period D) by multiplying total costs in a given accounting period by units started in that period

by dividing total costs in a given accounting period by total units produced in that period

The contribution margin income statement ________. A) reports gross margin B) is allowed for external reporting to shareholders C) categorizes costs as either direct or indirect D) can be used to predict future profits at different levels of activity

can be used to predict future profits at different levels of activity

Using master-budget capacity to set selling prices ________. A) avoids the recalculation of unit costs when expected demand levels change B) spreads fixed costs over available capacity C) can result in a downward demand spiral D) uses the perspective of long-run product pricing

can result in a downward demand spiral

Given a constant contribution margin per unit and constant fixed costs, the period-to-period change in operating income under variable costing is driven solely by ________. A) changes in the quantity of units actually sold B) changes in the quantity of units produced C) changes in ending inventory D) changes in sales price per unit

changes in the quantity of units actually sold

Switching production to products that absorb the highest amount of fixed manufacturing costs is also called ________. A) cost reduction B) cherry picking C) producing for sales D) throughput costing

cherry picking

A cost of operating a facility, department, activity area, or like cost object that is shared by two or more users is called a ________. A) combined cost B) distinct cost C) fixed cost D) common cost

common cost

The selling price per unit less the variable cost per unit is the ________. A) fixed cost per unit B) gross margin C) margin of safety D) contribution margin per unit

contribution margin per unit

As per CVP, operating income calculations use ________. A) net income and dividends B) income tax expense and net income C) contribution margins and fixed costs D) nonoperating revenues and nonoperating expenses

contribution margins and fixed costs

An example of a business which would have no beginning or ending inventory but which could use process costing to compute unit costs would be a ________. A) clothing manufacturer B) corporation whose sole business activity is processing the customer deposits of several banks C) manufacturer of custom houses D) manufacturer of large TVs

corporation whose sole business activity is processing the customer deposits of several banks

An example of an allowable cost considered by U.S government contract is ________. A) costs of economy-class airfares B) costs of lobbying activities C) costs of alcoholic beverages D) costs of vacation for executives

costs of economy-class airfares

Complete reciprocated costs ________. A) are less than the support department's own costs B) include the support department's costs plus any interdepartmental cost allocations C) are used for step-down allocations D) are also referred to as budgeted costs

include the support department's costs plus any interdepartmental cost allocations

Which of the following forms a part of decision making in CVP analysis? A) selection of inventory method for financial reporting purposes B) decision to form a capital policy C) decision to advertise D) decision to improve the efficiency of the work force

decision to advertise

The following information is for Alex Corp: Product X: Revenue $15.00 Variable Cost $2.50 Product Y: Revenue $25.00 Variable Cost $10.00 Total fixed costs $50,000 If the sales mix shifts to one unit of Product X and two units of Product Y, then the breakeven point will ________. A) increase B) stay the same C) decrease D) will be greater than the original breakeven point

decrease

Critics of absorption costing suggest evaluating management on its ability to ________. A) exceed production quotas B) increase operating income C) decrease fixed costs D) decrease variable costs

decrease fixed costs

The following information is for the Jeffries Corporation: Product A: Revenue $16.00 Variable Cost $12.00 Product B: Revenue $24.00 Variable Cost $16.00 Total fixed costs $75,000 If the sales mix shifts to four units of Product A and one unit of Product B, then the weighted-average contribution margin will ________. A) increase per unit B) stay the same C) decrease per unit D) either increase or stay the same

decrease per unit

Northern Star sells several products. Information of average revenue and costs is as follows: Selling price per unit $20.00 Variable costs per unit: Direct material $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 The company sells 12,000 units at the end of the year. If direct labor and direct material costs increase by $1 each, contribution margin ________. A) increases by $20,000 B) increases by $14,000 C) decreases by $24,000 D) decreases by $14,000

decreases by $24,000

Ways to "produce for inventory" that result in increasing operating income include ________. A) switching production to products that absorb the least amounts of fixed manufacturing costs B) delaying items that absorb the greatest amount of fixed manufacturing costs C) deferring maintenance to accelerate production D) undervaluing ending inventory by not recording certain costs that have been incurred

deferring maintenance to accelerate production

The cost-allocation method that allocates each support-department's costs to operating departments only is the ________. A) direct method B) single-rate cost allocation method C) step-down method D) reciprocal method

direct method

The planned operating income is calculated by ________. A) dividing net income by tax rate B) dividing net income by 1 − tax rate C) multiplying net income by tax rate D) multiplying net income by 1 − tax rate

dividing net income by 1 − tax rate

The direct allocation method ________. A) does not allocate support department costs to other support departments B) uses information about reciprocal services provided among support departments and can therefore lead to inaccurate estimates of the cost of operating departments C) allocates complete reciprocated costs D) offers key input for outsourcing decisions

does not allocate support department costs to other support departments

The step-down method ________. A) partially recognizes the services provided among support departments B) does not recognize the total services that support departments provide to each other C) is conceptually the most precise method D) results in allocating only the support costs used by operating departments

does not recognize the total services that support departments provide to each other

Under the stand-alone method of allocating common costs ________. A) the individual users of a cost object are ranked in the order of users least responsible for the common cost and then uses this ranking to allocate cost among those users B) disputes can arise over who is the primary user C) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs D) the individual users of a cost object are ranked in the order of users most responsible for the common cost and then uses this ranking to allocate cost among those users

each party bears a proportionate share of the total costs in relation to their individual stand-alone costs

Which of the following costs is inventoried when using variable costing? A) rent on factory building B) electricity consumed in manufacturing process C) sales commission paid on each sale D) advertising costs incurred for the product

electricity consumed in manufacturing process

In the computation of the cost per equivalent unit, the weighted-average method of process costing considers all the costs ________. A) entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period B) costs that have entered work in process from the units started or transferred in during the current accounting period C) that have entered work in process during the current accounting period from the units started or transferred in minus the costs associated with ending inventory D) that have entered work in process during the current accounting period from the units started or transferred in plus the costs associated with ending inventory

entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period

If there was no beginning work in process and no ending work in process under the weighted-average process costing method, the number of equivalent units for direct materials, if direct materials were added at the start of the process, would be ________. A) more than the units started or transferred in during the period B) equal to the units completed during the period C) less than the units completed during the period D) equal to total of units started and units completed during the period

equal to the units completed during the period

Product-sustaining costs in activity-based costing are similar to ________. A) mixed costs B) variable costs C) semi-variable costs D) fixed costs

fixed costs

The breakeven point revenues is calculated by dividing ________. A) fixed costs by total revenues B) fixed costs by contribution margin percentage C) total revenues by fixed costs D) contribution margin percentage by fixed costs

fixed costs by contribution margin percentage

Breakeven point in units is ________. A) total costs divided by profit margin per unit B) contribution margin per unit divided by total cost per unit C) fixed costs divided by contribution margin per unit D) the sum of fixed and variable costs divided by contribution margin per unit

fixed costs divided by contribution margin per unit

The difference between operating incomes under variable costing and absorption costing centers on how to account for ________. A) direct materials costs B) fixed manufacturing costs C) variable manufacturing costs D) selling and administrative costs

fixed manufacturing costs

The only difference between variable and absorption costing is the expensing of ________. A) direct manufacturing costs B) variable marketing costs C) fixed manufacturing costs D) variable administrative costs

fixed manufacturing costs

Advocates of throughput costing maintain that ________. A) both variable and fixed are necessary to produce goods; therefore, both types of costs should be inventoried B) all manufacturing costs plus some design costs should be inventoried C) fixed manufacturing costs are related to the capacity to produce rather than to the actual production of specific units D) except direct labor no other costs are truly variable in output

fixed manufacturing costs are related to the capacity to produce rather than to the actual production of specific units

There is no output-level variance for variable costing, when ________. A) the inventory level decreases during the period B) the inventory level increases during the period C) fixed manufacturing overhead is allocated to work in process D) fixed manufacturing overhead is not allocated to work in process

fixed manufacturing overhead is not allocated to work in process

In the manufacturing sector, ________. A) only variable costs are subtracted to determine gross margin B) fixed overhead costs are subtracted to determine gross margin C) fixed overhead costs are subtracted to determine contribution margin D) all operating costs are subtracted to determine contribution margin

fixed overhead costs are subtracted to determine gross margin

The biggest advantage of using practical capacity to allocate costs is that it ________. A) focuses the user's division with the costs of overused capacity B) never causes over or under-allocated overhead C) burdens the user divisions with the costs of unused capacity D) focuses management's attention on unused capacity

focuses management's attention on unused capacity

Managers find operation costing useful in cost management because it ________. A) often results in profit maximization B) results in cost minimization C) focuses on control of physical processes of a given production system D) uses job costing to account for the conversion costs and process costing for the material and customizable components

focuses on control of physical processes of a given production system

Multiple cost drivers ________. A) have only one revenue driver B) can utilize the simple CVP formula C) have no unique breakeven point D) are the result of multiple products

have no unique breakeven point

The reciprocal allocation method ________. A) is the most widely used because of its simplicity B) requires the ranking of support departments in the order that the allocation is to proceed C) highlights the complete reciprocated costs of support departments and how these costs differ from budgeted or actual costs of the departments D) allocates support-department costs to other support departments and to operating departments in a sequential manner that partially recognizes the mutual services provided among all support departments

highlights the complete reciprocated costs of support departments and how these costs differ from budgeted or actual costs of the departments

ne of the first steps to take when using CVP analysis to help make decisions is ________. A) calculating the break-even point B) identifying the variable and fixed costs C) calculation of the degree of operating leverage for the company D) estimating the volume of sales to make a good profit

identifying the variable and fixed costs

To discourage producing for inventory, management can ________. A) discourage using nonfinancial measures such as units in ending inventory compared to units in sales B) evaluate performance over a quarterly period rather than a single year C) incorporate a carrying charge for inventory in the internal accounting system D) implement absorption costing across all departments

incorporate a carrying charge for inventory in the internal accounting system

The following information is for the Jeffries Corporation: Product A: Revenue $16.00 Variable Cost $12.00 Product B: Revenue $24.00 Variable Cost $16.00 Total fixed costs $75,000 If the sales mix shifts to four units of Product A and one unit of Product B, then the breakeven point will ________. A) increase B) stay the same C) decrease D) either decrease or remain same

increase

Businesses offer bundled products to ________. A) increase customer exposure B) avoid the problems of cost allocation C) avoid the problems of revenue allocation D) decrease taxes

increase customer exposure

The following information is for Alex Corp: Product X: Revenue $15.00 Variable Cost $2.50 Product Y: Revenue $25.00 Variable Cost $10.00 Total fixed costs $50,000 If the sales mix shifts to one unit of Product X and two units of Product Y, then the weighted-average contribution margin will ________. A) increase per unit B) stay the same C) decrease per unit D) decrease by $0.50 per unit

increase per unit

The effect of spreading fixed manufacturing costs over a shrinking master-budget capacity utilization amount results in ________. A) greater utilization of capacity B) increased unit costs C) more competitive selling prices D) greater demand for the product

increased unit costs

Under absorption costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________. A) increasing the manager's bonus B) decreasing the manager's bonus C) not affecting the manager's bonus D) being unable to determine the manager's bonus using only the above information

increasing the manager's bonus

Which of the following will increase a company's breakeven point? A) increasing variable cost per unit B) increasing contribution margin per unit C) reducing its total fixed costs D) increasing the selling price per unit

increasing variable cost per unit

The method that ranks individual products in a bundle for revenue allocation is the ________. A) stand-alone revenue-allocation method B) incremental revenue-allocation method C) unit-cost weighting method D) physical-unit weighting method

incremental revenue-allocation method

Under the weighted-average method, the stage of completion of beginning work in process ________. A) is relevant in determining the equivalent units B) must be combined with the work done during the current period to determine the equivalent units C) is irrelevant in determining the equivalent-unit calculation D) can almost always be determined with a high degree of precision

is irrelevant in determining the equivalent-unit calculation

The advantage of using practical capacity to allocate costs ________. A) is that it allows a downward supply spiral to develop B) is that it focuses management's attention on managing unused capacity C) is that budgets are much easier to develop D) is that it results in departments bearing a lower percentage of fixed costs

is that it focuses management's attention on managing unused capacity

In a company with low operating leverage, ________. A) fixed costs are more than the contribution margin B) contribution margin and operating income are inversely related C) there is a higher possibility of net loss than a higher-leveraged firm D) less risk is assumed than in a highly leveraged firm

less risk is assumed than in a highly leveraged firm

Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 2,200 units. Units sold total 1,900 units. Variable cost per unit is $4. Beginning inventory is zero. The fixed manufacturing cost rate is based on the budgeted denominator level. The operating income using variable costing will be ________ as compared to the operating income under absorption costing. A) lower by $2,400 B) lower by $4,800 C) higher by $2,400 D) higher by $4,800

lower by $2,400

The higher the denominator level, the ________. A) higher the budgeted fixed manufacturing cost rate B) lower the amount of fixed manufacturing costs allocated to each unit produced C) higher the favorable production-volume variance D) more likely actual output will exceed the denominator level

lower the amount of fixed manufacturing costs allocated to each unit produced

Which of the following is an operating department? A) machining B) accounting C) materials management D) production control

machining

To apply CVP analysis in not-for profit organization ________. A) managers need to focus on the customer base rather than the cost drivers B) managers need to focus on measuring their output, which is the same as tangible units sold by manufacturing and merchandising companies C) managers need to focus on measuring their input, which is different from the tangible units consumed by manufacturing and merchandising companies D) managers need to focus on measuring their output, which is different from the tangible units sold by manufacturing and merchandising companies

managers need to focus on measuring their output, which is different from the tangible units sold by manufacturing and merchandising companies

In multiproduct situations, when sales mix shifts toward the product with the lowest contribution margin then ________. A) total revenues will increase B) interest cost will decrease C) total contribution margin will increase D) operating income will decrease

operating income will decrease

The marketing manager's performance evaluation is most fair when based on a denominator level using ________. A) practical capacity B) theoretical capacity C) master-budget capacity utilization D) normal capacity utilization

master-budget capacity utilization

The single-rate cost-allocation method may base the denominator choice on ________. A) master-budget capacity utilization B) fixed cost utilization C) variable cost utilization D) direct-cost utilization

master-budget capacity utilization

If the unit level of inventory increases during an accounting period, then ________. A) less operating income will be reported under absorption costing than variable costing B) more operating income will be reported under absorption costing than variable costing C) operating income will be the same under absorption costing and variable costing D) the exact effect on operating income cannot be determined Answer: B

more operating income will be reported under absorption costing than variable costing

The Marietta Company has fixed costs of $60,000 and variable costs are 75% of the selling price. To realize profits of $10,000 from sales of 50,000 units, the selling price per unit ________. A) must be $1.20 B) must be $6.00 C) must be $5.60 D) must be $4.23

must be $5.60

In certain high-cost defense contracts involving new weapons and equipment, contracts are rarely subject to competitive bidding because ________. A) the government taxes the defense companies at a higher level than that of other public sector companies B) there is an implicit agreement among defense contractors to "share contracts" C) all defense contractors have essentially the same cost structure D) no contractor is willing to assume all the risk of receiving a fixed price for the contract

no contractor is willing to assume all the risk of receiving a fixed price for the contract

It is most difficult to estimate ________ because of the need to predict demand for the next few years. A) practical capacity B) theoretical capacity C) master-budget capacity utilization D) normal capacity utilization

normal capacity utilization

Which of the following measures capacity levels in terms of demand for the output of the plant? A) practical capacity and theoretical capacity B) theoretical capacity and normal capacity utilization C) normal capacity utilization and master-budget capacity utilization D) master-budget capacity utilization and practical capacity

normal capacity utilization and master-budget capacity utilization

Under variable costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________. A) increasing the manager's bonus B) decreasing the manager's bonus C) not affecting the manager's bonus D) being unable to determine the manager's bonus using only the above information

not affecting the manager's bonus

Which of the following is an output measure for a hospital? A) number of doctors needed to cater to patients B) number of patients admitted every day in a hospital C) number of days spent by a patient in a hospital D) charges applicable on the number of days spent by a patient in a hospital

number of days spent by a patient in a hospital

To apply CVP analysis in the hotel industry, which of the following is the most important measure of output? A) number of room-nights occupied B) number of visitors C) number of dishes on the menu D) number of employees

number of room-nights occupied

Advocates of throughput costing argue that ________. A) fixed manufacturing costs are also to be included as inventoriable costs B) direct manufacturing labor is relatively fixed C) direct materials costs are a cost of the period D) only direct material costs are included as inventoriable costs

only direct material costs are included as inventoriable costs

Customers expect to pay a price that includes ________. A) the cost of unused capacity B) only the cost of actual capacity used C) variable costs but not capacity costs D) both actual and unused capacity costs

only the cost of actual capacity used

In the merchandising sector ________. A) only variable costs are subtracted to determine gross margin B) fixed overhead costs are subtracted to determine gross margin C) fixed overhead costs are subtracted to determine contribution margin D) all operating costs are subtracted to determine contribution margin

only variable costs are subtracted to determine gross margin

At breakeven point, ________. A) operating income is equal to zero B) contribution margin minus fixed costs is equal to profits earned C) revenues equal fixed costs minus variable costs D) breakeven revenues equal fixed costs divided by the variable cost per unit

operating income is equal to zero

All else being equal, an increase in advertising expenditures will ________. A) reduce operating income B) reduce contribution margin C) increase variable costs D) increase selling price

reduce operating income

Tony Manufacturing produces a single product that sells for $80. Variable costs per unit equal $30. The company expects total fixed costs to be $78,000 for the next month at the projected sales level of 2,500 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 10% reduction in the selling price will result in a 10% increase in sales. If this proposed reduction in selling price is implemented ________. A) operating income will decrease by $9,500 B) operating income will increase by $10,000 C) operating income will decrease by $6,000 D) operating income will increase by $11,300

operating income will decrease by $9,500

Assume only the specified parameters change in a cost-volume-profit analysis. If the contribution margin increases by $6 per unit, then ________. A) fixed costs increases by $6 per unit B) operating profits decreases by $6 per unit C) fixed costs decreases by $6 per unit D) operating profits increases by $6 per unit

operating profits increases by $6 per unit

Cost-based prices ________. A) are one way of setting prices in a competitive market B) provide an inherit incentive for the producer to control costs C) pass the majority of risk to the buyer D) are required in all government contracts

pass the majority of risk to the buyer

Variable costing regards fixed manufacturing overhead as a(n) ________. A) administrative cost B) inventoriable cost C) period cost D) product cost

period cost

Which of the following is included in an explicit written contract for cost allocation? A) resource allocation for the budgeted costs B) the rate at which the company should be taxed upon C) permissible cost-allocation bases D) profit that the company must earn

permissible cost-allocation bases

The Internal Revenue Service requires the use of ________ for calculating fixed manufacturing costs per unit. A) practical capacity B) theoretical capacity C) master-budget capacity utilization D) normal capacity utilization

practical capacity

Using ________ as the denominator level also gives the manager a more accurate idea of the resources needed and used to produce a unit by excluding the cost of unused capacity. A) practical capacity B) normal capacity utilization C) theoretical capacity D) master-budget capacity utilization

practical capacity

Which of the following capacity levels do proponents of activity-based costing recommend to be used as the denominator level to calculate activity cost rates? A) practical capacity B) normal capacity utilization C) theoretical capacity D) master-budget capacity utilization

practical capacity

Which of the following capacity levels should a company choose, from a long-run product costing perspective, to allocate budgeted fixed manufacturing costs to products? A) master-budget capacity utilization to highlight unused capacity B) normal capacity utilization for benchmarking purposes C) practical capacity for pricing decisions D) theoretical capacity for performance evaluation

practical capacity for pricing decisions

The costs of unused capacity are highlighted when ________. A) actual usage based allocations are used B) budgeted usage allocations are used C) practical capacity-based allocations are used D) the dual-rate cost-allocation method allocates fixed costs based on actual usage

practical capacity-based allocations are used

Costing systems that are used for the costing of like or similar units of products in mass production are called ________. A) inventory-costing systems B) job-costing systems C) process-costing systems D) weighted-average costing systems

process-costing systems

n favorable production-volume variance occurs when ________. A) the denominator level exceeds production B) production exceeds the denominator level C) production exceeds unit sales D) unit sales exceed production

production exceeds the denominator level

Which of the following is an example of a revenue object? A) suppliers B) products C) labor D) duration to complete a given task

products

The method that allocates costs by explicitly including all the services rendered among all support departments is the ________. A) direct method B) step-down method C) reciprocal method D) sequential method

reciprocal method

All else being equal, a reduction in selling price will ________. A) increase contribution margin B) reduce fixed costs C) increase variable costs D) reduce operating income

reduce operating income

Practical capacity is the denominator-level concept that ________. A) reduces theoretical capacity for unavoidable operating interruptions B) is the maximum level of operations at maximum efficiency C) is based on the level of capacity utilization that satisfies average customer demand over periods generally longer than one year D) is based on anticipated levels of capacity utilization for the coming budget period

reduces theoretical capacity for unavoidable operating interruptions

Budgeted fixed manufacturing costs of a product using practical capacity ________. A) represents the cost per unit of supplying capacity B) can result in setting selling prices that are not competitive C) includes the cost of unused capacity D) should be used to evaluate a marketing manager's performance in the current year

represents the cost per unit of supplying capacity

The breakeven point is the activity level where ________. A) revenues equal fixed costs B) revenues equal variable costs C) contribution margin equals total costs D) revenues equal the sum of variable and fixed costs

revenues equal the sum of variable and fixed costs

Throughput contribution equals ________. A) variable costs minus fixed costs B) revenues minus all direct labor costs C) revenues minus all direct material cost of goods sold D) revenues minus manufacturing overhead

revenues minus all direct material cost of goods sold

Contribution margin equals ________. A) revenues minus period costs B) revenues minus product costs C) revenues minus variable costs D) revenues minus fixed costs

revenues minus variable costs

Which of the following costs will be treated as period costs under absorption costing? A) raw materials used in the production B) sales commission paid on sale of product C) depreciation on factory equipment D) rent for factory building

sales commission paid on sale of product

Gross margin is ________. A) sales revenue less variable costs B) sales revenue less cost of goods sold C) contribution margin less fixed costs D) contribution margin less variable costs

sales revenue less cost of goods sold

if the breakeven point is 1,000 units and each unit sells for $50, then ________. A) selling 1,040 units will result in a loss B) selling $60,000 will result in a loss C) selling $50,000 will result in zero profit D) selling $45,000 will result in profit

selling $50,000 will result in zero profit

To give more weight to the product that most likely drives the sales of the bundled product, the revenue allocation should be weighted using ________. A) selling prices B) unit costs C) physical units D) stand-alone product revenues

selling prices

The best method to determining weights for the stand-alone revenue-allocation method is ________. A) selling prices revenue-allocation method because the weights explicitly consider the prices customers are willing to pay for the individual products B) unit cost revenue-allocation method because it can be used on all occasions C) the direct revenue-allocation method since selling prices or unit costs are difficult to calculate for individual products D) physical-units revenue-allocation method because the physical units explicitly value the prices customers are willing to pay for the individual products

selling prices revenue-allocation method because the weights explicitly consider the prices customers are willing to pay for the individual products

Globus Autos 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) sensitivity analysis B) incremental budgeting C) variance analysis D) multiple cost drivers

sensitivity analysis

The method that allocates costs in each cost pool using the same rate per unit is known as the ________. A) incremental cost-allocation method B) reciprocal cost-allocation method C) single-rate cost allocation method D) dual-rate cost-allocation method

single-rate cost allocation method

Assume a manufacturing company that has started production in the current year. Which of the following would result in the highest profit being reported if the company has 1,000 units of ending inventory? A) throughput costing B) variable costing C) absorption costing D) standard costing

standard costing

Under which allocation method are one-way reciprocal support services recognized? A) direct method B) artificial cost method C) reciprocal method D) step-down method

step-down method

Which of the following is one of the methods of allocating support department costs to operating departments? A) dual-cost allocation method B) incremental method C) step-down method D) single-rate cost allocation method

step-down method

One possible means of determining the difference between operating incomes for absorption costing and variable costing is by ________. A) subtracting sales of the previous period from sales of this period B) subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory C) multiplying the number of units produced by the budgeted fixed manufacturing cost rate D) adding fixed manufacturing costs to the production-volume variance

subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory

Throughput costing is also called ________. A) absorption costing B) super-variable costing C) mixed costing D) direct costing

super-variable costing

Which of the following inventory costing methods results in the least amount of costs being inventoried? A) absorption costing B) variable costing C) throughput costing D) direct costing

throughput costing

Special cost-allocation problems arise when ________. A) support department costs exceed budgetary estimates B) practical capacity is used as the allocation base C) support departments provide reciprocal services to each other and operating departments D) the same cost-allocation base is used among various support departments

support departments provide reciprocal services to each other and operating departments

In a process-costing system, the calculation of equivalent units is used for calculating ________. A) the dollar amount of sales affected during the period B) the dollar amount of the cost of goods sold for the accounting period C) the dollar price earned for a particular job D) the dollar amount of revenue for the period including the revenue estimated to be received from the sale of equivalent units

the dollar amount of the cost of goods sold for the accounting period

The weighted-average process-costing method calculates the equivalent units by ________. A) considering only the work done during the current period B) the units started during the current period minus the units in ending inventory C) the units started during the current period plus the units in ending inventory D) the equivalent units completed during the current period plus the equivalent units in ending inventory

the equivalent units completed during the current period plus the equivalent units in ending inventory

A disadvantage of the weighted-average method compared to the FIFO process-costing method is that ________. A) FIFO is computationally simpler B) FIFO provides better management information for planning and control purposes C) when unit cost per input prices fluctuate markedly from month to month, its per unit cost is less representative than FIFO D) the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO

the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO

When budgeted cost-allocations rates are used ________. A) user departments are not informed about the charges until the end of the period B) the manager of the supplier division bears the risk of unfavorable cost variances C) user divisions pay for costs that exceed budgeted amounts D) user divisions pay for inefficiencies of the supplier department

the manager of the supplier division bears the risk of unfavorable cost variances

Under the incremental method of allocating common costs ________. A) the parties are interested in being viewed as primary users B) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs C) the first-incremental user bears a higher proportion of the cost in comparison with the primary user D) the primary user bears the maximum of the total cost

the primary user bears the maximum of the total cost

Which of the following approaches spreads underallocated or overallocated overhead among ending balances in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold? A) the adjusted allocation-rate approach B) the proration approach C) the write-off variances to cost of goods sold approach D) the reinstatement approach

the proration approach

Contract disputes regarding cost allocation can be reduced by defining ________. A) the material items allowed for production B) the terms used, such as what constitutes direct labor C) permissible tax deductions D) minimum profit level the company should earn

the terms used, such as what constitutes direct labor

The breakeven point decreases if ________. A) the variable cost per unit increases B) the total fixed costs decrease C) the contribution margin per unit decreases D) the selling price per unit decreases

the total fixed costs decrease

An assumption of the FIFO process-costing method is that ________. A) the units in beginning inventory are not necessarily assumed to be completed by the end of the period B) the units in beginning inventory are assumed to be completed first C) ending inventory will always be completed in the next accounting period D) no calculation of conversion costs is possible

the units in beginning inventory are not necessarily assumed to be completed by the end of the period

Process costing should be used to assign costs to products when ________. A) the units produced are similar B) cost reduction is the top most priority C) the units produced are dissimilar D) cost reduction is not the primary objective

the units produced are similar

Operating income reported on the end-of-period financial statements is changed when ________ is used to handle the production-volume variance at the end of the accounting period. A) the adjusted allocation-rate approach B) the proration approach C) the write-off variances to cost of goods sold approach D) the reinstatement approach

the write-off variances to cost of goods sold approach

The budgeted fixed manufacturing cost rate is the lowest for ________. A) practical capacity B) theoretical capacity C) master-budget capacity utilization D) normal capacity utilization

theoretical capacity

If unit outputs exceed the breakeven point ________. A) there will be an increase in fixed costs B) total sales revenue will exceed fixed costs C) total sales revenue will exceed variable costs D) there will be a profit

there will be a profit

If 1,000 units are produced and only 700 units are sold, ________ results in the greatest amount of expense reported on the income statement. A) throughput costing B) variable costing C) absorption costing D) period costing

throughput costing

If 800 units are produced and 1,200 units are sold, the costing method which will result in the greatest operating income is ________. A) throughput costing B) variable costing C) absorption costing D) period costing

throughput costing

Many companies have switched from absorption costing to variable costing for internal reporting ________. A) to comply with external reporting requirements as required by GAAP B) to increase bonuses for managers C) to reduce the undesirable incentive to build up inventories D) so the denominator level is more accurate

to reduce the undesirable incentive to build up inventories

Managers use cost-volume-profit (CVP) analysis to ________. A) forecast the cost of capital for a given period of time B) to study the behavior of and relationship among the elements such as total revenues, total costs, and income C) estimate the risks associated with a given job D) analyse a firm's profitability and help to decide wealth distribution among its stakeholders

to study the behavior of and relationship among the elements such as total revenues, total costs, and income

If breakeven point is 1,000 units, each unit sells for $30, and fixed costs are $10,000, then on a graph the ________. A) total revenue line and the total cost line will intersect at $30,000 of revenue B) total cost line will be zero at zero units sold C) revenue line will start at $10,000 D) total revenue line and the total cost line will intersect at $40,000 of revenue

total revenue line and the total cost line will intersect at $30,000 of revenue

2) When actual cost-allocations rates are used ________. A) user divisions pay for costs that exceed budgeted amounts B) managers of the supplier division are motivated to improve efficiency C) user divisions are unaware of the allocated amounts until the end of the budget period D) managers know with certainty the rates to be used in that budget period

user divisions are unaware of the allocated amounts until the end of the budget period

The stand-alone revenue-allocation method ________. A) uses product-specific information on the products in the bundle as weights for allocating the bundled revenues to the individual products B) ranks individual products in a bundle according to criteria determined by management C) ranks individual products in a bundle according to costs allocated to the products D) survey customers about the importance of each of the individual products in their purchase decision

uses product-specific information on the products in the bundle as weights for allocating the bundled revenues to the individual products

Approaches used to rank products for revenue allocation can include ________. A) surveying suppliers on the importance of each product B) using recent data on stand-alone sales performance C) having sales agents use their knowledge and intuition D) surveying middlemen on the importance of each product

using recent data on stand-alone sales performance

The contribution income statement highlights ________. A) gross margin B) the segregation of costs into period costs and inventoriable costs C) different product lines D) variable and fixed costs

variable and fixed costs

The contribution-margin format is used for ________. A) variable costing income statement B) mixed costing income statement C) absorption costing income statement D) job order costing income statement

variable costing income statement

In general, if inventory increases during an accounting period, ________. A) variable costing will report less operating income than absorption costing B) absorption costing will report less operating income than variable costing C) variable costing and absorption costing will report the same operating income D) both variable costing and absorption costing will show losses

variable costing will report less operating income than absorption costing

Assume only the specified parameters change in a CVP analysis. The contribution margin percentage increases when ________. A) total fixed costs increase B) total fixed costs decrease C) variable costs per unit increase D) variable costs per unit decrease

variable costs per unit decrease

Which of the following costs is inventoried when using absorption costing? A) variable selling costs B) fixed administrative costs C) variable manufacturing costs D) fixed selling costs

variable manufacturing costs

The dual-rate cost-allocation method classifies costs in each cost pool into a ________. A) budgeted-cost pool and an actual-cost pool B) variable-cost pool and a fixed-cost pool C) direct-cost pool and an indirect-cost pool D) direct-cost pool and a reciprocal-cost pool

variable-cost pool and a fixed-cost pool

Under the dual-rate cost-allocation method, when fixed costs are allocated based on actual usage then ________. A) user-division managers are motivated to make accurate long-run usage forecasts B) user-division managers can better plan for the short-run and for the long-run C) the costs of unused capacity are highlighted D) variations in one division's usage affect another division's allocation

variations in one division's usage affect another division's allocation

Managers of supplier departments ________. A) view the budgeted rates positively if unfavorable cost variances occur due to price decreases outside of their control B) view the budgeted rates negatively if favorable cost variances occur due to price decreases outside of their control C) view the budgeted rates negatively if unfavorable cost variances occur due to price increases outside of their control D) view the budgeted rates negatively if unfavorable cost variances occur due to price decreases outside of their control

view the budgeted rates negatively if unfavorable cost variances occur due to price increases outside of their control

In a process-costing system when goods move from department to department, the accounting for such transfers is relatively simple under ________. A) standard costing B) FIFO costing C) weighted-average costing D) operations costing

weighted-average costing

When a greater proportion of costs are fixed costs, then ________. A) a small increase in sales results in a small decrease in operating income B) when demand is low the risk of loss is high C) a decrease in sales reduces the total fixed cost per unit D) a decrease in sales reduces the cost per unit

when demand is low the risk of loss is high

On occasion, the FIFO and the weighted-average methods of process costing will result in the same dollar amount of costs being transferred to the next department. Which of the following scenarios would have that result? A) when the beginning and ending inventories are equal in terms of unit numbers B) when the beginning and ending inventories are equal in terms of the percentage of completion for both direct materials, and conversion costs C) when there is no ending inventory D) when there is no beginning inventory

when there is no beginning inventory

In CVP analysis, focusing on target net income rather than operating income ________. A) will increase the breakeven point B) will decrease the breakeven point C) will not change the breakeven point D) will help managers construct a better capital policy

will not change the breakeven point

A distinct feature of the FIFO process-costing method is that the ________. A) work done on beginning inventory before the current period is blended with the work done during the current period in the calculation of equivalent units B) work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units C) work done on ending inventory is kept separate from the work done during the current period in the calculation of equivalent units and is usually not included in the calculation D) FIFO process-costing method is only minimally different from the weighted-average process-costing method

work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units