EXAM 1 - Cost Accounting

Brookstone Company produces 9 volt batteries and AAA batteries. Brookstone Company uses a plantwide rate to apply overhead based on direct labor hours. The following data are given: ​ Actual overhead $325,000 Estimated overhead $350,000 Estimated activity: ​ 9 volt battery 100,000 direct labor hours AAA battery 400,000 direct labor hours Actual activity: ​ 9 volt battery 125,000 direct labor hours AAA battery 400,000 direct labor hours Units produced: ​ 9 volt battery 500,000 AAA battery 250,000 ​ What is the predetermined overhead rate?

$0.70

Assume the following information for the Blue Knights Corporation for the year ended December 31, 2018: ​ Sales $2,250 Cost of goods manufactured for the year 1,350 Beginning finished goods inventory 450 Ending finished goods inventory 495 Selling and administrative expenses 300 ​ What is the cost of goods sold for the year ended December 31, 2018?

$1,305 SUPPORTING CALCULATIONS: $1,350 + 450 − $495 = $1,305

Selling and administrative expenses $300,000 Direct materials used 530,000 Direct labor (100,000 hours) 600,000 Factory overhead application rate $5 per DLH ​ Inventories Beginning Ending Work in process $150,000 $160,000 Finished goods 80,000 50,000 ​ The cost of goods sold is

$1,650,000. SUPPORTING CALCULATIONS: $530,000 + $600,000 + $500,000($5 × 100,000) + $150,000 − $160,000 + $80,000 − $50,000 = $1,650,000

The following information is available for electricity costs for the last six months of the year: ​ Month Production Volume Electricity Costs February 1,000 $1,700 March 2,200 4,000 April 2,000 3,200 May 1,630 3,100 June 1,240 2,600 July 1,340 3,020 ​ Using the high-low method, what is the estimated variable cost per unit of production? (Round answer to two decimal places.)

$1.92

Samson Company recently installed an activity-based relational database. Using the information contained in the activity relational table, the following pool rates were computed:$400 per purchase order$24 per machine hour, Process 1$30 per machine hour, Process 2$80 per engineering hour Two products are produced by Samson Company: L and M. The plant has two manufacturing processes, Process 1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes through Process 1, while Product M goes through Process 2. The product relational table for Samson is as follows: ​ Product L ​ Activity Driver Number Name Activity Usage 1 Units 200,000 2 Purchase orders 250 3 Machine hours 80,000 4 Engineering hours 1,250 ​ ​ ​ ​ Product M ​ Activity Driver Number Name Activity Usage 1 Units 25,000 2 Purchase orders 125 3 Machine hours 10,000 4 Engineering hours 1,500 ​ How much purchasing overhead cost will be assigned to Product L using the number of purchase orders?

$100,000

Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers as follows: Activity Expected Cost Activity Driver Activity Capacity Engineering $1,000,000 Engineering hours 5,000 hours Setups 900,000 Setups 200 setups Machining 2,000,000 Machine hours 25,000 machine hours Inspection 800,000 Inspection hours 2,500 inspection hours ​ Quasi-Tech produces two models: Model C and Model D. The following table shows how the two products consume activity: ​ Model C Model D Units completed 300,000 200,000 Engineering hours 1,000 4,000 Setups 80 120 Machine hours 20,000 5,000 Inspection hours 1,500 1,000 ​ Using the activity ratios for engineering and machining, what is the overhead rate for machining?

$112.80

Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: Product Number of Setups Machine Hours Packing O rders D 10 500 75 F 10 2,000 175 ​ ​ ​ ​ Cost per pool $9,000 $60,000 $15,000 ​ If the number of machine hours is used to assign machine hour cost, determine the amount of machine hour cost to be assigned to Product D.

$12,000

Information from the records of the Conundrum Company for September 2018 was as follows: ​ Sales $307,500 Selling and administrative expenses 52,500 Direct materials used 66,000 Direct labor 75,000 Variable factory overhead 50,000 Factory overhead 51,250 ​ ​ Inventories ​ Sept. 1, 2018 Sept 30, 2018 Direct materials $ 8,000 $10,500 Work in process 18,750 21,000 Finished goods 17,250 14,250 ​ Conundrum Corporation produced 20,000 units. ​ What is the total product cost per unit?

$12.1125 $66,000 + $75,000 + $50,000 + $51,250 = $242,250/20,000 = $12.1125

Fast & Furious Company produces two products: toy planes and toy race cars. It uses departmental overhead rates for the two production departments: Molding and Finishing. Molding uses machine hours to assign overhead, and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Fast & Furious has prepared the following data: ​ ​ Molding Finishing Total Estimated overhead $250,000 $100,000 $350,000 Actual overhead $240,000 $120,000 $360,000 ​ ​ ​ ​ Expected direct labor hours: ​ ​ ​ Planes 5,000 5,000 10,000 Race cars 5,000 35,000 40,000 Expected machine hours: ​ ​ ​ Planes 17,000 3,000 20,000 Race cars 3,000 7,000 10,000 Actual direct labor hours: ​ ​ ​ Planes 4,500 5,500 10,000 Race cars 5,500 34,500 40,000 Actual machine hours: ​ ​ ​ Planes 16,500 3,500 20,000 Race cars 3,200 6,800 10,000 ​ How much overhead was over- or underapplied?

$13,750

Fixed cost per unit is $7 when 25,000 units are produced and $5 when 35,000 units are produced. What is the total fixed cost when nothing is produced?

$175,000

Inventory balances for the Jameson Company in October 2018 are as follows: ​ October 1, 2018 October 31, 2018 Raw materials $ 27,000 $21,000 Work in process 48,000 37,200 Finished goods 108,000 90,000 ​ During October, purchases of direct materials were $36,000. Direct labor and factory overhead costs were $60,000 and $84,000, respectively. ​ What is the cost of goods manufactured?

$196,800 $42,000 + $60,000 + $84,000 + $48,000 − $37,200 = $196,800

The Wellness Clinic is considering a time-driven activity-based costing system. Given the following data: Resources ​ ​ Activities Time per Activity Supervision $ 60,000 ​ Treating patients 1.40 hrs. Supplies and uniforms 80,000 ​ Providing hygienic care 1.00 hrs. Salaries 350,000 ​ Responding to requests 0.60 hrs. Computer 10,000 ​ Monitoring patients 1.00 hrs. Monitor 25,000 ​ ​ ​ Total $525,000 ​ ​ ​ Total nursing hours(practical capacity) 15,000 ​ ​ ​ ​ What is the activity rate for responding to requests?

$21

A company usually processes 20,000 orders at a total cost of $300,000. During the year, only 16,000 orders were processed. What is the cost of resource usage ?

$240,000

Bienvenue, Inc., has identified the following overhead costs and activity drivers for next year: Expected Expected Overhead Item Cost Activity Driver Quantity Setup costs $100,000 Number of setups 500 Ordering costs 40,000 Number of orders 3,200 Maintenance 200,000 Machine hours 4,000 Power 20,000 Kilowatt-hours 80,000 ​ The following are two of the jobs completed during the year and the totals for each job ​ Job CC Job DD Direct materials $375 $1,000 Direct labor $350 $1,200 Units completed 100 160 Direct labor hours 50 80 Number of setups 1 4 Number of orders 4 5 Machine hours 20 25 Kilowatt-hours 30 50 ​ The company's normal activity is 4,000 direct labor hours.If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job DD would be

$27.03.

Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low observations were as follows: Maintenance Cost Sales $46,000 $600,000 52,000 800,000 ​ What is the fixed portion of the maintenance cost?

$28,000

Information from the records of Chrome Ponies Enterprises for June 2018 is as follows: ​ Sales $41,000 Direct labor 10,000 Selling and administrative expenses 7,000 Direct materials purchases 6,000 Factory overhead 13,500 ​ ​ Inventories ​ June 1, 2018 June 30, 2018 Direct materials $1,200 $1,400 Work in process 2,500 2,800 Finished goods 2,300 1,900 ​ Chrome Ponies Enterprises' cost of goods manufactured in June is

$29,000. SUPPORTING CALCULATIONS: ($1,200 + $6,000 − $1,400) + $10,000 + $13,500 + $2,500 − $2,800 = $29,000

Stanford Company incurred the following maintenance cost during a five-month period: ​ Month Production Volume Maintenance Costs June 75 $250 July 115 310 August 190 400 September 60 240 October 135 355 ​ Using a computer or calculator, compute the estimate of maintenance costs at 100 units of production using the method of least squares. This value would be

$291.

Carriage Manufacturing uses an activity-based costing system. The company produces Model 21 and Model 22. Information relating to the two products is as follows: ​ ​ Model 21 Model 22 Units produced 24,000 30,000 Machine hours 7,500 8,500 Direct labor hours 8,000 12,000 Materials handling (number of moves) 4,000 6,000 Setups 5,000 7,000 ​ The following costs are reported: ​ Materials handling $ 40,000 Labor-related overhead 120,000 Setups 60,000 ​ Setup costs assigned to Model 22 are

$35,000.

Summer Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are listed as follows: ​ Maintenance $255,000 Materials handling 125,000 Setups 30,000 Inspection 105,000 Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 100,000 direct labor hours are budgeted for next year.The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually, bids are based upon full manufacturing cost plus 10%.Estimates for the proposed job are as follows: ​ Direct materials $15,000 Direct labor (8,000 hours) $12,000 Number of material moves 100 Number of inspections 120 Number of setups 24 Number of machine hours 4,000 ​ The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity drivers that would be used is as follows: ​ Machine hours 60,000 Material moves 20,000 Setups 3,000 Quality inspections 12,000 ​ What is the amount of overhead allocated to the proposed job if Summer Manufacturing uses direct labor hours as its only activity driver?

$41,200

The Wellness Clinic is considering a time-driven activity-based costing system. The following data are given: ​ Resources ​ ​ Activities Time per Activity Supervision $ 60,000 ​ Treating patients 1.40 hrs. Supplies and uniforms 80,000 ​ Providing hygienic care 1.00 hrs. Salaries 350,000 ​ Responding to requests 0.60 hrs. Computer 10,000 ​ Monitoring patients 1.00 hrs. Monitor 25,000 ​ ​ ​ Total $525,000 ​ ​ Total nursing hours(practical capacity) 15,000 ​ ​ ​ ​ What is the activity rate for treating patients?

$49

Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year, and operating cost is $2 per machine hour. Last year, 275,000 machine hours were used to produce 100,000 units. What was the total maintenance cost per unit produced last year?

$5.70

The records of Family Manufacturing show the following information: ​ Estimated manufacturing overhead $690,000 Estimated machine hours 46,000 Actual machine hours worked 50,000 ​ ​ Actual costs incurred: ​ Indirect materials $170,000 Indirect labor 230,000 Utilities 120,000 Insurance 100,000 Rent 80,000 ​ Assuming that overhead is applied based on an overhead rate calculated using machine hours as the base in the highly automated production environment, the amount of over- or underapplied overhead is

$50,000 overapplied.

The following information pertains to Whitestone Industries for the year: ​ Estimated total overhead costs $37,500 Estimated direct labor costs 25,000 Actual direct labor costs 22,500 Actual overhead costs 36,000 Activity base Direct labor costs ​ What is the predetermined overhead rate for Whitestone Industries for the year?

150%

The collected data sets that are organized and interrelated for use by an organization's ABC information system are called

an activity-based costing database.

Lawson Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are as follows: ​ Maintenance $180,000 Materials handling 27,000 Setups 24,000 Inspection 90,000 ​ Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 20,000 direct labor hours are budgeted for next year.The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually, bids are based upon full manufacturing cost plus 15%. Estimates for the proposed job are as follows: Direct materials $3,000 Direct labor (600 hours) $9,000 Number of material moves 4 Number of inspections 6 Number of setups 8 Number of machine hours 80 ​ In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based activity driver, direct labor hours. The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity drivers that would be used are as follows: Machine hours 5,000 Material moves 600 Setups 200 Quality inspections 1,000 ​ If the number of inspections is used to assign inspection costs, the amount of inspection costs allocated to the proposed job would be

$540.

Tandem Company manufactures two products (D and F). The overhead costs ($89,750) have been divided into three cost pools that use the following activity drivers: Product Number of Setups Machine Hours Packing O rders D 10 500 75 F 10 2,000 175 ​ ​ ​ ​ Cost per pool $11,000 $60,000 $18,750 ​ What is the allocation rate per setup using activity-based costing?

$550

Inventory balances for Marshall, Inc., in June 2018 are as follows: ​ June 1, 2018 June 30, 2018 Raw materials $1,125 $ 875 Work in process 2,000 1,550 Finished goods 4,500 3,750 ​ During June, purchases of direct materials were $1,500. Direct labor and factory overhead costs were $2,500 and $3,500, respectively. Conversion costs for June were

$6,000. SUPPORTING CALCULATIONS: $2,500 + $3,500 = $6,000

X-TREME Corporation has the following activities: creating bills of materials (BOM), studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger accounts reveal the following expenditures for manufacturing engineering: Salaries $ 75,000 Equipment 40,000 Supplies 10,000 Total $125,000 ​ The equipment is used for two activities: improving processes and designing tooling. Thirty-five percent of the equipment's time is used for improving processes, and 65% is used for designing tools. The salaries are for two engineers. One is paid $50,000, while the other earns $25,000. The $50,000 engineer spends 40% of his time training employees in new processes and 60% of his time on improving processes. The remaining engineer spends equal time on all activities. Supplies are consumed in the following proportions: Creating BOMs 25% Studying capabilities 10% Improving processes 20% Training employees 25% Designing tooling 20% ​ What is the cost assigned to the creating BOMs activity?

$7,500

Information from the records of the Conundrum Company for September 2018 was as follows: ​ Sales $307,500 Selling and administrative expenses 52,500 Direct materials used 66,000 Direct labor 75,000 Variable factory overhead 50,000 Factory overhead 51,250 ​ ​ Inventories ​ Sept. 1, 2018 Sept 30, 2018 Direct materials $ 8,000 $10,500 Work in process 18,750 21,000 Finished goods 17,250 14,250 Conundrum Corporation produced 20,000 units. The prime costs per unit for September were

$7.05 $66,000 + $75,000 = $141,000/20,000 units = $7.05 per unit

Information from the records of the Abel Corporation for July 2018 was as follows: Sales $1,230,000 Selling and administrative expenses 210,000 Direct materials used 264,000 Direct labor 300,000 Factory overhead * 405,000 *variable overhead is $205,000, fixed overhead is $200,000 what is total conversion costs?

$705,000 $300,000 + $405,000 = $705,000

Beginning work-in-process inventory is $188,000, ending work-in-process inventory is $220,000, cost of goods manufactured is $850,000, and direct materials used are $162,000. What are the conversion costs?

$720,000 SUPPORTING CALCULATIONS: Conversion costs = Cost of goods manufactured + Ending work-in-process − Beginning work-in-process − Direct materials used = $850,000 + $220,000 − $188,000 − $162,000 = $720,000

The following computer printout estimated overhead costs using multiple regression: ​ ​ ​ t for H0 ​ Standard Error Parameter Estimate Parameter = 0 Pr > t of Parameter Intercept 1.000 1.96 0.0250 510.204 Setup hours 25 81.96 0.0001 0.305 Number of parts 100 9.50 0.0001 10.527 ​ ​ ​ ​ ​ R Square (R 2 ) 0.94 Standard Error (S e ) 75.00 Observations 160 ​ During the year, the company used 1,000 setup hours and 500 parts. What is the predicted overhead cost?

$76,000

Manoli Company has collected the following data for use in calculating product costs:Activity Data (expected and actual): ​ Rug Cleaners Sweepers Total Units produced 50,000 250,000 300,000 Prime costs $200,000 $750,000 $950,000 Direct labor hours 10,000 40,000 50,000 Machine hours 20,000 10,000 30,000 Number of setups 25 75 100 Inspection hours 1200 2,800 4,000 Number of moves 140 210 350 ​ Departmental Data (expected and actual): ​ Molding Assembly Total Direct labor hours: ​ ​ ​ Rug cleaners 5,000 5,000 10,000 Sweepers 5,000 35,000 40,000 Totals 10,000 40,000 50,000 Machine hours: ​ ​ ​ Rug cleaners 17,000 3,000 20,000 Sweepers 3,000 7,000 10,000 Totals 20,000 10,000 30,000 Overhead costs: ​ ​ ​ Machining $120,000 $ 30,000 $150,000 Moving materials 40,000 30,000 70,000 Setting up 70,000 10,000 80,000 Inspecting products 20,000 30,000 50,000 Totals $250,000 $100,000 $350,000 What is the consumption ratio for the plantwide activity rate of direct labor hours?

0.2; 0.8

Manoli Company has collected the following data for use in calculating product costs:Activity Data (expected and actual): ​ Rug Cleaners Sweepers Total Units produced 50,000 250,000 300,000 Prime costs $200,000 $750,000 $950,000 Direct labor hours 10,000 40,000 50,000 Machine hours 20,000 10,000 30,000 Number of setups 25 75 100 Inspection hours 1200 2,800 4,000 Number of moves 140 210 350 ​ Departmental Data (expected and actual): ​ Molding Assembly Total Direct labor hours ​ ​ ​ Rug cleaners 5,000 5,000 10,000 Sweepers 5,000 35,000 40,000 Total 10,000 40,000 50,000 Machine hours: ​ ​ ​ Rug cleaners 17,000 3,000 20,000 Sweepers 3,000 7,000 10,000 Totals 20,000 10,000 30,000 Overhead costs: ​ ​ ​ Machining $120,000 $ 30,000 $150,000 Moving materials 40,000 30,000 70,000 Setting up 70,000 10,000 80,000 Inspecting products 20,000 30,000 50,000 Totals $250,000 $100,000 $350,000 ​ What are the consumption ratios for rug cleaners for the departments on the basis of the departmental drivers (Molding; Assembly)?

0.85; 0.125

The simple list of activities identified in an ABC system is called

activity inventory.

Hereford Company is planning to introduce a new product with an 80% learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the batch unit time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?

60 hours

Violet Company has five process engineers, and each of them can process 2,500 design changes. Last year 5,000 design changes were processed by the five engineers. Each engineer is paid $50,000 per year. Calculate the unused capacity.

7,500 change orders

Which of the following is an advantage of using the scatterplot method over the high-low method to estimate costs?

A cost analyst can review the data visually and eliminate outliers.

Which of the following is an example of a staff position in an organization?

Accountant

The type of management which broadens the focus of accounting because it is concerned with factors that drive costs, such as cycle time and process productivity is called:.

Cost management

Total costs may be computed with which of the following formulas?

Fixed costs + (Variable costs per unit × Unit volume)

One or more of the following is (are) a cost accounting system(s) that use(s) only unit-based activity drivers to assign costs to cost objects.

Functional-based cost management system

Which of the following is an advantage of the high-low method?

It is objective and simple to calculate.

Which of the following statements is true of traceability?

It is the ability to assign a cost directly to a cost object in an economically feasible way by means of a causal relationship.

Which of the following manufacturing management approaches has allowed firms to increase quality, reduce inventories, eliminate waste, and reduce costs?

Lean manufacturing

Thaisom Company applies manufacturing overhead. At the end of the year the following data were available: Actual manufacturing overhead$115,000Estimated manufacturing overhead120,000Applied manufacturing overhead118,000 What is the journal entry if the amount of under- or overapplied overhead is considered small?

Manufacturing Overhead 3,000 Cost of Goods Sold 3,000

Costs that are expensed in the period in which they are incurred are called:

Noninventoriable costs

Which of the following costs are expensed in the period in which they are incurred?

Nonproduction costs

The following computer printout estimated overhead costs using regression: ​ ​ t for H0 ​ Standard Error Parameter Estimate Parameter = 0 Pr > t of Parameter Intercept 100.41 4.81 0.0003 20.88 Dlh 14.05 6.78 0.0001 2.07 ​ ​ ​ ​ ​ R Square (R 2 ) ​ 0.80 ​ ​ Standard Error (S e ) ​ 25.03 ​ ​ Observations ​ 17 ​ ​ ​ During the last accounting period 10,000 direct labor hours were worked. Which of the following is the correct model?

Overhead = 100.41 + 14.05 Dlh

Which of the following formulas is used by duration-based costing (DBC) to assign the overhead costs to a particular product?

Overhead cost per unit = Overhead rate × Cycle time for a particular product

Which of the following will be included in traditional product costs?

Production costs

Firms that emphasize ethics outperform firms that don't emphasize ethics.

TRUE

The process of choosing among competing alternatives is called decision making.

TRUE

Divulging company information when not legally obligated to do so violates the confidentiality part of the IMA Code of Conduct.

True

What does a correlation coefficient near -1 mean?

Two variables are moving in opposite directions.

Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted balances: Raw Materials $20,000Work in Process $40,000Finished Goods $10,000Cost of Goods Sold $50,000 ​ If manufacturing overhead was $12,000 underapplied and considered material, what is the journal entry?

Work in Process 4,800 Finished Goods 1,200 Cost of Goods Sold 6,000 Manufacturing Overhead 12,000 ​

Ladder Company wants to develop a cost-estimating equation for its monthly cost of electricity. It has the following data: Month Cost of Electricity Direct Labor Hours February $ 8,100 750 May 9,000 850 August 10,200 1,000 November 8,700 800 ​ Using the high-low method, which of the following is the best equation?

Y = $1,800 + $8.40X

Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year, and operating cost is $2 per machine hour. Last year, 275,000 machine hours were used to produce 100,000 units. Develop a cost equation for the total machine maintenance cost.

Y = $20,000 + $2Mhr

Longberry Corporation manufactures and sells party items. The following representative direct labor hours and production costs are provided for a four-month period: ​ Month Direct Labor Hours Production Costs May 3,600 $15,000 June 4,800 17,500 July 6,000 20,000 August 4,800 17,500 Totals 19,200 $70,000 ​ Let a = Fixed production costs per month ​ b = Variable production costs per direct labor hour ​ n = Number of months ​ X = Direct labor hours per month ​ Y = Total monthly production costs ​ S = Summation ​ The monthly production cost can be expressed as

Y = a + bX.

Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value beyond which the line is parallel to the horizontal axis?

a consultant paid $100 per hour with a maximum fee of $2,000

A(n) _____ is a basic unit of work performed within an organization.

activity

The activity that aids management in achieving objectives such as product or customer costing, continuous improvement and environmental management is called

activity driver.

Flexible resources

are acquired from outside sources, not requiring a long-term commitment. are supplied as needed. have no unused capacity.

The income statement prepared for external reporting is

based on a functional classification. referred to as absorption-costing income. called full-costing income.

Marion Manufacturing uses an activity-based costing system. The company produces Model X and Model Y. Information relating to the two products is as follows: ​ Model X Model Y Units produced 20,000 40,000 Machine hours 8,000 10,000 Direct labor hours 14,000 16,000 Engineering labor (hours) 1,000 1,400 Setups 40 60 ​ The following costs are reported: ​ Engineering $ 48,000 Setups 100,000 Machine-related overhead 144,000 ​ Setups would be classified as a

batch-level activity.

The annual expenses associated with the multi-period category independent of actual usage of the resource are referred to as

committed fixed expenses.

Accounting activities within an organization are usually under the overall supervision of the

controller.

Comparing actual quality costs with planned quality costs is an example of

controlling. performance evaluation.

Disclosing all information, unfavorable as well as favorable, that could influence an intended user's understanding of reports, would relate to what section of the IMA Code of Conduct?

credibility

Which of the following items is required for cost assignment to product i under duration-based costing (DBC)?

cycle time for each product i

Managers are considering outsourcing sub-components of production. Data is collected about the costs of making the sub-component. Different bids are sought about the purchase of the sub-components. Which managerial activity is applicable in this situation?

decision making

In a company that supplies muffins to bakeries, which of the following would NOT be considered an input?

delivered muffins

Unit-level cost drivers create distortions when

different products consume resources differently.

If unit-based product costing is used, which of the following would be traced directly to the product?

direct labor

A managerial accountant has determined the following relationships between overhead and several possible bases: Basis Correlation with Total Overhead Direct labor hours 0.842 Direct labor dollars 0.279 Machine hours −0.837 Employee minutes in coffee breaks −0.243 ​ The best basis for overhead application is

direct labor hours.

Conversion costs include

direct labor. factory overhead.

Which of the following costing methods is a before-the-fact simplification method that eliminates the first stage of assigning costs to activities of an activity-based costing (ABC) system and dramatically simplifies the assignment of cost of resources to activities?

duration-based costing

In an accounting information system, the inputs are usually

economic events.

The _____ system is an integrated system capable of providing access to real-time data from the various functional areas of a company.

enterprise resource planning

The accounting information subsystem that is primarily concerned with producing outputs for external users is called:

financial accounting information system

Which of the following items is NEVER relevant to the cost flows of a service organization?

finished goods inventory

The acceptance of a savings bond from a supplier would be a violation of which standard of ethical conduct for management accountants?

integrity

Principles of personal ethical behavior include

integrity. respect for others. fairness.

A demand-pull system that strives to produce a product only when it is needed and only in the quantities demanded by customers is referred to as:

just-in-time manufacturing.

A department that is capital-intensive most likely would use a predetermined departmental overhead rate based on which of the following activity bases?

machine hours

In a department that drills holes in raw materials utilizing a highly automated process, which activity base is likely to be most appropriate for assigning overhead costs?

machine hours

Value-chain product costs include which of the following?

marketing costs research and development customer service costs

Which of the following is an example of a variable cost?

materials used in production

When least squares is used to fit an equation involving two or more independent variables, the method is called

multiple regression.

Batch-level costs are assigned using

non-unit-based activity drivers.

Drivers that explain changes in costs as factors other than changes in units produced are called

non-unit-based cost drivers.

Product costs can be distorted if a unit-based activity driver is used and

non-unit-based overhead costs are a significant proportion of total overhead and the consumption ratios differ between unit-based and non-unit-based input categories.

A secondary activity is

one that is consumed by intermediate cost objects.

In an approximately relevant ABC system,

only the most expensive activities are allocated using appropriate cause-and-effect drivers.

In an activity-based management system, one is NOT likely to find

only unit-based drivers.

In a company that supplies muffins to bakeries, delivered muffins to bakeries would be a(n)

output.

Assume that actual overhead costs equaled estimated (budgeted) overhead for the period. Actual direct labor hours exceeded estimated direct labor hours used to calculate the predetermined overhead rate. If overhead is applied using the predetermined overhead rate, then overhead is

overapplied.

The use of unit-based activity drivers to assign costs can result in significant cost distortions when

overhead costs are a significant percentage of total manufacturing costs.

Setting the company's profit targets for the upcoming year is an example of the management function of

planning.

The manager has to decide what tasks are needed and how they should be accomplished. This statement describes

planning.

The efficient level of activity performance is called

practical capacity.

Which of the following would be considered a line function?

production

Which of the following job positions is a line function?

production supervisor

The overall objective of accounting information systems is to

provide information to users.

Which of the following costs would NOT be included in calculating inventory values under the absorption-costing basis?

selling and administrative expenses

The following computer printout estimated overhead costs using multiple regression: ​ ​ ​ t for H0 ​ Standard Error Parameter Estimate Parameter = 0 Pr > t of Parameter Intercept 1.000 1.96 0.0250 510.204 Setup hours 25 81.96 0.0001 0.305 Number of parts 100 9.50 0.0001 10.527 ​ ​ ​ ​ ​ R Square (R 2 ) 0.94 Standard Error (S e ) 75.00 Observations 160 ​ During the year, the company used 1,000 setup hours and 500 parts. Which slope and intercept parameters are significant at the 0.05 level?

setup hours intercept number of parts

Which of the following would NOT be included in the conversion cost of an automobile?

steel

Salaries paid to shift supervisors are an example of a

step-fixed cost.

Which of the following duties is usually assigned to the controller?

tax planning

A coefficient of determination of 0.91 means

that the independent variable explains 91 percent of the variation in cost.

Error costs can be defined as

the costs associated with making poor decisions based on bad cost information.

A smaller standard error indicates that

the regression line more closely approximates the data.

Which of the following expenses incurred by a department store is a direct cost for the women's shoe department?

the salespersons' commissions in the women's shoe department

Amigos Industries analyzed the relationship between total factory overhead and changes in direct labor hours. It found the following: ​ Y = $6,000 + $6X ​ The Y in this equation is an estimate of

total factory overhead.

Which of the following is the officer responsible for money management and serves chiefly as the custodian of the organization's funds?

treasurer

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

true

The overhead rates of traditional functional-based product costing use

unit-based activity drivers.

In a traditional cost management system, cost behavior is assumed to be driven only by

unit-based cost drivers.

The drivers that explain changes in costs as units produced change are called

unit-level drivers.

Apparent Corp. has developed the following information on product costs and inventories for a three-month period: April May June Finished goods inventory, units: Beginning 20 25 30 Manufactured 25 40 35 Available 45 65 65 Sold 25 40 50 Ending 20 25 15 ​ Manufacturing costs for April are $4,000, for May are $6,000, and for June are $5,500. Based on managerial judgment, the best predictor of manufacturing costs is

units manufactured.