Managerial Accounting Final Prep MC

The costs of direct materials are classified as: Conversion cost,Manufacturing cost,Primecost A)YesYesYes B)NoNoNo C)YesYesNo D)NoYesYes Choice C Choice B Choice D Choice A

Choice D

Assume the following: The standard labor rate per hour is $16.85. The standard labor-hours allowed per unit of finished goods is 3 hours. The actual quantity of labor hours worked during the period was 44,000 hours. The total actual direct labor cost for the period was $726,000. The company produced 15,000 units of finished goods during the period. What is the labor rate variance? $15,400 U $13,400 F $13,400 U $15,400 F

$15,400 F

Fabrick Company's quality cost report is to be based on the following data: Lost sales due to poor quality$ 22,600Quality data gathering, analysis, and reporting$ 67,100Net cost of spoilage$ 63,200Re-entering data because of keying errors$ 19,100Test and inspection of in-process goods$ 19,700Final product testing and inspection$ 48,500Statistical process control activities$ 36,700Returns arising from quality problems$ 40,000Downtime caused by quality problems$ 61,900 What would be the total prevention cost appearing on the quality cost report? $107,100 $103,800 $86,800 $85,200

$103,800

Kesterson Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$ 6.55 Direct labor$ 3.80 Variable manufacturing overhead$ 1.50 Fixed manufacturing overhead $ 25,500Sales commissions$ 1.80 Variable administrative expense$ 0.50 Fixed selling and administrative expense $ 6,800 If 9,500 units are produced, the total amount of indirect manufacturing cost incurred is closest to: $25,500 $46,230 $14,250 $39,750

$39,750

Pedregon Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$ 6.90 Direct labor$ 3.40 Variable manufacturing overhead$ 1.70 Fixed manufacturing overhead $ 17,200Sales commissions$ 0.90 Variable administrative expense$ 0.95 Fixed selling and administrative expense $ 6,300 If the selling price is $21.20 per unit, the contribution margin per unit sold is closest to: $5.25 $7.35 $10.90 $7.80

$7.35

Beach Corporation, which produces a single product, budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 30,000 towels produced and sold: Direct materials$96,000Direct labor$48,000Variable manufacturing overhead$72,000Fixed manufacturing overhead$60,000Variable selling and administrative expenses$12,000Fixed selling and administrative expenses$36,000 During the first year of operations, Beach Corporation actually produced 30,000 towels but only sold 24,000 towels. Actual costs did not fluctuate from the cost behavior patterns described above. The 24,000 towels were sold for $16 per towel. Assume that direct labor is a variable cost. Under absorption costing, what is Beach Corporation's actual net operating income for its first year? $124,800 $115,200 $60,000 $117,600

$115,200

Assume a merchandising company provides the following information from its master budget for the month of May: Sales$244,000 Cost of goods sold$83,500 Cash paid for merchandise purchases$78,500 Selling and administrative expenses$38,500 Cash paid for selling and administrative expenses$38,800 What is the budgeted net operating income? $136,700 $122,000 $4,700 $43,500

$122,000

Bries Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,000. Budgeted cash receipts total $183,000 and budgeted cash disbursements total $188,000. The desired ending cash balance is $30,000. The excess (deficiency) of cash available over disbursements for January is: ($5,000) $23,000 $201,000 $13,000

$13,000

Dacker Products is a division of a major corporation. The following data are for the most recent year of operations: Sales$ 36,780,000Net operating income$ 2,958,960Average operating assets$ 8,300,000The company's minimum required rate of return16% The division's residual income is closest to: $(3,177,840) $1,630,960 $2,958,960 $4,286,960

$1,630,960

Chavin Company had the following results during August: net operating income, $310,000; turnover, 5; and ROI 18%. Chavin Company's average operating assets were: $62,000 $1,722,222 $1,550,000 $55,800

$1,722,222

Assume a company's activity-based costing system includes three activities. The following information is available with respect to those activities: Activity Cost PoolEstimated Overhead CostExpected ActivityTravel$130,000 100,000miles drivenDeliveries$110,000 2,200customer deliveriesCustomer service$220,000 10,000phone calls What is the activity rate for the Travel activity? $1.13 per mile driven $1.30 per mile driven $13.00 per mile driven $0.13 per mile driven

$1.30 per mile driven

A manufacturer of premium wire strippers has supplied the following data: Units produced and sold580,000Sales revenue$ 4,176,000Variable manufacturing expense$ 2,871,000Fixed manufacturing expense$ 778,000Variable selling and administrative expense$ 348,000Fixed selling and administrative expense$ 104,000Net operating income$ 75,000 The company's unit contribution margin is closest to: $5.55 per unit $2.25 per unit $1.65 per unit $6.60 per unit

$1.65 per unit

Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost PoolActivity RateSetting up batches$ 59.61per batchProcessing customer orders$ 72.99per customer orderAssembling products$ 4.30per assembly hour Data concerning two products appear below: Product K91BProduct F65ONumber of batches9061Number of customer orders4054Number of assembly hours494901 How much overhead cost would be assigned to Product K91B using the activity-based costing system? (Round your intermediate calculations and final answers to 2 decimal places.) $93,678.30 $136.90 $10,408.70 $5,364.90

$10,408.70

Paolucci Corporation's relevant range of activity is 6,300 units to 13,500 units. When it produces and sells 9,900 units, its average costs per unit are as follows: Average Cost per UnitDirect materials$ 6.75Direct labor$ 3.65Variable manufacturing overhead$ 1.65Fixed manufacturing overhead$ 2.90Fixed selling expense$ 0.95Fixed administrative expense$ 0.65Sales commissions$ 0.90Variable administrative expense$ 0.55 If 8,900 units are sold, the variable cost per unit sold is closest to: $12.05 $14.95 $18.00 $13.50

$13.50

Assume that a company provided the following information and assumptions from its master budget:Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month.Production budget: The ending finished goods inventory is always 25% of next month's unit sales.Selling and administrative expense budget: The variable selling and administrative expense is $4.00 per unit. The total fixed selling and administrative expense is $60,000 including $11,000 of depreciation.What is the total budgeted selling and administrative expense for July? $132,000 $131,000 $129,000 $130,000

$132,000

Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated machine-hours72,700Estimated variable manufacturing overhead$3.30 per machine-hourEstimated total fixed manufacturing overhead$838,710 The predetermined overhead rate for the recently completed year was closest to: $6.74 per machine-hour $8.67 per machine-hour $9.90 per machine-hour $14.84 per machine-hour

$14.84 per machine-hour

Rodarta Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's predetermined overhead rate for fixed manufacturing overhead is $1.20 per machine-hour and the denominator level of activity is 6,600 machine-hours. In the most recent month, the total actual fixed manufacturing overhead was $8,340 and the company actually worked 6,400 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 6,480 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month? $240 Favorable $144 Unfavorable $96 Favorable $240 Unfavorable

$144 Unfavorable

Chhom Corporation makes a product whose direct labor standards are 0.9 hours per unit and $30 per hour. In November the company produced 7,450 units using 6,205 direct labor-hours. The actual direct labor cost was $130,305. The labor efficiency variance for November is: $15,000 U $15,000 F $70,845 F $70,845 U

$15,000 F

Pratte Boat Wash's cost formula for its cleaning equipment and supplies is $2,570 per month plus $48 per boat. For the month of April, the company planned for activity of 62 boats, but the actual level of activity was 17 boats. The actual cleaning equipment and supplies for the month was $3,580. The spending variance for cleaning equipment and supplies in April would be closest to: $194 U $194 F $1,966 F $1,966 U

$194 U

Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing$ 4,625Supervising$ 31,500Other $ 10,900 Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing)Batches (Supervising)Product M012,000750Product M5500750Total12,5001,500 Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. Product M0Product M5Sales (total)$ 79,600$ 92,400Direct materials (total)$ 29,000$ 31,900Direct labor (total)$ 28,300$ 42,200 What is the product margin for Product M5 under activity-based costing? $22,300 $2,365 $18,300 $2,110

$2,365

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours32,800Total fixed manufacturing overhead cost$164,000Variable manufacturing overhead per machine-hour$ 5 Recently, Job T687 was completed with the following characteristics: Number of units in the job10Total machine-hours30Direct materials$ 745Direct labor cost$1,490 The total job cost for Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.) $2,235 $2,535 $1,790 $1,045

$2,535

Huelskamp Corporation has provided the following data concerning its overhead costs for the coming year: Wages and salaries$ 360,000Depreciation120,000Rent180,000Total$ 660,000 The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: Activity Cost PoolTotal ActivityAssembly60,000labor-hoursOrder processing400ordersOtherNot applicable The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below: Activity Cost PoolsTotalAssemblyOrder ProcessingOtherWages and salaries25%65%10%100%Depreciation15%45%40%100%Rent35%40%25%100% The activity rate for the Assembly activity cost pool is closest to: $2.65 per labor-hour $3.85 per labor-hour $2.85 per labor-hour $2.75 per labor-hour

$2.85 per labor-hour

Dake Corporation's relevant range of activity is 3,100 units to 6,500 units. When it produces and sells 4,800 units, its average costs per unit are as follows: Average Cost per UnitDirect materials$ 7.00Direct labor$ 3.10Variable manufacturing overhead$ 1.75Fixed manufacturing overhead$ 3.00Fixed selling expense$ 1.05Fixed administrative expense$ 0.75Sales commissions$ 0.85Variable administrative expense$ 0.75 If 3,800 units are produced, the total amount of indirect manufacturing cost incurred is closest to: $6,650 $18,050 $14,400 $21,050

$21,050

Decaprio Incorporated produces and sells a single product. The company has provided its contribution format income statement for June. Sales (5,600 units)$ 224,000Variable expenses117,600Contribution margin106,400Fixed expenses86,700Net operating income$ 19,700 If the company sells 5,800 units, its net operating income should be closest to: (Do not round intermediate calculations.) $27,700 $19,700 $23,500 $20,404

$23,500

Variable expenses for Alpha Corporation are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year: $600,000 $375,000 $250,000 $150,000

$250,000

Beamish Incorporated, which produces a single product, has provided the following data for its most recent month of operations: Number of units produced9,700Variable costs per unit: Direct materials$ 121Direct labor$ 105Variable manufacturing overhead$ 6Variable selling and administrative expense$ 13Fixed costs: Fixed manufacturing overhead$349,200Fixed selling and administrative expense$727,500 There were no beginning or ending inventories. The absorption costing unit product cost was: $268 per unit $356 per unit $232 per unit $226 per unit

$268 per unit

Petrus Framing's cost formula for its supplies cost is $1,710 per month plus $9 per frame. For the month of March, the company planned for activity of 611 frames, but the actual level of activity was 614 frames. The actual supplies cost for the month was $7,490. The activity variance for supplies cost in March would be closest to: $281 F $27 F $281 U $27 U

$27 U

Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $300,000, variable expenses of $152,100, and traceable fixed expenses of $70,300. The Alpha Division has sales of $610,000, variable expenses of $335,800, and traceable fixed expenses of $131,900. The total amount of common fixed expenses not traceable to the individual divisions is $133,200. What is the company's net operating income? $274,200 $219,900 $422,100 $86,700

$86,700

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price$ 90Units in beginning inventory0Units produced3,400Units sold3,000Units in ending inventory400 Variable costs per unit: Direct materials$ 21Direct labor$ 38Variable manufacturing overhead$ 6Variable selling and administrative expense$ 4Fixed costs: Fixed manufacturing overhead$54,400Fixed selling and administrative expense$ 3,000 The total gross margin for the month under the absorption costing approach is: $27,000 $59,400 $63,000 $12,000

$27,000

Assume the following: Purchases of raw materials$38,000 Indirect materials used in production$6,900 Beginning raw materials inventory$10,000 Ending raw materials inventory$14,000 What is the direct materials used in production? $41,100 $27,100 t$35,100 $59,100

$27,100

Brummer Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.20 hours per unit. The variable overhead rate standard is $9.50 per hour. In January the company produced 4,750 units using 980 direct labor-hours. The actual variable overhead rate was $9.40 per hour. The variable overhead efficiency variance for January is: $285 F $285 U $282 U $282 F

$285 U

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price$ 133Units in beginning inventory0Units produced7,000Units sold6,800Units in ending inventory200Variable costs per unit: Direct materials$ 41Direct labor$ 57Variable manufacturing overhead$ 5Variable selling and administrative expense$ 4Fixed costs: Fixed manufacturing overhead$133,000Fixed selling and administrative expense$ 34,000 What is the total period cost for the month under absorption costing? $61,200 $34,000 $133,000 $194,200

$61,200

Immen Corporation manufactures two products: Product B82O and Product P99Y. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products B82O and P99Y. Activity Cost PoolActivity MeasureTotal CostTotal ActivityMachiningMachine-hours$ 330,00015,000MHsMachine setupsNumber of setups$ 300,000500setupsProduct designNumber of products$ 46,0002productsOrder sizeDirect labor-hours$ 330,00010,000DLHs Activity MeasureProduct B82OProduct P99YMachine-hours7,0008,000Number of setups200300Number of products11Direct labor-hours3,0007,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product B82O? $704,200 $503,000 $610,000 $301,800

$301,800

A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are $224,000, its margin of safety is: $96,000 $32,000 $128,000 $192,000

$32,000

Dreckman Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for August. Fixed Element per MonthVariable Element per Customer ServedActual Total for AugustRevenue $4,000$125,500Employee salaries and wages$46,600$ 900$ 74,700Travel expenses $ 600$ 18,800Other expenses$33,100 $ 33,500 When the company prepared its planning budget at the beginning of August, it assumed that 36 customers would have been served. However, 31 customers were actually served during August. The "Other expenses" in the flexible budget for August would have been closest to: $38,903 $33,500 $33,100 $28,847

$33,100

Perl Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: Costs: Wages and salaries$ 360,000Depreciation200,000Occupancy100,000Total$ 660,000 The distribution of resource consumption across the three activity cost pools is given below: Activity Cost PoolsTotalFabricatingOrder ProcessingOtherWages and salaries15%60%25%100%Depreciation20%35%45%100%Occupancy25%50%25%100% How much cost, in total, would be allocated in the first-stage allocation to the Order Processing activity cost pool? $396,000 $319,000 $336,000 $330,000

$336,000

Sioux Corporation is estimating the following sales for the first four months of next year: January$ 210,000February$ 280,000March$ 340,000April$ 370,000 Sales are normally collected 60% in the month of sale and 40% in the month following the sale. Based on this information, how much cash should Sioux expect to collect during the month of April? $370,000 $222,000 $119,000 $358,000

$358,000

Meade Nuptial Bakery makes very elaborate wedding cakes to order. The company has an activity-based costing system with three activity cost pools. The activity rate for the Size-Related activity cost pool is $1.18 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $29.15 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $83.25 per order. (Each wedding involves one order for a cake.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately. Data concerning two recent orders appear below: Ericson WeddingHaupt WeddingNumber of reception guests71228Number of tiers on the cake76Cost of purchased decorations for cake$ 19.95$ 71.55 Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ericson wedding cake to just break even? $83.25 $19.95 $442.62 $391.03

$391.03

Fletes Corporation manufactures two products: Product O95C and Product M31N. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products O95C and M31N. Activity Cost PoolActivity MeasureTotal CostTotal ActivityMachiningMachine-hours$ 207,0009,000MHsMachine setupsNumber of setups$ 140,000350setupsProduct designNumber of products$ 98,0002productsOrder sizeDirect labor-hours$ 340,00010,000DLHs Activity MeasureProduct O95C Product M31NMachine-hours6,0003,000Number of setups190160Number of products11Direct labor-hours4,0006,000 Using the ABC system, how much total manufacturing overhead cost would be assigned to Product O95C? $136,000 $392,500 $399,000 $263,000

$399,000

Songster Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: Original BudgetActual CostsFixed overhead costs: Supervision$ 14,100$ 13,650Utilities5,3005,060Factory depreciation7,2007,470Total overhead cost$ 26,600$ 26,180 The company based its original budget on 3,500 machine-hours. The company actually worked 3,700 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,820 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month? $420 Unfavorable $2,432 Favorable $2,432 Unfavorable $420 Favorable

$420 Favorable

Assume the following: Beginning finished goods inventory$10,000 Ending finished goods inventory$8,300 Unadjusted cost of goods sold$48,000 What is the cost of goods manufactured? $42,300 $50,000 $44,600 $46,300

$46,300

Assume that a company's revenue in its flexible budget is $76,000. Its actual amount of revenue is $70,800 and the amount of revenue in the company's planning budget is $78,000. The amount of the revenue variance is: $5,200 U. $7,200 U. $3,200 U. $5,200 F.

$5,200 U.

Majer Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or RateStandard Cost Per UnitDirect materials6.6ounces$ 4.00per ounce$ 26.40Direct labor0.6hours$ 13.00per hour$ 7.80Variable overhead0.6hours$ 4.00per hour$ 2.40 The company reported the following results concerning this product in February. Originally budgeted output5,200unitsActual output4,800unitsRaw materials used in production30,300ouncesActual direct labor-hours7,910hoursPurchases of raw materials32,700ouncesActual price of raw materials$ 42.90per ounceActual direct labor rate$ 52.40per hourActual variable overhead rate$ 4.30per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for February is: $5,457 F $5,520 U $5,520 F $5,457 U

$5,520 F

Doogan Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or RateDirect materials8.7grams$ 3.30per gramDirect labor0.5hours$ 33.00per hourVariable overhead0.5hours$ 8.30per hour The company produced 6,500 units in January using 40,610 grams of direct material and 2,510 direct labor-hours. During the month, the company purchased 45,700 grams of the direct material at $3.00 per gram. The actual direct labor rate was $32.30 per hour and the actual variable overhead rate was $8.10 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for January is: $502 F $650 F $502 U $650 U

$502 F

Nantor Corporation has two divisions, Southern and Northern. The following information was taken from last year's income statement segmented by division: Total CompanySouthernNorthernSales$ 4,400,000$ 2,740,000$ 1,660,000Contribution margin$ 1,850,000$ 1,170,000$ 680,000Divisional segment margin$ 970,000$ 780,000$ 190,000 Net operating income last year for Nantor Corporation was $440,000. In last year's income statement segmented by division, what were Nantor's total common fixed expenses? $1,410,000 $530,000 $880,000 $1,500,000

$530,000

Crocetti Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit$ 121Budgeted unit sales (all on credit): January7,000February7,500March11,900April14,900 Credit sales are collected: 40% in the month of the sale 60% in the following month The budgeted accounts receivable balance at the end of February is closest to: $605,000 $544,500 $363,000 $907,500

$544,500

Milar Corporation makes a product with the following standard costs: Standard Quantity orHoursStandard Price orRateDirect materials2.0pounds$ 7.00per poundDirect labor1.3hours$ 11.00per hourVariable overhead1.3hours$ 3.00per hour In January the company produced 5,000 units using 10,310 pounds of the direct material and 2,290 direct labor-hours. During the month, the company purchased 10,880 pounds of the direct material at a cost of $76,760. The actual direct labor cost was $38,241 and the actual variable overhead cost was $11,942. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is: $460 F $600 U $460 U $600 F

$600 U

Assume a company has two divisions, Division C and Division D. Division C has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market)$60 Variable cost per unit$44 Fixed costs per unit (based on capacity)$8 Capacity in units 20,000 Division D could use Division C's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division D has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division C makes.If the company's divisional managers are evaluated based on their division's profits and Division C is currently selling 15,000 units on the outside market, what is Division D's highest acceptable transfer price if it were to buy 4,000 units from Division C? $48 $52 $58 $44

$58

Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market)$72 Variable cost per unit$56 Fixed costs per unit (based on capacity)$4 Capacity in units 20,000 Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes.If that the company's divisional managers are evaluated based their division's profits and Division A is currently selling 20,000 units on the outside market, what is lowest acceptable transfer price for Division A if it were to sell 4,000 units to Division B? $68 $76 $70 $72

$72

Dustman Manufacturing Corporation's most recent production budget indicates the following required production: JanuaryFebruaryMarchAprilRequired production (units)4,0006,0005,5005,000 Each unit of finished product requires 3 feet of raw materials. The company maintains raw materials inventory equal to 2,000 feet plus 10% of the next month's expected production needs. The raw material used in Dustman Manufacturing Corporation's product costs $4.50 per foot. What is the value of raw material that Dustman Manufacturing should plan on purchasing for the month of February? $80,325 $73,575 $74,250 $81,000

$80,325

Mahon Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: CastingCustomizingMachine-hours19,20017,200Direct labor-hours7,6008,600Total fixed manufacturing overhead cost$117,120$86,000Variable manufacturing overhead per machine-hour$ 1.80 Variable manufacturing overhead per direct labor-hour $ 3.60 During the current month the company started and finished Job T138. The following data were recorded for this job: Job T138:CastingCustomizingMachine-hours7040Direct labor-hours1460 The amount of overhead applied in the Customizing Department to Job T138 is closest to: (Round your intermediate calculations to 2 decimal places.) $344.00 $116,960.00 $816.00 $688.00

$816.00

Beamer Corporation produces one product and it seems that the demand for that product is exceeding their manufacturing capacity. Below is the information concerning the machine that produces their product: Actual run time this week3,000MinutesMachine time available per week5,000MinutesActual run rate this week3.2Units per minuteIdeal run rate4Units per minuteDefect-free output this week7,200UnitsTotal output this week (including defects)9,600Units Beamer's efficiency rate was: 0.31 0.42 0.60 0.80

0.80

Assume the following information: Amount Selling price$30 Variable expense per unit$12 Fixed expenses$11,000per monthUnit sales 2,060per month The degree of operating leverage is closest to: 0.42. 1.42. 2.03. 0.61.

1.42

Schapp Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: HoursMove time3.5Wait time11.3Queue time7.7Process time2.4Inspection time1.3 The throughput time was: 14.9 hours 26.2 hours 19.0 hours 7.2 hours

14.9 hours

Moyas Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $240,000 and its net operating income was $16,000. If fixed expenses totaled $80,000 for the year, the break-even point in unit sales was: 20,000 units 24,000 units 14,400 units 25,600 units

20,000 units

Navern Corporation manufactures and sells custom home elevators. From the time an order is placed until the time the elevator is installed in the customer's home averages 87 days. This 87 days is spent as follows: Wait time17 daysInspection time13 daysProcess time23 daysMove time22 daysQueue time12 days What is Navern's manufacturing cycle efficiency (MCE) for its elevators? 41.4% 32.9% 58.6% 55.2%

32.9%

Masde Corporation produces and sells Product CharlieD. To guard against stockouts, the company requires that 25% of the next month's sales be on hand at the end of each month. Budgeted sales of Product CharlieD over the next four months are: JuneJulyAugustSeptemberBudgeted sales in units40,00060,00050,00080,000 Budgeted production for August would be: 80,000 units 77,000 units 57,500 units 107,000 units

57,500 units

Hettrick International Corporation's only product sells for $120.00 per unit and its variable expense is $52.80. The company's monthly fixed expense is $396,480 per month. The unit sales to attain the company's monthly target profit of $13,000 is closest to: (Round your intermediate calculations to 2 decimal places.) 3,412 7,755 5,753 6,093

6,093

Assume the following information: Amount Selling price$30 Variable expense ratio 40%Fixed expenses$8,000per monthUnit sales 1,000per month A 5% increase in sales will generate what percent increase in net operating income? 10% 9% 12% 15%

9%

Cabell Products is a division of a major corporation. Last year the division had total sales of $11,650,000, net operating income of $1,141,700, and average operating assets of $3,495,000. The company's minimum required rate of return is 11%. The division's margin is closest to: 30.0% 32.7% 9.8% 89.1%

9.8%

Which of the following statements is true? Absorption costing treats variable manufacturing overhead as a product cost Absorption costing treats variable administrative expense as a product cost Absorption costing treats fixed manufacturing overhead as a period cost Absorption costing treats sales commissions as a product cost.

Absorption costing treats variable manufacturing overhead as a product cost

Assume that a company has decided to include "overall equipment effectiveness" and "percent of customer complaints settled on first contact" as performance measures within its balance scorecard. Which of the following choices reflects management's most likely expectations regarding how these measures should change over time? Overall equipment effectiveness Percent of customer complaints settledon first contactA)Increase IncreaseB)Increase DecreaseC)Decrease IncreaseD)Decrease Decrease Choice A Choice B Choice C Choice D

Choice A

Which of the following will increase a company's manufacturing cycle efficiency (MCE)? Decrease in Inspection TimeDecrease in Queue TimeA)YesYesB)YesNoC)NoYesD)NoNo Choice A Choice B Choice C Choice D

Choice A

Which of the following approaches to preparing an income statement includes a calculation of the gross margin? TraditionalApproachContributionApproachA)YesYesB)YesNoC)NoYesD)NoNo Choice B Choice C Choice D Choice A

Choice B

Which of the following is not one of the four perspectives of the balanced scorecard? Financial Learning and Growth Departmental Internal Business Processes

Departmental

Cost classifications used for assigning costs to cost objects include: Product cost and period cost. Direct cost and indirect cost. Correct Relevant cost and irrelevant cost. Incorrect Variable cost and fixed cost.

Direct cost and indirect cost

Which of the following statements is true? Increasing sales while holding expenses constant will increase margin. Increasing sales while holding average operating assets constant will decrease margin. Increasing sales while holding average operating assets constant will increase margin. Increasing sales while holding expenses constant will decrease margin.

Increasing sales while holding expenses constant will increase margin.

Which of the following is not an advantage of decentralization? -It delegates day-to-day problem solving to lower-level managers, thereby enabling top-level managers to concentrate on overall strategy. -It enables lower-level managers to focus on achieving their own objectives rather than focusing on the overall goals of the company. -It eliminates layers of decision making and approvals so that organizations can respond more quickly to customers and changing circumstances. -It empowers lower-level managers to make decisions based on up-to-date information about day-to-day operations.

It enables lower-level managers to focus on achieving their own objectives rather than focusing on the overall goals of the company.

Which of the following statements is false with respect to the selling and administrative expense budget? It estimates the cash disbursements for selling and administrative expenses that appear in the cash budget It impacts the budgeted net operating income reported on the income statement It includes estimated variable and fixed selling and administrative expenses It excludes depreciation expense because selling and administrative expenses are period costs and not product costs.

It excludes depreciation expense because selling and administrative expenses are period costs and not product costs.

If a company has overapplied overhead, then the journal entry to dispose of it will have what effect on net operating income? It will decrease cost of goods sold, but it will not affect net operating income. It will increase cost of goods sold, but it will not affect net operating income. It will decrease net operating income. It will increase net operating income.Correct

It will increase net operating income

Last year, Salas, Inc., sold 100,000 units. The variable expense ratio was 60%. Total fixed costs were $130,000. Assume that an increase in unit sales will lead to an increase in total sales by $20,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income change? Net operating income will decrease by $122,000 Net operating income will increase by $20,000 Net operating income will increase by $8,000 Net operating income will increase by $12,000

Net operating income will increase by $8,000

Magnus, a division of Chess Corp., has a net operating income of $75,000 and average operating assets of $500,000. If the manager of the division is evaluated based on ROI, will she want to make an investment of $50,000 that would generate additional net operating income of $5,000 per year? No Yes She is indifferent

No

Germano Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: Capacity in units90,000Selling price to outside customers$ 93Variable cost per unit$ 33Fixed cost per unit (based on capacity)$ 39 The Pool Products Division is currently purchasing 24,000 of these pumps per year from an overseas supplier at a cost of $88 per pump. Assume that the Pump Division is selling all of the pumps it can produce to outside customers. Does there exist a transfer price that would make both the Pump and Pool Products Division financially better off than if the Pool Products Division were to continue buying its pumps from the outside supplier? No, the minimum transfer price that the selling division should be willing to accept exceeds the maximum transfer price that the buying division should be willing to accept. Yes, both divisions are always better off regardless of whether the selling division has enough idle capacity to handle all of the buying division's needs. The answer cannot be determined from the information that has been provided. Yes, the minimum transfer price that the selling division should be willing to accept is less than the maximum transfer price that the buying division should be willing to accept.

No, the minimum transfer price that the selling division should be willing to accept exceeds the maximum transfer price that the buying division should be willing to accept.

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

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

Parts administration is an example of a: Organization-sustaining Product-level activity Unit-level activity Batch-level activity

Product-level activity

Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market)$60 Variable cost per unit$47 Fixed costs per unit (based on capacity)$8 Capacity in units 20,000 Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes.Also assume that the company's divisional managers are evaluated based on their division's profits and that Division A is currently selling 15,000 units on the outside market. If the managers of the two divisions do not agree on a transfer price and Division B purchases 4,000 component parts from an outside supplier, what would be the effect on the company's profits? Profits would decrease by $32,000 Profits would decrease by $64,000 Profits would decrease by $25,500 Profits would decrease by $44,000

Profits would decrease by $44,000

Which of the following statements is false? Raw materials inventory is included in the balance sheet. Raw materials include direct materials. Raw materials inventory excludes indirect materials. Raw materials inventory excludes selling expenses.

Raw materials inventory excludes indirect materials

Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations: Per UnitPer Year Selling price $200 Direct materials $75 Direct labor $50 Variable manufacturing overhead $10 Sales commission $8 Fixed manufacturing overhead $300,000 Which of the following choices explains the relationship between the absorption costing net operating income and the variable costing net operating income? The absorption costing net operating income will be higher than the variable costing net operating income by $102,000 The absorption costing net operating income will be higher than the variable costing net operating income by $30,000 The absorption costing net operating income will be lower than the variable costing net operating income by $102,000 The absorption costing net operating income will be lower than the variable costing net operating income by $30,000.

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

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

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

Which of the following is not one of the sections within a cash budget? The investing section The cash receipts section The financing section The cash disbursements section

The investing section

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

The materials spending variance must be $200 unfavorable.

Which of the following statements is true? The denominator in a predetermined overhead is estimated using the formula Y = a + bx. The actual amount of the allocation base used in an overhead rate is determined using the formula Y = a + bx. The estimated amount of the allocation base used in a predetermined overhead rate is determined using the formula Y = a + bx. The numerator in a predetermined overhead is estimated using the formula Y = a + bx.

The numerator in a predetermined overhead is estimated using the formula Y = a + bx

Which of the following statements is true? The revenue variance can be favorable or unfavorable depending on the formula used to create the flexible budget. The revenue variance will equal zero if the actual revenue earned equals the revenue expected for the actual level of activity. The revenue variance will be favorable if the revenue in the flexible budget exceeds the revenue in the planning budget. The revenue variance can be favorable or unfavorable depending on the planned level of activity.

The revenue variance will equal zero if the actual revenue earned equals the revenue expected for the actual level of activity.

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

The spending variance for a variable expense will equal zero if the actual expense incurred equals the expense expected for the actual level of activity.

Assume the following (1) variable expenses = $282,000, (2) unit sales = 10,000, (3) the contribution margin ratio = 25%, and (4) net operating income = $10,000. Given these four assumptions, which of the following is true? The total fixed expenses = $70,500 The variable expense ratio is 300% The total contribution margin = $211,500 The total sales = $376,000

The total sales = $376,000

In an ABC system, departmental managers are typically interviewed to determine how the departmental non-personnel costs should be distributed across the activity cost pools. True or False

True

Which costs will change with a decrease in activity within the relevant range? Unit variable cost and unit fixed cost Unit fixed costs and total variable cost Unit fixed cost and total fixed cost Total fixed costs and total variable cost.

Unit fixed costs and total variable cost

Which of the following equations can be used to compute a materials price variance (where AQ = actual quantity; SQ = standard quantity allowed; AP = actual price; SP = standard price)? [AQ × (AP − SP)] [SQ ÷ (AP − SP)] [AQ ÷ (AP − SP)] [SQ × (AP − SP)]

[AQ × (AP − SP)]

Assume that a company's planned level of activity is 1,000 hours and its actual level of activity is 1,100 hours. Based on this information, the company's activity variances for its variable expenses will: be favorable or unfavorable depending on each expense's cost behavior pattern. all be unfavorable. all be zero. all be favorable.

all be unfavorable.

Inspection of products would be classified as a(n): prevention cost appraisal cost. internal failure cost. external failure cost.

appraisal cost.

The corporate social responsibility measure of "Percent of customers that strongly agree with the statement "Your company is committed to environmental stewardship"" is an example of which performance measure category? internal business processes. customer. financial. learning and growth.

customer.

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing? sales manager's salary property taxes on the factory building sales commissions direct material cost

direct material cost

During March, Pendergraph Corporation incurred $71,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $73,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a: debit to Work in Process of $73,000 debit to Manufacturing Overhead of $71,000 credit to Manufacturing Overhead of $71,000 credit to Work in Process of $73,000

debit to Manufacturing Overhead of $71,000

Net profit margin percentage is an example of which performance measure category? internal business processes. customer. financial. learning and growth.

financial

A budget that is based on the actual activity of a period is known as a: master budget. continuous budget. static budget. flexible budget

flexible budget

A revenue variance is calculated by comparing the: static budget to the actual results. planning budget to the flexible budget. planning budget to the actual results. flexible budget to the actual results

flexible budget to the actual results

The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): opportunity cost direct material cost indirect material cost period cost.

indirect material cost

All of the following can be differential costs except: sunk costs fixed costs opportunity costs variable costs

sunk costs

Bayest Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 57,000 actual direct labor-hours and incurred $392,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 60,400 direct labor-hours during the year and incur $356,360 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was: underapplied by $35,640 overapplied by $55,700 underapplied by $55,700 overapplied by $35,640

underapplied by $55,700

Net operating income computed under variable costing would exceed net operating income computed using absorption costing if: units sold equal units produced units sold exceed units produced the average fixed cost per unit is zero units sold are less than units produced

units sold exceed units produced