ACCT201B Final Exam Review JG

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Regression analysis

is less accurate than other methods of estimating costs.

The range of activity for which estimates and predictions are likely to be accurate is the

relevant range.

The basic concept involved in time value of money calculations is that

it is better to receive a dollar today than to receive a dollar in the future.

What is the document used to accumulate the costs of a job called?

job cost record

What are the two basic types of product costing systems?

job costing and process costing

Which product costing system would better account for a unique individual product?

job costing system

When a capital budgeting project generates a positive net present value, this means that the project earns a return higher than the

required rate of return.

Ortiz Co. produces 5,000 units of part A12E. The following costs were incurred for that level of production: Direct materials $ 55,000 Direct labor 160,000 Variable overhead 75,000 Fixed overhead 175,000 If Ortiz buys the part from an outside supplier, $40,000 of the fixed overhead is avoidable. Reference: Ref 7-3 If the outside supplier offers a unit price of $68, net income will increase (decrease) by

$(10,000).

A company purchases 12,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials? Group of answer choices

$.50

Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds.Edgar, Inc.'s materials price variance is

$1,200 U.

At the beginning of the year, Monroe Company estimates annual overhead costs to be $2,400,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is

$2,520,000.

Opportunity cost must be considered in decisions involving

resources that have alternative uses.

The master budget of Windy Co. shows that the planned activity level for next year is expected to be 50,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect labor $720,000 Machine supplies 180,000 Indirect materials 210,000 Depreciation on factory building 150,000 Total manufacturing overhead $1,260,000 A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of

$1,482,000.

Talk Time Cellular sells smart phones for $150. The unit variable cost per phone is $25 plus a selling commission of 10%. Fixed manufacturing costs total $5,600 per month, while fixed selling and administrative costs total $2,100. Talk Time expects sales of $12,300 during next year. How much is the margin of safety estimated for next year?

$1,800

Table 5.1 Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts $ .08 per part Machining Machine hours 7.20 per machine hour Assembling Number of parts .35 per part Packaging Number of finished units 2.70 per finished unit Refer to Table 5.1. What is the cost of materials handling per ceiling fan?

$1.60

A cost is $11,000 at 1,000 units, $12,000 at 2,000 units, and $13,000 at 3,000 units. Using the high-low method, how much is the fixed portion of these costs?

$10,000

Moreland Clean Company spent $8,000 to produce Product 89, which can be sold as is for $10,000, or processed further incurring additional costs of $3,000 and then be sold for $14,000. Which amounts are relevant to the decision about Product 89?

$10,000, $3,000, and $14,000

Table 5.5Pitt Jones Company had the following activities, estimated indirect activity costs, and allocation bases:Activities Indirect Activity Costs Allocation BaseAccount inquiry (hours) $60,000 2,000 hoursAccount billing (lines) 30,000 20,000 linesAccount verification (accounts) 15,000 20,000 accountsCorrespondence (letters) 10,000 1,000 lettersPitt Jones uses activity based costing.The above activities are used by Departments P and Q as follows:Department P Department QAccount inquiry (hours) 100 hours 200 hoursAccount billing (lines) 10,000 lines 7,000 linesAccount verification (accounts) 1,000 accounts 600 accountsCorrespondence (letters) 50 letters 100 lettersRefer to Table 5.5. What is the cost per driver unit for the correspondence activit

$10.00

MDI Enterprises prepared the following income statement for June: Sales revenue (6,000 units) $150,000 Cost of goods sold: Fixed costs $18,000 Variable costs 30,000 48,000 Gross profit 102,000 Operating expenses: Fixed costs 27,000 Variable costs 12,000 39,000 Operating income $ 63,000 How much is MDI's total contribution margin?

$108,000

The per-unit standards for direct materials are 1.5 gallons at $2.50 per gallon. Last month, 4,180 gallons of direct materials that actually cost $10,659 were used to produce 3,000 units of product. How much is the direct materials standard?

$11,250

The following information is available for Halle Department Stores: Average operating assets $600,000 Controllable margin 60,000 Contribution margin 150,000 Minimum rate of return 8% How much is Halle's residual income?

$12,000

Matthew Company uses a job costing system. On January 1, 20X9, Matthew Company's work in process inventory account had a balance of $30,000. During 20X9, $58,000 of direct materials were placed into production and manufacturing wages incurred amounted to $84,000, of which $66,000 were for direct labor. Manufacturing overhead is allocated on the basis of 120% of direct labor cost. At the end of 20X9, actual manufacturing overhead cost was $90,000. Jobs costing $220,400 were completed during 20X9. What is the December 31, 20X9, balance in work in process inventory?

$12,800

Table 5.3Alpha Company manufactures breadboxes and uses an activity-based costing system. The following information is provided for the month of May:Estimated EstimatedIndirect Quantity ofActivity Activity Costs Allocation Base Allocation BaseMaterials handling $ 3,500 Number of parts 5,000 partsAssembling 12,000 Number of parts 5,000 partsPackaging 5,750 Number of bread boxes 1,250 bread boxesEach breadbox consists of 4 parts and the direct materials cost per breadbox is $7.00.Refer to Table 5.3. What is the cost of materials handling and assembling per breadbox?

$12.40

Table 5.1Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows:Activity Allocation Base Cost Allocation RateMaterials handling Number of parts $ .08 per partMachining Machine hours 7.20 per machine hourAssembling Number of parts .35 per partPackaging Number of finished units 2.70 per finished unitRefer to Table 5.1. What is the total manufacturing cost per ceiling fan?

$124.30

The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $12 per direct labor hour, what was the actual rate of pay for direct labor?

$13 per direct labor hour

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's total variance is

$135 U.

Table 3.2Potts Company uses a job costing system and had the following data available for 20X9.Cost of raw materials purchased on account $ 75,000Cost of raw materials requisitioned(includes $2,000 of indirect materials) $ 43,000Direct labor cost incurred $ 75,000Manufacturing overhead costs incurred $ 95,000Cost of goods completed $ 226,750Cost of goods sold $ 138,000Raw materials inventory, Jan. 1, 20X9 $ 15,000Work in process inventory, Jan. 1, 20X9 $ 32,000Finished goods inventory, Jan. 1, 20X9 $ 31,000Predetermined manufacturing overhead rate 125%Refer to Table 3.2. What is the balance in work in process inventory at December 31, 20X9? Group of answer choices

$15,000

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 at normal capacity of 160,000 direct labor hours. If 180,000 direct labor hours are worked, flexible budget total for these costs is:

$157,500.

Which of the following is an example of a fixed cost for a manufacturer?

salary of plant manager

Table 5.1Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows:Activity Allocation Base Cost Allocation RateMaterials handling Number of parts $ .08 per partMachining Machine hours 7.20 per machine hourAssembling Number of parts .35 per partPackaging Number of finished units 2.70 per finished unitRefer to Table 5.1. What is the cost of machining per ceiling fan?

$18.00

Johnson Corp. has an 8% required rate of return. It's considering a project that would provide annual cost savings of $50,000 for 5 years. The most that Johnson would be willing to spend on this project is Present Value PV of an Annuity Year of 1 at 8% of 1 at 8% 1 .926 .926 2 .857 1.783 3 .794 2.577 4 .735 3.312 5 .681 3.993

$199,650.

A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: Direct materials $ 4 Direct labor 10 Variable overhead 8 Fixed overhead 6 A foreign company wants to purchase 2,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4,000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is

$2,000.

$2,400 U.

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory.What is the total amount to be budgeted for direct labor for the month?

$2,610

Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.Reference: Ref 11-1The standard direct materials price per pound is

$2.00.

Duradyne, Inc. has total costs of $18,000 when 2,000 units are produced and $26,000 when 5,200 units are produced. During March, 4,000 units were produced and sold for $8 each. If the high-low method is used, how much is the variable cost per unit? Group of answer choices

$2.50

Abacus has 800 obsolete calculators that are carried in inventory at a cost of $1,920. If these calculators are upgraded at a cost of $3,100, they could be sold for $4,500. Alternatively, the calculators could be sold "as is" for $1,600. What is the net advantage or disadvantage of reworking the calculators?

$200 disadvantage

Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

$202,500

Table 3.3Buncombe Company uses a job costing system.Buncombe Company presents the following cost data for 20X9:Estimated manufacturing overhead costs $240,000Estimated direct labor cost $300,000Estimated direct labor hours 30,000Actual direct labor cost $315,000Actual direct labor hours 33,000Allocation base: Direct labor costOther expenses:Factory depreciation on equipment $65,300Factory rent $51,000Factory utilities $28,900Factory property taxes $26,000Indirect labor $23,800Indirect materials $32,000Sales commissions $52,500Refer to Table 3.3. What were the total actual manufacturing overhead costs for Buncombe Company in 20X9? Group of answer choices

$227,000

$24

In job costing, which of the following entries would be made to record the purchase of $20,000 in raw materials on account for Jake's Custom Furniture?

Raw Materials Inventory 20,000Accounts payable 20,000

$24.00

Tasty Bites produces corn chips. The cost of one batch is below: Direct materials $18 Direct labor 13 Variable overhead 11 Fixed overhead 14 An outside supplier has offered to produce the corn chips for $30 per batch. How much will Tasty Bites save if it accepts the offer?

$26 per batch

A company's unit costs based on 100,000 units are: Variable costs $75 Fixed costs 30 The normal unit sales price per unit is $165. A special order from a foreign company has been received for 5,000 units at $135 a unit. In order to fulfill the order, 3,000 units of regular sales would have to be foregone. Reference: Ref 7-1 The opportunity cost associated with this order is

$270,000.

A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs: Variable Fixed Indirect materials $90,000 Depreciation $37,500 Indirect labor 120,000 Taxes 7,500 Factory supplies 15,000 Supervision 30,000 A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

$277,500.

Stone Industries uses flexible budgets. At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed. If Stone had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

$3,000 favorable

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: Regular Supreme Direct labor hours 10,000 15,000 Machine hours 10,000 30,000 Number of parts 90,000 160,000 Overhead applied to Supreme using activity-based costing is Group of answer choices

$3,210,000.

A project under consideration currently has a negative net present value of $11,600 using a 6% rate of return and an estimated 4-year life. What must be the minimum present value of the soft benefits of this project in order to make it acceptable? (Round the answer to nearest whole dollar.) Group of answer choices

$3,348

Cleaners, Inc. is considering purchasing equipment costing $60,000 with a 6-year useful life. The equipment will provide cost savings of $14,600 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 Reference: Ref 12-2 What is the approximate net present value of this investment?

$3,583

Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials $8,400 Direct labor 11,250 Variable overhead 12,600 Fixed overhead 16,200 An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit. Reference: Ref 7-2 If Clemente accepts the offer, by how much will net income increase (decrease)?

$3,750

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20. Last month, 15,000 units were produced and 73,500 direct labor hours were actually worked at a total cost of $1,350,000. The direct labor quantity variance was

$30,000 favorable.

$30,000.

$30.00

A company developed the following per-unit standards for its product: 2 pounds of direct materials at $4 per pound. Last month, 1,500 pounds of direct materials were purchased for $5,700. The direct materials price variance for last month was

$300 favorable.

Young Co. has budgeted its activity for December according to the following information: 1. Sales at $600,000, all for cash. 2. Budgeted depreciation for December is $15,000. 4. The cash balance at December 1 was $15,000. 5. Selling and administrative expenses are budgeted at $60,000 for December and are paid for in cash. 6. The planned merchandise inventory on December 31 and December 1 is $18,000. 7. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid in cash. How much are the budgeted cash disbursements for December?

$510,000

Smith and Jones Company uses job costing. The records at Smith and Jones Company show Job. No. 110 charged with $11,000 of direct materials and $12,500 of direct labor. Smith and Jones Company allocates manufacturing overhead at 85% of direct labor cost. What is the total cost of Job No. 110?

$34,125

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs: Direct Materials $13,000 Direct Labor 15,000 Variable Overhead 3,000 Fixed Overhead 7,000 Crigui could avoid $4,000 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 60,000 units externally, what is the maximum external price that Crigui would expect to pay for the units? Group of answer choices

$35,000

Shane Industries prepared a fixed budget of 60,000 direct labor hours, with estimated overhead costs of $300,000 for variable overhead and $90,000 for fixed overhead. Shane then prepared a flexible budget at 57,000 labor hours. How much is total overhead costs at this level of activity?

$375,000

An investment promises a return of $8,000 per year at the end of each of the next six years. How much will you be willing to invest today to receive the $8,000 payments and earn a return of 7%?

$38,132

Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses. Reference: Ref 6-5 The per unit manufacturing cost under variable costing is

$39.

At Bahama Foods, the break-even point is 1,600 units. If fixed costs total $44,000 and variable costs are $12 per unit, what is the selling price per unit?

$39.50

The per-unit standards for direct materials are 2 pounds at $5 per pound. Last month, 11,200 pounds of direct materials that actually cost $53,000 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

$4,000 favorable.

Rogers Racers makes toy race cars that sell for $12 each with a variable cost of $5 per car. Annual fixed costs are $7,000. How much will profit increase if 600 more units are sold?

$4,200

Quincy Corp. earned controllable margin of $500,000 on sales of $6,400,000. The division had average operating assets of $5,200,000. The company requires a return on investment of at least 8%. How much is residual income?

$84,000

Lawn Cut Perfection provided data concerning the costs incurred to mow residential lawns for which customers pay $45 per mowing. Data for the past 7 months are as follows: January February March April May June July Number of lawns mowed 200 110 150 100 220 120 210 Mowing cost $12,900 $8,120 $10,200 $8,200 $13,060 $8,400 $13,280 How much is the estimated variable cost of mowing one lawn using the high-low method?

$40.50

A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: January $360,000 February 216,000 March 540,000 The cash inflow in the month of March is expected to be

$406,800.

Petal Co. reported the following information for 2016: October November December Budgeted sales $930,000 $870,000 $1,080,000 • All sales are on credit.• Customer amounts on account are collected 50% in the month of sale and 50% in the following month.How much is the November 30, 2016 budgeted Accounts Receivable?

$435,000

If the required direct materials purchases are 24,000 pounds, the direct materials required for production is three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct materials in pounds?

36,000

Sloan Inc. recently invested in a project with a 3-year life span. The net present value was $9,000 and annual cash inflows were $21,000 for year 1; $24,000 for year 2; and $27,000 for year 3. The initial investment for the project, assuming a 15% required rate of return, was Present Value PV of an Annuity Year of 1 at 15% of 1 at 15% 1 .870 .870 2 .756 1.626 3 .658 2.283

$45,180.

Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.Cash collections for the third quarter are budgeted at

$5,319,000.

How much will you need to invest today at 10% to have a total of $10,000 accumulated six years from today? Group of answer choices

$5,645

The Hemingway Company uses a job costing system. In April, raw material requisitions of $44,000 were issued (direct materials, $40,000) and raw materials purchases totaled $56,600. The April 30th balance in raw materials inventory was $18,400. What was the balance on April 1st in raw materials inventory?

$5,800

Table 5.5Pitt Jones Company had the following activities, estimated indirect activity costs, and allocation bases:Activities Indirect Activity Costs Allocation BaseAccount inquiry (hours) $60,000 2,000 hoursAccount billing (lines) 30,000 20,000 linesAccount verification (accounts) 15,000 20,000 accountsCorrespondence (letters) 10,000 1,000 lettersPitt Jones uses activity based costing.The above activities are used by Departments P and Q as follows:Department P Department QAccount inquiry (hours) 100 hours 200 hoursAccount billing (lines) 10,000 lines 7,000 linesAccount verification (accounts) 1,000 accounts 600 accountsCorrespondence (letters) 50 letters 100 lettersRefer to Table 5.5. How much of the correspondence cost will be assigned to Department P?

$500

Table 2.3Fitness Company reports the following data for 20X9, its first year of operations:Cost of goods manufactured $440,000Work in process inventory, Dec. 31, 20X9 130,000Direct materials used 115,000Manufacturing overhead incurred 160,000Finished goods inventory, Dec. 31, 20X9 75,000Refer to Table 2.3. What are the total manufacturing costs for the year ended December 31, 20X9?

$570,000

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December?

$588 F

A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds. The quantity variance is $1,800 unfavorable. What is the standard price?

Table 5.5Pitt Jones Company had the following activities, estimated indirect activity costs, and allocation bases:Activities Indirect Activity Costs Allocation BaseAccount inquiry (hours) $60,000 2,000 hoursAccount billing (lines) 30,000 20,000 linesAccount verification (accounts) 15,000 20,000 accountsCorrespondence (letters) 10,000 1,000 lettersPitt Jones uses activity based costing.The above activities are used by Departments P and Q as follows:Department P Department QAccount inquiry (hours) 100 hours 200 hoursAccount billing (lines) 10,000 lines 7,000 linesAccount verification (accounts) 1,000 accounts 600 accountsCorrespondence (letters) 50 letters 100 lettersRefer to Table 5.5. How much of the account inquiry cost will be assigned to Department Q?

$6,000

It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what will be the effect on net income?

$6,000 increase

Mallory Company manufactures widgets. Bowden Company has approached Mallory with a proposal to sell the company widgets at a price of $82,000 for 100,000 units. Mallory is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced: Direct material $ 31,000 Direct labor 29,000 Manufacturing overhead 40,000 Total $100,000 The manufacturing overhead consists of $16,000 of costs that will be eliminated if the components are no longer produced by Mallory. From Mallory's point of view, how much is the incremental cost or savings if the widgets are bought instead of made?

$6,000 incremental cost

Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials $8,400 Direct labor 11,250 Variable overhead 12,600 Fixed overhead 16,200 An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit. Reference: Ref 7-2 If Clemente could avoid $3,000 of fixed overhead by accepting the offer, net income would increase (decrease) by

$6,750.

Sandusky Inc. has the following costs when producing 100,000 units: Variable costs $600,000 Fixed costs 900,000 An outside supplier is interested in producing the item for Sandusky. If the item is produced outside, Sandusky could use the released production facilities to make another item that would generate $150,000 of net income. At what unit price would Sandusky accept the outside supplier's offer if Sandusky wanted to increase net income by $120,000?

$6.30

Idol Creations produces two models of keyboards, compact and deluxe. Information regarding the products is summarized for the month of April in the following table: Compact Deluxe Total Number of units 600 400 1,000 Sales $48,000 $36,000 $84,000 Variable costs 15,000 12,000 27,000 Fixed costs 21,000 20,000 41,000 Profit $12,000 $ 4,000 $16,000 Profit per unit $20.00 $10.00 If the company's weighted average contribution margin ratio is 67.86%, and the weighted average contribution margin per unit is $57.00, how much will Idol Creation's total sales be at break-even? Group of answer choices

$60,419

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000. If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

$600 favorable.

Ruth Company produces 1,000 units of a necessary component with the following costs: Direct Materials $34,000 Direct Labor 15,000 Variable Overhead 9,000 Fixed Overhead 10,000 Ruth Company could avoid $6,000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Ruth Company would accept to acquire the 1,000 units externally? Group of answer choices

$62,000

Smart Manufacturing budgeted costs for 50,000 linear feet of block are: Fixed manufacturing costs $24,000 per month Variable manufacturing costs $16.00 per linear foot Smart installed 40,000 linear feet of block during March. How much is budgeted total manufacturing costs in March? Group of answer choices

$664,000

$7,350.

Opague Corporation uses a job costing system. The work in process inventory balance on December 31, 20X9, consists of Job No. 120, which has a balance of $19,000. Job No. 120 has been charged with manufacturing overhead costs of $5,100. Opaque allocates manufacturing overhead at a predetermined rate of 85% of direct labor cost. What was the amount of direct materials charged to Job No. 120?

$7,900

$7.00

A company developed the following per-unit standards for its product: 2.4 pounds of direct materials at $2 per pound. Last month, 700 pounds of direct materials were purchased and used for $1,470. The company produced 290 units of product. How much is the direct materials price variance for last month? Group of answer choices

$70 unfavorable

Randolph Corporation sells a single product at a price of $275 per unit. Variable cost per unit is $135 and fixed costs total $356,860. If sales are expected to be $825,000, what is the company's margin of safety?

$700,975

Given the following information, determine the cost of goods manufactured and the cost of goods sold for the year ended December 31, 20X9.Direct labor incurred $126,000Manufacturing overhead incurred 359,000Direct materials used 271,000Finished goods inventory, 1/1/20X9 395,000Finished goods inventory, 12/31/20X9 442,000Work in process inventory, 1/1/20X9 193,000Work in process inventory, 12/31/20X9 218,000 Group of answer choices

$731,000 and $684,000

Table 5.5Pitt Jones Company had the following activities, estimated indirect activity costs, and allocation bases:Activities Indirect Activity Costs Allocation BaseAccount inquiry (hours) $60,000 2,000 hoursAccount billing (lines) 30,000 20,000 linesAccount verification (accounts) 15,000 20,000 accountsCorrespondence (letters) 10,000 1,000 lettersPitt Jones uses activity based costing.The above activities are used by Departments P and Q as follows:Department P Department QAccount inquiry (hours) 100 hours 200 hoursAccount billing (lines) 10,000 lines 7,000 linesAccount verification (accounts) 1,000 accounts 600 accountsCorrespondence (letters) 50 letters 100 lettersRefer to Table 5.5. How much of the account verification costs will be assigned to Department P?

$750

Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon's labor quantity variance is Group of answer choices

$770 U.

Oak Hill Furniture has a contribution margin ratio of 20%, and a contribution margin per unit of $12. If fixed costs are $156,000, how much sales revenue must the company generate in order to reach its break-even point? Group of answer choices

$780,000

The per-unit standards for direct labor are 1.5 direct labor hours at $15 per hour. If in producing 2,400 units, the actual direct labor cost was $46,000 for 3,000 direct labor hours worked, the total direct labor variance is

$8,000 favorable.

Bear, Inc. estimates its sales at 200,000 units in the first quarter and that sales will increase by 20,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.Cash collections for the third quarter are budgeted at

$8,274,000.

Martin Company incurred the following costs for 70,000 units: Variable costs $420,000 Fixed costs 392,000 Martin has received a special order from a foreign company for 3,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $6,300 for shipping.If Martin wants to earn $6,000 on the order, what should the unit price be?

$8.00

Shipp, Inc. manufactures a product requiring two pounds of direct material. During 2013, Shipp purchases 24,000 pounds of material for $99,200 when the standard price per pound is $4. During 2013, Shipp uses 22,000 pounds to make 12,000 products. The standard direct material cost per unit of finished product is Group of answer choices

$8.00.

Denray Deli has two locations, downtown and in the town mall. During March, the company reported total net income of $144,000 with sales of $1,200,000. The contribution margin in the downtown store was 30%. The contribution margin in the town mall store is $80,000. Total fixed costs are allocated as $110,000 in the downtown store and $90,000 in the town mall location. How much are sales at the downtown location?

$880,000

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon. The materials price variance was $80,000 favorable. What is the standard price per gallon?

The standard number of hours that should have been worked for the output attained is 6,000 direct labor hours and the actual number of direct labor hours worked was 6,300. If the direct labor price variance was $3,150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?

$9.50 per direct labor hour

WayFair Clothing has total fixed costs of $34,000 per month. It sells a single product with variable costs of $5.60 per unit. If 8,000 units can be sold this month, what price must Wayfair charge in order to break-even?

$9.85

If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%?

$900,000

$93

The standard rate of pay is $12 per direct labor hour. If the actual direct labor payroll was $47,040 for 4,000 direct labor hours worked, the direct labor price (rate) variance is

$960 favorable.

An investment of $100,000 promises net operating cash inflows of $40,000 per year for each of the next three years. If the required rate of return is 14%, what is the net present value of the project?

($7,135)

Mercantile Corporation has sales of $2,000,000, variable costs of $800,000, and fixed costs of $900,000. Reference: Ref 6-4 Mercantile's margin of safety ratio is

.25.

Kathleen Corp. produced 320,000 units in 150,000 direct labor hours. Production for the period was estimated at 330,000 units and 165,000 direct labor hours. A flexible budget would compare budgeted costs and actual costs, respectively, at

150,000 hours and 150,000 hours.

In a job order cost system, it would be correct in recording the purchase of raw materials to debit Group of answer choices

Raw Materials Inventory.

What type of businesses can use a job costing system?

service, merchandising, and manufacturing businesses

Pell Manufacturing is preparing its direct labor budget for May. Projections for the month are that 33,400 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $12, what is the total budgeted direct labor cost for May?

1,202,400.

Splurge Electronics sells homework machines for $80 each. Variable costs per unit are $45 and total fixed costs are $43,750. Splurge is considering the purchase of new equipment that would increase fixed costs to $48,700, but decrease the variable costs per unit by $5. At that level, Splurge Electronics expects it can sell 1,500 units next year. What is the company's break-even point in units if it purchases the new equipment, assuming the selling price remains constant? (Round your answer to the nearest whole number.)

1,218 units

Rogers Racers makes toy race cars that sell for $12 each with a variable cost of $5 per car. Annual fixed costs are $7,000. How many cars must be sold to earn a profit of $3,150? Group of answer choices

1,450 cars

What is the present value factor for a $4,000 cash outflow that is made today?

1.00

Revert Creations sells a single product at a price of $50 per unit. Fixed costs total $312,000 and variable costs per unit are $24. Revert is considering the purchase of new equipment that would reduce variable costs per unit to $21, but fixed costs would increase to $334,370. Above what volume would Revert be profitable with the new machine, assuming the selling price remains constant?

11,530 units

A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $240,000. The number of units the company must sell to break even is

120,000 units.

Table 2.2The following information pertains to Bright Toy Company's operating activities for the year ending December 31, 20X9. The company sells light box toys and sold 10,000 units in 20X9.Purchases $ 126,000Selling and Administrative Expenses 90,000Merchandise inventory, 1/1/20X9 14,000Merchandise inventory, 12/31/20X9 10,000Sales Revenue 250,000Refer to Table 2.2. What is the Cost of Goods Available for Sale for the year ending December 31, 20X9?

130,000

If controllable margin is $300,000 and the average investment center operating assets are $2,000,000, the return on investment is

15%.

Planning involves which of the following activities?

setting goals and objectives for the company

Davie Company uses a job costing system. Davie Company uses estimated direct labor hours of 180,000 and estimated manufacturing overhead costs of $990,000 in establishing its 20X9 predetermined manufacturing overhead rate. Actual results showed:Actual manufacturing overhead costs $950,000Allocated manufacturing overhead costs $962,500What were the number of direct labor hours worked during 20X9?

175,000

What is the proper preparation sequencing of the following budgets? 1. Budgeted Balance Sheet 2. Sales Budget 3. Selling and Administrative Budget 4. Budgeted Income Statement

2, 3, 4, 1

2,500 units

Brady Corp. is considering the purchase of a piece of equipment that costs $20,000. Projected net annual cash flows over the project's life are: Year Net Annual Cash Flow 1 $ 3,000 2 8,000 3 15,000 4 9,000 The cash payback period is

2.60 years.

Bunch of Books, a producer of children's books, has provided the following information: Selling price per unit $6.60 Contribution margin per unit $3.00 Total fixed costs $46,200 What is the break-even point in books?

20,790 books

Widgely Sales Company's break-even point is 12,200 units. Each unit incurs variable costs of $2.20 and is sold for $4.90. How much are total fixed costs? Group of answer choices

20,790 books

A company budgeted unit sales of 204,000 units for January, 2017 and 240,000 units for February 2017. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2016, how many units should be produced in January, 2017 in order for the company to meet its goals?

214,800 units

Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.Production in units for the third quarter should be budgeted at

220,500.

Naples, Inc. recorded operating data for its shoe division for the year. Sales $750,000 Contribution margin 135,000 Total fixed costs 90,000 Average total operating assets 300,000 How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?

25%

Splurge Electronics sells homework machines for $80 each. Variable costs per unit are $45 and total fixed costs are $43,750. Splurge Electronics expects it can sell 1,500 units next year. By how many units can Splurge's sales drop before the company incurs a loss?

250 units

The direct materials budget shows: Units to be produced 3,000 Total pounds needed for production 9,000 Total materials required 9,900 What are the direct materials per unit?

3.0 pounds

Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. Reference: Ref 11-1 The standard direct materials quantity per unit is

3.0 pounds.

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie Nursery keeps 15% of the next month's sales as ending inventory. How many units should Lorie Nursery produce during April?

308

A cost is $4,900 at 800 units, $5,600 at 900 units, and $6,200 at 980 units. This cost is a Group of answer choices

step cost.

38,880

The standard quantity allowed for the units produced was 4,500 pounds, the standard price was $2.50 per pound, and the materials quantity variance was $375 favorable. Each unit uses 1 pound of materials. How many units were actually produced?

4,350

Mercantile Corporation has sales of $2,000,000, variable costs of $800,000, and fixed costs of $900,000. Reference: Ref 6-4 Mercantile's degree of operating leverage is

4.00.

Lion Industries required production for June is 132,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 300,000 and 330,000 pounds, respectively. How many pounds of direct material Z must be purchased?

426,000.

THIS SUBJECT WILL NOT BE ON THE EXAM. The correct answer is $428,000. Select it to get it right. The following information is taken from the production budget for the first quarter: Beginning inventory in units 1,200 Sales budgeted for the quarter 426,000 Capacity in units of production facility 472,000 How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter? Group of answer choices

428,000

The following information is taken from the production budget for the first quarter: Beginning inventory in units 1,200 Sales budgeted for the quarter 426,000 Capacity in units of production facility 472,000 How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter?

428,000

Doe Manufacturing plans to sell 6,000 purple lawn chairs during May, 5,700 in June, and 6,000 during July. The company keeps 15% of the next month's sales as ending inventory. How many units should Doe produce during June?

5,745

The production budget shows expected unit sales are 100,000. The required production units are 104,000. What are the beginning and desired ending finished goods units, respectively? Beginning Units Ending Units

6,000 10,000

If a company plans to sell 48,000 units of product but sells 60,000, the most appropriate comparison of the cost data associated with the sales will be by a budget based on

60,000 units of activity.

Bark Company is considering buying a machine for $240,000 with an estimated life of ten years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $6,000 each year. The cash payback period on this investment is

8 years.

Three costs incurred by Randall Rockers are summarized below at two different activity levels, 600 and 700 units: 600 Units 700 Units Cost A $2,700 $3,150 Cost B 2,940 3,360 Cost C 4,800 5,600 Which of these costs is variable? Group of answer choices

A and C

Which of the following components are included in a mixed cost? Group of answer choices

A fixed cost and a variable cost

Which one of the following is an example of a period cost?

A manager's salary for work that is done in the corporate head office

Which of the following is an irrelevant cost?

A sunk cost

If the time value of money techniques are used correctly, the present value of cash flows far in the future will be

lesser than the present value of the same amount of cash flows in the present.

In job costing, all manufacturing labor costs incurred are initially debited to what account?

manufacturing overhead

Which of the following statements about the payback period method is true?

All other things being equal, a company would prefer a project with a longer payback period.

In job costing, which of the following would be debited to assign the costs of indirect labor?

manufacturing overhead

Which of the following will cause an increase in ROI?

An increase in sales

The accountant for a manufacturer is ready to prepare income statements. What must be calculated first?

manufacturing overhead

When making a decision to buy a computer, all of the following should be considered except for

sunk costs.

A company is trying to decide whether to keep or drop the organic foods department in its grocery store. If organic foods are dropped, the manager will be laid off. What is the manager's salary in relation to the decision to keep or drop the department?

Avoidable and therefore incremental

Which of the following assumptions might negatively affect the validity of a CVP analysis?

Both the assumptions—costs can be accurately separated into fixed and variable components, and fixed costs remain fixed, and variable costs per unit do not change over the activity levels of interest—negatively affect the validity of a CVP analysis.

Truckel, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $11 Variable overhead 5 Fixed overhead 8 Total $24 Reference: Ref 7-4 Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $16 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Truckel make or buy the wickets?

Buy; savings = $5,000

Which of the following ignores the time value of money?

Cash payback

Which of the following is not an assumption underlying CVP analysis?

Costs can be accurately separated into their fixed and variable components.

For a manufactured product, indirect labor and indirect materials are classified as what type of costs?

manufacturing overhead and product costs

Which of the following is a reason the amount of cash paid out for manufacturing overhead each period does not equal the total overhead incurred?

Depreciation is an overhead expense that does not require the use of cash.

During 2016, it cost Westa, Inc. $18 per unit to produce part T5. During 2017, it has increased to $21 per unit. In 2017, Southside Company has offered to provide Part T5 for $16 per unit to Westa. As it pertains to the make-or-buy decision, which statement is true?

Differential costs are $5 per unit.

Which costs comprise WIP inventory on a production cost report?

Direct materials, direct labor, and manufacturing overhead

An investment was analyzed and its NPV was determined to be $2,000. The company's expected rate of return was 12%. The manager of the division is currently earning 12% on its other investments. This investment will generate losses for the first two years. Which of the following statements best describes what the manager will likely be motivated to do if he is evaluated based on profits?

Do not accept the proposal since losses are expected for the first two years

In which of the following situations will an annuity table be useful?I. Calculating the net present value of an investment with equal cash flows for the first nine years, but a different flow in year 10II. Calculating the internal rate of return of an investment with unequal cash flows each yearIII. Calculating the net present value of an investment with an equal cash flow in years one through four, and a different equal cash flow in years 5 through 10

I, II, and III

Which of the following companies is most likely to use job costing?

Elizabeth's Custom Furniture Company

A company has a cost that is $7.00 per unit at a volume of 10,000 units and $5.00 per unit at a volume of 14,000 units. What type of cost is this?

Fixed costs

Which of the following methods provides the most accurate predictions of future costs?

Regression analysis.

Which of the following is not a method that is used to estimate variable and fixed costs?

High-low method

Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

Income would increase by $40,000.

In the manufacture of a product, which of the following is an example of manufacturing overhead?

The performance of the manager of Ottawa Division is measured by residual income. Which of the following would decrease the manager's performance measure?

Increase in amount of return on investment desired

Which of the following is not a true statement?

Incremental analysis is the same as CVP analysis.

Which of the following is not a qualitative factor to be considered in a make-or-buy decision?

Incremental benefit from buying outside

Which of the following pairs of techniques use the time value of money concept?

Internal rate of return method and the net present value method

Why is the level of operating leverage important?

It affects the change in profit when sales change.

Which of the following is a characteristic of a service company?

It does not have tangible products intended for sale.

Which of the following is true for a firm with high operating leverage?

It has a relatively high amount of mixed costs.

Which of the following is a disadvantage of the cash payback technique?

It ignores the expected profitability of a project

In job costing, the entry to transfer direct labor and indirect labor costs from manufacturing wages to units in production includes debits to which of the following?

manufacturing overhead and work in process inventory

What is the document which is prepared by manufacturing personnel to request materials for the production process?

materials requisition

Your required rate of return is greater than zero. How much is a payment of $3,000 to be received a year from today worth?

Less than $3,000 today

The capital budgeting technique that indicates the profitability of a capital expenditure is the

net present value method.

Which of the following statements about managerial accounting is true?

Managerial accounting reports provide detailed information on parts of a company.

Specialty Wood Products Company had the following labor-related transactions at it's plant last month:Woodworkers' wages 100,000Staining tank workers' wages 20,000Maintenance personnel wages 10,000What is the journal entry to record the incurrence of these wages?

Manufacturing wages 130,000Wages payable (or cash) 130,000

Which of the following is a unit-level activity?

Material handling

A cost is $34,500 at an activity level of 23,000 units, and $42,000 at an activity level of 28,000 units. What type of cost is this?

Mixed costs

The profitability index is computed by dividing the

net present value of cash flows by the initial investment.

Which of the following statements is(are) true concerning common costs?I. They are costs that are directly traceable to an individual product line.II. They are normally avoidable.

Neither I nor II

Which of the following is an example of an industry that would use a process costing system rather than a job costing system?

paint

Within the relevant range, variable costs

per unit change when the activity level changes.

Internal rate of return method and the net present value method

Opportunity costs

Which of the following is most likely relevant in a make-or-buy decision?

Opportunity costs

Eddy Company is starting business and is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $60 and Eddy Company would sell it for $135. The cost to assemble the product is estimated at $27 per unit and Eddy Company believes the market would support a price of $174 on the assembled unit. What is the correct decision using the sell or process further decision rule?

Process further, the company will be better off by $12 per unit.

Which of the following statements is correct?

Profit is equal to revenue minus total variable costs minus total fixed costs.

What type of costs are selling and administrative costs for a manufacturer?

period costs

Which of the following management responsibilities is being fulfilled when management plans to increase sales growth by a certain percentage for the following year?

planning and decision-making

Janssen Company has old inventory on hand that cost $24,000. Its scrap value is $32,000. The inventory could be sold for $80,000 if manufactured further at an additional cost of $24,000. What should Janssen do?

Sell the inventory for $32,000 scrap value

In the manufacture of a product, which of the following is an example of indirect labor? Group of answer choices

plant managers

Which of the following costs is least likely to be a variable cost?

Supervisory salaries

Hanalei Fishing Trips is operating at its break-even point of 4,200 fishing trips per year. Which of the following statements is true?

The amount of the company's total costs equals the amount of its revenues.

A negative net present value indicates that the

present value of the cash inflows was less than the present value of the cash out flows.

A total materials variance is analyzed in terms of

price and quantity variances.

Job costing is most likely used in which of the following industries?

printing

Harrison Enterprises currently produces 8,000 units of part B13. Current unit costs for part B13 are as follows: Direct materials $12 Direct labor 9 Factory rent 7 Administrative costs 10 General factory overhead (allocated) 7 Total $45 If Harrison decides to buy part B13, 50% of the administrative costs would be avoided. All of the company's items, including part B13, are manufactured in the same rented production facility. The company has an offer from a wholesaler that wishes to sell the part to Harrison for $31 per unit. What will occur if the company accepts the offer? Group of answer choices

The cost for this part will increase by $5 per unit.

A company is trying to decide whether to sell partially completed goods in their current state or incur additional costs to finish the goods and sell them as complete units. Which of the following is not relevant to the decision?

The costs incurred to process the units to this point

The direct materials budget shows: Units to be produced 3,000 Total pounds needed for production 9,000 Total materials required 9,900 What are the direct materials per unit?

Hyde Corp.'s cash budget showed total available cash less cash disbursements. What does this amount equal?

The excess of available cash over cash disbursements

A system for assigning costs for products made in a continuous process is

process costing.

Which of the following will have no effect on the break-even point in units?

The number of units sold declines.

Which of the following is not a component of a time value of money calculation?

The opportunity costs of the alternative actions

What must be true if the contribution margin is less than zero?

The selling price per unit is less than the variable cost per unit

What is the primary difference between a static budget and a flexible budget?

The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.

Which one of the following statements is true?

There is no correlation of favorable or unfavorable for price and quantity variances.

In the manufacture of a product, which statement describes direct materials?

They are used to determine total inventoriable product costs.

In job costing, which of the following entries would be made to record $10,000 of direct materials and $5,000 of indirect materials used in production by Jake's Custom Furniture? Group of answer choicesManufacturing overhead 15,000Raw Materials inventory 15,000Raw Materials inventory 15,000Work in process inventory 15,000Work in process inventory 15,000Raw Materials inventory 15,000Work in process inventory 10,000Manufacturing overhead 5,000Raw Materials inventory 15,000

Work in process inventory 10,000Manufacturing overhead 5,000 Raw Materials inventory 15,000

C-Drive Components has collected the following production data for the past four months: Units produced Total cost 7,000 $16,500 10,000 22,500 8,500 17,750 9,000 21,000 If the high-low method is used, what is the monthly total cost equation?

Total cost = $2,500 + ($2.00 × units produced)

How is the cost per equivalent unit computed?

Total costs to account for divided by total equivalent units

Which of the following correctly describes fixed and variable cost behavior as total volume increases? Group of answer choices

Total fixed costs stay the same and total variable costs increase.

The number of equivalent units is computed before computing the cost per equivalent unit.

True

Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

True

What of the following would not be relevant in a make-or-buy decision?

Unavoidable variable costs

Manufacturing overhead costs from a manufactured product are what type of cost?

product cost

The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result?

Unfavorable labor quantity variance

Which of the following will always be a relevant cost?

Variable cost

In the analysis concerning the acceptance or rejection of a special order, which items are relevant?

Variable costs and avoidable costs

Which one of the following will not increase return on investment?

Variable costs are increased

Work in process inventory 100,000Manufacturing overhead 30,000Manufacturing wages 130,000

In job costing,which of the following entries would be made to assign $10,000 of manufacturing labor to jobs, 70% of which was direct labor and 30% of which was indirect labor?

Work in process inventory 7,000Manufacturing overhead 3,000Manufacturing wages 10,000

Which of the following is the correct order for the preparation of the listed budgets?

What are indirect costs incurred in a manufacturing plant that cannot be traced directly to a manufactured product treated as?

product costs and expensed when incurred

An investment that costs $50,000 will return $15,000 operating cash flows per year for five years. Determine the net present value of the investment if the required rate of return is 14 percent. Should the investment be undertaken? Group of answer choices

Yes, the net present value is positive at $1,496.50.

When manufacturing products, how are direct labor and direct materials classified?

product costs and expensed when the goods are sold

Table 3.2Potts Company uses a job costing system and had the following data available for 20X9.Cost of raw materials purchased on account $ 75,000Cost of raw materials requisitioned(includes $2,000 of indirect materials) $ 43,000Direct labor cost incurred $ 75,000Manufacturing overhead costs incurred $ 95,000Cost of goods completed $ 226,750Cost of goods sold $ 138,000Raw materials inventory, Jan. 1, 20X9 $ 15,000Work in process inventory, Jan. 1, 20X9 $ 32,000Finished goods inventory, Jan. 1, 20X9 $ 31,000Predetermined manufacturing overhead rate 125%Refer to Table 3.2. The journal entry to record the actual manufacturing overhead costs incurred would include which of the following?

debit to manufacturing overhead $95,000

In job costing, the journal entry to record $200 of depreciation expense on factory equipment for the current period involves which of the following?

debit to manufacturing overhead for $200

Mini Inc. is contemplating a capital project costing $47,019. The project will provide annual cost savings of $18,000 for 3 years and have a salvage value of $3,000. The company's required rate of return is 10%. The company uses straight-line depreciation. Present Value PV of an Annuity Year of 1 at 10% of 1 at 10% 1 .909 .909 2 .826 1.736 3 .751 2.487 This project is

acceptable because it has a zero NPV.

The discount rate is referred to by all of the following alternative names except the

accounting rate of return.

A static budget is appropriate in evaluating a manager's performance if

actual activity closely approximates the master budget activity.

When manufacturing products, which of the following is an example of a period cost?

advertising expense

Which of the following management responsibilities is being fulfilled when management decides to move production to another country to lower costs?

all of the above

When determining the cost of a manufactured product, a plant manager's salary may be referred to as which of the following?

an indirect cost

Projects with a negative net present value will always have a(n)

an internal rate of return greater than the cost of capital.

When a department or product line is dropped, the common fixed costs that had been allocated to that department

are allocated to the remaining departments or product lines.

In the manufacture of a product, how is rent expense incurred on a factory building treated? Group of answer choices

as a product cost

Where would period costs be found on the financial statements?

as operating costs that are shown on the income statement in the period in which they are incurred.

Which of the following describes how, in ABC, the activity allocation rate is computed?

as the estimated quantity of allocation base times the estimated total indirect cost of the activity

Costs that will be eliminated if a particular course of action is undertaken are called

avoidable costs.

Relevant costs are always

avoidable costs.

The direct materials budget details 1. the quantity of direct materials to be purchased. 2. the cost of direct materials to be purchased.

both 1 and 2

cannot be determined from the information given

The direct materials and direct labor budgets provide information for preparing the

cash budget.

The single most important output in preparing financial budgets is the

cash budget.

When management conducts variance analysis by comparing budget results to actual results, which of the following responsibilities is being fulfilled?

controlling

Which of the following is one of the four primary responsibilities of management?

controlling

A critical factor in budgeting for a service firm is to

coordinate professional staff needs with anticipated services.

For a manufacturer, to what is beginning work in process equal?

cost of goods manufactured plus ending work in process minus manufacturing costs incurred in the current period

Indirect costs incurred in manufacturing automobiles include all of the following except

cost of the automobile engines.

The only difference in the balance sheets of service businesses, manufacturing businesses, and merchandising businesses relates to

current assets

If manufacturing overhead has been overapplied during the year, the adjusting entry at the end of the year will show a

debit to Manufacturing Overhead.

The entry to record the purchase of raw materials on account using a job costing system would include which of the following?

debit to raw materials inventory

In job costing, the assignment of direct and indirect materials to cost objects requires a credit to what account?

raw materials inventory

In job costing, the cost of indirect materials used in production are credited to which of the following?

raw materials inventory

Table 3.2Potts Company uses a job costing system and had the following data available for 20X9.Cost of raw materials purchased on account $ 75,000Cost of raw materials requisitioned(includes $2,000 of indirect materials) $ 43,000Direct labor cost incurred $ 75,000Manufacturing overhead costs incurred $ 95,000Cost of goods completed $ 226,750Cost of goods sold $ 138,000Raw materials inventory, Jan. 1, 20X9 $ 15,000Work in process inventory, Jan. 1, 20X9 $ 32,000Finished goods inventory, Jan. 1, 20X9 $ 31,000Predetermined manufacturing overhead rate 125%Refer to Table 3.2. The journal entry to record the cost of the raw materials placed into production would include which of the following?

debit to work in process inventory for $41,000

Table 3.2Potts Company uses a job costing system and had the following data available for 20X9.Cost of raw materials purchased on account $ 75,000Cost of raw materials requisitioned(includes $2,000 of indirect materials) $ 43,000Direct labor cost incurred $ 75,000Manufacturing overhead costs incurred $ 95,000Cost of goods completed $ 226,750Cost of goods sold $ 138,000Raw materials inventory, Jan. 1, 20X9 $ 15,000Work in process inventory, Jan. 1, 20X9 $ 32,000Finished goods inventory, Jan. 1, 20X9 $ 31,000Predetermined manufacturing overhead rate 125%Refer to Table 3.2. The journal entry to record the allocation of manufacturing overhead costs would include which of the following?

debit to work in process inventory for $95,000

When the level of activity decreases, total variable costs

decrease in direct proportion to the decrease in activity.

When the level of activity increases, total fixed costs

decrease.

When the level of activity increases, the fixed cost per unit

decreases.

In a production budget, total required production units are the budgeted sales units plus

desired ending finished goods units minus beginning finished goods units.

The high-low method calculates the total fixed cost as the

difference between total variable costs and total costs at a particular activity level.

Incremental analysis is synonymous with

differential analysis

What are conversion costs?

direct labor and manufacturing overhead

What are prime costs?

direct materials and direct labor

Manufacturing costs are typically classified as

direct materials, direct labor, or manufacturing overhead.

The direct labor quantity standard is sometimes called the direct labor

efficiency standard.

If a payback period for a project is greater than its expected useful life, the

entire initial investment will not be recovered.

Beginning cash balance plus total receipts

equals total available cash.

The predetermined overhead rate is based on the relationship between

estimated annual costs and expected annual activity.

An overly optimistic sales budget may result in

excessive inventories

The margin of safety is the difference between

expected level of sales and the break-even point in revenue dollars.

Which of the following statements is correct concerning product costs?

expensed in the period the related product is sold

Which of the following describes the way fixed costs in total behave?

fixed costs in total will remain the same as production levels change

Which of the following describes the way fixed costs per unit behave?

fixed costs per unit will decrease as production decreases.

In determining the cost of an upholstered chair, all of the following would probably be considered a direct material except for which one?

glue

An unrealistic budget is more likely to result when it

has been developed in a top down fashion.

Which of the following statements is true regarding activity-based costing systems?

have separate indirect cost allocation rates for each activity

If project A has a lower payback period than project B, this may indicate that project A may have a

higher NPV and be more profitable.

Past relationships between cost and activity may not be a useful basis for estimating future costs Group of answer choices

if future activity levels are expected to be beyond the relevant range.

All of the following statements about the simple rate of return method are correct except that it

ignores the salvage value of an investment.

When the level of activity increases, the variable cost per unit Group of answer choices

increases.

A revenue that differs between alternatives and makes a difference in decision-making is called a(n)

incremental revenue.

Which of the following are included in manufacturing overhead?

indirect labor and indirect materials

When manufacturing products, which of the following is an example of an inventoriable cost?

indirect materials

A capital budgeting method that takes into consideration the time value of money is the Group of answer choices

internal rate of return method.

What are product costs called that are regarded as an asset for financial reporting under GAAP?

inventoriable costs

The flexible budget

is a series of static budgets at different levels of activity.

Inventoriable product costs for a manufactured product include which of the following? Group of answer choices

the costs of direct materials, direct labor, and manufacturing overhead used to produce a product

If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then

the order will likely be rejected.

If Manufacturing Overhead has a credit balance at the end of the period, then

the overhead assigned to Work in Process Inventory is less than the overhead incurred.

While preparing the production budget, the desired ending finished goods inventory for the first period is

the same as the beginning inventory for the second period.

A significant weakness of the high-low method is that

the two data points that are used may not be representative of the general relationship between cost and activity.

Which of the following statements describes inventoriable product costs?

they are not shown on the income statement until the products are sold

If actual costs are greater than standard costs, there is a(n)

unfavorable variance.

What is a cost whose total amount changes in direct proportion to a change in volume called?

variable cost

Only direct materials, direct labor, and variable manufacturing overhead costs are considered product costs when using

variable costing.

Which of the following describes the way variable costs in total behave?

variable costs in total will remain the same as production levels change

Which of the following describes the way variable costs per unit behave?

variable costs per unit will remain the same as production levels change

Complete the sentence. Variable costs

vary per unit of output as production levels change.

In the manufacture of a product, which of the following is an example of direct labor?

wages of assembly line personnel

In job costing, which of the following would be credited to accumulate the actual labor costs incurred but not paid?

wages payable

When do inventoriable costs for a product become expenses?

when units in inventory are sold

Firms that have high operating leverage

will have smaller changes in profit when the activity level changes.

In a job costing system, when direct materials are requisitioned, they flow directly into what account? Group of answer choices

work in process inventory

In job costing, the cost of direct materials used in production are debited to which of the following?

work in process inventory

In job costing, which of the following would be debited to record direct labor costs actually incurred?

work in process inventory

In job costing, which of the following would be debited to record the requisition of direct materials?

work in process inventory

In job costing, the journal entry to assign $1,500 of direct labor and $200 of indirect labor to units in production involves a debit to what account(s)?

work in process inventory for $1,500 and a debit to manufacturing overhead for $200

In job costing, the journal entry to issue $500 of direct materials and $30 of indirect materials to units in production involves a debit to what account(s)?

work in process inventory for $500 and a debit to manufacturing overhead for $30

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