Managerial Accounting Final (Ch 16 - Ch 27)

The Darwin Company reports the following information: Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Period costs are

$ 24,500 (Period Costs = selling + administrative expenses) (selling expenses = advertising expenses, sales salaries expenses, commissions expenses) (administrative expenses = office salaries expense, office supplies expense, depreciation expense - office building and equipment) Period Costs = Sales Salaries expense + Office Salaries expense. = 15600 + 8900 = $ 24500

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to calculate Bounty' variable utilities costs per machine hour. Round your answer to the nearest cent. March $3,100 15,000 April 2,700 10,000 May 2,900 12,000 June 3,600 18,000

$0.11 = [(3,600-2,700/(18,000-10,000)]

The manufacturing cost of Calico Industries for three months of the year are provided below:

$0.40 per unit and $8,000

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material at $ 4.50; and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials quantity variance?

$1020 unfavorable

When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and factory overhead, $2,400. A total of 1,000 units were produced at a per-unit cost of

$12.40 [4400+5600+2400 = 12400/1000]

Selected accounts with some amounts omitted are as follows Work in Process Aug. 1 Balance 275,000 Aug. 31 Goods finished 1,030,000 31 Direct materials X 31 Direct labor 450,000 31 Factory overhead X Factory Overhead Aug. 1—31 Costs incurred 145,000 Aug. 1 Balance 15,000 31 Applied X If the balance of Work in Process at August 31 is $220,000, what was the amount debited to Work in Process for factory overhead in August, assuming a factory overhead rate of 30% of direct labor costs?

$135,000 [Direct Labor 450,000*0.3 = 135,000]

Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $11, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?

$150,000 cost increase ($20-$15 * 30,000 units)

In the manufacture of 10,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,000. What is the total conversion cost?

$158,000 [direct labor cost incurred was $105,000 + applied factory overhead was $53,000 = $158,000]

Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 What is the differential cost from the acceptance of the offer?

$165,000 Calculate the differential cost from the acceptance of the offer: Extra revenue = 15,000 units * $17.50 = $262,500 Profit of the acceptance of the export order = 15,000 units * ($17.50 -$11) = $97,500 (also 262500-165000 = 97500) Variable cost of the product = 15,000 units *$11 = $165,000 Therefore, the correct answer is $165,000. The differential cost of the offer is the variable cost per unit ($11) multiplied by the number of units (15,000). The fixed cost is not differential as it will not change for the entity as a whole with the acceptance of the offer. $11 x 15,000 units = $165,000

The following data relate to direct labor costs for August: Actual costs: 5,500 hours at $24.00 per hour. Standard costs: 5,000 hours at $23.70 per hour. What is the direct labor rate variance?

$1650 unfavorable

Keating Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $48,750. Keating will incur repair, insurance, and property tax expenses estimated at $8,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is

$17,000

Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20 per pound and costs $15.75 per pound to produce. Product D would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. What is the differential revenue of producing Product D?

$18 per pound

Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. The number of equivalent units of production for the period for materials if the average cost method is used to cost inventories was

$18,000

Delaney Company is considering replacing equipment which originally cost $600,000 and which has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation?

$180,000 = (Original Cost - Depreciation Cost = $600,000 - $420,000 = $180,000)

A firm operated at 90% of capacity for the past year, during which fixed costs were $420,000, variable costs were 40% of sales, and sales were $1,000,000. Operating profit was

$180,000 [Sales - Fixed Costs - Variable Costs]

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?

$2,125,000 [850,000/0.4 = 2,125,000]

Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and the desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of the finished product are given below. Material A 0.50 lb. per unit @ $0.70 per pound Material B 1.00 lb. per unit @ $1.70 per pound Material C 1.20 lb. per unit @ $1.00 per pound The dollar amount of material A used in production during the year is

$217,700

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $95,000 and expected direct labor hours of 9,500 for the current fiscal year. If job number 117 incurred 2,300 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for

$23,000 [2300 direct labor hours *10]

For February, sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $96,000; advertising expenses are $90,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are $2,500 plus 1/2 of 1% of sales. Total selling expenses for the month of February are

$241,000

Selected accounts with a credit amount omitted are as follows Work in Process Apr. 1 Balance 7,000 Apr. 30 Goods finished X 30 Direct materials 78,400 30 Direct labor 195,000 30 Factory overhead 136,500 Finished Goods Apr. 1 Balance 42,000 30 Goods finished 387,000 What was the balance of Work in Process as of April 30?

$29,900 [Work in process = 7000+78400+195000+136500 = 416900 - 387,000 (Goods Finished April 30) = $29,900]

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours per unit @ $0.80 per hour Variable overhead 3 hours per unit @ $2.00 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The amount of the variable factory overhead controllable variance is

$3,000 unfavorable

Income from operations for Division L is $250,000, total service department charges are $400,000 and operating expenses are $2,750,000. What are the revenues for Division L?

$3,400,000

The debits to Work in Process—Assembly Department for May, together with data concerning production, are as follows: May 1, work in process: Materials cost, 3,000 units $ 8,000 Conversion costs, 3,000 units, 66.7% completed 6,000 Materials added during May, 10,000 units 30,000 Conversion costs during May 31,000 Goods finished during May, 11,500 units 0 May 31 work in process, 1,500 units, 50% completed 0 All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for May is

$3.00

The condensed income statement for a Fletcher Inc. for the past year is as follows: Product F G H Total Sales $300,000 $210,000 $340,000 $850,000 Costs: Variable costs $180,000 $180,000 $220,000 $590,000 Fixed costs 50,000 50,000 40,000 140,000 Total costs $230,000 $230,000 $260,000 $730,000 Income (loss) $ 70,000 $(20,000) $ 80,000 $120,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?

$30,000 decrease Change in net income = Fixed cost avoidable - contribution margin lost

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material, $ 4.50; and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials price variance?

$3000 favorable

Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $30 per pound and costs $28 per pound to produce. Product C would sell for $55 per pound and would require an additional cost of $31 per pound to produce. What is the differential cost of producing Product C?

$31 per pound

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: Rails Division Locomotive Division Corporate Total Cost of goods sold $ 47,200 $30,720 Direct operating expenses 27,200 20,040 Sales 108,000 78,000 Interest expense $ 2,040 General overhead 18,160 Income tax 4,700 The income from operations for the Rails Division is

$33,600 (Profit - Direct operating expenses = Income from Operations) ($60,800 - $27,200 = $33,600)

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: Rails Division Locomotive Division Corporate Total Cost of goods sold $ 47,200 $30,720 Direct operating expenses 27,200 20,040 Sales 108,000 78,000 Interest expense $ 2,040 General overhead 18,160 Income tax 4,700 The net income for Train Corporation is

$35,940

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units): Direct materials $170,000 Direct labor 360,000 Variable factory overhead 190,000 Fixed factory overhead 50,000 $770,000 Operating expenses: Variable operating expenses $ 60,000 Fixed operating expenses 18,000 78,000 If 500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

$36,000

At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct materials of $170,000, and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

$378,000 = (212500+137500+28000 fixed) = [110,000/8,000 = 13.75 direct labor hr] [170,000/8,000 = 21.25 per material hr] [13.75 x 10,000 hours = 137500] [21.25 x $10,000 = 212500]

Compute conversion costs given the following data: Direct Materials, $347,500; Direct Labor, $196,300; Factory Overhead, $187,900; and Selling Expenses, $45,290.

$384,200 = [Direct Labor, $196,300 + Factory Overhead, $187,900]

Selected accounts with amounts omitted are as follows Work in Process Aug. 1 Balance 275,000 Aug. 31 Goods finished 1,030,000 31 Direct materials X 31 Direct labor 450,000 31 Factory overhead X Factory Overhead Aug. 1 - 31 Costs incurred 145,000 Aug. 1 Balance 15,000 31 Applied (30% of direct labor cost) X If the balance of Work in Process at August 31 is $220,000, what was the amount debited to Work in Process for direct materials in August?

$390,000

Jacoby Company received an offer from an exporter for 30,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable 12 Fixed 5 What is the differential revenue from the acceptance of the offer?

$450,000

The following data relate to direct labor costs for the current period: Standard costs 6,000 hours at $12.00 Actual costs 7,500 hours at $11.40 What is the direct labor rate variance?

$4500 favorable

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours per unit @ $0.80 per hour Variable overhead 3 hours per unit @ $2.00 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The amount of the total factory overhead cost variance is

$5,000 unfavorable

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units): Direct materials $180,000 Direct labor 240,000 Variable factory overhead 280,000 Fixed factory overhead 100,000 $800,000 Operating expenses: Variable operating expenses $130,000 Fixed operating expenses 50,000 180,000 If 1,500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

$52,500

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units): Direct materials $180,000 Direct labor 240,000 Variable factory overhead 280,000 Fixed factory overhead 100,000 $800,000 Operating expenses: Variable operating expenses $130,000 Fixed operating expenses 50,000 180,000 If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

$56,000 = [Direct materials $180,000 + Direct labor $240,000 + Variable factory overhead $280,000 = $700,000 / 20,000 units = $35/unit; $35 unit * 1600 unsold units = $56,000]

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: Rails Division Locomotive Division Corporate Total Cost of goods sold $ 47,200 $30,720 Direct operating expenses 27,200 20,040 Sales 108,000 78,000 Interest expense $ 2,040 General overhead 18,160 Income tax 4,700 The gross profit for the Rails Division is

$60,800 = (Sales - Cost of Goods Sold = Profit) (108,000 - 47200 = 60800)

The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is

$62 per machine hour [Predetermined overhead rate: $15,500,000/250,000]

Selected accounts with some amounts omitted are as follows Work in Process Oct. 1 Balance 20,000 Oct. 31 Goods finished X 31 Direct materials 96,700 31 Direct labor 201,000 31 Factory overhead X Finished Goods Oct. 1 Balance 52,000 31 Goods finished 360,000 If the balance of Work in Process at October 31 is $21,000, what was the amount of factory overhead applied in October?

$63,300 [201,000-96,700-20,000-21,000 = $63,300]

Consider Derek's budget information: materials to be used totals $64,750; direct labor totals $198,400; factory overhead totals $394,800; work in process inventory January 1, $189,100; and work in progress inventory on December 31, $197,600. What is the budgeted cost of goods manufactured for the year?

$649,450

Farris Company is considering a cash outlay of $500,000 for the purchase of land, which it could lease out for $40,000 per year. If alternative investments are available that yield a 15% return, the opportunity cost of the purchase of the land is

$75,000 [$500,000*0.15]

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

$8,000 increase [Current operating Income = $600,000 - ($600,000*80%) - $130,000 = -$10,000 Operating profit when sales increased = $640,000 - ($640,000*80%) - $130,000 = -$2,000 Operating profit will increase by $8,000 ($10,000 - $2,000)]

Below is budgeted production and sales information for Flushing Company for the month of December: Product XXX Product ZZZ Estimated beginning inventory 32,000 units 20,000 units Desired ending inventory 34,000 units 17,000 units Region I, anticipated sales 320,000 units 260,000 units Region II, anticipated sales 180,000 units 140,000 units The unit selling price for product XXX is $5 and for product ZZZ is $15.Budgeted sales for the month are

$8,500,000

Standard Actual Variable OH rate $3.35 Fixed OH rate $1.80 Hours 18,900 17,955* Fixed overhead $46,000 Actual variable overhead $67,430 Total factory overhead $101,450 *Actual hours are equal to standard hours for units produced. The total factory overhead cost variance is

$8,981.75 unfavorable

Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20 per pound and costs $15.75 per pound to produce. Product D would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. What is the differential cost of producing Product D?

$8.55 per pound

Woodpecker Co. has $296,000 in accounts receivable on January 1. Budgeted sales for January are $860,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are

$984,000 = ($172,000 + $516,000 + $296,000) = [$860,000 x 20% = $172,000] + [$860,000 x 80% = $688,000 x 75% = $516,000]

Jensen Company reports the following: Direct materials used $345,000 Direct labor incurred 250,000 Factory overhead incurred 400,000 Operating expenses 175,000 Jensen Company's product costs are

$995,000 (Product Costs = Direct Materials + Direct Labor + Factory Overhead)

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. What is the rate of return on investment for Division D?

114.7%

O'Boyle Co.'s fixed costs are $256,000, the unit selling price is $36, and the unit variable costs are $20, what is the break-even sales (units)?

16,000 units [Fixed costs/(selling price - unit variable cost = 256,000/(36-20)]

The International Boot Company has income from operations of $80,000, invested assets of $500,000, and sales of $1,525,000. What is the investment turnover?

3.05 = Sales/invested assets = $1,525,000/$500,000

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

45% [(850,000-850,000*0.55)/850,000]

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. What is the contribution margin ratio?

45.5% [Sales-Variable Cost/Sales x 100]

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)?

4808 units [Fixed costs/(selling price - unit variable cost = $250,000/($125-$73)]

Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. What is the profit margin for Division D?

49.1% = ($350,000 - $120,000-$58,000) = 172,000/350,000 = 0.491 x 100 = 49.1%

If a company uses a process costing system to account for the costs in its five production departments, how many work in process accounts will it use?

5

Below is budgeted production and sales information for Flushing Company for the month of December: Product XXX Product ZZZ Estimated beginning inventory 32,000 units 20,000 units Desired ending inventory 34,000 units 17,000 units Region I, anticipated sales 320,000 units 260,000 units Region II, anticipated sales 180,000 units 140,000 units The unit selling price for product XXX is $5 and for product ZZZ is $15. Budgeted production for product XXX during the month is

502,000 units = [180,000+320,000+(34,000-32,000) = 502,000]

Motorcycle Manufacturers, Inc. projected sales of 78,000 machines for the year. The estimated January 1 inventory is 6,500 units, and the desired December 31 inventory is 6,000 units. What is the budgeted production (in units) for the year?

77,500 units (78,000-6500 = 71500 + 6000 = 77,500)

The period costs of a textbook printer would include

CEO salary expense

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had production costs of $375,000. The entry to record the transfer of costs from finished goods to cost of goods sold is

Cost of Goods Sold 375,000 Finished Goods 375,000

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as

Direct Labor Cost

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:

Exceed units sold

The three categories of manufacturing costs comprising the total cost of work in process are direct labor, direct materials, and

Factory Overhead

The two categories of cost comprising conversion costs are

Favory Overhead & Direct Labor

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The entry to record the transfer of costs from work in process to finished goods is

Finished Goods 540,000 Work in Process 540,000

Which of the graphs in Figure 21-1 illustrates the behavior of a total fixed cost?

Graph 1 https://o.quizlet.com/RAXvaFwrQfKiSYWHMEvLdA_m.png

Which of the graphs in Figure 21-1 illustrates the nature of a mixed cost?

Graph 2 https://o.quizlet.com/RAXvaFwrQfKiSYWHMEvLdA_m.png

Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

Graph 3 https://o.quizlet.com/RAXvaFwrQfKiSYWHMEvLdA_m.png

Which of the following is not true in regards to direct materials for a bakery?

Paper cupcake liners, that become part of the product, must be accounted for as direct materials.

Pinacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead costs for the year were $650,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for the current year is:

Plantwide Factory overhead rate = Budgeted overhead costs / Budgeted Machine Hours = $700,000/100,000 hours = $7.00 per machine hour

Which of the following shows how product cost flow through the accounts of a manufacturing company?

Raw materials → Work in process → Finished goods → Cost of goods sold

Which of the following is NOT one of the common types of responsibility centers?

Revenue Center

A cost that will not be affected by later decisions is termed a(n)

Sunk Cost

Materials must have which two qualities in order to be classified as direct materials?

They must be an integral part of the finished product and be a significant portion of the total product cost.

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. In addition, factory overhead charged to production was $32,000. The entry to record the direct labor costs is

Work in Process 150,000 Wages Payable 150,000

Which of the following would be most likely to use process costing?

a lawn fertilizer manufacturer

The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period 4.00 1.50 What would be the effect on income from operations if absorption costing is used rather than variable costing? What would be the effect on income from operations if absorption costing is used rather than variable costing?

a. $42,000 increase [7,000 units x $6.00]

Break-Even Sales and Sales to Realize Income from Operations For the current year ending March 31, Jwork Company expects fixed costs of $412,800, a unit variable cost of $49, and a unit selling price of $73.

a. Compute the anticipated break-even sales (units). 17,200 units ($73-$49 = $24) [412,800/24 = 17,200] b. Compute the sales (units) required to realize income from operations of $96,000. 21,200 units [412,800 + 96,000 = 508,800/24 = 21,200]

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

absorption costing

Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is NOT considered a human behavior problem?

allowing employees the opportunity to be a part of the budget process

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

are less than units sold

Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?

assembly labor's wages

Production estimates for August are as follows: Estimated inventory (units), August 1 12,000 Desired inventory (units), August 31 9,000 Expected sales volume (units), August 75,000 For each unit produced, the direct materials requirements are as follows: Material A ($5 per lb.) 3 lbs. Material B ($18 per lb.) 1/2 lb. The total direct materials purchases (assuming no beginning or ending inventory of material) of Materials A and B required for August production is

b. $1,080,000 for A; $648,000 for B

In order to be useful to managers, managerial accounting reports should possess all of the following characteristics except

be prepared in accordance with generally accepted accounting principles

Cost of goods sold for a manufacturer equals cost of goods manufactured plus

beginning finished goods inventory less ending finished goods inventory

The balanced scorecard measures

both financial and nonfinancial information

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is

d. $500,000 overapplied

In a job order cost accounting system, the entry to record the flow of direct materials into production is to

debit Work in Process, credit Materials

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to

debit Work in Process, credit Wages Payable

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?

debit Work in Process—Dept. B; credit Work in Process—Dept. A

Which of the following describes the behavior of the fixed cost per unit?

decreases with increasing production

The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is

differential revenue

The cost of a manufactured product generally consists of which of the following costs?

direct labor cost, direct materials cost, and factory overhead cost

Which types of inventories does a manufacturing business report on the balance sheet?

direct materials inventory, work in process inventory, and finished goods inventory

Laurie Inc.'s static budget for 10,000 units of production includes $60,000 for direct materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show

direct materials of $72,000, direct labor of $52,800, fixed utilities of $5,000, and supervisor salaries of $25,000

The standard price and quantity of direct materials are separated because

direct materials prices are controlled by the purchasing department and quantity used is controlled by the production department

The balanced scorecard measures four areas of financial and nonfinancial performance of a business. Identify one of the following that is not included as a performance measurement.

employees

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

equal units sold

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as

factory overhead cost

Costs that remain constant in total dollar amount as the level of activity changes are called

fixed costs

The three most common cost behavior classifications are

fixed costs, variable costs, and mixed costs

Under variable costing, which of the following costs would not be included in finished goods inventory?

fixed factory overhead cost

Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the

fixed factory overhead volume variance

When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing

goal conflict

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to

increase by $1,700,000 = [Beginning actual started at $40,300,000. increase by $1,700,000 by the end of the year = $42,000,000]

Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price $250 Unit variable cost 100 Total fixed costs $840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be

increased by 640 units

A responsibility center in which the department manager is responsible for costs, revenues, and assets for a department is called:

investment center

Which of the following are the two main types of cost accounting systems for manufacturing operations?

job order cost and process cost systems

What is the primary criterion for the preparation of managerial accounting reports?

managers needs

Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the

market price approach

Standards that represent levels of operation that can be attained with reasonable effort are called

normal standards

If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the absorption costing income statement?

not reported

The amount of income that would result from an alternative use of cash is called:

opportunity cost

What term is used to describe the process of developing the organization's objectives and translating those into courses of action?

planning

Which of the following are basic phases of the management process?

planning and controlling

Managerial accounting reports are

prepared according to management needs

The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis is

process

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n)

profit center = (Cost + Revenues = Profit)

Which of the following expenses incurred by a department store is an indirect expense?

salary of vice president of finance

For which of the following businesses would a process cost system be appropriate?

shampoo manufacturer

The principle of exceptions allows managers to focus on correcting variances between

standard costs and actual costs

A favorable cost variance occurs when

standard costs are more than actual costs

Which of the following would most likely use a job order costing system?

swimming pool installer

Which of the following is not a disadvantage of decentralized operation?

top management freed from everyday tasks to do strategic planning

At the end of the fiscal year, the balance in Factory Overhead is small. The balance would be

transferred to Cost of Goods Sold

Under absorption costing, which of the following costs would not be included in finished goods inventory?

variable and fixed selling and administrative expenses

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?

variable costing

Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show

variable costs of $72,000, and $23,000 of fixed costs [$72,000 = (40,000/5,000 = 8x8000 = 64,000) + (5000/5000 x 8,000 = $8,000)]