Study
Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses takes 45,000 direct labor hours and involves 1,700 parts and 115 inspections. The manufacturing of tinted glasses takes 115,000 direct labor hours and involves 1,400 parts and 450 inspections. The traditional method applies $560,000 of overhead on the basis of direct labor hours. What is the amount of overhead per direct labor hour applied to the clear glass products?
$157,500
A company anticipates the cost to heat the building will be $21,000. Product A takes up 500 square feet of space, while Product B takes up 200 square feet. The activity rate per product using activity-based costing would be which of the following?
$30/square foot
A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the company's after-tax income?
$72,000
Which of the following represents the components of the income statement for a service business?
Service Revenue - Operating Expenses = operating income
Which of the following product situations is better suited to job order costing than to process costing?
The costs are easily traced to a specific product.
The variable overhead efficiency variance is caused by the difference between which of the following?
actual and standard allocation base
The variable overhead rate variance is caused by the sum between which of the following?
actual and standard overhead rates
The units required in production each period are computed by which of the following methods?
adding budgeted sales to the desired ending inventory and subtracting beginning inventory
Which is not a section of the cash budget?
allowance for uncollectible accounts
Break-even for a multiple product firm
can be calculated by dividing total fixed costs by the contribution margin of a composite unit
Which of the following is a finance budget?
cash budget
Which of the following terms means the ability to work in cross-functional teams in order to complete a task?
collaboration
The amount of a unit's sales price that helps to cover fixed expenses is its
contribution margin
The costs to be accounted for consist of which of the following?
costs in the beginning inventory and costs added during the period
Internal users of accounting information would not include ____
creditors
When sales price increases and all other variables are held constant, the break-even point will
decrease
During the control function, the measurements taken of the performance must be accurate enough to see
deviations and variances
Which of the following would not be classified as manufacturing overhead?
direct labor
Which of the following is a conversion cost?
factory depreciation expenses
When variable costs increase and all other variables remain unchanged, the break-even point will
increase
Which document lists the total direct materials used in a specific job?
job cost sheet
What are some possible reasons for a direct labor time variance?
less qualified workers
In a job order costing system, which account shows the overhead used by the company?
manufacturing overhead
Which document lists the inventory that will be removed from the raw materials inventory?
materials requisition form
The stockholders of a company are:
owners
Which of the following is the primary source of revenue for a service business?
providing intangible goods and services
Variable costs are expenses that
remain constant on a per-unit basis but change in total based on activity level
When fixed costs increase and all other variables remain unchanged, the contribution margin will
remain unchanged
What is the cost of direct labor if the conversion costs are $330,000 and manufacturing overhead is $275,000?
$55,000
Which of the following is a possible cause of an unfavorable labor rate variance?
hiring higher-quality workers at a higher wage
What are some possible reasons for a labor rate variance?
hiring of less qualified workers
The controller of a corporation:
reports to the CFO and is in charge of the accounting side of the business
Which of the following is not considered a product cost?
selling expense
What is the main difference between static and flexible budgets?
the variable costs are adjusted in a flexible budget
When is the material price variance favorable?
when the actual price is less than the standard price
When is the direct labor time variance favorable?
when the actual quantity used is less than the standard quantity
In a job order cost system, overhead applied is debited to which account?
work in process inventory
During production, how are the costs in process costing accumulated?
to each individual department
The most common budget is prepared for a
year
Which approach requires management to justify all its expenditures?
zero-based budgeting