Cost Midterm MC

Mannitou Company made the following predictions for 2018: Factory overhead costs $300,000 Direct labor hours 50,000 hours Machine hours 100,000 hours Job A2 (which was started and completed in June) used 3,000 direct labor hours, 2,000 machine hours, and $57,000 of prime costs. If factory overhead is applied based on machine hours, the cost of Job A2 for the Mannitou Company is a. $63,000. b. $66,000. c. $75,000. d. $69,000.

a. $63,000.

The income statement for Symbiosis Manufacturing Company for 2018 is as follows: Sales (10,000 units) $120,000 Variable expenses 72,000 Contribution margin $48,000 Fixed expenses 36,000 Operating income $12,000 What is the contribution margin ratio? a. 40% b. 60% c. 100% d. 30%

a. 40%

The Cumberland Company provides the following information: Sales (250,000 units) $625,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the break-even point in units for Cumberland? a. 50,000 units b. 41,668 units c. 125,000 units d. 250,000 units

a. 50,000 units

Direct material cost is $15,000 when 3,000 units are produced. What is the direct material cost when 1,500 units produced? a. $7,500 b. $3,500 c. $3,000 d. $6,000

a. 7,500

Hologram Printing Company projected the following information for next year: Selling price per unit $75.00 Contribution margin per unit $30.00 Total fixed costs $120,000 Tax rate 40% How many units must be sold to obtain an after-tax profit of $67,500? a. 7,750 units b. 5,167 units c. 5,625 units d. 3,750 units

a. 7,750 units

The cash or cash equivalent value sacrificed for goods and services that are expected to bring a current or future benefit to the organization is/are called: a. Cost b. An activity c. Expenses d. A loss

a. Cost

Which of the following costs is an example of product costs? a. direct materials b. nonfactory office salaries c. advertising expense d. selling commissions

a. Direct materials

The following information was taken from a computer printout generated with the least-squares method for use in estimating overhead costs: Slope 45 Intercept 5,700 Correlation coefficient .72 Activity variable Direct labor hours The cost formula is a. Overhead = $5,700 + $45X b. Overhead = $5,700 + ($45 × 0.72) c. Overhead = $5,700 − $45X d. Overhead = $5,700 × 0.72

a. Overhead = $5,700 + $45X

Which of the following is an example of an expense? a. the cost of a product delivered to a customer b. the write-off of an obsolete product c. the cost of a proposed advertising campaign d. the cost of the purchase of equipment

a. The cost of a product delivered to a customer

Activity-based costing assigns cost to cost objects by first tracing costs to a. activities and then tracing costs to cost objects. b. departments and then tracing costs to products. c. customers and then tracing costs to products. d. products and then tracing costs to cost objects.

a. activities and then tracing costs to cost objects.

Which of the following costs is NOT included on a job-order cost sheet? a. actual factory overhead costs b. applied factory overhead costs c. direct labor costs d. direct material costs

a. actual factory overhead costs

Which of the following costs is a period cost for a manufacturing company? a. controller's salary b. fringe benefits for factory employees c. wages of machine operators d. insurance on factory equipment

a. controller's salary

Which of the following costs would be included as part of factory overhead? a. depreciation of plant equipment b. paper used in the production of books c. direct labor d. depreciation on the corporation's office building

a. depreciation of plant equipment

Prime product costs include a. direct materials and direct labor. b. only factory overhead. c. direct labor and factory overhead. d. only direct labor.

a. direct materials and direct labor.

Rent of $10,000 paid per month for renting a building is an example of a(n): a. fixed cost. b. marginal cost. c. opportunity cost. d. variable cost.

a. fixed cost

In the formula Y = F + VX, F refers to the a. intercept. b. slope. c. independent variable. d. dependent variable.

a. intercept

All of the following are non-unit-based activity drivers EXCEPT a. number of direct labor hours. b. number of material moves. c. number of inspections. d. number of setups.

a. number of direct labor hours.

The appropriate cost accounting system to use when inventory items are produced on an assembly line is a. process costing. b. perpetual method. c. weighted average. d. job-order costing.

a. process costing

Which of the following would NOT use a process costing system? a. satellites b. cotton yarn c. electrical wire d. newsprint

a. satellites

The overhead rates of the traditional functional-based product costing use a. unit-based activity drivers. b. non-unit-based activity drivers. c. process costing. d. job order costing.

a. unit-based activity drivers.

What is is a basic unit of work performed within an organization.

activity

The Mildmanner Corporation has the following data for 2018: Selling price per unit $15 Variable cost per unit $9 Fixed costs $45,000 Units sold 10,000 units The margin of safety in units will be (round to the nearest whole unit) a. 667. b. 4,000. c. 7,500. d. 2,500.

d. 2,500

Value-chain product costs include which of the following? a. customer service costs b. marketing costs c. research and development d. All of these choices are correct.

d. All of these choices are correct

Products might consume overhead in different proportions due to differences in a. product complexity. b. setup times. c. product size. d. All of these choices are correct.

d. All of these choices are correct.

Which of the following quantities is an example of an activity driver in activity-based costing? a. number of direct labor hours b. number of machine hours c. number of labor transactions d. All of these choices are correct.

d. All of these choices are correct.

Which of the following quantities is an example of an activity driver in activity-based costing? a. number of machine hours b. number of orders placed c. number of setups d. All of these choices are correct.

d. All of these choices are correct.

A predetermined overhead rate is calculated using which of the following formulas? a. Actual annual overhead / budgeted annual driver level b. Actual annual overhead / actual annual driver level c. Budgeted annual overhead / actual annual driver level d. Budgeted annual overhead / budgeted annual driver level

d. Budgeted annual overhead / budgeted annual driver level

The term given to units that represents the number of completed units that is equal, in terms of production inputs, to a given number of partially completed units is: a. Units started and completed b. Units completed c. Total units in production d. Equivalent units

d. Equivalent units

A cost that expires without producing any revenue benefit is known as a(n) _____.

loss

What is concerned with determining what activities should be performed and assessing how well they are performed.

Operating Control

Motorsports, Inc. had a predetermined overhead rate of $2 per direct labor hour. The direct labor hours were estimated to be 25,000. The actual manufacturing overhead incurred was $47,000 and 24,000 actual direct labor hours were worked. How much was overhead over/under applied last year? a. $1,000 underapplied b. $1,000 overapplied c. $3,000 overapplied d. $2,000 underapplied

b. $1,000 overapplied

Fixed cost per unit is $7 when 25,000 units are produced and $5 when 35,000 units are produced. What is the total fixed cost when nothing is produced? a. $200,000 b. $175,000 c. $12 d. $130,000

b. $175,000

The Cumberland Company provides the following information: Sales (250,000 units) $625,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the contribution margin ratio for Cumberland? a. 0.76 b. 0.50 c. 0.16 d. 0.34

b. 0.50

Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative total time using the incremental unit-time learning curve to produce 2,000 units? a. 100 b. 180 c. 90 d. 80

b. 180

Julius Corporation had the following income statement for 2018: Sales $80,000 Variable expenses 56,000 Contribution margin $24,000 Fixed expenses 16,000 Operating income $8,000 What is the degree of operating leverage for Julius Corporation for 2018? a. 2.000 b. 3.000 c. 0.333 d. 2.333

b. 3.000

The income statement for Sapphire Manufacturing Company for 2018 is as follows: Sales (20,000 units) $150,000 Variable expenses 50,000 Contribution margin $100,000 Fixed expenses 30,000 Operating income $70,000 If sales increase by 2,000 units, what will happen to profit? a. Profit will increase by $13,000. b. Profit will increase by $10,000. c. Profit will decrease by $18,000. d. Profit will decrease by $15,000.

b. Profit will increase by $10,000.

The unit-costing method that merges prior-period work and costs with current-period work and costs is called: a. Transferred-in cost b. Weighted average method c. FIFO costing method d. Operating costing

b. Weighted average method

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

b. Y = $20,000 + $2 MHR

More accurate product costing information is produced by assigning costs using a. a volume-based, plantwide rate. b. activity-based pool rates. c. volume-based, departmental rates. d. All of these choices are correct.

b. activity-based pool rates.

The total overhead assigned to actual production at any point in time is called: a. non-unit-based overhead. b. applied overhead. c. overhead assignment. d. budgeted overhead.

b. applied overhead.

The predetermined overhead rate is usually calculated at the a. end of the year. b. beginning of the year. c. beginning of each month. d. end of each month.

b. beginning of the year.

The sum of direct labor and factory overhead is referred to as a. prime costs. b. conversion costs. c. period costs. d. direct product costs.

b. conversion costs

Assuming all other things are equal, if there was a decrease in the break-even point, fixed costs must have: a. increased b. decreased c. increased first, then decreased d. remained the same

b. decreased

Which of the following firms would make extensive use of a job-order costing? a. canned foods b. dental and medical services c. petroleum d. discount brokers

b. dental and medical services

In the formula Y = F + VX, Y refers to the a. intercept. b. dependent variable. c. independent variable. d. slope.

b. dependent variable

A cost used up in the production of revenues is a(n) a. unexpired cost b. expense c. loss d. asset

b. expense

In a company that supplies muffins to bakeries, which of the following would be considered an input? a. Baking b. Flour c. Delivered Muffins d. None of the above

b. flour

Equivalent units expresses all activity of the period in terms of a. direct labor hours. b. fully completed units. c. partially completed units. d. units of input.

b. fully completed units.

A debit balance in Overhead Control: a. equals the total applied overhead at a given point in time. b. gives the total actual overhead costs at a given point in time. c. indicates actual overhead costs have entered the work-in-process inventory account. d. indicates applied overhead exceeds actual overhead.

b. gives the total actual overhead costs at a given point in time.

A costing system that uses actual costs for direct materials and labor and predetermined overhead rates to apply overhead is called a(n) a. actual costing system. b. normal costing system. c. standard costing system. d. activity-based costing system.

b. normal costing system.

Which of the following costs would be considered a direct material? a. glue in the production of automobiles b. paper used in the production of books c. depreciation on the corporation's office building d. labor used to finish product

b. paper used in the production of books

As the volume of activity increases within the relevant range, the variable cost per unit a. decreases. b. remains the same. c. increases. d. decreases at first, then increases.

b. remains the same

The following is an example of a mixed cost: a. materials used in production b. salary plus commission on sales c. direct materials d. supervisors' salaries

b. salary plus commission on sales

A nursing home requires one nurse for each six patients. This is an example of a a. mixed cost. b. step cost. c. variable cost. d. fixed cost.

b. step cost

Salaries paid to shift supervisors are an example of a a. mixed cost. b. step-fixed cost. c. step-variable cost. d. variable cost.

b. step-fixed cost

Under the weighted average method, once weighted average equivalent units are calculated then the first-in, first-out equivalent units can be obtained by subtracting out: a. units in ending work in process. b. the prior-period output found in beginning work in process. c. units completed and transferred out. d. equivalent units in ending work in process.

b. the prior-period output found in beginning work in process.

If production volume increases from 16,000 to 20,000 units, a. total costs will increase by 25 percent. b. total variable costs will increase by 25 percent. c. total costs will increase by 20 percent. d. mixed and variable costs will increase by 25 percent.

b. total variable costs will increase by 25 percent.

The Cumberland Company provides the following information: Sales (250,000 units) $625,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the break-even point in sales dollars for Cumberland? a. $300,000 b. $37,500 c. $125,000 d. $100,000

c. $125,000

The Mildmanner Corporation has the following data for the current year: Selling price per unit $15 Variable cost per unit $9 Fixed costs $45,000 Units sold 10,000 units The margin of safety expressed in sales revenue will be a. $45,000. b. $112,500 c. $37,500. d. $75,000.

c. $37,500.

The records of Family Manufacturing show the following information: Estimated manufacturing overhead $690,000 Estimated machine hours 46,000 Actual machine hours worked 50,000 Actual costs incurred: Indirect materials $170,000 Indirect labor 230,000 Utilities 120,000 Insurance 100,000 Rent 80,000 The amount of overapplied or underapplied overhead is a. $10,000 underapplied. b. $60,000 overapplied. c. $50,000 overapplied. d. $65,200 underapplied

c. $50,000 overapplied.

Summersville Production Company had the following projected information for the current year: Selling price per unit $150 Variable cost per unit $90 Total fixed costs $300,000 What level of sales dollars is needed to obtain a target before-tax profit of $75,000? a. $375,000 b. $750,000 c. $937,500 d. $625,000

c. $937,500

Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative average time per batch using the incremental unit-time learning curve for 2,000 units? a. 80 b. 100 c. 90 d. 180

c. 90

In a company that supplies muffins to bakeries, which of the following would NOT be considered an input? a. Flour b. Oil c. Delivered Muffins d. Eggs

c. Delivered Muffins

Which of the following costs incurred by a bus manufacturer would NOT be directly attributable to the finished product? a. the wages paid to assembly-line production workers b. the windshields for buses c. the depreciation on factory building d. the tires for buses

c. The depreciation on factory building

n the formula Y = F + VX, total variable cost is represented by: a. F. b. V. c. VX. d. Y.

c. VX

Normal costing uses which cost in work in process? a. actual overhead b. budgeted overhead c. applied overhead d. applied direct materials

c. applied overhead

Which of the following products would NOT use job-order costing? a. ships b. houses c. chemicals d. custom-built furniture

c. chemicals

Which of the following costs is a period cost? a. depreciation of factory equipment b. transportation-in for material shipments c. depreciation of office computers d. amortization of a patent for the company's product

c. depreciation of office computers

Unit-level cost drivers create distortions when a. products are produced using resources homogeneously. b. products use resources similarly. c. different products consume resources differently. d. All of these choices are correct.

c. different products consume resources differently.

For a labor-intensive manufacturing operation, which of the following would be the most appropriate activity driver? a. units of output b. number of employees c. direct labor hours d. machine hours

c. direct labor hours

The contribution margin at the break-even point a. plus total fixed costs equals total revenues. b. is greater than variable costs. c. equals total fixed costs. d. is zero.

c. equals total fixed costs.

A very high degree of operating leverage indicates a firm a. is operating close to its break-even point. b. has high variable costs. c. has high fixed costs. d. has a high net income.

c. has high fixed costs.

Assuming all other things are the same, if there was a decrease in the break-even point, selling price per unit must have: a. increased first, then decreased b. decreased c. increased d. remained the same

c. increased

What system would a manufacturer of unique special orders or batch processes most likely use to accumulate costs? a. variable costing b. contract costing c. job-order costing d. process costing

c. job-order costing

A department that is capital-intensive most likely would use a predetermined departmental overhead rate based on which of the following activity bases? a. direct labor hours b. direct labor cost c. machine hours d. units of direct material used

c. machine hours

Transferred-in costs are accounted for in the same manner as a. conversion costs. b. materials added at the end of the process. c. materials added at the beginning of the process. d. labor costs.

c. materials added at the beginning of the process.

Which of the following costs is a product cost? a. lease payments on cars used by salespersons b. president's salary c. property taxes on factory building d. depreciation on office equipment

c. property taxes on factory building

When normal costing is used, actual overhead costs are a. not recorded. b. recorded in the work-in-process account. c. recorded in the overhead control account. d. recorded in the finished goods account.

c. recorded in the overhead control account.

The range of activity within which a linear cost function is valid is called the a. normal range. b. activity range. c. relevant range. d. None of these choices are correct.

c. relevant range

Which of the following would NOT be included in the conversion cost of an automobile? a. screws used in assembly b. assembly worker wages c. steel d. depreciation on machinery

c. steel

When computing equivalent units of production, the method that combines partially completed units in beginning inventory with current period production is a. the FIFO method. b. the LIFO method. c. the weighted average method. d. the specific identification method.

c. the weighted average method.

Which of the following is an example of a loss? a. the cost of a product delivered to a customer b. the cost of the purchase of equipment c. the write-off of an obsolete product d. the cost of a delivered advertising campaign

c. the write-off of an obsolete product

Total contribution margin is calculated by subtracting a. total manufacturing costs from total revenues. b. cost of goods sold from total revenues. c. total variable costs from total revenues. d. fixed costs from total revenues.

c. total variable costs from total revenues.

The collection of all job cost sheets defines a a. materials file. b. cost of goods file. c. work-in-process file. d. finished goods file.

c. work-in-process file.

Summersville Production Company had the following projected information for the current year: Selling price per unit $150 Variable cost per unit $90 Total fixed costs $300,000 What is the profit when one unit more than the break-even point is sold? a. $600,060 b. $1,500,150 c. $150 d. $60

d. $60

The following information is provided by Zinger Corporation for the year: Actual direct labor hours worked 75,000 Budgeted overhead $450,000 Budgeted direct labor hours 50,000 Actual overhead costs incurred $550,000 If normal costing is used, the amount of overhead applied for the year is: a. $550,000. b. $300,000. c. $450,000. d. $675,000.

d. $675,000

Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve? a. 100 hours b. 80 hours c. 20 hours d. 160 hours

d. 160 hours

Which of the following is true of the first-in, first-out costing method? a. It includes only prior-period work in determining the completed units of output. b. It calculates the equivalent units of output at the beginning of a reporting period. c. It treats the work in beginning work-in-process as belonging to the current period. d. It uses only current output to calculate the current-period unit cost.

d. It uses only current output to calculate the current-period unit cost.

Process costing would be most applicable for a. high rise building construction. b. custom machining. c. CPA audits. d. an electronics producer.

d. an electronics producer.

Disadvantages of actual costing include a. actual cost systems cannot provide accurate unit cost information on a timely basis. b. actual cost systems produce unit costs that fluctuate from period to period. c. estimates must be used when calculating the actual overhead rate. d. both "actual cost systems cannot provide accurate unit cost information on a timely basis" and "actual cost systems produce unit costs that fluctuate from period to period".

d. both "actual cost systems cannot provide accurate unit cost information on a timely basis" and "actual cost systems produce unit costs that fluctuate from period to period".

The costs included in the cost per equivalent unit using the weighted average method are a. current costs. b. ending work in process. c. beginning work in process. d. both "current costs" and "beginning work in process".

d. both "current costs" and "beginning work in process".

All of the following costs are included in factory overhead EXCEPT a. indirect labor. b. plant foreman's salary. c. factory supplies. d. direct labor.

d. direct labor

In the formula Y = F + VX, X refers to the a. slope. b. dependent variable. c. intercept. d. independent variable.

d. independent variable

An equipment lease that specifies a payment of $8,000 per month plus $7 per machine hour used is an example of a a. step cost. b. fixed cost. c. variable cost. d. mixed cost.

d. mixed cost

A job-order costing system that uses actual costs for direct materials and direct labor and estimated costs for overhead is called a(n) _____. a. actual job-order costing system b. hybrid job-order costing system c. average job-order costing system d. normal job-order costing system

d. normal job-order costing system

All of the following are unit-based activity drivers EXCEPT a. machine hours. b. number of units. c. direct labor hours. d. number of setups.

d. number of setups.

Which of the following costs is NOT a product cost? a. indirect labor b. steel used in inventory items produced c. repairs on manufacturing equipment d. rent on an office building

d. rent on an office building

In the formula Y = F + VX, V refers to the a. intercept. b. dependent variable. c. total variable costs. d. slope.

d. slope

Which of the following costs is NOT a period cost? a. depreciation on sales staffs' cars b. sales commission c. receptionist's salary d. steel used in steel railings

d. steel used in steel railings

When products and their costs are moved from one process to the next process, these costs are referred to as a. equivalent unit costs. b. unit costs. c. WIP inventory costs. d. transferred-in costs.

d. transferred-in costs.

As production occurs, materials, direct labor, and applied manufacturing overhead are recorded in a. materials. b. cost of goods sold. c. finished goods. d. work in process.

d. work in process

What are factors that cause changes in resource usage, activity usage, costs and revenues

drivers