Final Accounting Exam
Kneeland Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 6.80 Direct labor $ 4.15 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 121,500 Sales commissions $ 1.00 Variable administrative expense $ 0.50 Fixed selling and administrative expense $ 40,500 If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:
$138,000 Total variable manufacturing overhead cost: ($1.65 per unit × 10,000 units) $ 16,500 Total fixed manufacturing overhead cost: 121,500 Total manufacturing overhead cost: $ 138,000
Paolucci Corporation's relevant range of activity is 7,200 units to 15,000 units. When it produces and sells 11,100 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.90 Direct labor $ 3.80 Variable manufacturing overhead $ 1.80 Fixed manufacturing overhead $ 3.50 Fixed selling expense $ 1.10 Fixed administrative expense $ 0.80 Sales commissions $ 1.05 Variable administrative expense $ 0.70 If 10,100 units are sold, the variable cost per unit sold is closest to:
$14.25
Hubbard Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During January, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,060 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Fixed Element per Month Variable element per tenant-day Revenue $ 0 $31.10 Wages and salaries $ 2,300 $ 7.20 Food and supplies 1,000 8.10 Facility expenses 9,500 2.70 Administrative expenses 7,000 0.30 Total expenses $19,800 $18.30 Actual results for January: Revenue $63,606 Wages and salaries $17,282 Food and supplies $18,346 Facility expenses $14,432 Administrative expenses $ 7,408 The facility expenses in the flexible budget for January would be closest to:
$15,062 Explanation Cost = Fixed cost + (Variable cost per unit × q) = $9,500 + ($2.70 × 2,060) = $15,062
The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 3.5 hours Standard variable overhead rate $15.20 per hour The following data pertain to operations for the last month: Actual hours 3,800 hours Actual total variable manufacturing overhead cost $59,090 Actual output 800 units What is the variable overhead efficiency variance for the month?
$15,200 U Explanation SH = 800 units × 3.5 hours per unit = 2,800 hours Variable overhead efficiency variance = (AH − SH) × SR = (3,800 hours − 2,800 hours) × $15.20 per hour = (1,000 hours) × $15.20 per hour = $15,200 U
Magno Cereal Corporation uses a standard cost system for its "crunchy pickle" cereal. The materials standard for each batch of cereal produced is 1.4 pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pickles at a total cost of $253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for August?
$18,000 favorable Explanation Materials quantity variance = (AQ − SQ) × SP = [78,000 pounds − (60,000 batches × 1.4 pounds per batch)] × $3.00 per pound = [78,000 pounds − (84,000 pounds)] × $3.00 per pound = [−6,000 pounds)] × $3.00 per pound = $18,000 F
Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 7,900 MHs Actual level of activity 8,100 MHs Standard variable manufacturing overhead rate $6.60 per MH Actual total variable manufacturing overhead $51,200 What was the variable overhead rate variance for the month?
$2,260 Favorable Explanation Variable overhead rate variance = (AH × AR) − (AH × SR) = $51,200 − (8,100 hours × $6.60 per hour) = $51,200 − $53,460 = $2,260 F
The following materials standards have been established for a particular product: Standard quantity per unit of output 4.5 meters Standard price $17.60 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,000 meters Actual cost of materials purchased $126,350 Actual materials used in production 6,600 meters Actual output 1,440 units What is the materials price variance for the month?
$3,150 U Explanation Materials price variance = (AQ× AP) − (AQ × SP) = $126,350 − (7,000 meters × $17.60 per meter) = $126,350 − $123,200 = $3,150 U
Longobardi Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the labor-hours for the upcoming year at 35,600 labor-hours. The estimated variable manufacturing overhead was $6.76 per labor-hour and the estimated total fixed manufacturing overhead was $906,732. The actual labor-hours for the year turned out to be 32,000 labor-hours. The predetermined overhead rate for the recently completed year was closest to:
$32.23 per labor-hour Estimated total manufacturing overhead = $906,732 + ($6.76 per labor-hour × 35,600 labor-hours) = $1,147,388 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $1,147,388 ÷ 35,600 labor-hours = $32.23 per labor-hour
Bernson Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $492,000 and 30,000 machine-hours for the period. The company incurred actual total fixed manufacturing overhead of $517,000 and 28,300 total machine-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)
$464,120 Estimated total fixed manufacturing overhead (a) $ 492,000 Estimated activity level (b) 30,000 Predetermined overhead rate (a) ÷ (b) $ 16.40 Actual activity level 28,300 Manufacturing overhead applied $ 464,120
Harold Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 7,900 units, but its actual level of activity was 7,860 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Fixed element per month Variable element per unit Revenue $ 0 $ 39.80 Direct labor $ 0 $ 7.70 Direct materials 0 18.00 Manufacturing overhead 38,200 1.50 Selling and administrative expenses 27,400 0.50 Total expenses $ 65,600 $ 27.70 Actual results for March: Revenue $ 297,318 Direct labor $ 59,962 Direct materials $ 135,850 Manufacturing overhead $ 51,370 Selling and administrative expenses $ 31,950 The spending variance for direct materials in March would be closest to:
$5,630 F Explanation Actual results $ 135,850 Flexible budget [$0 + ($18 × 7,860)] 141,480 Spending variance $ 5,630 Because the actual expense is less than the flexible budget, the variance is favorable (F).
Speyer Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,230 patient-visits and the actual level of activity was 1,220 patient-visits. The cost formula for administrative expenses is $4.70 per patient-visit plus $25,500 per month. The actual administrative expense was $24,400. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was:
$6,834 Explanation Actual results $24,400 Flexible budget [$25,500 + ($4.70 × 1,220)] 31,234 Spending variance $ 6,834 Because the flexible budget is greater than the actual expense, the variance is favorable (F).
Feemster Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,900 units, but its actual level of activity was 5,850 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October: Data used in budgeting: Fixed element per month Variable element per unit Revenue $ 0 $ 29.90 Direct labor $ 0 $ 5.60 Direct materials 0 8.60 Manufacturing overhead 37,000 1.30 Selling and administrative expenses 27,200 0.80 Total expenses $ 64,200 $ 16.30 Actual results for October: Revenue $ 176,095 Direct labor $ 31,510 Direct materials $ 49,800 Manufacturing overhead $ 45,775 Selling and administrative expenses $ 31,670 The activity variance for net operating income in October would be closest to:
$680 U Explanation Revenue per unit $ 29.90 Total variable expense per unit 16.30 Contribution margin per unit $ 13.60 Total fixed expense $ 64,200 Flexible budget [($13.60 × 5,850) − $64,200] $ 15,360 Planning budget [($13.60 × 5,900) − $64,200] 16,040 Activity variance $ 680 Because the flexible budget net operating income is less than the planning budget, the variance is unfavorable (U).
Pooler Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.60 direct labor-hours. The direct labor rate is $8.00 per direct labor-hour. The production budget calls for producing 7,500 units in April and 7,300 units in May. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months?
$71,040 Direct Labor Budget April May Total Required production in units 7,500 7,300 Direct labor-hours per unit 0.60 0.60 Total direct labor-hours needed 4,500 4,380 Direct labor cost per hour $ 8 $ 8 Total direct labor cost $ 36,000 $ 35,040 $ 71,040
A company produces a single product. Variable production costs are $12.50 per unit and variable selling and administrative expenses are $3.50 per unit. Fixed manufacturing overhead totals $41,000 and fixed selling and administration expenses total $45,000. Assuming a beginning inventory of zero, production of 4,500 units and sales of 3,850 units, the dollar value of the ending inventory under variable costing would be:
$8,125 Units in ending inventory = Units in beginning inventory + Units produced − Units sold = 0 units + 4,500 units − 3,850 units = 650 units Value of ending inventory under variable costing = Units in ending inventory × Variable production cost = 650 units × $12.50 per unit = $8,125
Haylock Incorporated bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 5,600 direct labor-hours will be required in August. The variable overhead rate is $5.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $69,440 per month, which includes depreciation of $15,680. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
$84,000 Manufacturing Overhead Budget August Budgeted direct labor-hours 5,600 Variable manufacturing overhead rate $ 5.40 Variable manufacturing overhead $ 30,240 Fixed manufacturing overhead 69,440 Total manufacturing overhead 99,680 Less depreciation 15,680 Cash disbursement for manufacturing overhead $ 84,000
Sathre Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Fixed Element per Month Variable Element per Well Serviced Revenue $4,500 Employee salaries and wages $56,400 $ 900 Servicing materials $ 700 Other expenses $35,400 When the company prepared its planning budget at the beginning of December, it assumed that 34 wells would have been serviced. However, 32 wells were actually serviced during December. The "Employee salaries and wages" in the flexible budget for December would have been closest to:
$85,200 Explanation Flexible Budget Wells serviced (q) 32 Employee salaries and wages ($56,400 + $900q) $85,200
Molzahn Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year: Estimated total manufacturing overhead at the beginning of the year $ 481,250 Estimated direct labor-hours at the beginning of the year 35,000 direct labor-hours Results of operations: Actual direct labor-hours 40,000 direct labor-hours Manufacturing overhead: Indirect labor cost $ 179,000 Other manufacturing overhead costs incurred $ 465,000 Manufacturing overhead is overapplied or underapplied by:
$94,000 underapplied
Dominik Corporation purchased a machine 5 years ago for $527,000 when it launched product M08Y. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 310 machine costing $545,000 or by a new model 240 machine costing $450,000. Management has decided to buy the model 240 machine. It has less capacity than the model 310 machine, but its capacity is sufficient to continue making product M08Y. Management also considered, but rejected, the alternative of dropping product M08Y and not replacing the old machine. If that were done, the $450,000 invested in the new machine could instead have been invested in a project that would have returned a total of $532,000. In making the decision to buy the model 240 machine rather than the model 310 machine, the differential cost was:
$95,000 (differential cost = $545,000-$450,000=$95,000)
The Richmond Corporation uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $2.75 for materials and $4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was:
$95,400
Piper Corporation's standards call for 1,000 direct labor-hours to produce 250 units of product. During October the company worked 1,250 direct labor-hours and produced 300 units. The standard hours allowed for October would be:
1,200 hours Explanation Standard hours per unit of output = 1,000 direct labor-hours ÷ 250 units = 4 direct labor-hours per unit Standard hours allowed = 300 units × 4 direct labor-hours per unit = 1,200 hours
The following are budgeted data: January February March Sales in units 16,800 23,600 19,800 Production in units 19,800 20,800 19,700 One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:
20,580 Direct Materials Budget February Required production in units 20,800 Raw materials required per unit 1 Raw materials needed to meet the production 20,800 Add desired ending raw materials inventory (19,700 × 1 × 20%) 3,940 Total raw materials needs 24,740 Less beginning raw materials inventory (20,800 × 1 × 20%) 4,160 Raw materials to be purchased 20,580
Product Y sells for $15 per unit, and has variable expenses of $9 per unit. Fixed expenses total $300,000 per year. How many units of Product Y must be sold each year to yield an annual profit of $90,000?
65,000 units Unit sales to attain a target profit = (Target profit + Fixed expenses) ÷ Unit contribution margin = ($90,000 + $300,000) ÷ ($15 per unit − $9 per unit) = $390,000 ÷ $6 per unit = 65,000 units
Bendel Incorporated has an operating leverage of 5.7. If the company's sales increase by 15%, its net operating income should increase by about:
85.5% Percentage change in net operating income = Degree of operating leverage × Percentage change in sales = 5.7 × 15% = 85.5%
The salary of the company's accountant.
Administrative cost
Bennette Corporation has provided the following data concerning its overhead costs for the coming year: Wages and salaries $ 440,000 Depreciation 170,000 Rent 190,000 Total $ 800,000 The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: Activity Cost Pool Total Activity Assembly 30,000 labor-hours Order processing 550 orders Other Not applicable The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below: Activity Cost Pools Total Assembly Order Processing Other Wages and salaries 45% 40% 15% 100% Depreciation 10% 40% 50% 100% Rent 30% 25% 45% 100% The activity rate for the Order Processing activity cost pool is closest to:
Allocations to the Order Processing activity cost pool: Wages and salaries (40% × $440,000) $ 176,000 Depreciation (40% × $170,000) 68,000 Rent (25% × $190,000) 47,500 Total $ 291,500 Order Processing: $291,500 ÷ 550 orders = $530 per order
Mayeux Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: Costs: Wages and salaries $ 320,000 Depreciation 160,000 Utilities 240,000 Total $ 720,000 Distribution of resource consumption: Activity Cost Pools Total Assembly Setting Up Other Wages and salaries 50% 40% 10% 100% Depreciation 10% 55% 35% 100% Utilities 15% 50% 35% 100% How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?
Allocations to the Setting Up activity cost pool: Wages and salaries (40% × $320,000) $ 128,000 Depreciation (55% × $160,000) 88,000 Utilities (50% × $240,000) 120,000 Total $ 336,000
How would the following costs be classified (product or period) under variable costing at a retail clothing store? Cost of purchasing clothing Sales commissions A) Product Product B) Product Period C) Period Product D) Period Period
B) Product Period
Which of the following budgets are prepared before the sales budget? Budgeted Income Statement Direct Labor Budget A) Yes Yes B) Yes No C) No Yes D) No No
Choice D
In the cost reconciliation report under the weighted-average method, the "Total cost accounted for" equals:
Cost of ending work in process inventory + Cost of units transferred out
The journal entry to record applying overhead during the production process is:
Debit Credit Work in Process XXX Manufacturing Overhead XXX
The cost of a hard drive installed in a computer.
Direct materials cost
Activity-based costing is best proposed, designed and implemented by the accounting department without requiring the time of busy managers.
False
In absorption costing, nonmanufacturing costs are assigned to units of product.
False
Selling costs are indirect costs.
False
Unit-level activities are performed each time a batch is handled or processed.
False
Given the following data: Selling price per unit $ 2.00 Variable production cost per unit $ 0.30 Fixed production cost $ 3,000 Sales commission per unit $ 0.20 Fixed selling expenses $ 1,500 The break-even point in dollars is:
Fixed expenses = $3,000 + $1,500 = $4,500 Unit contribution margin = Selling price per unit − Variable expenses per unit = $2.00 per unit − ($0.30 per unit + $0.20 per unit) = $1.50 per unit Contribution margin ratio = Unit contribution margin ÷ Unit selling price = $1.50 per unit ÷ $2.00 per unit = 0.75 Dollar sales to break even = Fixed expenses ÷ Contribution margin ratio = $4,500 ÷ 0.75 = $6,000 (break-even point in dollars)
When closing overapplied manufacturing overhead to Cost of Goods Sold, which of the following would be true?
Gross margin will increase.
Which of the following statements is not correct concerning multiple overhead rate systems?
In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.
There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?
It is calculated based on the sales budget and the desired ending inventory.
The salary of the assembly shop's supervisor.
Manufacturing overhead cost
Assigning manufacturing overhead to a specific job is complicated by all of the below except:
Manufacturing overhead is incurred only to support some jobs.
If the degree of operating leverage is 4, then a one percent change in quantity sold should result in a four percent change in:
Net operating income
In a job-order costing system that is based on machine-hours, which of the following formulas is correct?
Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours
All of the following statements are correct when referring to process costing except:
Process costing would be appropriate for a jeweler who makes custom jewelry to order.
In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the "Total raw materials available" is computed by adding together the "Beginning raw materials inventory" and:
Purchase of raw materials
Factory security and assembly activities at an appliance manufacturing plant would be best classified as unit-level, batch-level, product-level, or organization-sustaining activities?
Security = organization, Assembly = unit
Sales commissions paid to the company's salespeople.
Selling cost
The cost of advertising in the Puget Sounds Computer User newspaper.
Selling cost
The general model for calculating a quantity variance is:
Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).
Ieso Corporation has two stores: J and K. During November, Ieso Corporation reported a net operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses are $60,000 in Store J, and $40,000 in Store K. Sales in Store J totaled:
Store J CM ratio = Store J contribution margin ÷ Store J sales 0.40 = $100,000 ÷ Store J sales Store J sales = $100,000 ÷ 0.40 = $250,000
Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?
The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead.
Paparo Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity Assembly $ 891,800 52,000 machine-hours Processing orders $ 80,955 2,100 orders Inspection $ 114,256 1,480 inspection-hours Data concerning the company's product Q79Y appear below: Annual unit production and sales 750 Annual machine-hours 1,180 Annual number of orders 140 Annual inspection hours 45 Direct materials cost $ 47.00 per unit Direct labor cost $ 41.41 per unit According to the activity-based costing system, the average cost of product Q79Y is closest to:
The activity rates for each activity cost pool are computed as follows: Total Cost Total Activity Activity Rate Assembly $ 891,800 52,000 machine-hours $ 17.15 per machine-hour Processing orders $ 80,955 2,100 orders $ 38.55 per order Inspection $ 114,256 1,480 inspection-hours $ 77.20 per inspection-hour The overhead cost charged to Product Q79Y is: Orders Activity Rate Activity ABC Cost Assembly $ 17.15 per machine-hour 1,180 machine-hours $ 20,237.00 Processing orders $ 38.55 per order 140 Orders 5,397.00 Inspection $ 77.20 per inspection-hour 45 inspection-hours 3,474.00 Total overhead cost $ 29,108.00 Direct materials (750 units × $47.00 per unit) $ 35,250.00 Direct labor (750 units × $41.41 per unit) 31,057.50 Overhead 29,108.00 Total cost $ 95,415.50 Cost per unit = $95,415.50 ÷ 750 units = $127.22 per unit
Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?
The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.
In a flexible budget, what will happen to fixed costs as the activity level increases?
The fixed cost per unit will decrease.
When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:
Traceable fixed expenses ÷ Segment CM ratio
Actual overhead costs are not assigned to jobs in a job costing system.
True
Wages paid to production supervisors would be classified as manufacturing overhead.
True
Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 118 Units in beginning inventory 400 Units produced 2,100 Units sold 2,300 Units in ending inventory 200 Variable costs per unit: Direct materials $ 37 Direct labor $ 23 Variable manufacturing overhead $ 3 Variable selling and administrative expense $ 5 Fixed costs: Fixed manufacturing overhead $ 73,500 Fixed selling and administrative expense $ 29,900 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under variable costing?
Unit product cost under variable costing: Direct materials $ 37 Direct labor 23 Variable manufacturing overhead 3 Variable costing unit product cost $ 63 Sales ($118 per unit × 2,300 units) $ 271,400 Variable expenses: Variable cost of goods sold ($63 per unit × 2,300 units) $ 144,900 Variable selling and administrative ($5 per unit × 2,300 units) 11,500 156,400 Contribution margin 115,000 Fixed expenses: Fixed manufacturing overhead 73,500 Fixed selling and administrative expense 29,900 103,400 Net operating income $ 11,600
Davison Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 95 Units in beginning inventory 0 Units produced 5,000 Units sold 4,900 Units in ending inventory 100 Variable costs per unit: Direct materials $ 26 Direct labor $ 40 Variable manufacturing overhead $ 1 Variable selling and administrative expense $ 4 Fixed costs: Fixed manufacturing overhead $ 40,000 Fixed selling and administrative expense $ 73,500 What is the total period cost for the month under variable costing?
Variable selling and administrative expense ($4 per unit × 4,900 units sold) $ 19,600 Fixed manufacturing overhead 40,000 Fixed selling and administrative expense 73,500 Total period cost variable costing $ 133,100
If the contribution margin is not sufficient to cover fixed expenses:
a loss occurs
Under a job-order costing system, the dollar amount transferred from Work in Process to Finished Goods is the sum of the costs charged to all jobs:
completed during the period
When computing the cost per equivalent unit, the weighted-average method of process costing considers:
costs incurred during the current period plus cost of beginning work in process inventory.
When using a flexible budget, a decrease in activity within the relevant range:
decreases total costs
The wages of employees who assemble computers from components.
direct labor cost
Which of the following costs at a manufacturing company would be treated as a product cost under variable costing?
direct material cost
A budget that is based on the actual activity of a period is known as a:
flexible budget
In a job-order costing system, indirect labor cost is usually recorded as a debit to:
manufacturing overhead
Depreciation on equipment used to test assembled computers before release to customers.
manufacturing overhead cost
Allocating common fixed expenses to business segments:
may cause managers to erroneously discontinue business segments.
If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will:
not change
Which of the following would not affect the break-even point?
number of units sold
Refer to the T-account below: Manufacturing Overhead Debit Credit (2) 9,000 (12) 167,000 (3) 15,000 (4) 80,000 (5) 30,000 (6) 25,000 159,000 167,000 Balance 8,000 The ending balance of $8,000 represents which of the following?
overapplied overhead
When preparing a direct materials budget, the required purchases of raw materials in units equals:
raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.
The production department should generally be responsible for materials price variances that resulted from:
rush orders arising from poor scheduling.
The usual starting point for a master budget is:
the sales forecast or sales budget
A favorable labor rate variance indicates that
the standard rate exceeds the actual rate
In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:
the total activity for the activity cost pool.
An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:
under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.
In a job-order costing system, manufacturing overhead applied is recorded as a debit to:
work in process inventory
