Managerial Accounting Midterm

A contribution margin format income statement breaks costs into variable and fixed costs. True False

True

A traditional income statement (used in financial reporting) breaks costs into cost of goods sold and operating expenses. True False

True

If a company contains a number of investment centers of differing sizes, return on investment (ROI) should be used rather than residual income to rank the financial performance of the divisions. True False

True

Which of the following would be classified as product-level activity? Advertising a product. Setting up a machine for a batch of a standard product. Operating a cafeteria for employees. Running the Human Resource department.

Advertising a product.

When determining customer profitability, activity-based costing can be used to analyze: All of the above Billing and collections of customer' account Special packaging, shipping and handling for customers' order Customer orders processed

All of the above

The activity variance for revenue is favorable if the actual revenue for the period exceeds the revenue in the static planning budget. True False

True

The main benefit of using an activity-based costing system relates to more precise cost allocation, especially when diverse products are produced. True False

True

A company has fixed cost of $1,000 and a contribution margin of $4, breakeven point in units is 250. How many units must be sold to earn a $500 profit? 250 units 375 units 625 units 500 units

375 Units

Speyer Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,530 patient-visits and the actual level of activity was 1,490 patient-visits. The cost formula for administrative expenses is $4.00 per patient-visit plus $15,300 per month. The actual administrative expense was $19,810. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was: $1,450 F $820 F $160 F $1,610 F

$1,450 F

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 $1,500 Unfavorable $19,500 Unfavorable $54,000 Unfavorable

$18,000 Favorable

The following materials standards have been established for a particular product: Standard quantity per unit of output 5.3 meters Standard price $ 17.20 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 8,100 meters Actual cost of materials purchased $ 141,345 Actual materials used in production 7,600 meters Actual output 1,400 units What is the materials price variance for the month? $2,025 U $3,141 U $8,600 U $8,725 U

$2,025 U

Ramkissoon Midwifery's cost formula for its wages and salaries is $2,060 per month plus $442 per birth. For the month of July, the company planned for activity of 117 births, but the actual level of activity was 114 births. The actual wages and salaries for the month was $54,500. The spending variance for wages and salaries in July would be closest to: $2,052 U $726 U $2,052 F $726 F

$2,052 U

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Direct materials $ 6,000 Direct labor $ 20,000 Rent on factory building $ 15,000 Sales salaries $ 25,000 Depreciation on factory equipment $ 8,000 Indirect labor $ 12,000 Production supervisor's salary $ 15,000 Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be: $2.50 per direct labor-hour $3.00 per direct labor-hour $2.79 per direct labor-hour $4.00 per direct labor-hour

$2.50 per direct labor-hour

Seventy percent of Pitkin Corporation's sales are collected in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: January February March April Budgeted sales $200,000 $300,000 $350,000 $250,000 Total budgeted cash collections in April would be: $275,000 $175,000 $70,000 $30,000

$275,000

All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale. The following are budgeted sales data for the company: January February March April Total sales $50,000 $60,000 $40,000 $30,000 What is the amount of cash that should be collected in March? $51,000 $24,000 $37,000 $41,000

$51,000

Delaware Inc. incurred the following costs in October, 2020, for producing 5,000 units of personalized photo frames. Direct materials, $15,000 Direct labor, $10,000 Overhead applied, $13,500 Determine the product unit cost of photo frames. $5.00 $8.56 $7.70 $5.56

$7.70

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 $87,000 $84,600 $89,888

$85,200

Gnas Corporation's total current assets are $210,000, its noncurrent assets are $590,000, its total current liabilities are $160,000, its long-term liabilities are $490,000, and its stockholders' equity is $150,000. The current ratio is closest to: 0.33 0.76 0.36 1.31

1.31

Feiler Corporation has total current assets of $483,000, total current liabilities of $347,000, total stockholders' equity of $1,057,000, total plant and equipment (net) of $1,031,000, total assets of $1,514,000, and total liabilities of $457,000.The company's current ratio is closest to: 0.95 0.32 0.30 1.39

1.39

The Silver Corporation uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the Corporation made the following estimates: Dept. A: Top number Dept. B: Bottom number Direct labor cost $60,000 $40,000 Manufacturing overhead $90,000 $45,000 Direct labor-hours 6,000 9,000 Machine-hours 2,000 15,000 What predetermined overhead rates would be used in Dept. A and Dept. B, respectively? 67% and $3.00 150% and $3.00 67% and $5.00 150% and $5.00

150% and $3.00

A company has fixed costs of $900 and a per unit contribution margin of $3. In other words, the selling price per unit is $10 and unit variable cost is $7. How many units does it take to break-even? 300 units 900 units Cannot be solved 600 units

300 units

Which of the following statements is correct with regard to a CVP graph? A CVP graph assumes that total expense varies in direct proportion to unit sales. A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line. A CVP graph shows the maximum possible profit. A CVP graph shows the operating leverage as the gap between total sales revenue and total expense at the actual level of sales.

A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line.

The production capacity is 100,000 units. Currently 80,000 units are produced. One foreign customer offers a special order of 5,000 units. Do you reject or accept this special order? Reject the special order Reject the special order if selling price > variable cost per unit Accept the special orders if selling price > variable cost per unit Accept the special order if selling price < variable cost per unit

Accept the special orders if selling price > variable cost per unit

Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances. True False

True

Which of the following may appear on a flexible budget performance report? All of the above may appear on a flexible budget performance report. An unfavorable activity variance. A favorable revenue variance. An unfavorable spending variance.

All of the above may appear on a flexible budget performance report.

Which of the following performance measures is (are) used to evaluate the general financial success or failure of an investment center? An investment center is a unit of a business that is responsible for making asset (investment decisions) and is autonomous from other divisions or centers. All of these measures are used Residual income Economic value added Return on investment

All of these measures are used

Which of the following costs are estimated in determining product costs? Applied manufacturing overhead No costs are estimated to determine product costs Direct Materials Direct Labor

Applied manufacturing overhead

All other things equal, which of the following would increase a division's residual income? A) Increase in expenses. B) Decrease in average operating assets. C) Increase in minimum required return. D) Decrease in net operating income. B A C D

B

Which of the following budgets includes new sales of stock issuance and new long-term debt issuance? Financial budget Sales budget Direct labor budget Selling and administration expense budget

Financial budget

XYZ produces and sells A and B. A's contribution margin is $10 per unit and B's contribution margin is $15 per unit. To produce one unit of A or B, 5 machine hours are required. Which product, A or B, should be prioritized for production? B Produces a higher contribution margin, therefore B should be prioritized A and B produce the same contribution margin (neither is a priority) None of the above A produces a higher contribution margin, therefore A should be prioritized

B Produces a higher contribution margin, therefore B should be prioritized

Production order processing is an example of a: Batch-level activity. Unit-level activity. Product-level activity. Organization-sustaining activity.

Batch-level activity.

Purchase order processing is an example of a: Batch-level activity. Unit-level activity. Product-level activity. Organization-sustaining.

Batch-level activity.

The typical balanced scorecard is best described as containing: Neither financial nor non-financial performance measures Financial performance measures Both financial and non-financial performance measures Non-financial performance measures

Both financial and non-financial performance measures

Which of the following budgets include the balance in the Accounts Receivable and Accounts Payable accounts? Budgeted Balance Sheet Sales budget Budgeted Income Statement Budgeted Direct Labor

Budgeted Balance Sheet

A segment of a business responsible for both revenues and expenses would be called: A) a cost center. B) an investment center. C) a profit center. D) residual income. C A B D

C

Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same? A) A reduction in expenses. B) An increase in net operating income. C) An increase in operating assets. D) An increase in sales. C A B D

C

Which of the following budgets includes cash receipts from customers and cash disbursements made to vendors and employees? Cash budget Sales budget Production budget Direct labor budget

Cash budget

Which of the following manufacturers would most likely use process costing? Remodeling Contractors Shipbuilders Cereal Manufacturers Custom machining firm

Cereal Manufacturers

In the cost reconciliation report under the weighted-average method, the "Costs to be accounted for" section contains which of the following items? Cost of beginning work in process inventory Cost of ending finished goods inventory Cost of units transferred out Cost of ending work in process inventory

Cost of beginning work in process inventory

In the cost reconciliation report under the weighted-average method, the "Total cost accounted for" equals: Cost of ending work in process inventory + Cost added to production during the period Cost of ending work in process inventory + Cost of units transferred out Cost of beginning work in process inventory + Cost of units transferred out Cost of beginning work in process inventory + Cost of units transferred in

Cost of ending work in process inventory + Cost of units transferred out

Which of the following would not be included in operating assets in return on investment calculations? A) Cash. B) Accounts Receivable. C) Equipment D) Factory building rented to (and occupied by) another company. D A B C

D

Suppose a company evaluates divisional performance using both ROI and residual income. The company's minimum required rate of return for the purposes of residual income calculations is 12%. If a division has a residual income of $6,000, then its ROI is less than 12%. True False

False

Throughput time is the amount of time required to move a completed unit from the factory floor to the warehouse. True False

False

Which of the following is NOT a period cost? Cost of a seminar concerning tax law updates that was attended by the company's controller. Insurance on a company showroom where customers can view new products. Salary of a clerk who handles customer billing. Depreciation of factory maintenance equipment.

Depreciation of factory maintenance equipment.

Time-based activity-based costing does NOT use which of the following types of data inputs? Direct cost data. Resource data. Activity data. Cost object data.

Direct cost data.

Which of the following is the correct formula to compute the predetermined overhead rate? Estimated total manufacturing overhead costs / Estimated total units in the allocation base Estimated total units in the allocation base / Estimated total manufacturing overhead costs Estimated total manufacturing overhead costs / Actual total units in the allocation base Actual total manufacturing overhead costs / Estimated total units in the allocation base

Estimated total manufacturing overhead costs / Estimated total units in the allocation base

An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period. True False

False

Financial measures such as ROI are generally better than nonfinancial measures of key success drivers such as customer satisfaction as leading indicators of future financial performance. True False

False

In general, the production manager is responsible for the materials price variance. True False

False

Land held for possible plant expansion would be included as an operating asset when computing return on investment (ROI). True False

False

Waste on the production line will result in an unfavorable materials price variance. True False

False

GM has 3 segments - Chevy, Cadillac, and Buick. The manager of Chevy cannot control Variable expenses incurred within Chevy Fixed expenses incurred by GM headquarters Fixed expenses incurred within Chevy Income tax expenses for Chevy's earnings

Fixed expenses incurred by GM headquarters

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. A company may choose to create a separate overhead rate for each of its production departments. A multiple overhead rate system is more complex than a system based on a single plant-wide overhead rate. A multiple overhead rate system is usually more accurate than a system based on single plant-wide overhead rate.

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.

Refer to the T-account below: Prepaid Insurance Bal. 30,000 (8) 9,000 Entry (8) could represent which of the following? Overhead cost applied to Work in Process. Insurance cost incurred on the factory which is added to the Manufacturing Overhead account. Payment of insurance for the upcoming period. Overhead cost applied to Finished Goods.

Insurance cost incurred on the factory which is added to the Manufacturing Overhead account.

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. It details the required direct labor hours. It details the required raw materials purchases. It summarizes the costs of producing units for the budget period.

It is calculated based on the sales budget and the desired ending inventory.

Which of the following statements is NOT correct concerning the Cash Budget? It is not necessary to prepare any other budgets before preparing the Cash Budget. The Cash Budget should be prepared before the Budgeted Income Statement. The Cash Budget should be prepared before the Budgeted Balance Sheet. The Cash Budget builds on earlier budgets and schedules as well as additional data.

It is not necessary to prepare any other budgets before preparing the Cash Budget.

Which of the following statements about using a plantwide overhead rate based on direct labor is correct? It is often overly simplistic and incorrect to assume that direct labor-hours is a company only manufacturing overhead cost driver. Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs. The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead cost to jobs. Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.

It is often overly simplistic and incorrect to assume that direct labor-hours is a company only manufacturing overhead cost driver.

In a job-order costing system, indirect labor cost is usually recorded as a debit to: Finished Goods. Work in Process. Cost of Goods Sold. Manufacturing Overhead.

Manufacturing Overhead.

Assigning manufacturing overhead to a specific job is complicated by all of the below EXCEPT: The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period. Manufacturing overhead is incurred only to support some jobs Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job. Manufacturing overhead consists of both variable and fixed costs.

Manufacturing overhead is incurred only to support some jobs

A cost that has both a fixed and variable component is known as a____ cost. (An example of this type of cost is an electricity bill that has a monthly fixed fee of $25 plus $.08 per kilowatt hour charge.): Mixed cost Sunk cost Fixed cost Opportunity cost

Mixed cost

Refer to the T-account below: Manufacturing Overhead (2) 9,000 (2) 167,000 (3) 15,000 (4) 80,000 (5) 30,000 (6) 25,000 159,000 167,000 Bal. 8,000 The ending balance of $8,000 represents which of the following? Overapplied overhead. Underapplied overhead. Manufacturing overhead that will be carried over to the next period. A bookkeeping error.

Overapplied overhead.

Departmental overhead rates may not correctly assign overhead costs due to: Overreliance on volume as a basis for allocating overheda costs where products differ regarding the number of units produced, lot size, or complexity of production. The use of direct labor hours in allocatin goverhead costs to products rather than machine time or quantity of materials used. The high correlation between direct labor-hours and the incurrence of overhead costs. Difficulties associated with identifying cost pools for the first stage of the allocation process.

Overreliance on volume as a basis for allocating overheda costs where products differ regarding the number of units produced, lot size, or complexity of production.

Designing a new backpack at an outdoor sports equipment company is an example of a: Product-level activity. Unit-level activity. Batch-level activity. Facility-level activity.

Product-level activity.

Parts administration is an example of a: Product-level activity. Unit-level activity. Batch-level activity. Organization-sustaining.

Product-level activity.

Refer to the T-account below: Raw Materials Bal. 15,000 (9) 75,000 (5) 85,000 Bal. 25,000 Entry (5) could represent which of the following? Payments for raw materials. Purchases of raw materials. Requisitions of raw materials to be used in production. Overhead cost applied to Work in Process.

Purchases of raw materials.

The _______ is the cushion between budgeted sales revenue and break-even sales revenue. Safety margin (or margin of safety) Contribution margin Target net profit Contribution margin ratio

Safety margin (or margin of safety)

Which of the following costs is NOT a fixed cost that remains the same at all levels of activity? Property tax on factory Salary of production line workers (direct labor) Depreciation of equipment Salary of a president

Salary of production line workers (direct labor)

Net operating income is income before interest and taxes . True False

True

Which of the following statements is true? I. Overhead can be applied slowly as a job is worked on. II. Overhead can be applied when the job is completed. III. Overhead should be applied to any job not completed at year-end in order to properly value the work in process inventory. Only statement I is true. Statements I, II and III are all true. Only statement II is true. Both statements I and II are true.

Statements I, II and III are all true.

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. The Manufacturing Overhead Budget provides a schedule of all costs of production other than direct materials and labor costs. The Manufacturing Overhead Budget shows the expected cash disbursements for manufacturing overhead. The Manufacturing Overhead Budget is prepared after the Sales Budget.

The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory? The cost of the glue in a chair. The amount paid to the individual who stains a chair. The factory utilities of the department in which production takes place. The workman's compensation insurance of the supervisor who oversees production.

The amount paid to the individual who stains a chair.

In a flexible budget, what will happen to fixed costs as the activity level increases? The fixed cost per unit will decrease. The fixed cost per unit will remain unchanged. The fixed cost per unit will increase. Fixed costs are not included in a flexible budget.

The fixed cost per unit will decrease.

The break-even point is that level of activity (units) where: Total revenue is less than total cost Total revenue equals total cost Profit is greater than zero Total revenue is greater than total cost

Total revenue equals total cost

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 Common fixed expenses ÷ Segment CM ratio (Traceable fixed expenses + Common fixed expenses) ÷ Segment CM ratio Non-traceable fixed expenses ÷ Segment CM ratio

Traceable fixed expenses ÷ Segment CM ratio

The main difference between a flexible budget and a static budget is that the static budget is not adjusted for changes in the level of activity. True False

True

To help assess how well a manager has controlled costs, actual costs should be compared to what the costs should have been for the actual level of activity. True False

True

To obtain the value of cost of goods sold on a traditional income statement, absorption costing (full costing) must be used to comply with GAAP. Product cost with absorption costing includes direct materials, direct labor, and manufacturing overhead. True False

True

When the materials price variance is recorded at the time of purchase, raw materials are recorded as inventory at standard cost. True False

True

Which of the following is true of a company that uses absorption costing? Unit product costs can change as a result of changes in the number of units manufactured. Net operating income fluctuates directly with changes in sales volume. Fixed production and fixed selling costs are considered to be product costs. Variable selling expenses are included in product costs.

Unit product costs can change as a result of changes in the number of units manufactured.

Break-even analysis assumes that: Total revenue is constant. Unit fixed expense is constant. Selling prices must fall in order to generate more revenue. Unit variable expense is constant.

Unit variable expense is constant.

Machining a part for a product is an example of a: Unit-level activity. Batch-level activity. Product-level activity. Organizational-level activity.

Unit-level activity.

The formula for calculating budgeted sales is: Units sold x selling price Units produced x selling price Units in inventory x selling price Units sold x variable cost per unit

Units sold x selling price

Which of the following costs change in direct proportion to a change in the activity level (as volume goes up, costs go up at the same rate of change)? (Direct materials or direct labor is an example.) Discretionary cost Fixed cost Variable cost Mixed cost

Variable cost

Which of the following statements concerning direct and indirect costs is NOT true? A direct cost is one that can be easily traced to the particular cost object. Whether a particular cost is classified as direct or indirect does not depend on the cost object. A particular cost may be direct or indirect, depending on the cost object. The factory manager's salary would be classified as an indirect cost of producing one unit of product.

Whether a particular cost is classified as direct or indirect does not depend on the cost object.

In a job-order costing system, manufacturing overhead applied is recorded as a debit to: Finished Goods. Work in Process. Cost of Goods Sold. Manufacturing Overhead.

Work in Process.

If the contribution margin is not sufficient to cover fixed expenses: variable expenses equal contribution margin. a loss occurs. contribution margin is negative. total profit equals total expenses.

a loss occurs.

The salary paid to the president of a company would be classified on the income statement as a(n): selling expense. manufacturing overhead cost. direct labor cost. administrative expense.

administrative expense.

Manufacturing overhead includes: all direct material, direct labor and administrative costs. all manufacturing costs except direct labor. all manufacturing costs except direct labor and direct materials. all selling and administrative costs.

all manufacturing costs except direct labor and direct materials.

Generally speaking, net operating income under variable and absorption costing will: be equal only when production and sales are equal. always be equal. never be equal. be equal only when production exceeds sales.

be equal only when production and sales are equal.

Direct costs: are incurred to benefit a particular accounting period. are the variable costs of producing a product. are incurred due to a specific decision. can be easily traced to a particular cost object.

can be easily traced to a particular cost object.

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: in process during the period. completed during the period. started in process during the period. completed and sold during the period.

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 only. costs incurred during the current period plus cost of beginning work in process inventory. costs incurred during the current period less cost of beginning work in process inventory. costs incurred during the current period plus cost of ending work in process inventory.

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. decreases variable cost per unit. increases variable cost per unit. increases total costs.

decreases total costs.

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing? direct material cost property taxes on the factory building sales manager's salary sales commissions

direct material cost

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be: favorable. unfavorable. zero. either favorable or unfavorable.

favorable.

A budget that is based on the actual activity of a period is known as a: flexible budget. continuous budget. static budget. master budget.

flexible budget.

When sales exceed production and the company uses the LIFO inventory flow assumption, the net operating income reported under variable costing generally will be: greater than net operating income reported under absorption costing. less than net operating income reported under absorption costing. equal to net operating income reported under absorption costing. higher or lower because no generalization can be made.

greater than net operating income reported under absorption costing.

The market price of Friden Company's common stock increased from $15 to $18. Earnings per share of common stock remained unchanged. The company's price-earnings ratio would: increase. remain unchanged. impossible to determine. decrease.

increase.

The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): indirect material cost. opportunity cost. direct material cost. period cost.

indirect material cost.

Materials used in a factory that are not an integral part of the final product, such as cleaning supplies, should be classified as: direct materials. administrative expense. manufacturing overhead. a period cost.

manufacturing overhead.

In a job-order costing system, which of the following events would trigger recording data on a job cost sheet? the purchase of direct materials the payment for product advertising none of the choices the payment of fire insurance on the factory building

none of the choices

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: increase. decrease. not change. change but direction cannot be determined.

not change.

When preparing a direct materials budget, the required purchases of raw material in units equals: raw materials needed to meet the production schedule + desired ending inventory or raw materials - beginning inventory of raw materials. raw materials needed to meet the production schedule − desired ending inventory of raw materials − beginning inventory of raw materials. raw materials needed to meet the production schedule − desired ending inventory of raw materials + beginning inventory of raw materials. raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials

raw materials needed to meet the production schedule + desired ending inventory or raw materials - beginning inventory of raw materials.

When unit sales are constant, but the number of units produced fluctuates and everything else remains the same, net operating income under variable costing will: remain constant. fluctuate in direct proportion to changes in production. fluctuate inversely with changes in production. be greater than net operating income under absorption costing.

remain constant.

When manufacturing overhead is applied to production, it is added to: the Cost of Goods Sold account. the Finished Goods inventory account. the Work in Process account. the Raw Materials account.

the Work in Process account.

The ratio of total cash, marketable securities, accounts receivable, and short-term notes to current liabilities is: working capital. the current ratio. the debt-to-equity ratio. the acid-test ratio.

the acid-test ratio.

A favorable labor rate variance indicates that the standard rate exceeds the actual rate. actual hours exceed standard hours. standard hours exceed actual hours. the actual rate exceeds the standard rate.

the standard rate exceeds the actual rate.

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then: the standard variable overhead rate exceeded the actual rate. the actual variable overhead rate exceeded the standard rate. the actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output. the standard direct labor-hours allowed for the actual output exceeded the actual hours.

the standard variable overhead rate exceeded 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. the direct labor-hours required by the product. the machine-hours required by the product. the total direct labor-hours for the activity cost pool.

the total activity for the activity cost pool

When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs: the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase. the unit product costs of both high and low volume products typically increase. the unit product costs of both high and low volume products typically decrease. the unit product costs of high volume products typically increase and the unit product cost of low volume products typically decrease.

the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase.

A reason why absorption costing income statements are sometimes difficult to interpret is that: they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories. they omit variable expenses entirely in computing net operating income. they include all fixed manufacturing overhead on the income statement each year as a period cost. they ignore inventory levels in determining cost of goods sold.

they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories.

Which of the following is correct? The break-even point occurs on the CVP graph where: total variable expenses equal total contribution margin. total profit equals total expenses. total contribution margin equals total fixed expenses. total profit equals total fixed expenses.

total contribution margin equals total fixed expenses.

The costing method that treats all fixed costs as period costs is: variable costing. absorption costing. job-order costing. process costing.

variable costing.

A cost that would be included in product costs under both absorption costing and variable costing is: variable manufacturing costs. supervisory salaries. factory rent. variable selling expenses.

variable manufacturing costs.