Cost Acct Final

Ace your homework & exams now with Quizwiz!

Actual ResultsFlexible Budget VarianceFlexible BudgetSales Activity VarianceMaster BudgetUnits13,000?2,000U?Sales revenue?13,000F???Less:Variable mfg. costs$87,750$91,000?$105,000Variable mktg/adm.costs?$3,250U?$4,000F30,000Contribution margin$52,000??$6,000U? What is the activity variance for the variable manufacturing costs?

$14,000

Calculate the conversion costs from the following information: Fixed manufacturing overhead $2,000 Variable manufacturing overhead 1,000 Direct materials 2,500 Direct labor 1,500

$4,500

If a company multiplies its actual overhead rate by the actual activity level of its allocation base, it is using

Actual costing

Which of the following companies would most likely use job costing?

Advertising agency

Under absorption costing, fixed manufacturing costs ________

Are inventoriable costs

A continuous (rolling) budget:

Budget that is always available for a specified future period. It is created by continually adding a month, quarter, or year to the period that just ended. It is also called a rolling budget or rolling forecast.

Which of the following income statement items is analyzed using the sales mix and the sales quantity variances?

Contribution margin.

T/F: Which of the following costs is both a prime cost and a conversion cost?

Direct Labor

Which of the following would be the least appropriate allocation base for allocating overhead in a highly automated (i.e., capital-intensive) manufacturing company?

Direct labor hours

T/F: Abnormal spoilage is spoilage that should arise under efficient operating conditions.

FALSE

T/F: In variable costing, all nonmanufacturing costs are subtracted from contribution margin.

FALSE

T/F: Normal spoilage is spoilage that is NOT considered to be inherent in a production process.

FALSE

T/F: Overhead costs allocated to the sales office and individual customers are always relevant

FALSE

T/F: Reworked goods are unacceptable units of production usually NOT capable of being repaired or converted into a salable product

FALSE

T/F: Spoilage always occurs at beginning stages of a production process and can be detected only at the end of process.

FALSE

T/F: The basic variance analysis framework used for manufacturing companies can also be used in service organizations

FALSE

T/F: The dual cost-allocation method classifies costs into two pools, a budgeted cost pool and an actual cost pool.

FALSE

T/F: Throughput costing considers only direct materials and direct manufacturing labor to be truly variable costs.

FALSE

T/F: Absorption costing is also referred to as super-variable costing

False

T/F: In essence, the terms "master budget" and "operating budget" mean the same thing and can be used interchangeably.

False

The next year's budget for Trend, Inc., a multi-product company, is given below: At the end of the year, the total fixed costs and the variable costs per unit were exactly as budgeted, but the following units per product line were sold. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company. Product LinesUnits SalesA 253,230 $1,848,579 B 113,770 $1,479,010 Is the total sales quantity variance favorable or unfavorable?

Favorable

The field of accounting that reports according to generally accepted accounting principles (GAAP) is called

Financial accounting

In flexible budgets, costs that remain the same regardless of the output levels within the relevant range are ________.

Fixed costs

When a manager is concerned with monitoring total cost, total revenue, and net profit conditioned upon the level of productivity, an accountant should normally recommend

Flexible Budget Yes, Standard Costing Yes

Which of the following costs would most likely be classified as variable, assuming the account analysis method is used to determine cost behaviors?

Indirect materials.

Which of the following is not a benefit of budgeting?

It reduces the need for tracking actual cost activity.

Which of the following budgets does not require the production budget?

Marketing and administrative expenses.

Which of the following statements is(are) true regarding the sales activity variance? (A) The sales activity variance is the actual selling price per unit times the difference between the budgeted units and actual units. (B) If the sales activity variance for sales revenue is unfavorable, then the contribution margin sales activity variance will be unfavorable.

Only B is true

T/F: Adjusted allocation-rate approach restates all amounts in the general and subsidiary ledgers by using actual rather than budgeted cost rates

TRUE

T/F: Allocated fixed overhead can be expressed in terms of allocation-base units or in terms of the budgeted fixed cost per unit.

TRUE

T/F: An effective plan for variable overhead costs will eliminate activities that do not add value

TRUE

T/F: Avoidable variable and fixed costs should be evaluated when deciding whether to discontinue a product, product line, business segment, or customer.

TRUE

T/F: Both variable and fixed manufacturing overhead costs are included in the manufacturing overhead budget

TRUE

T/F: Bottlenecks in the production process can be discovered by the budgeting process before they occur.

TRUE

T/F: Cost behavior is the most important characteristic for managerial decision making.

TRUE

T/F: Differential revenue is the difference in total revenue between two alternatives.

TRUE

T/F: Engineering and human resource factors are both important when estimating theoretical or practical capacity.

TRUE

T/F: If a company inspects units only at the end of the production process, the units in ending work-in-process inventory are not assigned any costs of normal spoilage.

TRUE

T/F: Indirect material and indirect labor are two examples of manufacturing overhead costs

TRUE

T/F: Job costing system is an example of absorption costing.

TRUE

T/F: Most major projects require budget and completion stage revisions at certain intervals due to their inherent uncertainty.

TRUE

T/F: Possible reasons for the larger actual materials-handling labor-hours per batch include the possibility of unmotivated, inexperienced, and underskilled employees

TRUE

T/F: Practical capacity rather than master-budget volume is a better way to price product and avoid downward demand spiral

TRUE

T/F: Scrap is residual material that results from manufacturing a product; it has low total sales value compared with the total sales value of the product.

TRUE

T/F: Service organizations generally use the same job costing procedures as manufacturers

TRUE

T/F: Some amounts of spoilage, rework, or scrap are inherent in many production processes

TRUE

T/F: Some variances are the result of accounting errors and omissions, including timing differences

TRUE

T/F: Spoilage can be considered either normal or abnormal.

TRUE

T/F: Standard costing is a costing system that allocates overhead costs on the basis of the standard overhead-cost rates times the standard quantities of the allocation bases allowed for the actual outputs produced

TRUE

T/F: The choice of the capacity level used to allocate budgeted fixed manufacturing costs to products can greatly affect the product-cost information available to managers.

TRUE

T/F: The direct material price variance is based on the quantity of materials purchased when the quantity purchased is different from the quantity used

TRUE

T/F: The fixed setup overhead flexible-budget variance is calculated as actual costs - flexible-budget variance

TRUE

T/F: The main difference between variable costing and absorption costing is the way in which fixed manufacturing costs are accounted for.

TRUE

T/F: The predetermined overhead rate is computed by dividing the estimated activity of the allocation base into the estimated manufacturing overhead costs.

TRUE

T/F: The sales activity variance is the result of a difference between budgeted units sold and actual units sold.

TRUE

T/F: The two most common methods of costing inventories in manufacturing companies are variable costing and absorption costing.

TRUE

T/F: The unit costs of normal and abnormal spoilage are the same when the two are detected at the same inspection point

TRUE

T/F: Tightly budgeted machine time standards can lead to unfavorable variable overhead efficiency variance.

TRUE

T/F: Under both variable and absorption costing, research and development costs are period costs.

TRUE

T/F: Under the opportunity cost approach, the cost of each alternative includes the incremental costs and the opportunity cost.

TRUE

T/F: When forecasting fixed costs, managers should concentrate on total lump-sum costs instead of unitized fixed overhead costs.

TRUE

The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs. What document is used to determine the actual amount of direct labor to record on a job cost sheet?

Time ticket

T/F: In a make-or-buy decision when there are alternative uses for capacity, the opportunity cost of idle capacity is relevant

True

The quantities of chemicals purchased and used during the current production period are shown in the schedule below. A total of 140 batches of Charger Power were manufactured during the current production period. The controller of BE has determined its costs and chemical usage variations at the end of the production period. Is the total material price variance favorable or unfavorable?

Unfavorable

The quantities of chemicals purchased and used during the current production period are shown in the schedule below. A total of 140 batches of Charger Power were manufactured during the current production period. The controller of BE has determined its costs and chemical usage variations at the end of the production period. ChemicalQuantity PurchasedTotal CostQuantity Is the materials yield variance favorable or unfavorable?

Unfavorable

The set of activities that transforms raw resources into the goods and services end users purchase and consume is called the:

Value Chain

Which of the following journal entries is used to record actual variable overhead costs incurred

Variable Overhead Control Accounts Payable

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

Variable costing

The following events took place at a manufacturing company for the current year: (1) Purchased $95,000 in direct materials. (2) Incurred labor costs as follows: (a) direct, $56,000 and (b) indirect, $13,600. (3) Other manufacturing overhead was $107,000, excluding indirect labor. (4) Transferred 80% of the materials to the manufacturing assembly line. (5) Completed 65% of the Work-in-Process during the year. (6) Sold 85% of the completed goods. (7) There were no beginning inventories. What is the journal entry to record the direct labor costs for the period?

Work-In-Process Inventory xxx Wages Payable xxx

Costs of normal spoilage are usually accounted for as ________.

a component of the costs of good units manufactured

Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as ________.

abnormal spoilage

In the cost equation TC = F + VX, X is best described as the:

activity level used to estimate the total cost.

A costing method that first assigns costs to activities and then assigns them to products based on the products' consumption of those activities is:

activity-based costing.

Sensitivity analysis can best be used in the budgeting process to:

answer "what-if" questions regarding key projections

An operating budget would not include a:

cash budget

Salary of top management and general-administration costs is an example of ________

corporate-sustaining costs

ABC systems use the concept of a ________ to identify the cost drivers that best demonstrate the cause-and-effect relationship between each activity and the costs in the related cost pool.

cost hierarchy

The formal process of choosing between alternatives is known as a(n) ________

decision model

A variance can best be described as

differences between planned results and actual results.

A standard cost system may be used in:

either job-order costing or process costing

Corporate administrative costs allocated to a division cost pool are most likely to be ________

facility-sustaining costs

A decision model involves a(n) ________.

formal method of making a choice that often involves both quantitative and qualitative analyses

Fixed overhead costs ________.

have no efficiency variance

Capacity constraints include ________.

increased need of display space for a retailer

Smiley Face Company manufactures signs from direct materials to the finished product. This is considered ________.

insourcing

The costs of unused capacity are highlighted when ________.

practical capacity-based allocations are used

The practice of setting price below cost with the intent to drive competitors out of business:

predatory pricing

The time from initial research and development to the time that support to the customer ends is the:

product life cycle.

The cost of the direct labor will be treated as an expense on the income statement when the resulting:

products are sold.

An example of a period cost is:

rent on a headquarters building

Which of the following is a step in developing budgeted variable overhead rates?

selecting the cost-allocation base to use in allocating machine-handling costs

Which of the following is one of the methods of allocating support department costs to operating departments?

step-down method

More insight into the static-budget variance can be gained by subdividing it into ________.

the flexible-budget variance and the sales-volume variance

Contract disputes regarding cost allocation can be reduced by defining ________.

the terms used, such as what constitutes direct labor

The process of first allocating costs to intermediate cost pools and then to the individual cost objects using different allocation bases is a(n)

two-stage allocation system

Rework refers to ________.

units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units

The stand-alone revenue-allocation method ________.

uses product-specific information on the products in the bundle as weights for allocating the bundled revenues to the individual products

The dual-rate cost-allocation method classifies costs in each cost pool into a ________.

variable-cost pool and a fixed-cost poo

Which of the following is an example of sunk costs?

wages to security staffs


Related study sets

Finance Chapter 4 Cash Flow and Financial Planning

View Set

AP Statistics: Chapter 7 Vocabulary

View Set

Intro to Financial Accounting Exam 2 Chapters 4-6

View Set

Entrepreneurship & New Venture Growth Final

View Set

7.2 Listen and select pero or sino to replace the beep in each statement.

View Set