Exam 1-MC

Actual costs are: A. the costs incurred B. budgeted costs C. estimated costs D. forecasted costs

A

How much of account verification costs will be assigned to Department A? A. $15,000 B. S18,750 C. S75,000 D. $5,000

B

If the contribution margin ratio is 0.40, targeted operating income is $50,000, and fixed costs are $75,000, then sales volume in dollars is: A. $250,000 B. S312,500 C. $275,000 D. $350,000

B

Payment of the factory rent increases the: A. Work-in-Process Control account B. Manufacturing Overhead Control account C. Both A and B are correct. D. None of these answers are correct.

B

The general term used to identify both the tracing and the allocation of accumulated a cost object is: A. cost accumulation B. cost assignment C. cost tracing D. conversion costing

B

Finished goods inventory would normally include: A. goods partially worked on but not yet fully completed B. direct materials in stock and awaiting use in the manufacturing process C. goods fully completed but not yet sold D. products in their original form intended to be sold without changing their basic form

C

How much of the account billing cost will be assigned to Department B? A. $14,000 B. $140,000 C. $7,000 D. None of these answers are correct.

C

How much of the total costs will be assigned to Department B? A. $79,000 B. $40,000 C. $112,000 D. $440,000

C

Philadelphia Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2010: Direct materials $140,000 Direct labor (3,500 hours @$11/hour) S 38,500 Indirect labor $ 10,000 Plant facility rent S 30,000 Depreciation on plant machinery and equipment $15,000 Sales commissions $ 20,000 Administrative expenses S 25,000 The actual amount of manufacturing overhead costs incurred in June 2010 totals: A. $278,500 B. S100,000 C. $55,000 D. $40,000

C

The number of units that must be sold to achieve S6,000 of operating income is: A. 1,000 units B. 1,166 units C. 1,200 units D. None of these answers are correct

C

Which of the following is NOT one of the questions management accountants might attempt to help answer in the formulation of strategy? A. Who are our most important customers? B. What substitute products exist in the marketplace? C. Does the strategy comply with GAAP (Generally Accepted Accounting Principles)? D. Will adequate cash be available to implement the strategy?

C

___ is the acquisition, coordination, and assembly of resources to produce a product or deliver a service. A. Research and development B. Customer service C. Production D. Marketing

C

A budget can serve as: A. a planning tool B. a control tool C. a basis for preparing financial statements D. a planning and control tool

D

A budget: A. is a quantitative expression of a proposed management plarn B. helps translate strategy into actions C. aids in the coordination and communication among various business functions D. All of these answers are correct.

D

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is: A. material used to make the soccer balls B. labor to shape the leather used to make the soccer ball C. shift supervisor for the soccer line D. plant supervisor

D

Companies use ABC system information to: A. analyze costs B. prepare budgets C. evaluate performance D. All of these answers are correct.

D

Cost objects include: A. products B. customers C. departments D. All of these answers are correct

D

If targeted operating income is $40,000, then targeted sales revenue is: $350,000 $233,333 $166,667 $250,000

A

Management accounting A. focuses on estimating future revenues, costs, and other measures to forecast activities and their results B. provides information about the company as a whole C. provides information that is generally available only on a quarterly or annual basis D. reports information that has occurred in the past that is verifiable and reliable

A

Strategy specifies: A. how an organization matches its own capabilities with the opportunities in the marketplace B. standard procedures to ensure quality products C. incremental changes for improved performance D. the demand created for products and services

A

When using a normal costing system, manufacturing overhead is allocated using the manufacturing overhead rate and the quantity of the allocation base . A. budgeted; actual B. budgeted; budgeted C. actual; budgeted D. actual; actual

A

Which of the following is a fixed cost for an automobile manufacturing plant? A. administrative salaries B. electricity used by assembly-line machines C. sales commissions D. windows for each car produced

A

_____ is the generation of, and experimentation with, ideas related to new products, services, or processes. A. Research and development B. Design of products, services, or processes C. Production D. Marketing

A

Answer the following questions using the information below Mertens Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $200,000 10,000 hours Account billing lines $140,000 4,000,000 lines Account verification accounts $75,000 40,000 accounts Correspondence letters $ 25,000 4,000 letters Total costs $440,000 The above activities are used by Departments A and B as follows: Account inquiry hours 2,000 hours 4,000 hours Account billing lines 400,000 lines 200,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,600 letters How much of the account inquiry cost will be assigned to Department A? A. $40,000 B. S200,000 C. $80,000 D. None of these answers are correct.

A

Answer the following questions using the information below: Pederson Company reported the following: Manufacturing costs $2,000,000 Units manufactured 50,000 Units sold 47,000 units sold for $75 per unit Beginning inventory 0 units What is the average manufacturing cost per unit? A. $40.00 B. $42.55 C. $0.25 D. $75.00

A

Answer the following questions using the information below: Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue, $2,800 of variable costs, and $1,200 of fixed costs. Breakeven point in units is: A. 200 units B. 300 units C. 500 units D. None of these answers are correct.

A

Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000. How many dresses must the Bridal Shoppe sell to yield after-tax net income of $18,000, assuming the tax rate is 40 % ? A. 200 dresses B. 170 dresses C. 150 dresses D. 145 dresses

A

Cost-volume-profit analysis is used primarily by management: A. as a planning tool B. for control purposes C. to prepare external financial statements D. to attain accurate financial results

A

Direct materials inventory would normally include: A. direct materials in stock and awaiting use in the manufacturing process B. goods partially worked on but not yet fully completed C. goods fully completed but not yet sold D. products in their original form intended to be sold without changing their basic form

A

Fixed costs: A. may include either direct or indirect costs B. vary with production or sales volumes C. include parts and materials used to manufacture a product D. can be adjusted in the short run to meet actual demands

A

How much of the total costs will be assigned to Department A? A. $79,000 B. $40,000 C. $112,000 D. $440,000

A

If products are different, then for costing purposes: A. an ABC costing system will yield more accurate cost numbers B. a simple costing system should be used C. a single indirect-cost rate should be used D. none of the above

A

describe(s) the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations. A. Supply chain B. Key success factors C. Continuous improvement D. Customer focus

A

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of direct costs for the golf equipment line are: A. beverages provided daily in the plant break room B. monthly lease payments for a specialized piece of equipment needed to manufacture the golf driver C. salaries of the clerical staff that work in the company administrative offices D. utilities paid for the manufacturing plant

B

ABC systems create: A. one large cost pool B. homogenous activity-related cost pools C. activity-cost pools with a broad focus D. activity-cost pools containing many direct costs

B

Activity-based costing is most likely to yield benefits for companies with all of the follov characteristics EXCEPT: A. numerous products that consume different amounts of resources B. operations that remain fairly consistent C. a highly competitive environment, where cost control is critical D. accessible accounting and information systems expertise to maintain the system

B

Answer the following questions using the information below alocation base. The accounting records contain the following information e's Dog Supply Manufacturing uses machine-hours as the only overhead cost- Manufacturing overhead costs $200,000 240,000 Estimated Actual Machine-hours 40,000 50,000 Using job costing, the 2010 actual indirect-cost rate is: A. $4.00 per machine-hour B. $4.80 per machine-hour C. S5.00 per machine-hour D. $6.00 per machine-hour

B

Answer the following questions using the information below: The following information is for Nichols Company: Selling price $50 per unit Variable costs $30 per unit Total fixed costs $100,000 The number of units that Nichols Company must sell to reach targeted operating income of $30,000 is: A. 5,000 units B. 6,500 units C. 3,334 units D. 4,334 units

B

If Bel Air Realtor plans an operating income of $ 210,000 and the tax rate is 30 % , then Bel Air's planned net income should be: $63,000 $147,000 $273,000 $357,000

B

If sales increase by $25,000, operating income will increase by: A. $10,000 B. $15,000 C. $22,200 D. None of these answers are correct.

B

Stewart Company's actual manufacturing overhead is $2,800,000. Overhead is allocated on the basis of direct labor hours. The direct labor hours were 50,000 for the period. What is the manufacturing overhead rate? A. $47.00 B. $56.00 C. $75.00 D. None of the above are correct.

B

Variable costs: A. are always indirect costs B. increase in total when the actual level of activity increases C. include most personnel costs and depreciation on machinery D. can always be traced directly to the cost object

B

What are the fixed costs per unit associated with Product ICT101? A. $102 B. $48 C. $52 D. $32

B

What is the amount of ending finished goods inventory? A. $1,880,000 B. $120,000 C. $225,000 D. $105,000

B

When direct materials are requisitioned the ____ account is increased. A. Manufacturing Overhead Control B. Work-in-Process Control C. Materials Control D. Accounts Payable Control

B

Which of the following people is LEAST likely to use management accounting information? A. the controller B. a shareholder evaluating a stock investment C. the treasurer D. an assembly department supervisor

B

Which statement is true? A. All variable costs are direct costs. B. Because of a cost-benefit tradeoff, some direct costs may be treated as indirect costs. C. All fixed costs are indirect costs. D. All direct costs are variable costs.

B

Work-in-process inventory would normally include: A. direct materials in stock and awaiting use in the manufacturing process B. goods partially worked on but not yet fully completed C. goods fully completed but not yet sold D. products in their original form intended to be sold without changing their basic form

B

___ costing is used by a business to price unique products for different jobs. A. Actual B. Job C. Process D. Traditional

B

is the detailed planning and engineering of products, services, or processes. A. Distribution B. Design of products, services, or processes C. Production D. Marketing

B

2010 is: Using actual costing, the amount of manufacturing overhead costs allocated to jobs during A. $300,000 B. $250,000 C. $240,000 D. $200,000

C

A report showing the actual financial results for a period compared to the budgeted financial results for that same period would most likely be called a: A. strategic plan B. management forecast C. performance report D. revised plan

C

Actual costing is a costing system that traces direct costs to a cost object by A. using the budgeted direct cost rates times the budgeted quantities of direct-cost inputs. B. using the actual direct costs rates times the budgeted quantities of the direct-cost inputs. C. using the actual direct cost rates times the actual quantities of the direct-cost inputs. D. using the budgeted direct cost rates times the actual quantities of the direct cost inputs.

C

Amber Manufacturing provided the following information for last month: Sales $20,000 Variable costs 6,000 Fixed costs 9,000 Operating income $5,000 If sales double next month, what is the projected operating income? A. $10,000 B. $25,000 C. $19,000 D. $12,000

C

An accelerated need for refined cost systems is due to: A. global monopolies B. rising prices C. intense competition D. a shift toward increased direct costs

C

Answer the following questions using the information below: Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue, $2,800 of variable costs, and $1,200 of fixed costs. Contribution margin per unit is: A. S4.00 B. $4.29 C. $6.00 D. None of these answers are correct.

C

At the breakeven point of 2,000 units, variable costs total $4,000 and fixed costs total $6,000. The 2,001st unit sold will contribute to profits A. $1 B. S2 C. $3 D. S5

C

Contribution margin equals: A. revenues minus period costs B. revenues minus product costs C. revenues minus variable costs D. revenues minus fixed costs

C

Cost-volume-profit analysis assumes all of the following EXCEPT: A. all costs are Cost-volume-profit variable or fixed B. units manufactured equal units sold C. total variable costs remain the same over the relevant range D. total fixed costs remain the same over the relevant range

C

Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1,000. His fixed costs are $20,000, while his variable costs are $500 per procedure. Dr. Hunter currently plans to perform 200 procedures this month. What is the margin of safety assuming 100 procedures are budgeted? $40,000 or 40 times $50,000 or 50 times $60,000 or 60 times $100,000 or 100 times

C

In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the allocated to a job. A. direct materials B. direct labor C. manufacturing overhead costs D. total costs

C

O'Reilly Enterprises manufactures digital video equipment. For each unit $2,950 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labor hour. Calculate the cost of each unit. A. $4,950 B. S9,950 C. $8,450 D. $11,950

C

Answer the following questions using the information below: thr ICT101 Singaer are as Company follows: manufactures several difterent products. Unit costs associated with Product Direct materials S 60 Direct manufacturing labor 10 Variable manufacturing overhead 18 Fixed manufacturing overhead 32 Sales commissions ( 2 % ofsales ) Administrative salaries 16 Total $140 What are the variable costs per unit associated with Product ICT101? A. $18 B. $22 C. $88 D. $92

D

Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity? A. S0.50 B. $1.00 C. $1.50 D. $2.00

D

For a given job the direct costs associated with the job are: A. actual overhead B. direct material C. direct manufacturing labor D. Both b and c are correct.

D

How much of correspondence costs will be assigned to Department B? A. $800 B. S6,250 C. $25,000 D. $10,000

D

If the contribution margin ratio is 0.25, targeted operating income is S25,000, and targeted sales volume in dollars is $200,000, then total fixed costs are: A. $50,000 B. $100,000 C. $75,000 D. $25,000

D

Managers use management accounting information to strategy . A. choose B. communicate C. implement D. All of these answers are correct.

D

The breakeven point is the activity level where: A. revenues equal fixed costs B. revenues equal variable costs C. contribution margin equals variable costs D. revenues equal the sum of variable and fixed costs

D

The following information pertains to Alleigh's Mannequins: Manufacturing costs $1,500,000 Units manufactured 30,000 Units sold 29,500 units sold for $85 per unit Beginning inventory 0 units What is the amount of gross margin? A. S1,475,000 B. $1,500,000 C. $2,507,500 D. $1,032,500

D