Archives

The Chase Company has a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours (DLHs). The company recorded the following activity and cost data relating to manufacturing overhead for October: The amount of […]

Atwich Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were: A total of […]

The economic impact of the inability to reach a target denominator level of activity would best be measured by: A. the amount of the volume variance. B. the contribution margin lost by failing to meet the target denominator level of […]

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store’s operations follow: o Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000 for January. o Collections are expected to be 55% in the […]

When switching from a traditional costing system to an activity-based costing system that includes some batch-level costs: A. the unit product costs of high volume products typically change less than the unit product costs of low volume products. B. the […]

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store’s operations follow: o Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000 for January. o Collections are expected to be 55% in the […]

The following is Allison Corporation’s contribution format income statement for last month: The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. What is the company’s break-even sales in dollars? A. $0 B. […]

Reference: 8-17 Hamp 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 December, the kennel budgeted for 3,000 tenant-days, but its actual level of activity was […]

Reichelderfer Corporation has provided data concerning the company’s Manufacturing Overhead account for the month of August. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead […]

Niemiec Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The manufacturing cycle efficiency (MCE) was closest to: A. 0.20 B. 0.06 C. 0.12 D. 0.96 Answer: Stock Manufacturing […]

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: Required: a. What is the materials price variance for the month? b. What is the materials […]

Heroman Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The budgeted fixed manufacturing overhead cost for the most recent month was $26,550 and the actual fixed manufacturing overhead cost for the month was $26,570. The company […]

Ekmark Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Data for one of the company’s products follow: How much overhead cost would be assigned to Product P59G using the activity-based costing system? […]

Wesi Corporation prepares its statement of cash flows using the direct method. Which of the following should Wesi classify as an operating activity on its statement? A. Option A B. Option B C. Option C D. Option D Answer: Pedulla […]

The following data are available for the South Division of Redride Products, Inc. and the single product it makes: How many units must South sell each year to have an ROI of 16%? A. 240,000 B. 1,300,000 C. 52,000 D. […]

Carpon Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store’s operations follow: o Sales are budgeted at $340,000 for November, $350,000 for December, and $370,000 for January. o Collections […]

Hocking Corporation’s comparative balance sheet appears below: The company’s net income (loss) for the year was $10,000 and its cash dividends were $1,000. It did not sell or retire any property, plant, and equipment during the year. The company uses […]

Stanfa Corporations standard wage rate is $10.50 per direct labor-hour (DLH) and according to the standards, each unit of output requires 8.0 DLHs. In January, 3,700 units were produced, the actual wage rate was $10.80 per DLH, and the actual […]

The Pacific Company manufactures a single product. The following data relate to the year just completed: During the last year, 5,000 units were produced and 4,800 units were sold. There were no beginning inventories. The carrying value of finished goods […]

Porl Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. The following budget data are available: All of […]

Fixed manufacturing overhead is included in product costs under: A. Option A B. Option B C. Option C D. Option D Answer: The following is Allison Corporation’s contribution format income statement for last month: The company has no beginning or […]

Bakker Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total variable manufacturing cost per unit is: A. $89.70 B. $131.80 […]

The following cost data pertain to the operations of Mancia Department Stores, Inc., for the month of February. The Brentwood Store is just one of many stores owned and operated by the company. The Shoe Department is one of many […]

Reference: 8-12 Nakhle 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 October, the kennel budgeted for 3,000 tenant-days, but its actual level of activity was […]

Ring, Incorporated’s income statement for the most recent month is given below. Refer to the original data. If Store Q sales increase by $30,000 with no change in fixed expenses, the overall company net operating income should: A. increase by […]

Stanfa Corporation’s standard wage rate is $10.50 per direct labor-hour (DLH) and according to the standards, each unit of output requires 8.0 DLHs. In January, 3,700 units were produced, the actual wage rate was $10.80 per DLH, and the actual […]

Diorio Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The manufacturing cycle efficiency (MCE) was closest to: A. 0.15 B. 0.05 C. 0.45 D. 0.18 Answer: Bonine Corporation […]

Under the FIFO method, the equivalent units of production relate only to work done during the current period. Answer: Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products. Answer: […]

Kramer Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Note: Your answers may differ from those offered below due to rounding error. In all […]

Kaelker Corporation has provided the following data: The inventory turnover for this year is closest to: A. 3.36 B. 0.87 C. 1.15 D. 3.15 Answer: The following monthly data are available for the Eager Company and its only product: The […]

A product sells for $20 per unit and has a contribution margin ratio of 40 percent. Fixed expenses total $240,000 annually. How many units of the product must be sold to yield a profit of $60,000? A. 37,500 units B. […]

The present value of a given amount decreases as the number of years over which it is to be discounted also decreases. Answer: When a company issues common stock in exchange for cash, the cash inflow is recorded in the […]

The most recent balance sheet and income statement of Heldt Corporation appear below: The company paid a cash dividend and it did not dispose of any property, plant, and equipment. The company did not purchase any bonds payable or repurchase […]

Which of the following characteristics applies to process costing, but does not apply to job order costing? A. the need for averaging. B. the use of equivalent units of production. C. separate, identifiable jobs. D. the use of predetermined overhead […]

At a sales volume of 35,000 units, Thoma Corporation’s sales commissions (a cost that is variable with respect to sales volume) total $448,000. To the nearest whole dollar, what should be the total sales commissions at a sales volume of […]

Elard Company uses the FIFO method in its process costing system. The first processing department, the Welding Department, started the month with 17,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. […]

The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to activity cost pools. Answer: Discretionary fixed costs arise from annual decisions by management to spend in certain fixed cost areas. Answer: TRUE For liability […]

Reference: 8-30 Snuggs Corporation makes a product with the following standard costs: The company reported the following results concerning this product in October. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is […]

Echenko Corporation uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. During the year the company’s Finished Goods inventory account was debited for $380,000 and credited for $335,500. The ending balance in the Finished […]

Financial statements for Orange Company appear below: Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $100. Orange Company’s return […]

Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, a decrease in accounts receivable is added to net income. Answer: Cash payments to retire bonds payable are reported as a […]

Reference: 8-32 Gentile Corporation makes a product with the following standard costs: The company produced 6,000 units in May using 36,970 kilos of direct material and 4,340 direct labor-hours. During the month, the company purchased 40,400 kilos of the direct […]

Ahsan Company makes 60,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: An outside supplier has offered to sell the company all of these […]

Callander Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $151.60 per unit. The best estimate of the total variable […]

Hartzog Corporation’s most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 […]

The following partially completed T-accounts summarize transactions for Fabatz Company during the year: The manufacturing overhead was: A. $2,200 underapplied B. $2,200 overapplied C. $400 overapplied D. $400 underapplied Answer: Reference: 8-29 Hurren Corporation makes a product with the following […]

If by dropping a product a firm can avoid more in fixed costs than it loses in contribution margin, then the firm is better off economically if the product is dropped. Answer: Generally, a product line should be dropped when […]

Reference: 8-7 Edington Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 2,800 client-visits, but its actual level of activity was 2,850 client-visits. The clinic has provided the following data concerning the formulas to be […]

Selected financial data from Osterville Company for the most recent year appear below: The income tax rate is 40%. Net operating income as a percentage of sales was: A. 40% B. 30% C. 10% D. 5% Answer: Scheidel Enterprises, Inc. […]

Reference: 8-31 Kibodeaux Corporation makes a product with the following standard costs: The company budgeted for production of 3,300 units in June, but actual production was 3,400 units. The company used 33,240 liters of direct material and 320 direct labor-hours […]

Excerpts from Goodrow Corporation’s most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of […]

At the end of the year, actual manufacturing overhead costs were $110,000 and applied manufacturing overhead costs were $118,800. If the denominator activity for the year was 20,000 machine-hours, and if 22,000 standard machine-hours were allowed for the years production, […]

Direct material costs are generally variable costs. Answer: If the actual rate per direct labor-hour exceeds the standard rate per direct labor-hour, then the journal entry to record the Direct Labor Rate Variance would be a credit. Answer: FALSE As […]

The Steff Company has the following flexible budget (in condensed form) for manufacturing overhead: The following data concerning production pertain to last year’s operations: – The company used a denominator activity of 15,000 direct labor-hours to compute the predetermined overhead […]

Mounts Corporation produces and sells two products. In the most recent month, Product I05L had sales of $32,000 and variable expenses of $10,880. Product P42T had sales of $45,000 and variable expenses of $18,380. And the fixed expenses of the […]

Reference: 8-33 Tidd Corporation makes a product with the following standard costs: The company reported the following results concerning this product in November. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is […]

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column) for May would be closest to: A) $230 F B) $1,200 U C) $1,200 F D) $230 U Answer: Assuming […]

The Consumer Products Division of Weiter Corporation had average operating assets of $570,000 and net operating income of $65,100 in March. The minimum required rate of return for performance evaluation purposes is 12%. What was the Consumer Products Division’s residual […]

Jurper Corporation used $150,000 of direct materials during April. At the end of April, Jurper’s direct materials inventory was $25,000 more than it was at the beginning of the month. Direct materials purchases during the April amounted to: A. $0 […]

The following data pertain to the Whalen Division of Northern Industries. The margin at Whalen was exactly the same in Year 2 as it was in Year 1. The return on investment in Year 1 was: A. 48.00% B. 32.50% […]

The job cost sheet is used in both job-order and process costing. Answer: Reynold Enterprises sells a single product for $25. The variable expense per unit is $15 and the fixed expense per unit is $5 at the current level […]

Standard costs should generally be based on the actual costs of prior periods. Answer: The revenue and spending variances are the differences between the static planning budget and the actual results for the period. Answer: False In segment reporting, sales […]

Carter Corporation applies manufacturing overhead on the basis of machine-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $135,850. Actual manufacturing overhead for the year amounted to $145,000 […]

Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Each unit of finished goods requires 2 grams of raw material. If the company plans to sell […]

The most recent comparative balance sheet of Broekemeier Corporation appears below: The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section […]

Broze Company makes four products in a single facility. These products have the following unit product costs: Additional data concerning these products are listed below. The grinding machines are potentially the constraint in the production facility. A total of 53,600 […]

Paying taxes to governmental bodies is considered an operating activity on the statement of cash flows. Answer: A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and […]

Schleich Corporation’s most recent balance sheet appears below: Net income for the year was $274. Cash dividends were $53. The company did not sell or retire any property, plant, and equipment during the year. The net cash provided by (used […]

The following data pertains to activity and costs for two months: Assuming that these activity levels are within the relevant range, the mixed cost for July was: A. $10,000 B. $35,000 C. $15,000 D. $40,000 Answer: C. Variable cost per […]

Reference: 8-27 The Litton Company has established standards as follows: Direct material: 3 pounds per unit @ $4 per pound = $12 per unit Direct labor: 2 hours per unit @ $8 per hour = $16 per unit Variable manufacturing […]

Grosseiller Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 900 units. The costs and percentage completion of these units in beginning inventory were: A total of […]

Financial leverage is negative when: A. the return on total assets is less than the rate of return on common stockholders’ equity. B. total liabilities are less than stockholders’ equity. C. total liabilities are less than total assets. D. the […]

The following data were taken from the accounting records of the Hazel Corporation which uses the weighted-average method in its process costing system: The equivalent units for conversion costs was: A. 102,000 units B. 112,000 units C. 111,000 units D. […]

Avoidable costs are also called relevant costs. Answer: Standard costs should generally be based on the actual costs of prior periods. Answer: False If a company’s return on assets is substantially higher than its cost of borrowing, then the common […]

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total period cost for the month under absorption costing? A. $58,300 B. $37,100 C. $259,900 D. $201,600 […]

The West Division of Shekarchi Corporation had average operating assets of $620,000 and net operating income of $80,100 in March. The minimum required rate of return for performance evaluation purposes is 14%. What was the West Division’s residual income in […]

Rothe Company manufactures and sells a single product that it sells for $90 per unit and has a contribution margin ratio of 35%. The company’s fixed expenses are $46,800. If Rothe desires a monthly target net operating income equal to […]

Financial statements for Narita Company appear below: Narita Company’s debt-to-equity ratio at the end of Year 2 was closest to: A. 0.17 B. 0.58 C. 0.25 D. 0.42 Answer: Intask Company uses the FIFO method in its process costing system. […]

Ribb Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $913,000 per month. The company is currently selling 9,000 units per month. Management is considering using a new component that would increase the […]

Prestwich Company has budgeted production for next year as follows: Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each […]

In February, one of the processing departments at Whisenhunt Corporation had beginning work in process inventory of $35,000 and ending work in process inventory of $11,000. During the month, the cost of units transferred out from the department was $410,000. […]

The Odle Company makes and sells a single product called a Kitt. Odle uses a standard costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0.9 direct labor-hours at $15 per […]

When there is a production constraint, a company should emphasize the products with: A. the highest unit contribution margins. B. the highest contribution margin ratios. C. the highest contribution margin per unit of the constrained resource. D. the highest contribution […]

In a statement of cash flows, all of the following would be classified as financing activities except: A. the collection of cash related to a loan made to another entity. B. the payment of a cash dividend on the company’s […]

Reference: 8A-4 The Phelps Company applies overhead costs to products on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit of product. Phelps Company had the following budgeted and actual […]

Reference: 8-34 Caquias Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is […]

Segment margin is sales minus: A. variable expenses. B. traceable fixed expenses. C. variable expenses and common fixed expenses. D. variable expenses and traceable fixed expenses. Answer: Bordes Corporation has provided the following data concerning its most important raw material, […]

Enz Corporation manufactures a variety of products. The following data pertain to the company’s operations over the last two years: What was the absorption costing net operating income this year? A. $92,000 B. $56,000 C. $73,000 D. $75,000 Answer: Excerpts […]

The general model for calculating a price variance is: A) actual quantity of inputs × (actual price – standard price). B) standard price × (actual quantity of inputs – standard quantity allowed for output). C) (actual quantity of inputs at […]

Excerpts from Zorra Corporation’s most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850. The acid-test ratio at the end of Year 2 is closest to: A. […]

Diorio Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The delivery cycle time was: A. 29.1 hours B. 30.6 hours C. 8 hours D. 2.7 hours Answer: Dieringer […]

When a decision is made among a number of alternatives, the benefit that is lost by choosing one alternative over another is the: A. realized cost. B. opportunity cost. C. conversion cost. D. accrued cost. Answer: In computing its predetermined […]

Zippy Company has a process costing system. Information about units processed and processing costs incurred during a recent month in the Refining Department follow: The beginning work in process inventory had $10,946 of processing cost attached to it at the […]

Reference: 8-16 Pong 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 December, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was […]

Gordon Company produces a single product that sells for $10 per unit. Last year there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure: Net operating income under variable […]

Pittman Corporation, a merchandising company, reported the following results for September: Required: a. Prepare a traditional format income statement for September. b. Prepare a contribution format income statement for September. Answer: A partial listing of costs incurred at Starr Corporation […]

Schlender Corporation produces and sells two products. In the most recent month, Product L40O had sales of $22,000 and variable expenses of $8,580. Product Y27L had sales of $49,000 and variable expenses of $17,690. The fixed expenses of the entire […]

An outdoor barbecue grill manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company’s flexible budget for manufacturing overhead are given below: The following data pertain to operations for […]

Raybould Corporation has provided the following data concerning its most important raw material, compound M31P: When recording the purchase of materials, Raw Materials would be: A. credited for $49,950. B. credited for $51,300. C. debited for $49,950. D. debited for […]

The standards for product C54L specify 4.5 direct labor-hours per unit at $12.40 per direct labor-hour. Last month 1,560 units of product C54L were produced using 7,000 direct labor-hours at a total direct labor wage cost of $86,100. Required: a. […]

Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store’s operations follow: o Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 for January. o Collections are expected to be 75% […]

Hubiak Corporation produces a single product and has the following cost structure: Compute the unit product cost under absorption costing. Show your work! Answer: When a job has been completed, the goods are transferred from the production department to the […]

Threets Corporation’s most recent comparative balance sheet appears below: The company’s net income for the year was $109 and it paid a cash dividend. It did not dispose of any property, plant, and equipment during the year. The company did […]

Reference: 8-22 Friou Corporation manufactures and sells a single product. The company uses units as the measure of activity in its flexible budgets. During July, the company budgeted for 6,300 units, but its actual level of activity was 6,250 units. […]

Last year, Farrer Corporation had sales of $1,500,000, variable expenses of $900,000, and fixed expenses of $400,000. What would be the dollar sales at the break-even point? A. $1,300,000 B. $1,000,000 C. $1,380,000 D. $1,200,000 Answer: Hartzog Corporation’s most recent […]

Resendes Refiners, Inc., processes sugar cane that it purchases from farmers. Sugar cane is processed in batches. A batch of sugar cane costs $48 to buy from farmers and $16 to crush in the company’s plant. Two intermediate products, cane […]

Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which of the following would probably be the most accurate measure of activity to use for allocating the cost of inspecting the finished products at Guerra? A. […]

An automated turning machine is the current constraint at Naik Corporation. Three products use this constrained resource. Data concerning those products appear below: Rank the products in order of their current profitability from most profitable to least profitable. In other […]

Ingerson Company, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under variable costing? A. $109 B. $79 C. $99 D. $89 Answer: […]

With regard to the CVP graph, which of the following statements is not correct? A. The CVP graph assumes that volume is the only factor affecting total cost. B. The CVP graph assumes that selling prices do not change. C. […]

Nilgiri Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Note: Your answers may differ from those offered below due to rounding error. In all […]