Variable costs per unit vary directly with levels of production.
Unfavorable variances are represented by credit balances in the overhead account.
The manager of an investment center is responsible for generating revenue as well as
controlling expenses.
The difference between budgeted and applied fixed factory overhead is referred to as a
fixed overhead volume variance.
Sales minus cost of goods sold is referred to as variable contribution margin.
In an ERP system, data is decentralized among an organization’s divisions.
Variable costing is commonly used for external reporting.
Decentralization increases the time required for decision-making.
Financial accounting is most concerned with addressing the needs of individual
departments of the firm.
Accountants have little involvement with business processing reengineering (BPR)
initiatives.
If a division generates a positive residual income then the division’s
A. asset turnover was very high.
B. profitability was greater than that of other divisions in the company.
C. performance was above expectations.
D. actual return on investment exceeds the division’s target return.
A company would be reducing its discretionary costs if it
A. fired a production supervisor.
B. closed its research and development department.
C. successfully negotiated a reduction in its factory rent.
D. reduced its direct labor costs by hiring temporary workers.
An increase in productive processing time will increase
A. throughput.
B. process yield.
C. return on investment.
D. productive capacity.
Smith Corporation
Smith Corporation has two service departments: Data Processing and Personnel. Data
Processing provides more service than does Personnel. Smith Corporation also has two
production departments: A and B. Data Processing costs are allocated on the basis of
assets used while Personnel costs are allocated based on the number of employees.
Refer to Smith Corporation. Using the direct method, what amount of Data Processing
costs is allocated to A (round to the nearest dollar)?
A. $362,319
B. $637,681
C. $253,623
D. $446,377
A management information system should do which of the following?
A. yes no yes
B. yes yes no
C. no no yes
D. yes yes yes
External factors that cause the achievement of company goals are the
A. annual budget.
B. industry price and cost structure.
C. talents possessed by its managers.
D. board of directors.
Joint costs are allocated to which of the following products?
A. yes yes
B. yes no
C. no no
D. no yes
A continuous loss
A. occurs unevenly throughout a process.
B. never occurs during the production process.
C. always occurs at the same place in a production process.
D. occurs evenly throughout the production process.
The variancemost useful in evaluating plant utilization is the
A. variable overhead spending variance.
B. fixed overhead spending variance.
C. variable overhead efficiency variance.
D. fixed overhead volume variance.
Davis Corporation has developed the following flexible budget formula for monthly
overhead:
How much overhead should Davis expect if the firm plans to produce 200,000 units?
A. $52,600
B. $59,000
C. $196,600
D. $203,000
Which of the following falls under the Activity-Based Management umbrella?
A. no no yes
B. yes no no
C. yes yes yes
D. no yes no
For one product that a firm produces, the manufacturing cycle efficiency is 25 percent.
If the total production time is 10 hours, what is the total manufacturing time?
A. 2.5 hours
B. 8.0 hours
C. 10.0 hours
D. 40.0 hours
Scrap is defined as a
A. finished unit of product that has no sales value.
B. residual of the production process that has limited sales value.
C. residual of the production process that can be reworked for sale as an irregular unit
of product.
D. residual of the production process that has no sales value.
Glassman Company
Glassman Company produces two products: A and B. The company has three overhead
functions that are required for both products.
Below is production information for Products A and B:
The company produces 800 units of Product A and 8,000 units of Product B each
period.
The overhead functions have the following hourly costs:
Refer to Glassman Company If total overhead is assigned to A and B on the basis of
direct labor hours, Product B will have an overhead cost per unit of
A. $51.32
B. $76.97
C. $510.32
D. None of the responses are correct.
The following information was taken from the records of the Slidell Corporation for the
month of July. (There were no inventories of work in process or finished goods on July
1.)
Indirect manufacturing costs are applied on a direct labor cost basis. The under-applied
balance is due to seasonal variations and will be carried forward. The following cost
estimates have been submitted for the work in process inventory of July 31: material,
$3,000; direct labor, $2,000.
Required:
a. Determine the number of units that were completed and transferred to finished goods
during the month.
b. Complete the estimate of the cost of work in process on July 31.
c. Compute cost of goods manufactured for the month.
d. Determine the cost of each unit completed during the month.
e. Determine the total amount debited to the Overhead Control accounts during the
month.
The term “relevant range” as used in cost accounting means the range over which
A. costs may fluctuate.
B. cost relationships are valid.
C. production may vary.
D. relevant costs are incurred.
When multiple labor categories are used, the monetary impact of using a higher or
lower number of hours than a standard allows is referred to as a
______________________________ variance.
In a manufacturing organization, the budgets that are prepared after the production
budget are the ______________________________,
_________________________,and ____________________ budgets.
What factors influence the total level of discretionary costs in an organization?
ABC has been criticized for a variety of reasons. Discuss these criticisms.
Why don’t upper-level managers simply dictate transfer prices to divisional managers,
and thereby avoid all the hassles and expense of the negotiations between them
(divisional managers)?
If underapplied or overapplied factory overhead is material, it is prorated among
________________________________________,
________________________________________, and
___________________________________.