(Actual direct hours ‘“ Standard direct hours) × Standard rate per hour
Match the following formulas or descriptions with the term (a-e) it defines.
a. Direct materials price variance
b. Direct labor rate variance
c. Direct labor time variance
d. Direct materials quantity variance
e. Budgeted variable factory overhead
Activity-based costing can be used to allocate period costs to various products that the
company sells.
a. True
b. False
Indirect labor would be included in factory overhead.
a. True
b. False
Sales commission expense for a department store is an example of a direct expense.
a. True
b. False
The lean philosophy views inventory as a necessary buffer to protect against process
problems.
a. True
b. False
Based on the following data for the current year, what is the inventory turnover?
Sales on account during year $700,000
Cost of merchandise sold during year 270,000
Accounts receivable, beginning of year 45,000
Accounts receivable, end of year 35,000
Inventory, beginning of year 90,000
Inventory, end of year
a. 2.7 110,000
b. 9.7
c. 2.5
d. 3.0
Job order cost accounting systems may be used to evaluate a company’s efficiency.
a. True
b. False
The benefits of comparing actual performance of the operations against planned goals
include all of the following except
a. providing prompt feedback to employees about their performance relative to the goal
b. preventing unplanned expenditures
c. helping to establish spending priorities
d. determining how managers are performing against prior years’ actual operating
results
Which of the following accounts will be found on the income statement?
a. Inventory
b. Work in Process
c. Finished Goods
d. Cost of Goods Sold
Using the variable cost concept, determine the markup per unit for 30,000 units using
the following data:
Variable cost per unit $15.00
Total fixed costs $90,000
Desired profit a. $10 $150,000
b. $15
c. $8
d. $23
Tom’s Tool Factory is an investment center and is responsible for all of its net income
and the use of its assets. This year, the invested assets totaled $475,000, and net income
was $275,000. What is the rate of return on assets?
a. 57.9%
b. 172.3%
c. 5.0%
d. 115.0%
a system that uses a different overhead rate for each activity
Match the following phrases with the term (a-g) that it most closely describes.
a. job order cost system
b. process cost system
c. activity-based costing
d. under applied overhead
e. over applied overhead
f. finished goods ledger
g. materials ledger
manufacturing deals with several suppliers in hopes of finding the best price.
a. Traditional
b. Lean
c. Economic
d. Productivity improvement
The amount of increase or decrease in cost that is expected from a particular course of
action as compared with an alternative is
a. period cost
b. product cost
c. differential cost
d. discretionary cost
The materials used by the Hibiscus Company’s Division A are currently purchased from
an outside supplier at $55 per unit. Division B is able to supply Division A with 20,000
units at a variable cost of $42 per unit. The two divisions have recently negotiated a
transfer price of $48 per unit for the 20,000 units. (a) By how much will each division’s
income increase as a result of this transfer? (b) What is the total increase in income for
Hibiscus Company?
Service department charges are similar to the expenses of a profit center that purchased
services from a source outside the company.
a. True
b. False
Schedule of Activity Costs
From the above schedule of activity costs, determine the appraisal costs.
a. $50,000
b. $23,000
c. $73,000
d. $104,000