1) budgets can serve as the standard against which actual performance is measured.
when compensation is based on this comparison, the organization is said to use:
a.fixed performance contracts
b.rolling financial forecasts
c.continuous-improvement budgets
d.variable compensation contracts
e.a linear compensation plan
2) midgettco.has accumulated data to use in preparing its annual profit plan for the
upcoming year. the cost behavior pattern of the maintenance costs must be determined.
the accounting staff suggested that linear regression be employed to derive an equation
for maintenance hours and costs. data regarding the maintenance hours and costs for the
last year and the results of the regression analysis are as follows:
average cost per hour ($51,840 6,270) = $8.27 (rounded to the nearest cent)
r = .99821
r2 = .99780
using the high-low method, total monthly fixed cost is calculated to be (round to nearest
dollar):
a.$757
b.$687
c.$756
d.$733
e.$717
3) in the context of abc, cross-subsidization refers to:
a.production departments subsidizing each other
b.costing inaccuracies which affect the relative profitability of products
c.cross-selling products lines, which affect customer profitability
d.efforts to increased coordination among department heads
e.none of the above
4) sheen co. manufacturers laser printers. it has outlined the following overhead cost
drivers:
sheen co. has an order for 1,000 laser printers that has the following production
requirements:
using activity-based costing, applied quality control factory overhead for the 1,000 laser
printers order is:
a.$7,800
b.$10,000
c.$10,500
d.$150
e.$21,600
5) factory overhead can be over-or under-applied because:
a.some actual factory overhead cost varies from the expected
b.some actual factory overhead costs are incurred unexpectedly
c.production volume may vary from expected volume
d.all of the above
e.none of the above. (a, b or c)
6) rockingham manufacturing company builds highly sophisticated engine parts for cars
competing in stock racing and drag racing. the company uses a normal costing system
that applies factory overhead on the basis of direct labor-hours. for the current year the
company estimated that it would incur $256,000 in factory overhead costs and 16,000
direct labor-hours. the april 1 balance in inventory accounts follow:
job y12 is the only job in process on april 1 . the following transactions were recorded
for the month of april:
a. purchased materials on account, $160,000
b. issued $180,000 of materials to production, $6,000 of which was for indirect
materials. cost of direct materials issued:
c. incurred and paid payroll cost of $40,920
direct labor cost ($20/hour; total 1,196 hours)
d. recognize deprecation for the month:
h. applied factory overhead to production on the basis of direct labor-hours
i. completed job y12 during the month and transferred it to the finished goods
warehouse
j. sold job z11 on account for $120,000
k. received $50,000 of collections on account from customers during the month
required
(1) calculate the company’s predetermined overhead rate.
(2) prepare journal entries for the april transactions. record job-specific items in
individual work-in-process accounts.
(3) what was the balance of the materials inventory account on april 30?
(4) what was the balance of the work-in-process inventory control account on april 30?
(5) what was the amount of underapplied or overapplied overhead?
7) the calculation of an amount given different levels of a factor that influences that
amount is called:
a.sales-value analysis
b.what-if analysis
c.factor analysis
d.cost analysis
e.profit analysis
8) the departmental cost allocation approach is preferred when the firm has:
a.homogeneous processes
b.heterogeneous processes
c.diverse products
d.many production activities
9) normal spoilage and abnormal spoilage should be classified as:
a.option a
b.option b
c.option c
d.option d
e.none of the above
10) landry co. had the following information for the month of december. all direct
materials were one hundred percent complete, and beginning materials cost $14,000.
cost per equivalent unit for materials under the fifo method is calculated to be
(rounded):
a.$112.103
b.$49.242
c.$109.496
d.$82.757
e.$60.185
11) in deciding whether to accept or a reject a special sales order, which of the
following costs are likely relevant to the decision?
a.depreciation expense on manufacturing equipment
b.a portion of facilities-level costs
c.a portion of batch-level costs
d.total batch-level costs
e.an allocated share of fixed manufacturing support costs
12) a small company makes only two products with the following production
constraints representing two machines and their maximum availability:
if the profit equation is z = $4x + $2y, the maximum possible profit is:
a.$20
b.$21
c.$18
d.$24
e.$14
13) information pertaining to yekstop corp.’s sales revenue is presented below.
management estimates that 4% of credit sales are eventually uncollectible. of the
collectible credit sales, 65% are likely to be collected in the month of sale and the
remainder in the month following the sale. the company desires to begin each month
with an inventory equal to 75% of the sales projected for the month. all purchases of
inventory are on open account; 30% will be paid in the month of purchase, and the
remainder paid in the month following the month of purchase. the purchase costs are
approximately 60% of the selling prices.
total budgeted cash collections for yekstop corp. in december are:
a.$556,512
b.$375,216
c.$495,080
d.$502,568
e.$506,780
14) the u.s. department of agriculture urges the use of process costing together with:
a.normal costing
b.volume-based costing
c.activity-based costing
d.standard costing
15) which of the following is considered to be an advantage of using both nonfinancial
and financial information in the balanced scorecard?
a.nonfinancial information is most helpful in analyzing a company’s past performance,
while financial information is most useful in evaluating potential future performance
b.nonfinancial information provides the short-term perspective while financial
information provides the long-term perspective of performance
c.nonfinancial information reflects the company’s current and potential competitive
advantage, while financial information tends to focus on a firm’s achieved financial
performance
d.nonfinancial information should be included with financial information because it is
more reliable than financial information
16) midgettco.has accumulated data to use in preparing its annual profit plan for the
upcoming year. the cost behavior pattern of the maintenance costs must be determined.
the accounting staff suggested that linear regression be employed to derive an equation
for maintenance hours and costs. data regarding the maintenance hours and costs for the
last year and the results of the regression analysis are as follows:
average cost per hour ($51,840 6,270) = $8.27 (rounded to the nearest cent)
r = .99821
r2 = .99780
using the high-low method, total maintenance cost for 600 hours is calculated to be
(round to the nearest dollar):
a.$5,293
b.$4,777
c.$5,528
d.$4,755
e.$5,656
17) a comprehensive or overall formal plan for a business that includes specific plans
for expected sales, the units of product to be produced, the merchandise (or materials)
to be purchased, the manufacturing, selling, administrative, and general expense to be
incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed
or loans to be repaid, as well as a budgeted income statement and balance sheet, is
called a:
a.master budget
b.kaizen budget
c.capital expenditures budget
d.continuous budget
e.operating budget
18) landry co. had the following information for the month of december. all direct
materials were one hundred percent complete, and beginning materials cost $14,000.
cost per equivalent unit for conversion under the fifo method is calculated to be
(rounded):
a.$112.103
b.$49.242
c.$109.496
d.$82.757
e.$60.185
19) at the end of a fiscal year, overapplied factory overhead should be:
a.debited to cost of goods sold
b.credited to cost of goods sold
c.debited to cost of good manufactured
d.none of the above