1) In a combined 3-variance analysis, the total spending variance would be ________.
A) $20,500 F
B) $22,500 U
C) $20,500 U
D) $37,500 F
2) The gross margin for April was:
A) $1,465,600
B) $3,960,400
C) $1,017,600
D) $600,400
3) Plish Company manufactures only one type of washing machine and has two
divisions, the Compressor Division, and the Fabrication Division. The Compressor
Division manufactures compressors for the Fabrication Division, which completes the
washing machine and sells it to retailers. The Compressor Division ‘sells” compressors
to the Fabrication Division. The market price for the Fabrication Division to purchase a
compressor is $40.00. (Ignore changes in inventory.) The fixed costs for the
Compressor Division are assumed to be the same over the range of 5,000-10,000 units.
The fixed costs for the Fabrication Division are assumed to be $7.50 per unit at 10,000
units.
Compressor’s costs per compressor are:
Fabrication’s costs per completed air conditioner are:
Which of the following formulas correctly reflects the company’s operating income per
pound?
A) $10.00 – ($1.25 + $5.00) = $3.75
B) $10.00 – ($2.50 + $5.00) = $2.50
C) $10.00 – ($1.25 + $7.50) = $1.25
D) $10.00 – ($0.50 + $2.50 + $7.00) = 0
4) Financial accounting provides the primary source of information for ________.
A) decision making in the finishing department
B) improving customer service
C) preparing the income statement for shareholders
D) planning next year’s operating budget
5) Which of the following is a function of a controller?
A) operations administration
B) controlling the stock price
C) communication with the shareholders
D) interest-rate risk management
6) Globus Autos sells a single product. 8,000 units were sold resulting in $80,000 of
sales revenue, $20,000 of variable costs, and $10,000 of fixed costs. If a change is made
in one parameter of CVP analysis, it is an example of ________.
A) sensitivity analysis
B) incremental budgeting
C) variance analysis
D) multiple cost drivers
7) A master budget is ________.
A) a budget which starts from a zero base
B) developed for a period for a planned output
C) developed at the end of a period
D) a type of flexible budget
8) Finmin Company has the following sales budget for the last six months of 2015:
Sales are immediately due, however the cash collection of sales, historically, has been
as follows:
65% of sales collected in the month of sale,
25% of sales collected in the month following the sale,
8% of sales collected in the second month following the sale, and
2% of sales are uncollectible.
Cash collections for September are ________.
A) $143,000
B) $170,000
C) $186,000
D) $204,000
9) Managers and accountants collect most of the cost information that goes into their
systems through ________.
A) an information databank
B) computer programs
C) source documents
D) time surveys
10) Which of the following is an example of an intrinsic reward?
A) bonuses paid to employees
B) recognition of job well done
C) promotions based on performance
D) salaries paid to employees
11) Which of the following statements about customer value is true?
A) Customer value is shown in a corporation’s balance sheet.
B) Creating value for customers is an important part of planning and implementing
strategy.
C) Customer value is the only focus that helps managers to formulate strategies.
D) Customer value is lost with increase in costs of the product.
12) Genent Industries, Inc. (GII), developed standard costs for direct material and direct
labor. In 2015, GII estimated the following standard costs for one of their major
products, the 30-gallon heavy-duty plastic container.
During July, GII produced and sold 3,000 containers using 1,000 pounds of direct
materials at an average cost per pound of $19 and 625 direct manufacturing labor hours
at an average wage of $11.75 per hour.
July’s direct material flexible-budget variance is ________.
A) $1,000 unfavorable
B) $2,000 favorable
C) $2,500 unfavorable
D) $0
13) Mendel Company makes the following journal entry:
Which of the following statements is true of the given journal entry?
A) A variable manufacturing overhead cost of $175,000 is written-off.
B) An unfavorable spending variance of $30,000 is recorded.
C) A favorable efficiency variance of $5,000 is recorded.
D) A favorable flexible-budget variance of $25,000 is recorded.
14) An advantage of a negotiated transfer price is the ________.
A) close relationship between the negotiated price and the market price
B) negotiated transfer price preserves divisional autonomy
C) negotiations usually do not require much time and energy
D) simplicity of its computations and close approximation to market price
15) An inaccurate cost function with a slope coefficient that is estimated too low may
most likely result in ________.
A) predicting total costs that are too high
B) initiating cost cutting measures when they are unnecessary
C) evaluating a weak manager as having strong performance
D) promoting a product that is actually more profitable than budgeted
16) To reduce the excessive focus of subunit managers on their own subunits, many
companies compensate subunit managers on the basis of ________.
A) both the operating income earned by their respective subunits and the company as a
whole
B) both the investing income earned by their respective subunits and the company as a
whole
C) only the investing income earned by their respective subunits
D) both the net income and earned by their respective subunits and the company as a
whole
17) Comfort chair company manufacturers a standard recliner. During February, the
firm’s Assembly Department started production of 73,000 chairs. During the month, the
firm completed 78,000 chairs, and transferred them to the Finishing Department. The
firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs
in beginning inventory. All direct materials costs are added at the beginning of the
production cycle and conversion costs are added uniformly throughout the production
process. The FIFO method of process costing is used by Comfort. Beginning work in
process was 30% complete as to conversion costs, while ending work in process was
80% complete as to conversion costs.
What is the amount of direct materials cost assigned to ending work-in-process
inventory at the end of February?
A) $19,000
B) $23,000
C) $25,000
D) $27,000
18) Jane Industries manufactures plastic toys. During October, Jane’s Fabrication
Department started work on 10,000 models. During the month, the company completed
11,000 models, and transferred them to the Distribution Department. The company
ended the month with 1,500 models in ending inventory. There were 2,500 models in
beginning inventory. All direct materials costs are added at the beginning of the
production cycle and conversion costs are added uniformly throughout the production
process. The FIFO method of process costing is being followed. Beginning work in
process was 25% complete as to conversion costs, while ending work in process was
50% complete as to conversion costs.
What were the equivalent units for conversion costs during October?
A) 10,125
B) 11,375
C) 11,125
D) 9,000