1) When calculating the breakeven point in terms of units, fixed costs should be divided
by the contribution per unit.
2) Comparative balance sheets analyze balance sheets by comparing the ending
balances of two fiscal periods; usually highlighting the changes in each account.
3) Horizontal analysis and vertical analysis are used to analyze the performance of a
single company.
4) The journal entry to record the use of direct materials in Processing Department #1
would include a credit to WIP-Processing Department #1 .
5) Management accounting requires independent audits of the firm’s books.
6) The X Variable 1 Coefficient in regression analysis yields the variable cost per unit
of activity.
7) Oral and written communications skills are considered among the most valuable
skills a management accountant can possess.
8) An equal amount of manufacturing overhead should be allocated to each job.
9) The cost to research and develop, design and market new models would be
considered a product-level cost.
10) When calculating equivalent units in a second or later processing department, all
physical units should be considered 50% complete with respect to transferred-in work
and costs.
11) The amount of overallocation or underallocation is found by taking the difference
between the amount of overhead allocated during the year and the amount of overhead
incurred during the year.
12) Finished goods inventory is debited when the product is sold.
13) Unit variable costs do not change as total production increases.
14) Which of the following is not an advantage of post-audits of capital investments?
A) They indicate whether project should continue or should be abandoned
B) They help managers make better estimates for future projects
C) They encourage managers to submit realistic net cash inflows with their project
proposals
D) They help managers to decide which project should be selected
15) Management has little or no control over
A) discretionary fixed costs
B) committed fixed costs
C) all fixed costs
D) all of the above
16) Assuming an interest rate of 10%, the present value of $50,000 to be received 8
years from now would be closest to
A) $23,350
B) $21,200
C) $19,300
D) $107,200
17) R-Cubed manufactures custom playground equipment from recycled plastics for
city school districts. The school districts are required to use a certain percentage of
recycled materials to comply to its state grants. As a result, R-Cubed tracks both virgin
(non-recycled) and recycled materials used to manufacture its playground equipment.
R-Cubed uses a predetermined manufacturing overhead rate of $7.00 per direct labor
hour.
Here is a summary of the materials and labor used on a recent job for Stow City
Schools:
Calculate the percentage of recycled-content used in the Stow City Schools job (using
pounds).
A) 65%
B) 35%
C) 186%
D) 54%
18) Which term below best describes the quality cost category for “cost to re-inspect
reworked blenders”?
A) Prevention costs
B) Internal failure costs
C) Appraisal costs
D) External failure costs
19) The costs associated with hazardous materials transportation are combined with
other overhead costs in Horning Corporation’s current accounting system. This scenario
is an example of which type of EMA implementation challenge?
A) Historical orientation of accounting
B) Communication issue
C) Newness of EMA
D) Hidden Cost
20) Washington Bottling Company provides the following information about its single
product.
How many units must be sold to earn the targeted operating income?
A) 329,965
B) 56,100
C) 58,941
D) 386,065
21) Elaina Company had the following financial results for last month. What type of
responsibility center do these results reflect?
A) Profit center
B) Revenue center
C) Investment center
D) Cost center
22) Job 140 requires $12,000 of direct materials, $6,700 of direct labor, 550 direct labor
hours, and 270 machine hours. It also requires 9 hours of inspection at $40 per hour.
Manufacturing overhead is computed at $28 per direct labor hour used and $42 per
machine hour used.
The total amount of overhead allocated is
A) $34,100
B) $26,740
C) $45,440
D) $15,400
23) Benjamin Company manufactures a wide variety of products and uses an
activity-based costing system. Data from its activity-based costing system for all
products follows:
What is the engineering cost pool rate per engineering hour?
A) $12
B) $28
C) $47
D) $83
24) In a department, 26,000 units are completed and transferred out and 7,400 remain in
ending WIP at 65% complete. If an equivalent unit costs $9.00 for direct materials,
what is the value of materials transferred out?
A) $43,290
B) $167,400
C) $66,600
D) $234,000
25) Greatwater Manufacturing uses job costing. In May, material requisitions were
$44,000 ($39,000 of these were direct materials), and raw material purchases were
$57,700. The end of month balance in raw materials inventory was $24,300. What was
the beginning raw materials inventory balance?
A) $10,600
B) $43,000
C) $72,400
D) $25,300
26) All of the following are considered to be part of the cost hierarchy often used to
implement ABC, with the exception of
A) production-level activity
B) batch-level activity
C) product-level activity
D) unit-level activity
27) Which of the following is being fulfilled when management compares the budget to
actual results?
A) Directing
B) Planning
C) Adjusting
D) Controlling
28) ABC Toys manufactures and sells wooden toys for $15 each. The company has the
capacity to produce 25,000 toys in a year, but is currently producing and selling 20,000
toys per year. The company currently is incurring the following costs at its current
production level of 20,000 toys:
A retailer is interested in purchasing the excess capacity of 5,000 toys if it can receive a
special price. This special order would not affect ABC Toys’ regular sales or its cost
structure. ABC Toys’ profits would increase from this special order if the special order
price per toy is greater than
A) $8.00
B) $5.80
C) $7.25
D) $14.25
29) The Chilton Corporation specializes in manufacturing one type of desk lamp.
Chilton allocates variable manufacturing overhead costs on the basis of machine hours.
Chilton budgeted .5 machine hours per lamp and allocates overhead at a rate of $1.80
per machine hour. Last year Chilton manufactured 23,000 lamps, used 13,800 machine
hours and incurred actual overhead costs of $15,180.
What was Chilton’s variable manufacturing overhead rate variance last year?
A) $4,140 favorable
B) $4,140 unfavorable
C) $9,660 favorable
D) $9,660 unfavorable
30) Selected information regarding a company’s most recent quarter follows (all data in
thousands).
What was the ending raw materials inventory?
A) $ 400
B) $ 770
C) $ 150
D) $ 750
31) Kotrick Company has beginning inventory of 15,000 units and expected sales of
23,000 units. If the desired ending inventory is 18,000 units, how many units should be
produced?
A) 20,000
B) 56,500
C) 10,000
D) 26,000
32) Before operating income can be determined for a manufacturer, which of the
following is calculated?
A) Cost of goods available for sale
B) Cost of goods sold
C) Cost of goods manufactured
D) All of the above
33) The Bedford Corporation reported the following income statement and balance
sheet amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the earnings per share for the current year?
A) $5.12
B) $4.94
C) $4.05
D) $11.86
34) An outflow of cash from an investing activity would be
A) making loans to third parties
B) issuing notes payable
C) paying cash dividends to stockholders
D) purchasing treasury stock
35) The “triple bottom line” focuses on these three factors that influence a firm’s ability
to survive and thrive in the long run:
A) people, places, things
B) profit, people, planet
C) profit, people, place
D) planet, profit, place
36) Your boss wants you to analyze the relationship between the company’s monthly
operating costs and the current cost driver she has chosen. You run a regression analysis
and receive the following information:
Intercept Coefficient = 653,434
X Variable 1 Coefficient = 5.76
R-square = 0.3784
What is your company’s monthly cost equation?
A) y = $653,434x + $5.76
B) y = $0.38x + $653,434
C) y = $5.76x + $653,434
D) y = $0.38x + $576
37) Ohio Steel uses a job costing system. Ohio Steel uses estimated direct labor hours
of 100,000 and estimated manufacturing overhead costs of $320,000 in establishing its
predetermined manufacturing overhead rate. Actual results for the year showed:
The number of direct labor hours worked during the period was
A) 109,375
B) 93,257
C) 100,000
D) 102,000
38) The performance evaluation of a profit center is typically based on its
A) flexible budget variance
B) static budget variance
C) return on investment
D) return on assets
39) All of the following are shown on the combined cash budget except
A) projected cash balance at the end of the month
B) projected cash collections and cash payments
C) projected borrowings and repayments
D) All of the above are shown on the combined cash budget
40) Total fixed costs for Randolph Manufacturing are $752,450. Total costs, including
both fixed and variable, are $1,000,000 if 150,000 units are produced. The fixed cost
per unit at 186,250 units would be closest to
A) $1.31/unit
B) $5.31/unit
C) $4.00/unit
D) $5.03/unit
41) A(n) ________ “arises because the number of units actually sold differs from the
static budget units.”
A) flexible budget
B) sales volume variance
C) benchmarking
D) overhead flexible budget variance
42) Zanny Moldings has the following estimated costs for the upcoming year:
The company estimates that 1,600 direct labor hours will be worked in the upcoming
year, while 2,000 machine hours will be used during the year. The predetermined
manufacturing overhead rate per machine hour is closest to
A) $32
B) $96
C) $14
D) $53
43) The output from regression analysis generated in Excel gives us all of the following
information except
A) intercept coefficient
B) highest and lowest data points variable 1 coefficient
C) R-square
D) x variable 1 coefficient
44) To record the costs of indirect labor, which of the following would be debited?
A) Work in process inventory
B) Manufacturing overhead
C) Finished goods inventory
D) Wages payable
45) Using account analysis, what type of cost is a community activity pass that costs
$80 plus $15.00 per event?
A) Fixed
B) Step
C) Mixed
D) Variable
46) Which of the following would appear on a statement of cash flows prepared using
the direct method?
A) Amortization expense
B) Loss on sale of equipment
C) Collections from customers
D) Net income
47) Belle Auto Detailing reported the following results for the past week:
What is Belle’s direct labor efficiency variance?
A) $2,500 favorable
B) $2,500 unfavorable
C) $2,600 favorable
D) $2,600 unfavorable
48) R-Cubed manufactures custom playground equipment from recycled plastics for
city school districts. The school districts are required to use a certain percentage of
recycled materials to comply to its state grants. As a result, R-Cubed tracks both virgin
(non-recycled) and recycled materials used to manufacture its playground equipment.
R-Cubed uses a predetermined manufacturing overhead rate of $7.00 per direct labor
hour.
Here is a summary of the materials and labor used on a recent job for Stow City
Schools:
Calculate the total cost of the Stow City job.
A) $7,930
B) $7,480
C) $7,280
D) $7,790
49) Taylor Company reported the following information for the current year:
What would a vertical analysis report with respect to current year selling and general
expenses?
A) An increase of $57,768
B) 19% of net sales revenue
C) A decrease of 82.80%
D) 25% of net sales revenue
50) In what year will XBRL be required for all publicly traded companies?
A) 2017
B) 2015
C) 2011
D) 2010
51) Mockingbird Company expects to sell 5,200 bird perches in January and 9,500 in
February for $3 each. What will be the total sales revenue reflected in the sales budget
for those months?
A) January $1,733; February $3,167
B) January $15,600; February $28,500
C) January $3,167; February $1,733
D) January $28,500; February $15,600