If the products of a manufacturing process are produced to customer specifications, a
process cost system is more appropriate than a job order cost system.
a. True
b. False
Budgets are normally used only by profit-making businesses.
a. True
b. False
wood
Match the costs that follow to the type of product cost (a-c) or designate as not a
product cost (d).
a. direct labor
b. direct materials
c. factory overhead
d. not a product cost
A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000
short-term liability. The amount of working capital immediately after payment is
a. $845,000
b. $595,000
c. $720,000
d. $125,000
Each account in the work in process subsidiary ledger in a job order costing system is
called a job cost sheet.
a. True
b. False
Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and
fixed costs are $75,000. The contribution margin ratio and the unit contribution margin
are
a. 47% and $11 per unit
b. 53% and $7 per unit
c. 47% and $8 per unit
d. 52% and $11 per unit
Preventive machine maintenance
Identify the following quality control activities as either value-added or
non-value-added.
a. Value-added
b. Non-value-added
ABC Corporation has three service departments with the following costs and activity
base:
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and
activity information are as follows:
How much service department cost would be allocated to the Super Division? a.
$350,000
b. $100,000
c. $125,000
d. $550,000
Marshall Corporation had $220,000 in invested assets, sales of $242,000, income from
operations of $66,000, and a desired minimum rate of return of 3%. The rate of return
on investment for Marshall is
a. 9.1%
b. 30%
c. 3.0%
d. 27.3%
If fixed costs are $650,000 and the unit contribution margin is $30, the sales necessary
to earn an operating income of $30,000 are 14,000 units.
a. True
b. False
Given the following cost data, what type of cost is shown?
a. mixed cost
b. variable cost
c. fixed cost
d. period cost
The particular analytical measures chosen to analyze a company may be influenced by
all of the following except
a. industry type
b. capital structure
c. diversity of business operations
d. product quality or service effectiveness
The standard costs and actual costs for factory overhead for the manufacture of 2,500
units of actual production are as follows:
The amount of the fixed factory overhead volume variance is
a. $2,000 favorable
b. $2,000 unfavorable
c. $2,500 unfavorable
d. $0
The contribution margin ratio is computed as:
a. sales divided by contribution margin
b. contribution margin divided by sales
c. contribution margin divided by cost of sales
d. contribution margin divided by variable cost of sales
a subsidiary ledger that maintains a separate account for each type of material
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
Three measures of investment center performance are income from operations, rate of
return on investment, and residual income.
a. True
b. False
The entries to record cost and sale of a finished good on account is
a. debit Cost of Goods Sold, credit Finished Goods
b. debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit
Sales
c. debit Sales Expense, credit Finished Goods, credit Cash, credit Accounts Receivable
d. debit Work in Process, credit Finished Goods, debit Accounts Receivable, credit
Sales
Under a lean environment, employees have the responsibility and authority to
a. purchase inventory.
b. determine output amounts.
c. make decisions about operations, rather than waiting for management.
d. make engineering changes.
(a) If Swannanoa Company’s budgeted sales are $1,000,000, fixed costs are $350,000,
and variable costs are $600,000, what is the budgeted contribution margin ratio?
(b) If the contribution margin ratio is 30%, sales are $900,000, and fixed costs are
$200,000, what is the operating income?
A company with $70,000 in current assets and $50,000 in current liabilities pays a
$1,000 current liability. As a result of this transaction, the current ratio and working
capital will
a. both decrease
b. both increase
c. increase and remain the same, respectively
d. remain the same and decrease, respectively
Budget preparation is best determined in a top-down managerial approach.
a. True
b. False