Process costing techniques should be used in assigning costs to products
A. if a product is manufactured on the basis of each order received.
B. when production is only partially completed during the accounting period.
C. if a product is composed of mass-produced homogeneous units.
D. whenever standard-costing techniques should not be used.
As data input functions are automated, Intranet data becomes more
A. complicated to access.
B. manufacturing, but not accounting, oriented.
C. real-time accessible.
D. expensive to install, but easier to use.
Fred Hammond recently invested in a project that has an expected annual cash inflow
of $7,000 for 10 years, and an expected payback period of 3.6 years. How much did
Fred invest in the project?
A. $19,444
B. $36,000
C. $25,200
D. $40,000
Southern Digital, Inc.
The Southern Digital, Inc. produces a high-quality computer chip. Unit production costs
(based on capacity production of 100,000 units per year) follow:
Refer to Southern Digital, Inc. Assume, for this question only, that the Memory
Division is operating at a level of 70,000 chips per year. What is the minimum price that
the division would consider on a ‘special order” of 1,000 chips to be distributed through
normal channels?
A. $78
B. $95
C. $100
D. $81
Hall Company manufactures pool tables. The company has a policy of maintaining a
finished goods inventory equal to 35 percent of the next month’s planned sales. Each
card table requires 4 hours of labor. The budgeted labor rate for the coming year is $12
per hour. Planned sales for the months of July, August, and September are respectively
6,000; 8,000; and 5,000 units. What is Hall Company’s budgeted direct labor cost for
August?
A. $ 83,400
B. $333,600
C. $417,600
D. $434,400
An investment project is expected to yield $12,000 in annual revenues, has $3,000 in
fixed costs per year, and requires an initial investment of $6,000. Given a cost of goods
sold of 50 percent of sales, what is the payback period in years?
A. 1.00
B. 1.50
C. 2.00
D. 4.00
Non-value-added activities that are necessary to businesses, but not costs that
customers are willing to pay for are known as
A. business-value-added activities.
B. long-term variable activities.
C. short-term variable activities.
D. superior business activities.
A company that maintains a raw material inventory, which is based on the following
month’s production needs, will purchase less material than it uses in a month where
A. sales exceed production.
B. production exceeds sales.
C. planned production exceeds the next month’s planned production.
D. planned production is less than the next month’s planned production.
Organizational form directly affects which of the following?
A. no yes yes yes
B. yes yes yes no
C. no yes no yes
D. yes yes no no
A cost management system would be an integral part of implementing which of the
following?
A. no yes yes
B. no no no
C. yes no yes
D. yes yes no
Surfside Corporation
Surfside Corporation manufactures and sells two products: A and B. The operating
results of the company are as follows:
In addition, the company incurred total fixed costs in the amount of $9,000.
Refer to Surfside Corporation. How many units would the company have needed to sell
to produce a profit of $12,000?
A. 8,750
B. 20,000
C. 10,000
D. 8,400
Wright Company
Wright Company adds material at the start of production. The following production
information is available for September:
Refer to Wright Company. How many units were started and completed in the period?
A. 111,800
B. 120,000
C. 121,800
D. 130,000
Matthews Company has a policy of maintaining an inventory of finished goods equal
to 30 percent of the following month’s sales. For the forthcoming month of March,
Matthews has budgeted the beginning inventory at 30,000 units and the ending
inventory at 33,000 units. This suggests that
A. February sales are budgeted at 10,000 units less than March sales.
B. March sales are budgeted at 10,000 units less than April sales.
C. February sales are budgeted at 3,000 units less than March sales.
D. March sales are budgeted at 3,000 units less than April sales.
Stone Corporation is interested in purchasing a state-of-the-art widget machine for its
manufacturing plant. The new machine has been designed to basically eliminate all
errors and defects in the widget-making production process. The new machine will cost
$150,000, and have a salvage value of $70,000 at the end of its seven-year useful life.
Stone has determined that cash inflows for years 1 through 7 will be as follows:
$32,000; $57,000; $15,000; $28,000; $16,000; $10,000, and $15,000, respectively.
Maintenance will be required in years 3 and 6 at $10,000 and $7,000 respectively. Stone
uses a discount rate of 11 percent and wants projects to have a payback period of no
longer than five years.
Present value tables or a financial calculator are required.
In a JIT system, the quality of each product begins with
A. a company’s vendors.
B. employees.
C. inspection of finished goods inventory.
D. a good product warranty.
Cost tables are databases that provide information on which of the following?
A. design specifications
B. manufacturing processes
C. impact on product costs when different inputs resources are used
D. all of the above
For product life cycle costing, R&D costs are
A. expensed as incurred.
B. capitalized and allocated over the life cycle.
C. deducted as period costs.
D. charged to specific departments as incurred.
All other things being equal, an increase in sales price would increase
A. asset turnover.
B. profit margin.
C. residual income.
D. all of the above.
The sum of the non-value-added time and the value-added time equals
A. inspection time.
B. production time.
C. the product life cycle.
D. cycle time.
Bridges Corporation
Bridges Corporation manufactures and sells two products: A and B. The projected
information on these two products for the coming year is presented below:
Total fixed costs for the company are projected at $10,000.
Refer to Bridges Corporation. Compute Bridges Corporation’s projected break-even
point in total units.
Aldrich Company
Aldrich Company has the following information available for the current year:
Refer to Aldrich Company. Compute the labor rate and efficiency variances.
When multiple labor categories are used, the financial effect of using a different mix of
workers in a production process is referred to as a _________________________
variance.
When a relationship between several independent variables and one dependent variable
is analyzed, the regression is referred to as ____________________.
A chart that indicates each step in a production process is referred to as a
_________________________.
Castle Homes Corporation
The Carpet Division of Castle Homes Corporation manufactures a single grade of
residential grade carpeting. The division has the capacity to produce 500,000 square
yards of carpet each year. Its current costs and revenues are shown here:
The Housing Division currently purchases 40,000 yards of carpeting (of the grade
produced by the Carpet Division) each year at a cost of $6.50 per square yard from an
outside vendor.
Refer to Castle Homes Corporation. If the autonomous Housing and Carpet Divisions
enter negotiations on the internal transfer of 40,000 square yards of carpeting, what is
the Carpet Division’s minimum price?
Berkshire Company
The following information is available for Berkshire Company for the current year:
Standard:
Material X: 3.0 pounds per unit @ $4.20 per pound
Material Y: 4.5 pounds per unit @ $3.30 per pound
Class S labor: 3 hours per unit @ $10.50 per hour
Class US labor: 7 hours per unit @ $8.00 per hour
Actual:
Material X: 3.6 pounds per unit @ $4.00 per pound (purchased and used)
Material Y: 4.4 pounds per unit @ $3.25 per pound (purchased and used)
Class S labor: 3.8 hours per unit @ $10.60 per hour
Class US labor: 5.7 hours per unit @ $7.80 per hour
Berkshire Company produced a total of 45,750 units.
Refer to Berkshire Company. Compute the material price, mix, and yield variances
(round to the nearest dollar).
Any management action that reduces employment opportunities upon restructuring is
known as ____________________.
