Activity-based costing systems generally use volume-based cost drivers.
In a normal cost system, actual production overhead costs are typically accumulated in
an Overhead Control account and assigned to Work in Process at the end of the period.
When implementing TQM, an organization should establish long-term relationships
with preferred suppliers.
The outsourcing decision is also referred to as a ‘œmake-or-buy’ decision.
The most straight-forward method of assigning service department costs to
revenue-producing areas is the direct method.
One method to improve the effectiveness of open-book management is through game
playing.
In a normal job-order costing system, factory overhead is applied using actual rates
times actual input.
The budget is an important source of feedback for an organization.
Reed Company
Reed Company produces 50,000 units of Product Q and 6,000 units of Product Z during
a period. In that period, four set-ups were required for color changes. All units of
Product Q are black, which is the color in the process at the beginning of the period. A
set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500 red
units of Product Z; a set-up was made for 500 green units of Product Z. A set-up was
then made to return the process to its standard black coloration and the units of Product
Q were run. Each set-up costs $500.
Refer to Reed Company. Assume that Reed Company has decided to allocate overhead
costs using levels of cost drivers. What would be the approximate per-unit set-up cost
for the blue units of Product Z?
A. $.04.
B. $.25.
C. $.50.
D. None of the responses are correct.
Buxton Company
One of the products manufactured by Buxton Company is a plastic tray. The
information below relates to the Tray Production Department:
Refer to Buxton Company. What is the process quality yield in the Tray Production
Department?
A. 75%
B. 44%
C. 80%
D. 125%
Dynamic Designs, Inc. has developed a new design to produce track shoes that are
used in cross-country races. The company’s shoe design is innovative in that the insole
is made od a product that provides a greater cushion and adapts more easily to a
runner’s foot. Management estimates expected annual capacity to be 80,000 units;
overhead is applied using expected annual capacity. The company’s cost accountant
predicts the following current year activities and related costs:
Other than any possible under- or overapplied fixed overhead, management expects no
variances from the previous manufacturing costs. Under- or overapplied fixed overhead
is to be written off to Cost of Goods Sold.
Required:
Parker Company manufactures tables. If raw material used was $80,000 and Raw
Material Inventory at the beginning and end of the period, respectively, was $17,000
and $21,000, what was amount of raw material was purchased?
A. $76,000
B. $118,000
C. $84,000
D. $101,000
For a company that manufactures candy, how would the costs of product inspection be
classified?
A. Yes No
B. No Yes
C. Yes Yes
D. No No
In a decentralized organization,
A. all functions are delegated to subunit managers who are closest to the information.
B. subunits under the control of a single manager are normally grouped by
organizational structure.
C. it would be difficult to group geographically related subunits pursuing different
missions under the same manager.
D. functions such as financing and product/service pricing are typically retained by top
management.
Which of the following capital budgeting techniques may potentially ignore part of a
project’s relevant cash flows?
A. net present value
B. internal rate of return
C. payback period
D. profitability index
Wright Company
Wright Company adds material at the start of production. The following production
information is available for September:
Refer to Wright Company. What is the total cost to account for?
A. $ 93,405
B. $205,653
C. $274,558
D. $299,058
Production of Product 101 has been budgeted at 300,000 units for June. One unit of
Product 101 requires 3 lbs. of raw material. The projected beginning and ending
materials inventory for June are:
Beginning inventory: 4,000 lbs.
Ending inventory: 16,000 lbs.
How many lbs. of material should be purchased during June?
A. 288,000
B. 312,000
C. 912,000
D. 936,000
In a normal cost system, which of the following is used?
A. yes no yes
B. yes yes yes
C. yes yes no
D. no yes no
The focus of business process reengineering (BPR) is improving
A. products.
B. processes.
C. cost reduction.
D. decision making.
Discuss the relationship between benchmarking and total quality management (TQM).
List and describe the pro-forma financial statements that are prepared at the end of the
budgeting process.
What are the major differences between variable and absorption costing?
The portion of variance in a dependent variable explained by an independent variable
is referred to as the _________________________________________.
The process of determining the amount of change that must occur in a variable before a
different decision would be made is referred to as
_________________________________.
An analysis tool employing statistical techniques to answer business-related questions
is referred to as _________________________.
The amount of cost that differs across decision choices is referred to as
_________________________.