Downsizing has no effect on materials and labor inputs used to produce outputs.
Practical standards are the most effective standards for controlling and motivating
workers.
The total variance does not provide useful information about the source of cost
differences.
In an outsourcing decision, avoidable fixed costs are irrelevant.
ISO 9000 registration is required for regulated products sold in the United States.
Pearce Company
Pearce Company uses a standard cost system for its production process. Pearce
Company applies overhead based on direct labor hours. The following information is
available for July:
Refer to Pearce Company Using the four-variance approach, what is the fixed overhead
spending variance?
A. $15,900 U
B. $6,330 U
C. $6,930 U
D. $935 F
Buckingham Company
Buckingham Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
May when Buckingham produced 4,500 units:
Refer to Buckingham Company. Using the one-variance approach, what is the total
overhead variance?
A. $6,062 U
B. $3,625 U
C. $9,687 U
D. $6,562 U
Beasley Company
Beasley Company prepared a cash budget by quarters for the upcoming year. Missing
data amounts are indicated with question marks or lower case letters; these lower case
letters will be referred to in the questions that follow.
Beasley requires a minimum balance of $10,000 to start a quarter.
All data are in thousands.
Beasley Corporation
Cash Budget
Refer to Beasley Company. The total disbursements during the third quarter (item f) is:
A. $84
B. $78
C. $82
D. $59
Which service department cost allocation method provides for reciprocal allocation of
service costs among the service department as well as to the revenue producing
departments?
A. algebraic method
B. indirect method
C. step method
D. direct method
The primary difference between the FIFO and weighted average methods of process
costing is
A. in the treatment of beginning Work in Process Inventory.
B. in the treatment of current period production costs.
C. in the treatment of spoiled units.
D. none of the above.
Chronologically, the first part of the master budget to be prepared would be the
A. sales budget.
B. production budget.
C. cash budget.
D. pro forma financial statements.
Industrial Solutions Company
Industrial Solutions Company manufactures a cleaning solvent. The company employs
both skilled and unskilled workers. To produce one 55-gallon drum of solvent requires
Materials A and B as well as skilled labor and unskilled labor. The standard and actual
material and labor information is presented below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Industrial Solutions Company manufactured 500 55-gallon
drums.
Round all answers to the nearest whole dollar.
Refer to Industrial Solutions Company. What is the total material price variance?
A. $877 F
B. $877 U
C. $931 U
D. $931 F
Which of the following are considered controllable variances?
A. yes yes yes
B. no no yes
C. no yes no
D. yes yes no
Austin Company
Austin Company has established a target rate of return of 15% for all divisions. For the
most recent year, Waterloo Division generated sales of $12,000,000 and expenses of
$9,000,000. Total assets at the beginning of the year were $7,000,000 and total assets at
the end of the year were $9,000,000.
Refer to Austin Company. For the most recent year, what was Waterloo Division’s
return on investment?
A. 18.75%
B. 33.33%
C. 37.50%
D. 42.86%
Painter Corporation
Painter Corporation has the following information for the current month:
All materials are added at the start of the production process. Painter Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Painter Corporation. What are equivalent units of production for conversion
costs assuming weighted average is used?
A. 113,525
B. 114,400
C. 114,775
D. 115,650
Moore Company.
Moore Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #6, #9, and #13.
Direct material was requisitioned as follows for each job respectively: 30 percent, 25
percent, and 25 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000.
Other actual overhead costs totaled $36,000.
Refer to Moore Company. If Job #13 is completed and transferred, what is the balance
in Work in Process Inventory at the end of the period if overhead is applied at the end of
the period?
A. $ 96,700
B. $ 99,020
C. $139,540
D. $170,720
Which of the following is(are) the same between the weighted average and FIFO
methods of calculating EUPs?
A. no yes no
B. yes yes yes
C. yes no no
D. yes no yes
Alan Arnold has just turned 65. He has $100,000 to invest in a retirement annuity. One
investment company has offered to pay Alan $10,000 per year for 15 years (payments
to begin in one year) in exchange for an immediate $100,000 payment. If Alan accepts
the offer from the investment company, what is his expected return on the $100,000
investment (assume a return that is compounded annually)? Present value tables or a
financial calculator are required.
A. between 5 and 6 percent
B. between 6 and 7 percent
C. between 7 and 8 percent
D. between 8 and 9 percent
Buckingham Company
Buckingham Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
May when Buckingham produced 4,500 units:
Refer to Buckingham Company. Using the three-variance approach, what is the
spending variance?
A. $ 4,375 U
B. $ 3,625 F
C. $ 8,000 U
D. $15,750 U
A decision regarding whether a capital project is desirable based upon some previously
established minimum criteria is referred to as a(n)
___________________________________.
Why is the profitability index a better basis than net present value to compare projects
that require different levels of investment?
The capital budgeting technique that divides average annual profits from an investment
by the average investment in a project is referred to as the
_____________________________________.
In a normal job-order costing system, factory overhead is applied using
____________________ rates times ____________________ input.
A cost that has both fixed and variable components is known as a
____________________ cost.
A system of producing inventory where goods are produced only when needed by a
customer or work center is referred to as a _________________________.
Weaver Corporation
Weaver Corporation is considering an investment in a new product line. The investment
would require an immediate outlay of $100,000 for equipment and an immediate
investment of $200,000 in working capital. The investment is expected to generate a net
cash inflow of $100,000 in year 1, $150,000 in year 2, and $200,000 in years 3 and 4.
The equipment would be scrapped (for no salvage) at the end of the fourth year and the
working capital would be liquidated. The equipment would be fully depreciated by the
straight-line method over its four-year life.
Refer to Weaver Corporation. What is the payback period for the investment?
Why should predetermined overhead rates be used?
In a standard job-order costing system, factory overhead is applied using
____________________ rates times ____________________ input.
What are some of the major problems associated with accrual-based accounting
performance measures?