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1) Fixed costs are sometimes allocated to individual products as part of the standard
costing system. When this is the case, they should be treated as variable costs for
purposes of future cost estimation.
2) A composite unit is a hypothetical unit with weights based on the mix of individual
units.
3) The customer perspective of the balanced scorecard focuses on the success of the
company in its target market.
4) A materials-requisition record is an example of a source document.
5) The sum of all entries in underlying subsidiary ledgers equals the total amount in the
corresponding general ledger control accounts.
6) Lower-level managers will not actively participate in the budget process if they
perceive upper management does not believe in the process.
7) Although unit costs are regularly used in financial reports and for making product
mix and pricing decisions, managers should think in terms of total costs rather than unit
costs for making decisions.
8) Distribution refers to promoting and selling products or services to customers or
prospective customers.
9) One concern with dual pricing is that it leads to disputes about which price should be
used when computing the taxable income of subunits located in different tax
jurisdictions.
10) Financial planning models are non-mathematical, abstract representations of the
relationships among operating activities, financing activities, and other factors that
affect the master budget.
11) Unlike the net present value method and the internal rate-of-return method, the
payback method does NOT distinguish between the origins of the cash flows.
12) Among different types of costs associated with inventory, the opportunity cost of
the investment tied up in inventory is a(n) ________.
A) purchasing cost
B) ordering cost
C) stockout cost
D) carrying cost
13) Schulz Corporation applies overhead based upon machine-hours. Budgeted factory
overhead was $266,400 and budgeted machine-hours were 18,500. Actual factory
overhead was $287,920 and actual machine-hours were 19,050. Before disposition of
under/overapplied overhead, the cost of goods sold was $560,000 and ending
inventories were as follows:
Required:
a.Determine the budgeted factory overhead rate per machine-hour.
b.Compute the over/underapplied overhead.
c.Prepare the journal entry to dispose of the variance using the write-off to cost of
goods sold approach.
d.Prepare the journal entry to dispose of the variance using the proration approach.
14) The cost today of purchasing an asset identical to the one currently held is called
a(n) ________.
A) actual cost
B) current cost
C) prime cost
D) variable cost
15) For each item below indicate the source documents that would most likely authorize
the journal entry in a job-costing system.
Required:
a.direct materials purchased
b.direct materials used
c.direct manufacturing labor
d.indirect manufacturing labor
e.finished goods control
f.cost of goods sold
16) Which of the following statements is true of the internal-business-process
perspective of a balanced scorecard?
A) Internal-business-process perspective is composed of three subprocesses: innovation
process; learning-and-growth process; and postsales-service process.
B) Internal-business-process perspective evaluates the profitability of the strategy and
the creation of shareholder value.
C) Internal-business-process improvement targets are often determined after
benchmarking against an organization's main competitors standards.
D) Internal-business-process perspective is composed of three subprocesses: operations
process; learning-and-growth process; and postsales-service process.
17) Which component of strategy measures the changes in operating income attributed
solely to an increase in the quantity of output between Year 1 and Year 2?
A) the growth component
B) the price-recovery component
C) the productivity component
D) the cost leadership component
18) Transferred-in costs are treated as if they are ________.
A) conversion costs added at the beginning of the process
B) costs of beginning inventory added at the beginning of the process
C) direct labor costs added at the beginning of the process
D) a separate direct material added at the beginning of the process
19) Using the high-low method, the estimate of the fixed component of electrical cost
per month is closest to:
A) $7,371
B) $5,731
C) $5,875
D) $5,840
20) Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing
overhead costs to products. Manufacturing overhead costs are allocated on the basis of
machine-hours in the Machining Department and on the basis of direct labor-hours in
the Assembly Department. At the beginning of 20X3, the following estimates were
provided for the coming year:
The accounting records of the company show the following data for Job #316:
For Bauer Manufacturing, what is the annual manufacturing overhead cost-allocation
rate for the Machining Department?
A) $4.00
B) $4.20
C) $4.67
D) $5.25
21) Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing
overhead costs to products. Manufacturing overhead costs are allocated on the basis of
machine-hours in the Machining Department and on the basis of direct labor-hours in
the Assembly Department. At the beginning of 20X3, the following estimates were
provided for the coming year:
The accounting records of the company show the following data for Job #316:
What are the total manufacturing costs of Job #316?
A) $715
B) $880
C) $1,595
D) $1,000
22) Capity Tea Products has an exclusive contract with British Distributors. Calamine
and Capity are two brands of teas that are imported and sold to retail outlets. The
following information is provided for the month of March:
Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300,
respectively.
For the contribution margin, what is the total flexible-budget variance?
A) $330 favorable
B) $220 favorable
C) $550 favorable
D) $1,000 unfavorable
23) After conducting a market research study, Ed Manufacturing decided to produce a
new interior door to complement its exterior door line. It is estimated that the new
interior door can be sold at a target price of $240. The annual target sales volume for
interior doors is 20,000. Ed has target operating income of 20% of sales.
What is the target operating income?
A) $960,000
B) $3,840,000
C) $4,800,000
D) $5,760,000
