A summary of the materials requisitions completed during a period serves as the basis
for transferring the cost of the materials from the controlling account in the general
ledger to the controlling accounts for
a. Work in Process and Cost of Goods Sold
b. Work in Process and Factory Overhead
c. Finished Goods and Cost of Goods Sold
d. Work in Process and Finished Goods
Conversion and direct materials are generally both added at the end of the production
process.
a. True
b. False
The Dawson Company manufactures small lamps and desk lamps. The following shows
the activities per product and the total overhead information:
Calculate the overhead per unit to be charged to small lamps.
a. $75.00
b. $39.17
c. $38.33
d. $17.50
A responsibility center in which the department manager has responsibility for and
authority over costs and revenues is called a(n)
a. profit center
b. investment center
c. volume center
d. cost center
provides information for controlling and improving operations
Match each phrase that follows with the term (a-e) it describes.
a. cost of production report
b. equivalent units of production
c. manufacturing cells
d. yield
e. just-in-time processing
Standard costs should always be revised when they differ from actual costs.
a. True
b. False
Finch Company began its operations on March 31 of the current year. Finch has the
following projected costs:
(1) Of the manufacturing costs, three-fourths are paid for in the month they are
incurred; one-fourth is paid in the following month.
(2) Insurance expense is $1,000 a month; however, the insurance is paid four times
yearly in the first month of the quarter, (i.e., January, April, July, and October).
(3) Property tax is paid once a year in November.
The cash payments expected for Finch Company in the month of May are
a. $185,600
b. $149,900
c. $187,600
d. $189,100
Absorption costing is required for financial reporting under generally accepted
accounting principles.
a. True
b. False
Blackwelder Factory produces two similar products’”small lamps and desk lamps. The
total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is
further estimated that small lamp production will require 275,000 direct labor hours and
desk lamp production will need 125,000 direct labor hours.
Using the single plantwide factory overhead rate with an allocation base of direct labor
hours, how much factory overhead will Blackwelder Factory allocate to small lamp
production if actual direct hours for the period is 285,000?
a. $275,000
b. $285,000
c. $440,000
d. $456,000
Piper Corp. is operating at 70% of capacity and is currently purchasing a part used in its
manufacturing operations for $24 per unit. The unit cost for the business to make the
part is $36, including fixed costs, and $26, not including fixed costs. If 15,000 units of
the part are normally purchased during the year but could be manufactured using
unused capacity, what would be the amount of differential cost increase or decrease
from making the part rather than purchasing it?
a. $30,000 cost decrease
b. $180,000 cost increase
c. $30,000 cost increase
d. $180,000 cost decrease
The level of inventory of a manufactured product has increased by 8,000 units during a
period. The following data are also available:
What would be the effect on income from operations if absorption costing is used rather
than variable costing?
a. $80,000 decrease
b. $80,000 increase
c. $104,000 increase
d. $104,000 decrease
As of January 1 of the current year, the Gunner Company had accounts receivables of
$50,000. The sales for January, February, and March were as follows: $120,000,
$140,000, and $150,000, respectively. Of each month’s sales, 20% are for cash. Of the
remaining 80% (the credit sales), 60% are collected in the month of sale, with the
remaining 40% collected in the following month. What is the accounts receivable
balance as of March 31?
a. $72,000
b. $48,000
c. $58,720
d. $60,000
For short-run production planning, information in the variable costing format is more
useful to management than is information in the absorption costing concept format.
a. True
b. False
Information about costs developed through a job order cost system cannot be used to
evaluate an organization’s cost performance.
a. True
b. False
Maximum effectiveness and efficiency are reached when the lean philosophy is used
mainly by manufacturers.
a. True
b. False
focuses on reducing time, cost, and poor quality within the process
Match each phrase that follows with the term (a-e) it describes.
a. cost of production report
b. equivalent units of production
c. manufacturing cells
d. yield
e. just-in-time processing
The following information is available for Meyer Company:
Which of the following statements is correct?
a. The dividend yield is 6.0%, which is of interest to investors seeking an increase in
market price of their stocks.
b. The dividend yield is 6.0%, which is of special interest to investors seeking to earn
revenue on their investments.
c. The dividend yield is 16.7%, which is of interest to bondholders.
d. The dividend yield is 16.7% which is an important measure of solvency.
Variable costs as a percentage of sales are equal to 100% minus the contribution margin
ratio.
a. True
b. False