1) Quality-inspection costs is an example of batch-level costs.
2) Identifying and minimizing the sources of non-value-added manufacturing time
increases a firm’s responsiveness to its customers and reduces its costs.
3) Simple regression analysis estimates the relationship between the dependent variable
and one independent variable.
4) Managers must not interpret variances in isolation of each other.
5) An effective way to cut costs is to eliminate activities that do NOT improve the
product attributes that customers value.
6) Financial accounting provides an organization’s past-oriented information such as the
previous years’ financial statements.
7) Investment A requires a net investment of $1,400,000. The required rate of return is
10% for the five-year annuity. What are the annual cash inflows if the net present value
equals 0? (rounded)
A) $378,966
B) $369,296
C) $345,696
D) $251,466
8) The costs of unused capacity are highlighted when ________.
A) actual usage based allocations are used
B) budgeted usage allocations are used
C) practical capacity-based allocations are used
D) the dual-rate cost-allocation method allocates fixed costs based on actual usage
9) When target costing and target pricing are used together ________.
A) the target cost is established first, then the target price
B) the target cost is the estimated long-run cost that enables a product or service to
achieve a desired profit
C) the focus of target pricing is to undercut the competition
D) target costs are generally higher than current costs
10) Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its
costing system uses two cost categories, direct materials and conversion costs. Each
product must pass through the Assembly Department and the Testing Department.
Direct materials are added at the beginning of the production process. Conversion costs
are allocated evenly throughout production. Timekeeper Inc. uses weighted-average
costing.
Data for the Assembly Department for June 2015 are:
Costs for June 2015:
What amount of direct materials costs is assigned to the ending Work-in-Process
account for June?
A) $82,800
B) $62,100
C) $37,240
D) $30,454
11) The net operating income for March was:
A) $130,000
B) $134,000
C) $43,000
D) $47,000
12) If a company would like to increase its degree of operating leverage it should
________.
A) increase its sales relative to its fixed costs
B) increase its sales relative to its variable costs
C) increase its variable costs relative to its fixed costs
D) increase its fixed costs relative to its variable costs
13) The top management at Amore Corp, a manufacturer of computer games, is
attempting to recover from a flood that destroyed some of their accounting records. The
main computer system was also severely damaged. The following information was
salvaged:
Alpha Division Beta Division Gamma Division
Sales $5,500,000 (a) $2,500,000
Net operating income $3,500,000 $1,100,000 $1,200,000
Operating assets (b) (c) $1,600,000
Return on investment 0.25 0.15 (d)
Return on sales (e) 0.1 0.5
Investment turnover (f) (g) 1.5
What is the value of the operating assets belonging to the Alpha Division (b)?
A) $8,666,667
B) $14,000,000
C) $13,000,000
D) $14,303,600
14) If separable costs of Butter Cream was 16,000 and constant gross margin was 25%,
what would have been the allocated joint costs of Condensed Milk?
A) $7,438
B) $7,538
C) $30,238
D) $30,338
15) The journal entry to record direct labor for July is ________.
A) Work in ProcessMolding $3,000
Accounts Payable Control $3,000
B) Work in ProcessMolding $1,000
Overhead Control $1,000
C) Work in ProcessMolding $1,000
Wages Payable Control $1,000
D) Work in ProcessMolding $1,000
Work in ProcessFinishing $1,000
16) A partial listing of costs incurred at Falkenberg Corporation during October appears
below:
Required:
a. What is the total amount of product cost listed above? Show your work.
b. What is the total amount of period cost listed above? Show your work.
17) Which of the following is generally expressed through a short-run budget?
A) operational plans
B) expansion plans
C) strategic plans
D) startup plans
18) Under which allocation method are one-way reciprocal support services
recognized?
A) direct method
B) artificial cost method
C) reciprocal method
D) step-down method
19) All individual cost items included in the dependent variable should have ________.
A) a different cost driver
B) an independent relationship with the independent variable
C) an economically plausible relationship with the cost driver
D) a heterogeneous cost pool