The net realizable value approach requires that the net realizable value of by-products
and scrap be treated as a reduction in joint costs allocated to primary products.
The EOQ formula can be modified to calculate the number of units that should be
manufactured in a production run.
Market based transfer prices are most appropriate for customized high-volume and
high-cost services.
The price variance reflects the difference between the quantity of inputs used and the
standard quantity allowed for the output of a period.
A continuous budget is prepared by adding a new budget month as each month expires.
Cultural differences between countries may make performance evaluation in
multinational settings more difficult.
Balances for Accounts Receivable and Sales Discounts are projected before the cash
collections schedule is prepared.
Under the net realizable value approach, no value is recognized for by-products or
scrap until they are actually sold.
Registration under ISO 9000 is
A. required for all companies doing business internationally.
B. required for all European companies doing business in Europe.
C. not required for U.S. companies unless they use European suppliers.
D. required for all companies producing regulated products to be sold in the European
Union.
Saturn Corporation
Material A is added at the start of production, while Material B is added uniformly
throughout the process.
Refer to Saturn Corporation Assuming a weighted average method of process costing,
compute the average cost per EUP for conversion.
A. $39.90
B. $45.00
C. $43.03
D. $47.59
Which of the following capital budgeting techniques does not routinely rely on the
assumption that all cash flows occur at the end of the period?
A. internal rate of return
B. net present value
C. profitability index
D. payback period
Schmidt Corporation manufactures card tables. The company has a policy of
maintaining a finished goods inventory equal to 40 percent of the next month’s planned
sales. Each card table requires 3 hours of labor. The budgeted labor rate for the coming
year is $13 per hour. Planned sales for the months of April, May, and June are
respectively 4,000; 5,000; and 3,000 units. The budgeted direct labor cost for June for
Schmidt Corporation is $136,500. What are budgeted sales for July for Schmidt
Corporation?
A. 3,500 units
B. 4,250 units
C. 4,000 units
D. 3,750 units
Standard costs may be used for
A. product costing.
B. planning.
C. controlling.
D. all of the above.
To reflect greater uncertainty (greater risk) about a future cash inflow, an analyst could
A. increase the discount rate for the cash flow.
B. decrease the discounting period for the cash flow.
C. increase the expected value of the future cash flow before it is discounted.
D. extend the acceptable length for the payback period.
Goodall Corporation is working at full production capacity producing 10,000 units of a
unique product, RST. Manufacturing costs per unit for RST follow:
The unit manufacturing overhead cost is based on a variable cost per unit of $2 and
fixed costs of $30,000 (at full capacity of 10,000 units). The non-manufacturing costs,
all variable, are $4 per unit, and the selling price is $20 per unit. A customer, Hendricks
Company, has asked Goodall to produce 2,000 units of a modification of RST to be
called XYZ. XYZ would require the same manufacturing processes as RST. Hendricks
Company has offered to share equally the non-manufacturing costs with Goodall. XYZ
will sell at $15 per unit.
Required:
Jacksonville Company uses a job-order costing system. During May, the following
costs appeared in the Work in Process Inventory account:
Jacksonville Company applies overhead on the basis of direct labor cost. There was
only one job left in Work in Process at the end of May which contained $6,300 of
overhead. What amount of direct material was included in this job?
A. $ 7,200
B. $ 9,000
C. $11,160
D. $11,790
A ratio of outputs to inputs is a(n)
A. effectiveness measure.
B. efficiency measure.
C. qualitative measure.
D. cost reduction measure.
Weslaco Company has made the following information available for its production
facility for the current month. Fixed overhead was estimated at 19,000 machine hours
for the production cycle. Actual machine hours for the period were 18,900, which
generated 3,900 units.
Weslaco Company’s standard costs are as follows:
Determine the following items:
a. material purchase price variance
b. standard quantity allowed for material
c. total standard cost of material allowed
d. actual quantity of material used
e. labor rate variance
f. standard hours allowed for labor
g. total standard cost of labor allowed
h. labor efficiency variance
i. actual variable overhead incurred
j. standard machine hours allowed
k. variable overhead efficiency variance
l. budgeted fixed overhead
m. applied fixed overhead
n. fixed overhead spending variance
o. volume variance
p. total overhead variance
Discuss why standards may need to be changed after they have been in effect for some
period of time.
List and explain the four alternative measures of capacity.
What are the risks and dangers of downsizing?
What important information is conveyed by the margin of safety calculation in CVP
analysis?
What is a “job” as defined in a job-order costing system?
A packaged business software system that allows an organization to improve the
quality and timeliness of information as well as integrate and standardize information is
referred to as a(n) _____________________________________________.
Enterprise resource planning system or