Given the following cost and activity observations for Bounty Company’s utilities, use
the highÂlow method to calculate Bounty’ variable utilities costs per machine hour.
Round your answer to the nearest cent.
a. $10.00
b. $0.67
c. $0.63
d. $0.11
Reporting unusual items separately on the income statement allows investors to isolate
the effects of these items on income and cash flows.
a. True
b. False
Controlling deals with choosing goals and deciding how to achieve them.
a. True
b. False
Taylor Industries had a fire and some of its accounting records were destroyed.
Available information is presented below for the year ended December 31.
Additional information:
Factory overhead is 150% of direct labor cost
Finished goods inventory decreased by $18,000 during the year Work in process
inventory increased by $12,000 during the year
Calculate:
a) Materials inventory, January 1
b) Direct labor cost
c) Factory overhead incurred
d) Cost of goods sold
A business operated at 100% of capacity during its first month and incurred the
following costs:
If 75 units remain unsold at the end of the month, what is the amount of inventory that
would be reported on the absorption costing balance sheet?
a. $5,625
b. $5,250
c. $5,760
d. $6,210
In a lean environment, the journal entry to record raw materials purchases would
include a credit to the raw materials inventory account.
a. True
b. False
One reason that a common-sized statement is a useful tool in financial analysis is that it
enables the user to
a. judge the relative potential of two companies of similar size in different industries
b. determine which companies in a single industry are of the same value
c. determine which companies in a single industry are of the same size
d. make a better comparison of two companies of different sizes in the same industry
Because accountants have financial expertise, they are the only ones that are able to set
standard costs for the production area.
a. True
b. False
In a lean system, indirect labor is traced directly to product cells.
a. True
b. False
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices
are $55, $78, and $32, respectively. The variable costs for each product are $20, $50,
and $15, respectively. Each product must go through the same processing in a machine
that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours;
and Wales 1 hour.
Assuming that Widgeon Co. can sell all of the products it can make, what is the
maximum contribution margin it can earn per month?
a. $49,000
b. $70,000
c. $56,000
d. $34,000
If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is
80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory
overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).
a. True
b. False
The statement of cost of goods manufactured is an extension of the income statement
for a manufacturing company.
a. True
b. False
Austin Co. manufactures a product called Aster in a three-process series. All materials
are introduced at the beginning of the first process. Austin uses the first-in, first-out
method of inventory costing. Unit and cost data for the first process (Department A) for
the month of December follow:
Prepare Austin’s Department A cost of production report for December.
Tires for the bicycles
Indicate whether the cost would typically be considered product or period cost for the
cost object given.
a. Product
b. Period
A company sells goods for $150,000 that cost $54,000 to manufacture. Which statement
is true?
a. The company will recognize sales on the balance sheet of $150,000.
b. The company will recognize $96,000 gross profit on the balance sheet.
c. The company will decrease finished goods by $54,000.
d. The company will increase finished goods by $54,000.