It is not necessary to prepare the Cost of Goods Manufactured statement prior to
preparing the Cost of Goods Sold statement.
Process costing is most appropriate when manufacturing large batches of homogenous
products.
Most smaller businesses are organized as corporations.
The difference between actual variable overhead and budgeted variable overhead based
upon actual hours is referred to as the variable overhead spending variance.
Standards can be computed for materials, labor, and overhead.
Weighted average equivalent units of production (EUP) can be determined by adding
EUP’s in ending work in process to units transferred out.
Non-financial measures are generally less timely than are financial performance
measures.
Financial accounting is highly regulated by rules and regulations.
Allocating service department costs to revenue-producing departments is an alternative
to
A. responsibility accounting.
B. the use of profit centers.
C. the use of cost centers.
D. a transfer pricing system.
The cost of abnormal continuous losses is
A. considered a product cost.
B. absorbed by all units in ending inventory and transferred out on an equivalent unit
basis.
C. written off as a loss on an equivalent unit basis.
D. absorbed by all units past the inspection point.
Relative sales value at split-off is used to allocate
A. yes yes
B. yes no
C. no yes
D. no no
If the level of activity increases,
A. variable cost per unit and total fixed costs increase.
B. fixed cost per unit and total variable cost increase.
C. total cost will increase and fixed cost per unit will decrease.
D. variable cost per unit and total cost increase.
Griffith Corporation
Griffith Corporation is considering an investment in a labor-saving machine.
Information on this machine follows:
Refer to Griffith Corporation. What is the payback period on this investment?
A. 4 years
B. 2.14 years
C. 3.75 years
D. 5 years
EUP calculations for standard process costing are the same as
A. the EUP calculations for weighted average process costing.
B. the EUP calculations for FIFO process costing.
C. LIFO inventory costing for merchandise.
D. the EUP calculations for LIFO process costing.
Glassman Company
Glassman Company produces two products: A and B. The company has three overhead
functions that are required for both products.
Below is production information for Products A and B:
The company produces 800 units of Product A and 8,000 units of Product B each
period.
The overhead functions have the following hourly costs:
Refer to Glassman Company If total overhead is assigned to A and B on the basis of
units produced, Product A will have an overhead cost per unit of
A. $ 88.64.
B. $123.64.
C. $135.00.
D. None of the responses are correct.
StatPro Corporation
StatPro Corporation is a manufacturer of a versatile statistical calculator. The following
information is a summary of defective and returned units for the previous year.
Refer to StatPro Corporation. The total rework cost is
A. $7,500.
B. $15,000.
C. $2,500.
D. $3,750.
Jackson Company.
Jackson Company manufactures wood file cabinets. The following information is
available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company. Compute total manufacturing costs for June, if there were
1,500 direct labor hours and $21,000 of raw material was purchased.
A. $58,500
B. $46,500
C. $43,500
D. $43,100
Duval Corporation
The Duval Corporation has recently evaluated a proposal to invest in cost-reducing
production technology. According to the evaluation, the project would require an initial
investment of $17,166 and would provide equal annual cost savings for five years.
Based on a 10 percent discount rate, the project generates a net present value of $1,788.
The project is not expected to have any salvage value at the end of its five-year life.
Refer to Duval Corporation. What are the expected annual cost savings of the project?
Present value tables or a financial calculator are required.
A. $3,500
B. $4,000
C. $4,500
D. $5,000
Pearce Company
Pearce Company uses a standard cost system for its production process. Pearce
Company applies overhead based on direct labor hours. The following information is
available for July:
Refer to Pearce Company Using the three-variance approach, what is the efficiency
variance?
A. $11,770 F
B. $2,200 F
C. $7,975 U
D. $5,775 U
Freeman Corporation bought a piece of machinery. Selected data is presented below:
Present value tables or a financial calculator are required.
The initial cost of the machinery was
A. $157,392.
B. $174,992.
C. $165,812.
D. $170,303.
An increase in the use of technology has caused
A. fewer costs to be susceptible to short-run control.
B. companies to be more flexible in responding to changing short-term conditions.
C. managers to be less concerned about capacity utilization because of the increased
ability to produce in large quantities.
D. a decline in the amount of fixed costs in an organization.
Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C, D, E,
and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Shiny Floors sells the products after further processing, the following disposal costs
will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Shiny Floors Company. Using a physical measurement method, what amount
of joint processing cost is allocated to Product D?
A. $1,748
B. $2,447
C. $1,311
D. $3,495
Jackson Company.
Jackson Company manufactures wood file cabinets. The following information is
available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company. If there were 1,500 direct labor hours and $21,000 of raw
material purchased, Cost of Goods Manufactured is:
A. $49,100.
B. $45,000.
C. $51,000.
D. $49,500.
The budget that focuses on an organization’s long-term needs is referred to as a(n)
______________________________.
How costs change relative to changes in production or sales volume is referred to as
______________________________.
Lincoln Company
Lincoln Company applies overhead based on direct labor hours and has the following
available for the current month:
Refer to Lincoln Company. Compute all the appropriate variances using the
three-variance approach.
Discuss pay-for-performance plans.
Costs that have been found to bear observable and known relationships to a
quantifiable activity base are referred to as __________________________________.
List the five general criteria that should be considered when designing a performance
measurement system.
Discuss the assignment of costs to transferred-out inventories in both process costing
methods.