1) a manager of a large retail firm is interested in knowing what the company’s product
costs are.
which of the following would be considered a product cost for the manager’s company?
a.direct materials
b.direct labor
c.factory overhead
d.transportation costs paid by the retailer to transport the purchased product to its
distribution location
e.none of the above
2) the system where the cost of a product or service is obtained by assigning costs to
masses of similar units in each department and then computing unit cost on an average
basis is called
a.a process costing system
b.a job costing system
c.an activity-based costing system
d.an inventory materials control system
e.none of the above
3) a budgeting system that has, in effect, a budget for a set number of periods (i.e., a
constant planning horizon) at all times is called a(n):
a.financial budget
b.operating budget
c.rolling financial forecast
d.capital budget
e.master budget
4) which of the following is not a contemporary management technique used by the
management accountant to focus on process improvement?
a.enterprise risk management
b.lean manufacturing
c.life cycle costing
d.enterprise sustainability
5) diamond company has three product lines, a, b, and c. the following financial
information is available:
diamond is thinking of dropping product line c because it is reporting an operating loss.
assuming the company drops product line c and does not replace it, operating income
for the firm will:
a.be unchanged
b.increase by $1,200
c.increase by $1,500
d.decrease by $1,500
e.decrease by $2,700
6) conrad, inc. recently lost a portion of its records in an office fire. the following
information was salvaged from the accounting records.
direct labor cost incurred during the period amounted to 1.5 times the factory overhead.
the cfo of fisher, inc. has asked you to recalculate the following accounts and to report
to him by the end of the day.
what is the amount of net sales?
a.$68,500
b.$94,000
c.$72,500
d.$75,000
7) process costing can be found in which of the following companies (industries)?
a.coca-cola
b.royal dutch shell group
c.kimberly-clark (paper products)
d.reichhold chemical (chemicals)
e.all of the above
8) nerrod company sells its products at $500 per unit, net 30 . the firm’s gross margin
ratio is 40 percent. the firm has estimated the following operating costs:
nerrod company has gathered the following data pertaining to activities it performed for
two of its customers:
what is nerrod’s total customer unit-level cost applicable to xbt as a customer?
a.$50
b.$480
c.$4,120
d.$4,125
e.$6,300
9) orange, inc. has identified the following cost drivers for its expected overhead costs
for the year:
total direct labor hours budgeted = 2,000 hours.
the following data applies to one of the products completed during the year:
if estimated annual factory overhead is $480,000; overhead is applied using direct labor
hours; estimated annual direct labor hours are 200,000; actual march factory overhead
is $42,000; and actual march direct labor hours are 17,000; then overhead is:
a.$800 overapplied
b.$200 overapplied
c.$800 underapplied
d.$200 underapplied
e.$1,200 underapplied
10) which one the following is a variable that takes on values of 1, 2, 3, for each period
in sequence?
a.dummy variable
b.price change index
c.trend variable
d.dependent variable
e.independent variable
11) national inc. manufactures two models of cmd that can be used as cell phones, mpx,
and digital camcorders.
national uses a volume-based costing system to apply factory overhead based on direct
labor dollars. the unit prime costs of each product were as follows:
national’s controller had been researching activity-based costing and decided to switch
to it. a special study determined national’s two products have the following budgeted
activities:
using activity-based costing, applied engineering and design factory overhead for the
great p model per unit is (rounded to the nearest cent):
a.$4.60
b.$9.45
c.$13.44
d.$15.12
e.$42.61
12) to make a decision whether to accept or reject a special sales order, managers need
critical information about all the following except:
a.relevant costs
b.prior period operating costs
c.any opportunity costs
d.the strategic, competitive environment of the firm
13) which one of the following is the amount that actual factory overhead exceeds the
factory overhead applied?
a.factory overhead applied
b.actual factory overhead
c.overapplied overhead
d.allocated factory overhead
e.underapplied overhead
14) an adaptation of abc costing that simplifies abc by assigning resource costs directly
to cost objects is called:
a.activity analysis
b.multistage abc
c.time-driven abc
d.resource consumption accounting
e.customer profitability analysis
15) which equation correctly calculates the total weighted average equivalent units of
production?
a.completed and transferred out units + beginning work-in-process equivalent units
b.ending work-in-process equivalent units – completed and transferred out units
c.beginning work-in-process equivalent units – completed and transferred out units
d.completed and transferred out units + ending work-in-process equivalent units
e.ending work-in-process equivalent units + beginning work-in-process equivalent units
16) riverside company manufactures two sizes of t-shirts, medium and large. both sizes
go through cutting, assembling and finishing departments. the company uses operation
costing.
riverside company’s conversion costs applied to products for the month of june were:
cutting department $60,000, assembling department $60,000, and finishing department
$30,000. june had no beginning or ending work-in-process inventory.
the quantities and direct materials costs for june follow:
each t-shirt, regardless of size, required the same cutting, assembling and finishing
operations.
required:
(1) compute both unit cost and total cost for each shirt size produced in june.
(2) prepare journal entries to record direct materials and conversion costs incurred in
the three departments, and the finished goods costs for both shirt sizes.
17) data mining and analytical software are increasingly used by large retailers and
hotel chains, restaurants, and other businesses. in recent years, the trend is for smaller
companies and manufacturers to begin to see the value of data mining, analyzing the
data the company has about its customers and competitive environment to help the
company make improved decisions about pricing, customer service strategies, new
product development, and other competitive issues.
required: explain how a growing, medium-sized manufacturer of furniture for hotels,
businesses, and other commercial enterprises could use analytics to help it reach out to
new customers.
18) warren company uses a predetermined overhead rate. overhead for the next twelve
months is estimated to be $480,000. jackson applies overhead as a percentage of direct
labor cost. direct labor costs are estimated to be $400,000 for the next year. during the
year actual direct labor costs amounted to $520,000 and the actual overhead was
$605,000.
required:
(1) calculate the over/under-applied overhead for the year.
(2) prepare the journal entries to close the accounts, assuming that the
over/under-applied overhead is closed to cost of goods sold.
19) altima company uses an overhead costing system based on direct labor hours for its
two products x and y. the company is considering adopting an activity-based costing
system, and collects the following information for the month of october.
required:
(1) compute the unit manufacturing cost of each product under a volume-based costing
system based on direct labor hours.
(2) compute the unit manufacturing cost of each product under the activity-based
costing system.
20) daley co. manufactures computer monitors. following is a summary of its basic cost
and revenue data:
assume that daley co. is currently selling 700 computer monitors per month. fixed costs
are expected to be $96,000.
required: calculate daley co.’s margin of safety (mos) in units if 700 units are sold.
round your answer up, to the nearest whole number.
21) the following information pertains to the petrie company:
required: determine the cost of goods manufactured.