1) The total cost of a job shown on the job cost record is the sum of the direct materials
and direct labor traced to the job divided by the manufacturing overhead allocated to
the job.
2) Variable costing considers fixed manufacturing costs as inventoriable product costs.
3) The treasurer and the controller report directly to the CFO.
4) A breakeven mix is the combination of products that are available for sale.
5) The journal entry to record the use of direct materials in Processing Department #1
would include a debit to Raw Materials inventory.
6) The value chain concept helps companies control costs over the value chain as a
whole.
7) Inspection of incoming raw materials and production loss caused by downtime are
examples of prevention costs.
8) Since service firms do not carry large amounts of inventory, it is not necessary to
know the costs related to the different jobs.
9) The “triple bottom line” reports on three factors: profits, people, and planet.
10) The CFO is the person responsible for the day-to-day operations of the company.
11) The addition of a specified target operating income to contribution margin analysis
has the same effect on required sales in units as increasing fixed expenses.
12) Waste activities is another name for non-value-added activities.
13) Managerial information is always based on historical transactions with external
parties.
14) Potter & Weasley Company had the following activities, estimated indirect activity
costs, and allocation bases:
Potter & Weasley uses activity based costing.
The above activities are used by Departments P and Q as follows:
How much of the account verification costs will be assigned to Department P?
A) $9,000
B) $8,000
C) $10,500
D) $3,000
15) Cooper’s Company manufactures custom engines for use in the lawn and garden
equipment industry. The company allocates manufacturing overhead based on machine
hours. Selected data for costs incurred for Job 798 are as follows:
What is the total manufacturing cost of Job 798?
A) $17,740
B) $5,040
C) $8,500
D) $4,905
16) Big-box retailers such as Lowe’s are considered price-takers because
A) their products are not unique
B) there is less competition in the home improvement retail sector
C) their products are unique
D) they emphasize cost-plus pricing
17) Sandy Incorporated sells two products, larges and smalls. Larges sell for $90 per
unit with variable costs of $60 per unit. Smalls sell for $30 per unit with variable costs
of $10 per unit. Total fixed costs for the company are $41,600. Sandy Incorporated
typically sells three larges for every two smalls. What is the breakeven point in total
units?
A) 392 units
B) 4,160 units
C) 1,600 units
D) 320 units
18) The following information relates to Woolf Unlimited for the past two years.
What is the book value per share of common stock for the current year?
A) $38.80
B) $96.00
C) $69.20
D) $13.00
19) Four basic steps are used in an ABC system. List the proper order of these steps,
which are currently scrambled below:
a.Identify the primary activities and estimate a total cost pool for each
b.Allocate the costs to the cost object using the activity cost allocation rates
c.Select an allocation base for each activity
d.Calculate an activity cost allocation rate for each activity
A) c, a, b, d
B) a, c, d, b
C) b, a, c, d
D) a, d, c, b
20) What would a company need to conduct when considering whether to install an
ERP system or not?
A) TQM survey
B) cost-benefit analysis
C) JIT survey
D) ISO 9001:2000 survey
21) Costs incurred to detect poor quality goods and services refer to
A) activity-based costing
B) appraisal costs
C) value engineering
D) prevention costs
22) Using account analysis, what type of cost is the price of gasoline when your car gets
30 miles per gallon and each gallon costs $3.65?
A) Fixed
B) Mixed
C) Variable
D) Step
23) Comfort Cloud manufactures seats for airplanes. The company has the capacity to
produce 100,000 seats per year, but is currently producing and selling 75,000 seats per
year. The following information relates to current production:
If a special sales order is accepted for 3,200 seats at a price of $350 per unit, and fixed
costs increase by $12,000, how would operating income be affected? (NOTE: Assume
regular sales are not affected by the special order.)
A) Decrease by $244,000
B) Increase by $404,000
C) Increase by $256,000
D) Increase by $244,000
24) Which term listed below describes a system where companies purchase raw
materials when needed in production and complete finished goods when needed by
customers?
A) Internal failure costs
B) Backflush costing
C) Just-in-time
D) External failure costs
25) Two Brothers Moving prepared the following sales budget:
Credit collections are 25% in the month of sale, 60% in the month following the sale,
and 10% two months following the sale. The remaining 5% is expected to be
uncollectible.
What is the total cash received in April from April sales?
A) $40,000
B) $4,000
C) $38,500
D) $2,500
26) Cash flows from operations and gross margin growth would be examples of the
A) customer perspective
B) financial perspective
C) internal business perspective
D) learning and growth perspective
27) There are several reasons an organization might pursue sustainable initiatives. “As a
result of significant increase in the number of non-compliance notices it received in a
recent year, an organization increased sustainability training and focused management
attention on sustainability.” This situation is an example of which type of reason to
implement sustainable initiatives?
A) Cost reduction
B) Regulatory compliance
C) Stakeholder influence
D) Competitive strategy
28) The results of a customer survey about customer experiences with the company’s
services would be an example of measuring which perspective?
A) Financial
B) Customer
C) Internal business
D) Learning and growth
29) The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to long-term liabilities?
A) The debt ratio is 35.32%
B) Long-term liabilities increased by 4.47%
C) The current ratio is 1.24
D) Long-term liabilities decreased by $(1,400)
30) Raw materials inventory is credited for which of the following when recording the
use of direct materials in the production process?
A) Standard quantity of direct materials used for actual production times actual cost per
pound
B) Standard quantity of direct materials used for actual production times standard cost
per pound
C) Actual quantity of direct materials put into production times actual cost per pound
D) Actual quantity of direct materials put into production times standard cost per pound
31) Valley View Company produces hiking boots. The direct labor standard for each
pair of boots is 1 hour at a cost of $20.00 per direct labor hour. During the month of
May, Valley View Company used 2,500 direct labor hours to produce 2,350 pairs of
boots. Total direct labor cost for May was $48,000. What is the labor rate variance for
May?
A) $2,000 favorable
B) $2,000 unfavorable
C) $1,000 favorable
D) $1,000 unfavorable
32) A company has fixed costs of $60,000 per month. If sales double from 6,000 to
12,000 units during the month, fixed costs in total will
A) double
B) remain the same
C) be cut in half
D) be none of the above
33) Contribution margin income statement data for the most recent year follow:
Assuming the Dog food is discontinued, total fixed costs remain unchanged, and the
space formerly used to produce the line is rented for $25,000 per year, how will
operating income be affected?
A) Increase $58,000
B) Increase $184,000
C) Decrease $20,000
D) Increase $20,000
34) The manager of a local CVS drugstore would be in charge of a(n)
A) cost center
B) investment center
C) revenue center
D) profit center
35) Sneider Family Orange Groves processes a variety of fresh juices. The company has
the following expenses for July:
What is the total cost for the design category of the value chain?
A) $122,000
B) $197,000
C) $152,000
D) $272,000
36) Presented are the income statements of Currence and Stever Publications companies
for the current year:
Which company has the better relationship between net income and net sales revenue?
A) Impossible to determine
B) Both have the same relationship
C) Currence
D) Stever
37) Squire Corporation charged Job 110 with $13,400 of direct materials and $11,900
of direct labor. Allocation for manufacturing overhead is 75% of direct labor costs.
What is the total cost of Job 110?
A) $34,225
B) $ 8,925
C) $41,167
D) $25,300
38) Which of the following methods cuts throughput time?
A) XBRL
B) IFRS
C) JIT
D) ISO
39) Which of the following shows the effect on work in process inventory when
assigning direct labor costs to the production process?
A) Debited for standard quantity of direct labor used for actual production times
standard cost per hour
B) Debited for actual quantity of direct labor times standard cost per hour
C) Credited for standard quantity of direct labor used for actual production times
standard cost per hour
D) Credited for standard quantity usage of direct labor for actual production times
actual cost per hour
40) A pizza company produces frozen pizzas in three departments: assembly, freezing,
and packaging. In assembly, crust ingredients are added at the beginning of the process.
After the crust is made, the sauce, cheese, and toppings are added at the end of the
process. Conversion costs are added evenly. Data for the assembly department includes:
The cost per equivalent unit for conversion costs would be closest to
A) $1.01
B) $1.30
C) $1.20
D) $1.00
41) Speedy Print Shop bought a new high-speed photo copier for customers to be able
to bring in their digital pictures to make high-quality copies. Its useful life is 6 years.
The copier cost $7,740 and will generate annual cash inflows of $2,150. The residual
value of the copier is $1,320. The payback period in years is closest to
A) 4.21
B) 3.60
C) 2.99
D) 2.23
42) The ________ capital budgeting method uses accrual accounting income.
A) accounting rate of return
B) payback
C) net present value
D) internal rate of return