Culver, Inc. manufactures motors used in electric toothbrushes and other small
appliances. Culver’s fixed overhead rate is $7.60 and the company budgeted 165,000
direct labor hours for the year. During the year Culver produced 320,000 motors and
used 164,000 direct labor hours. Culver’s fixed overhead spending variance was $3,500
unfavorable for the year. What was Culver’s actual fixed overhead for the year?
a. $1,250,500
b. $1,257,500
c. $1,246,400
d. $1,249,900
The following information has been gathered by the controller of Acme Industries.
Required: Using standard costing, prepare the following journal entries.
a. Purchase of direct materials on account
b. Transfer of direct materials into production
c. Recording of payroll
d. Payment for variable overhead
e. Application of variable overhead to work in process
f. Recording of variable overhead variances
g. Application of fixed overhead to work in process
h. Payment of fixed overhead
i. Recording of fixed overhead variances
Benny Books sells first edition books. Benny purchases the books from his supplier for
$100 a book and sells them through his website for $225 a book. Benny’s fixed costs are
$87,000. Benny’s breakeven point in sales dollars is nearest to
a. $195,750.
b. $156,600.
c. $87,075.
d. $60,300.
Assembly line workers at Thompson Manufacturing worked a total of 12,000 direct
labor hours to produce 36,000 units. The standard for producing one unit is 15 minutes
at a wage rate of $10.70. If the actual wage rate was $10.50 per direct labor hour,
Thompson’s direct labor rate variance is
a. $2,400 favorable
b. $4,800 unfavorable
c. $9,450 favorable
d. $4,500 unfavorable
Benchmarking means trying to match another company’s
a. Matrics.
b. Performance.
c. Profits.
d. Processes
Identify which of the following items would be classified as capital assets.
a. Manufacturing equipment
b. Forklift
c. Janitorial supplies
d. Manufacturing overhead
e. Office furniture
During the current year, XYZ Corporation purchased land for $5,000 and sold a piece
of factory machinery with a book value of $15,000 for $12,000 cash. What is XYZ’s net
cash flows provided by investing activities for the year?
a. ($7,000)
b. ($10,000)
c. $7,000
d. $10,000
Which of the following is not a tool for monitoring strategic performance?
a.The balanced scorecard
b.Code of conduct
c.Supply chain management
d.Enterprise Resource Planning (ERP) systems
Managerial accounting reports
a.Use historical information.
b.Compare actual results to budged results.
c.Project the results of certain decisions.
d.All of these answer choices are correct.
According to the theory of constraints, which of the following is not a step required to
maximize and improve the performance of a value chain?
a. Identify the constraint.
b. Compare the constraints with industry averages.
c. Decide how to exploit the constraint.
d. Elevate the performance of the constraint.
In setting the direct labor quantity standard, estimated time can be derived from
a. Published benchmark studies.
b. Time-and-motion studies.
c. Both published benchmark studies and time-and-motion studies.
d. Neither published benchmark studies nor time-and-motion studies.
Mirada Manufacturing produces pumps for residential swimming pools. For the year,
management estimated that total manufacturing overhead would be $1,488,000.
Management decided to use direct labor hours to apply manufacturing overhead and
budgeted 62,000 direct labor hours. The following information was compiled before an
adjustment had been made to close Manufacturing Overhead Control:
For the year, manufacturing overhead was
a. $220,704 underapplied
b. $220,704 overapplied
c. $144,976 overapplied
d. $144,976 underapplied
During an accounting period, manufacturing overhead is applied to work in process
using
a. An application ticket.
b. A job cost sheet.
c. A predetermined overhead rate.
d. None of these answer choices are correct.
In absorption costing, all manufacturing costs are considered to be
a. Product costs
b. Period costs
c. Variable costs
d. Mixed costs
Which of the following is an example of a fifth perspective that some organizations
may want to add to their balanced scorecard?
a. Supplier relations
b. Community involvement
c. Environment impart
d. Any of these answer choices are correct
In preparing cash flows provided by operating activities using the indirect method,
which of the following items is deducted from net income?
a. Non-cash expenses such as amortization
b. Increases in current asset balances
c. Losses on investing and financing transactions
d. Increases in current liability balances
Sophia, Inc. is preparing its cash budget for the fourth quarter. The inventory manager
advises that materials purchases will be $40,000 in October and will increase by 25%
for each month thereafter due to the holiday season. Sophia ‘s purchases in September
were $32,000. Sophia pays for purchases 50% in the month after sale and 50% in the
2nd month after the sale. What are Sophia ‘s budgeted cash payments for purchases in
November?
a. $45,000
b. $36,000
c. $61,000
d. $40,000
Which of the following is a characteristic of a fixed cost?
a.The total cost remains constant, regardless of changes in the level of activity.
b.The cost per unit varies inversely with changes in the level of activity.
c.Both that the total cost remains constant, regardless of changes in the level of activity
and that the cost per unit varies inversely with changes in the level of activity.
d.Neither that the total cost remains constant, regardless of changes in the level of
activity nor that the cost per unit varies inversely with changes in the level of activity.