1) ISO 9001:2008 is a certification program for companies that adhere to an
international set of quality management standards and guidelines.
2) Manufacturing overhead costs cannot be directly traced to jobs.
3) Manufacturers follow four steps to implement a manufacturing overhead allocation
system. The last step is to allocate some manufacturing overhead to each individual job.
4) The quantities of incoming shipments of raw materials are counted and recorded on a
purchase order.
5) At a manufacturing company, inventory flows from work in process inventory, to raw
materials inventory, to finished goods inventory.
6) The manufacturing overhead account is credited for actual manufacturing overhead
costs incurred in the period.
7) Service companies must carry a large amount of inventory to meet consumer
demand.
8) When a company sells more than one product, it does not have a unique breakeven
point.
9) Government grants and tax credits increase the costs of implementing sustainability
measures.
10) Technology has been a driving factor in the changing roles of management
accountants.
11) Strategic planning involves setting short-term goals extending three to four months
into the future.
12) Job costing is often used by professional service providers, such as law firms.
13) A lean company typically strives to lengthen the manufacturing cycle time.
14) The “Ethics Hotline” provides specific resolutions (answers) to IMA members who
face ethical dilemmas.
15) Managers should consider the potential effect of a special order on long-run profits
and operations.
16) Budget committee is a what-if technique that asks what a result will be if a
predicted amount is not achieved or if an underlying assumption changes.
17) In process costing, when multiple production steps are required, the five-step
process costing procedure must be completed in each production department.
18) Stanley’s Candies is considering building a new plant in Europe. It predicts sales at
the new plant to be 40,000 units at $4.00/unit. Below is a listing of estimated expenses:
A European firm was contracted to sell the product and will receive a commission of
10% of the sales price. No U.S. home office expenses will be allocated to the new
facility.
The unit variable cost for Stanley’s Candies is
A) $1.25
B) $3.15
C) $2.30
D) $1.90
19) Wood Sculptor Company had the following labor-related transactions at their plant
last month:
What is the journal entry to record the incurrence of direct labor?
A)
B)
C)
D)
20) What does the variable overhead efficiency variance tell management?
A) How efficiently variable manufacturing overhead was used
B) How efficiently fixed manufacturing overhead was used
C) How efficiently employees applied manufacturing overhead to each unit
D) How much of the total variable manufacturing overhead variance is due to machine
hours used given the actual volume of output
21) New product development time would be an example of the
A) financial perspective
B) customer perspective
C) learning and growth perspective
D) internal business perspective
22) Alpha Technology’s work in process inventory on June 1 has a balance of $27,200
representing Job No. 72 . During June, $68,900 of direct materials were requisitioned
for Job No. 72 and $5,500 of direct labor cost was incurred on Job No. 72 .
Manufacturing overhead is allocated at a rate of $16.00 per direct labor hour. Actual
manufacturing overhead costs incurred in June amounted to $15,000. There were 700
actual direct labor hours worked in June. No new jobs were started during June. Job No.
72 is completed on June 28 .
a) Determine the total cost assigned to Job No. 72 .
b) Is manufacturing overhead overallocated or underallocated for the month of June?
By how much?
23) Internal parties receive information about past performance from
A) audit reports
B) budget reports
C) planning reports
D) managerial accounting reports
24) Which of the following is not used in a cost-benefit analysis?
A) Future benefits to be received from project
B) Amounts for future costs of project
C) Book value of past investment in equipment
D) Amount needed to invest in project initially
25) On the line in front of each statement, enter the letter corresponding to the term that
best fits that statement. You may use a letter more than once and some letters may not
be used at all.
A. Materials inventory E. Work in process inventory
B. Service companies F. Manufacturing companies
C. Merchandise inventory G. Merchandising companies
D. Finished goods inventory
____typically have a single category of inventory
____resell products they previously purchased ready-made from suppliers
____do not have inventory for resale
____produce its own inventory
____transform raw materials into new finished products
____ready to sell inventory of manufacturers
____partially completed items of manufacturers
26) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to common stock?
A) Stockholder’s equity as 7.81% of total capital
B) Increase of $5,460 in common stock
C) 88.50% increase from prior to current year of cost of goods sold
D) Sales return of $11.26
27) The following data relates to Logan Electric and its Light Bulb Division.
What is the Light Bulb Division’s Return on Investment (ROI)?
A) 25%
B) 10%
C) 250%
D) 18.33%
28) Luka Company uses the following overhead standard costs for a single unit of
product: 7.5 hours at $13.50 per hour. Actual data for the month showed overhead costs
of $132,000 for 1,800 units produced. What is the difference between actual overhead
costs and standard overhead costs allocated to products?
A) $107,700 favorable
B) $107,700 unfavorable
C) $50,250 favorable
D) $50,250 unfavorable
29) Managerial accountants may be responsible for
A) providing decision support
B) communicating results
C) analyzing data
D) all of the above
30) Palmer’s Gourmet Chocolates produces and sells assorted boxed chocolates. The
unit selling price is $50, unit variable costs are $25, and total fixed costs are $2,000.
What are breakeven sales in dollars?
A) $4,000
B) $1,333
C) $80
D) $2,000
31) A company sells treasury stock for an amount less than its acquisition cost. If the
company prepares the statement of cash flows using the indirect method or the direct
method, where would this transaction appear?
A) The sale of treasury stock would be presented in the investing activities section as a
cash receipt under both methods
B) The sale of treasury stock would be presented in the non-cash investing and
financing activities section under both methods
C) The sale of treasury stock would be presented in the operating activities section as a
reduction in net income under the indirect method and as a cash receipt under the direct
method
D) The sale of treasury stock would be presented in the financing activities section as a
cash receipt under both methods
32) Mae Company sells its product for $12 per unit and has variable costs of $8 per
unit. Total fixed costs are $60,000. Suppose variable costs increase by 10% due to an
increase in the cost of direct materials. What will be the effect on the breakeven point in
units?
A) Increase from 15,000 units to 18,750 units
B) Decrease from 3,000 units to 2,885 units
C) Decrease from 15,000 units to 5,357 units
D) Decrease from 7,500 units to 6,818 units
33) Which product costing system would better account for a unique product?
A) Overhead costing system
B) Job costing system
C) Process costing system
D) Product costing system
34) An LCD screen is purchased to be used in the manufacturing of a digital watch. The
standard price for the LCD screen used is $40.00. During the month of February, 3,400
screens were purchased and used. The materials price variance was $6,000 unfavorable.
The standard number of screens allowed for the actual number of watches
manufactured during the period was 25,000 screens. The actual purchase price of each
LCD screen would be closest to
A) $39.76 per LCD screen
B) $40.24 per LCD screen
C) $38.24 per LCD screen
D) $41.76 per LCD screen
35) Michael Corporation manufactures railroad cars, which is its only product. The
standards for railroad cars are as follows:
During the month of March, the company produced 1,650 railroad cars. Related
production data for the month follows:
What is the direct labor rate variance for the month?
A) $15,000 favorable
B) $15,000 unfavorable
C) $10,000 favorable
D) $10,000 unfavorable
36) The document many process costing companies use to summarize the entire
five-step process on one schedule is called the
A) conversion report
B) income costing statement
C) bill of materials
D) production cost report
37) Here is some basic data for Honey Dukes Corporation:
The entry to record the cost of goods completed would be a
A) debit to finished goods inventory for $287,000
B) credit to work in process inventory for $255,000
C) debit to work in process inventory for $255,000
D) credit to finished goods inventory for $975,000
38) Westfall Watches has two product lines: Luxury watches and Sporty watches.
Income statement data for the most recent year follow:
Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the
space formerly used to produce the Sporty line is used to increase the production of
Luxury watches by 250%, how will operating income be affected?
A) Increase $299,500
B) Increase $177,500
C) Increase $236,500
D) Decrease $177,500
39) Fosnight Enterprises prepared the following sales budget:
The expected gross profit rate is 30% and the inventory at the end of February was
$10,000. Desired inventory levels at the end of the month are 20% of the next month’s
cost of goods sold.
What is the desired beginning inventory on June 1?
A) $840
B) $1,680
C) $1,960
D) $9,800
40) The term ________ is best described as “a stream of equal periodic payments.”
A) time value of money
B) capital budgeting
C) annuity
D) payback period
41) ________ are owners of a company.
A) Customers
B) Shareholders
C) Creditors
D) Managers
42) If the selling price per unit is $42, the unit contribution margin is $15, and total
fixed expenses are $570,000, what will the breakeven sales in units be?
A) 38,000
B) 8,550,000
C) 21,111
D) 13,571
43) Indications that a product cost system needs revision include
A) managers lose bids they expected to win and win bids they expected to lose
B) employees do not believe the cost numbers are accurate
C) the company uses a single-allocation-base system developed long ago
D) all of the above
44) The following information relates to Woolf Unlimited for the past two years.
What is days’ sales in receivables for the current year?
A) 56.78 days
B) 69.20 days
C) 43.08 days
D) 10.00 days
45) In a process costing system, the number of WIP inventories
A) equals the number of production departments
B) equals the number of products produced
C) equals the number used in a job cost system
D) cannot equal the number of parts used in the product
46) Dallas Corporation had beginning inventory of 19,500 units and expects sales of
85,000 units during the year. Desired ending inventory is 18,500 units. How many units
should Dallas Corporation produce?
A) 84,000 units
B) 47,000 units
C) 86,000 units
D) 123,000 units
47) What is contribution margin equal to on a contribution margin income statement?
A) Fixed expenses plus variable expenses
B) Fixed expenses minus variable expenses
C) Sales revenues minus variable expenses
D) Sales revenues minus fixed expenses
48) I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road,
Peanut Butter, and Fruity Tooty. It sold 15,000 gallons last year. For every five gallons
of ice cream sold, one pound is Fruity Tooty and the remainder is split evenly between
Peanut Butter and Rocky Road. Fixed costs for I Scream For Ice Cream are $27,000
and additional information follows:
Breakeven sales in dollars for I Scream For Ice Cream is
A) $22,275
B) $17,357
C) $60,750
D) $33,750
49) Manufacturers follow four steps to implement a manufacturing overhead allocation
system. What is the first step?
A) Select an allocation base and estimate the total amount that will be used during the
year
B) Allocate some manufacturing overhead to each individual job
C) Calculate a predetermined manufacturing overhead rate
D) Estimate total manufacturing overhead costs for the coming year
50) Elk Manufacturing has budgeted the following amounts for its next fiscal year:
To maintain the original breakeven sales in units if fixed expenses were to increase by
20%, the selling price per unit would have to be
A) increased by 65.00%
B) increased by 15.00%
C) decreased by 15.00%
D) decreased by 65.00%
51) The present value of an investment is affected by which of the following?
A) The interest rate
B) The number of time periods (length of the investment)
C) The type of investment (annuity versus lump sum)
D) All of the above
52) Total costs for Locke & Company at 120,000 units are $289,000, while total fixed
costs are $145,000. The total variable costs at a level of 250,000 units would be
A) $300,000
B) $602,083
C) $138,720
D) $302,083
53) Selected information regarding a company’s most recent quarter follows (all data in
thousands).
What was the ending raw materials inventory?
A) $600
B) $350
C) $90
D) $490