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1) Budgeted fixed manufacturing costs of a product using practical capacity ________.
A) represents the cost per unit of supplying capacity
B) can result in setting selling prices that are not competitive
C) includes the cost of unused capacity
D) should be used to evaluate a marketing manager's performance in the current year
2) The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint
process. June production is 5,000 widgets; 8,750 gizmos; and 10,000 turnbols.
Respective per unit selling prices at splitoff are $75, $50, and $25. Joint costs up to the
splitoff point are $187,500.
If joint costs are allocated based upon the sales value at splitoff, what amount of joint
costs will be allocated to the widgets?
A) $30,882
B) $66,176
C) $44,118
D) $77,206
3) Bell Company sells several products. Information of average revenue and costs is as
follows:
The company sells 10,000 units.
What is the proportion of variable costs to total costs?
A) 45.00%
B) 48.56%
C) 53.56%
D) 43.56%
4) Assigning direct costs to a cost object is called ________.
A) cost allocation
B) cost assignment
C) cost pooling
D) cost tracing
5) Berman's Camera Shop has prepared the following flexible budget for September
and is in the process of interpreting the variances. F denotes a favorable variance and U
denotes an unfavorable variance.
The actual amount spent for direct manufacturing labor was ________.
A) $80,000
B) $83,000
C) $82,000
D) $78,000
6) Shotter Manufacturing is a small textile manufacturer using machine-hours to
calculate the single indirect-cost rate to allocate manufacturing overhead costs to
various jobs contracted during the year. The following estimates are provided for the
coming year for the company and for the jackets to be made for Jackson High School
Science Olympiad.
Required:
a.For Shotter Manufacturing, determine the annual manufacturing overhead
cost-allocation rate.
b.Determine the amount of manufacturing overhead costs allocated to the Jackson High
School job.
c.Determine the estimated total manufacturing costs for the Jackson High School job.
7) Hanung Corp has two service departments, Maintenance and Personnel. Maintenance
Department costs of $300,000 are allocated on the basis of budgeted
maintenance-hours. Personnel Department costs of $100,000 are allocated based on the
number of employees. The costs of operating departments A and B are $160,000 and
$240,000, respectively. Data on budgeted maintenance-hours and number of employees
are as follows:
Using the step-down method, what amount of Maintenance Department cost will be
allocated to Department A if the service department with the highest percentage of
interdepartmental support service is allocated first? (Round up)
A) $100,000
B) $132,372
C) $134,472
D) $138,462
8) Daniel Rubber Company produces a specialty item. Management has provided the
following information:
What is the cost per statue if throughput costing is used?
A) $20.00
B) $17.00
C) $13.00
D) $8.00
9) If the distress price is used as the transfer price, ________.
A) the selling division will show a loss because the distress price will not exceed the
full cost of the division
B) the buying division will show a loss because the distress price will not exceed the
full cost of the division
C) the selling division will show a loss because the distress price will exceed the full
cost of the division
D) the buying division will show a loss because the distress price will exceed the full
cost of the division
10) The following information pertains to the January operating budget for Casey
Corporation.
Budgeted sales for January $200,000 and February $100,000.
Collections for sales are 60% in the month of sale and 40% the next month.
Gross margin is 30% of sales.
Administrative costs are $10,000 each month.
Beginning accounts receivable is $20,000.
Beginning inventory is $14,000.
Beginning accounts payable is $65,000. (All from inventory purchases.)
Purchases are paid in full the following month.
Desired ending inventory is 20% of next month's cost of goods sold (COGS).
At the end of January, budgeted ending inventory is ________.
A) $10,000
B) $14,000
C) $20,000
D) $22,000
11) ABC assumes all costs are ________ because over the long run management can
adjust the amount of resources employed.
A) fixed
B) variable
C) committed
D) nondiscretionary
12) Global Giant, a multinational corporation, has a producing subsidiary in a low tax
rate country and a marketing subsidiary in a high tax country. If Global Giant wants to
minimize its worldwide tax liability, we would expect Global Giant to ________.
A) stop producing in the low tax rate country
B) stop marketing in the high tax rate country
C) establish a low transfer price when the producing unit sells to the marketing unit
D) establish a high transfer price when the producing unit sells to the marketing unit
13) The Charmatz Corporation has a central copying facility. The copying facility has
only two users, the Marketing Department and the Operations Department. The
following data apply to the coming budget year:
Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Marketing Department was 80,000 copies and by the
Operations Department was 360,000 copies.
If a single-rate cost-allocation method is used, what amount of copying facility costs
will be allocated to the Marketing Department? Assume actual usage is used to allocate
copying costs.
A) $16,800
B) $18,000
C) $12,000
D) $9,600
14) Managers of supplier departments ________.
A) view the budgeted rates positively if unfavorable cost variances occur due to price
decreases outside of their control
B) view the budgeted rates negatively if favorable cost variances occur due to price
decreases outside of their control
C) view the budgeted rates negatively if unfavorable cost variances occur due to price
increases outside of their control
D) view the budgeted rates negatively if unfavorable cost variances occur due to price
decreases outside of their control
