Stone Cliff Company manufactures custom-order furniture. During 2013, actual
manufacturing overhead totaled $720,000. Based on the 2013 results, and projected
production for 2014, management prepared the 2014 budget and estimated that
manufacturing overhead would total $800,000. The estimated number of direct labor
hours for 2014 is 500,000, and the estimated amount of direct labor cost is $1,000,000.
The company plans to use direct labor hours as the basis to allocate overhead to jobs.
During May and June 2014, employees worked on the following four jobs:
Job X87 was started in May and delivered to the customer in late June. What is the cost
of Job X87?
a. $256,000
b. $267,440
c. $266,296
d. $97,160
Perfect manufacturing cycle efficiency would yield a ratio equal to
a. Zero.
b. One.
c. Less than one.
d. More than one.
Backyard Creations purchased 7,800 feet of copper tubing at a price of $2.30 per foot
and used 7,500 feet during the period. The standard quantity allowed for the units
produced is 7,300 and the standard price of the copper tubing is $2.50 per foot. What is
Backyard Creations’ direct materials quantity variance for the period?
a. $460 unfavorable
b. $500 unfavorable
c. $750 unfavorable
d. $1,250 unfavorable
Mixed costs must be divided into which of the following components?
a. Period and product
b. Fixed and variable
c. Direct and indirect
d. Cost and profit
Harding Corporation sells two products, Standard and Supreme. Expected sales are
40,000 Standard and 60,000 Supreme. Standard’s unit contribution margin is $30 and
Supreme’s is $60. Fixed expenses are $1,800,000. How many Standard units would
Harding sell at the break-even point?
a. 15,000
b. 20,000
c. 22,500
d. 40,000
The Institute of Management Accountants (IMA) and many other professional
organizations have a code of conduct to direct the membership ‘s ethical behavior.
Discuss the standards that guide the conduct of members of the IMA.
Which of the following is a measure that relates to the internal business processes
perspective?
a. Delivery cycle time
b. Market share
c. Training hours per employee
d. Cash flow
The times interest earned ratio measures a company’s ability to
a. Maintain profit after paying interest.
b. Pay interest and debt on the due date.
c. Make interest payment out of current earnings.
d. Pay interest and debt from current assets already on hand.
Assume a scattergraph shows $500 at no activity and $2,500 at an activity level of
1,000 units. The variable cost per unit is:
a.$2.00
b.$1.40
c.$2.50
d.$5.00
In which of the following situations should a project not be accepted?
a. Internal rate of return is less than the discount rate
b. Internal rate of return is equal to the discount rate
c. Internal rate of return is greater than the discount rate
d. When the internal rate of return is greater than zero
When using a standard costing system, which of the following should be recorded when
recording the purchase of direct materials?
a. Debit raw materials inventory at the standard price and credit accounts payable at the
standard price
b. Debit raw materials inventory at the standard price and credit accounts payable at the
actual price with a debit or credit to direct materials price variance
c. Credit raw materials inventory at the standard price and debit accounts payable at the
actual price with a debit or credit to direct materials price variance
d. Credit raw materials inventory at the standard price and debit accounts payable at the
standard price
Which of the following would not be an advantage of decentralization?
a. Duplication of effort is minimized.
b. Companies can develop their own managers internally by giving lower-level
managers practice in developing their decision-making skills.
c. Top management is free to focus on the long-term strategies of the organization.
d. All of these answer choices are advantages of decentralization.
Curly Girl Manufacturing manufactures salon-quality hair dryers. Curly Girl applies
overhead based on direct labor hours. The company’s predetermined overhead rate was
based on an estimated 480,000 direct labor hours and $1,728,000 estimated total
overhead. During November, the company manufactured 22,400 hair dryers in Job
CG12 and incurred the following costs:
What is the unit cost of the hair dryers produced in Job CG12?
a. $36.10
b. $42.40
c. $24.23
d. $42.75
Based on the matching principle, all product costs flow through
a. Raw materials Inventory
b. Work in Process
c. Finished Goods
d. All of these answer choices are correct.
Jonathan, a student at Local University, has decided to major in accounting because his
goal is to become an FBI agent. Jonathan knows that accounting is one of the entry
programs that qualify an applicant for a special agent career. As most students do,
Jonathan wants to purchase a nice car when he graduates in five years with his master’s
degree. Because his expected salary will be good, he wants a high-performance sports
car. He has found the car of his dreams for $58,000. Jonathan’s parents have promised
him a graduation present of $25,000 when he finishes his master’s degree.
Required:
a. Calculate how much money Jonathan needs to deposit in his savings account today to
be able to pay cash for the car upon graduation, assuming that his parents contribute
what Jonathan expects. Jonathan can earn 8% on his deposit, compounded annually.
b. Calculate how much money Jonathan needs to deposit in his savings accountant
today to be able to pay cash for the car upon graduation, assuming that his parents
contribute what Jonathan expects. Jonathan can earn 8% on his deposit, compounded
semi-annually.
A management tool that integrates performance measures across four different
perspectives to guide operations toward achieving an organization’s strategy is called
a. Performance dashboard.
b. Balanced scorecard.
c. Key performance measures.
d. None of these answer choices are correct.
Discount rates are used to value which of the following items?
a. Future earnings
b. A partnership’s property when a new partner is being admitted
c. Distributions of estate assets
d. All of these answer choices are correct
The Machining division makes a component part that the Assembly division needs for a
new product. The Machining division ‘s variable cost of manufacturing the component
is $25 per unit. The component is also available on the open market at a price of $45
per unit. The Assembly division needs 900 units per year, and the Machining division
has excess capacity of 1,000 units.
Required
a. Calculate the cost-based transfer price that the Machining division should charge the
Assembly division.
b. Calculate the market-based transfer price that the Machining division should charge
the Assembly division.
c. What arguments would the Machining division ‘s manager and the Assembly division
‘s manager make in an attempt to get the price each wants?
Blond Co. is using the target cost approach on a new product. Information gathered so
far reveals:
What is the target selling price per unit?
a. $0.42
b. $0.70
c. $0.35
d. $0.77