On the variable costing income statement, all of the fixed costs are deducted from the
contribution margin.
a. True
b. False
Below is budgeted production and sales information for Flushing Company for the
month of December:
The unit selling price for product XXX is $5 and for product ZZZ is $15.
Budgeted production for product ZZZ during the month is
a. 403,000 units
b. 380,000 units
c. 397,000 units
d. 417,000 units
Schedule of Activity Costs
From the above schedule of activity costs, determine the prevention costs.
a. $30,000
b. $74,000
c. $76,000
d. $104,000
The following data relate to direct labor costs for February:
What is the direct labor rate variance?
a. $14,000 favorable
b. $14,000 unfavorable
c. $15,400 favorable
d. $15,400 unfavorable
Conversion costs are generally added evenly throughout the process.
a. True
b. False
At the end of July, the first month of the current fiscal year, the factory overhead
account had a debit balance. Which of the following describes the nature of this balance
and how it would be reported on the interim balance sheet?
a. Over applied, deferred credit
b. Under applied, deferred debit
c. Under applied, deferred credit
d. Over applied, deferred debit
A decrease in the ratio of liabilities to stockholders’ equity indicates an improvement in
the margin of safety for creditors.
a. True
b. False
The total cost of units completed during the period were
a. $117,000
b. $143,400
c. $121,000
d. $127,450
If sales totaled $800,000 for the year (80,000 units at $10.00 each) and the planned
sales totaled $799,500 (78,000 units at $10.25 each), the effect of the quantity factor on
the change in sales is:
a. $20,500 increase
b. $20,000 decrease
c. $20,500 decrease
d. $20,000 increase
Managerial accounting provides useful information to managers on product costs.
a. True
b. False
Planning is the process of developing the company’s objectives or goals and translating
these objectives into courses of action.
a. True
b. False
Flyer Company sells a product in a competitive marketplace. Market analysis indicates
that its product would probably sell at $48 per unit. Flyer management desires a 12.5%
profit margin on sales. Their current full cost for the product is $44 per unit.
If the company cannot cut costs any lower than they already are, what would the profit
margin on sales be to meet the market selling price?
a. 9.3%
b. 7.3%
c. 10.3%
d. 8.3%
The plant manager’s salary in a manufacturing business would be considered an indirect
cost.
a. True
b. False
Which of the following is (are) objective(s) of lean manufacturing?
a. eliminating waste
b. increasing inventory levels
c. increased production speed
d. all of the above
Which of the following is not a use of the cost of production report?
a. to help managers control operations
b. to help managers isolate problems
c. to project production
d. to help managers improve operations
Cost behavior refers to the manner in which a cost changes as the related activity
changes.
a. True
b. False
A specific activity range over which the cost changes are of interest.
Match the following terms with their definitions.
a. Relevant range
b. Break-even point
c. Contribution margin
d. Fixed costs
e. Variable costs
If income from operations for a division is $6,000, invested assets are $25,000, and
sales are $30,000, the investment turnover is 1.2.
a. True
b. False
Perpetual inventory controlling accounts and subsidiary ledgers are maintained for
materials, work in process, and finished goods in job order costing systems.
a. True
b. False
In using the variable cost concept of applying the cost-plus approach to product pricing,
fixed manufacturing costs and fixed selling and administrative expenses must be
covered by the markup.
a. True
b. False