The debits to Work in Process’”Assembly Department for May, together with data
concerning production, are as follows:
All direct materials are placed in process at the beginning of the process and the firstÂ-
in, firstÂout method is used to cost inventories. The materials cost per equivalent unit
for May is
a. $3.00
b. $3.80
c. $2.92
d. $2.31
Answer:
The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40
per hour. Original production had been budgeted for 1,100 units, but only 1,000 units
were actually produced. Labor standards were
7.6 hours per completed unit at a standard rate of $13.00 per hour.
The labor time variance is
a. $9,880 favorable
b. $9,880 unfavorable
c. $7,800 unfavorable
d. $7,800 favorable
Answer:
The following information pertains to Diane Company. Assume that all balance sheet
amounts represent both average and ending balance figures and that all sales were on
credit.
Assets
Liabilities and Stockholders’ Equity
Income Statement
What is the rate earned on total assets for Diane Company? a. 10.0%
b. 8.0%
c. 0.10%
d. 1.0%
Answer:
The systematic examination of the relationships among selling prices, volume of sales
and production, costs, and profits is termed
a. contribution margin analysis
b. cost-volume-profit analysis
c. budgetary analysis
d. gross profit analysis
Answer:
Managers of what type of decentralized units have authority and responsibility for
revenues, costs, and assets invested in the unit?
a. profit center
b. investment center
c. production center
d. cost center
Answer:
When using the product cost concept of applying the cost-plus approach to product
pricing, what is included in the markup?
a. desired profit
b. total fixed manufacturing costs, total fixed selling and administrative expenses, and
desired profit
c. total costs plus desired profit
d. total selling and administrative expenses plus desired profit
Answer:
In using the total cost concept of applying the cost-plus approach to product pricing,
selling expenses, administrative expenses, and profit are covered in the markup.
a. True
b. False
Answer:
Process manufacturing usually reflects a manufacturer that produces small quantities of
unique items.
a. True
b. False
Answer:
At the beginning of the period, the Assembly Department budgeted direct labor of
$110,000, direct materials of $170,000, and fixed factory overhead of $28,000 for 8,000
hours of production. The department actually completed 10,000 hours of production.
What is the appropriate total budget for the department, assuming it uses flexible
budgeting?
a. $288,000
b. $305,000
c. $350,000
d. $378,000
Answer:
If employees accept a wage contract that increases the unit contribution margin, the
break-even point will decrease.
a. True
b. False
Answer:
A project has estimated annual cash flows of $95,000 for 4 years and is estimated to
cost $260,000. Assume a minimum acceptable rate of return of 10%. Using the
following tables determine the (a) net present value of the project and (b) the present
value index, rounded to two decimal places.
Below is a table for the present value of $1 at compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Answer:
Includes manufacturing costs plus selling and administrative expenses
Match the definitions that follow with the term (a’“e) it defines.
a. Engineering change order
b. Total cost concept
c. Variable cost concept
d. Normal selling price
e. Setup
Answer:
The production department is proposing the purchase of an automatic insertion
machine. It has identified 3 machines and has asked the accountant to analyze them to
determine the best cash payback.
a. Machine A
b. Machine C
c. Machine B
d. All are equal.
Answer:
The following data is given for the Bahia Company:
Overhead is applied on standard labor hours.
The fixed factory overhead volume variance is
a. $65 unfavorable
b. $65favorable
c. $540 unfavorable
d. $540 favorable
Answer:
S&P Enterprises sold 10,000 units of inventory during a given period. The level of
inventory of the manufactured product remained unchanged. The manufacturing costs
were as follows:
Which of the following statements is true?
a. Net income will be the same under both variable and absorption costing.
b. Net income under variable costing will be $45,000 less than net income under
absorption costing
c. Net income under absorption costing will be $40,000 more than under variable
costing.
d. The difference in net income cannot be determined.
Answer:
The principle of exceptions allows managers to focus on correcting variances between
a. standard costs and actual costs
b. variable costs and actual costs
c. competitor’s costs and actual costs
d. competitor’s costs and standard costs
Answer:
Condelezza Co. manufactures two products, A and B, in two production departments,
Assembly and Finishing. Condelezza Co. expects to produce 10,000 units of Product A
and 20,000 units of Product B in the coming year. Budgeted factory overhead costs for
the coming year are:
The machine hours expected to be used in the coming year are as follows:
(a) Compute the plantwide factory overhead rate.
Compute the production department factory overhead rates.
(b) Compute the factory overhead per unit for each product using (1) the single
plantwide rate and (2) production department factory overhead rates.
(c) Which method is better (plantwide or department)? Why?
Answer:
The budget process involves doing all of the following except
a. establishing specific goals
b. executing plans to achieve the goals
c. periodically comparing actual results with the goals
d. dismissing all managers who fail to achieve operational goals specified in the budget
Answer:
Panamint Systems Corporation is estimating activity costs associated with producing
disk drives, tapes drives, and wire drives. The indirect labor can be traced to four
separate activity pools. The budgeted activity cost and activity base data by product are
provided below.
Determine the activity rate for materials handling per move.
a. $58.82
b. $50.00
c. $20.83
d. $80.65
Answer:
Lean manufacturing focuses on reducing time, cost, and poor quality in processes.
a. True
b. False
Answer:
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.
What is the target cost of the company’s product?
a. $44
b. $42
c. $43
d. $40
Answer:
Just-in-time operations attempt to significantly reduce
a. profits
b. inventory needed to produce products
c. waste and simplify the production process
d. processing time
Answer:
Managers depend on product costing to make decisions regarding continuing operations
and product mix.
a. True
b. False
Answer: